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Netflix says it can’t do anything about Aussies accessing US site, while being coy on GST issue

Reed Hastings

Hastings speaking at last night’s Netflix launch event in Sydney. Credit: Dan Barrett/ Televised Revolution

Netflix has claimed it is powerless to move the hundreds of thousands of Australians who are currently using virtual private networks (VPNs) to access the American library of the streaming service across to their newly launched Australian library.

In an interview with Sky News Business Reed Hastings, CEO of Netflix, acknowledged that the US streaming giant could enforce rules around only using American credit cards on the US version of the site but argued that consumers would just find other work arounds.

“You can pay with anything, you can pay with a gift card, you can pay with Paypal, so there is no effective block around payment method that works,” said Hastings, when challenged by host Helen Dalley about why the US video streaming giant refused to do more to combat the 200,000-300,000 Australians who use VPNs to circumvent geo-blocks which are designed to enforce existing local licence agreements.

“We’re really just focused on bringing the content together so its a great library here, and its a great library in every country, that’s the main thing we can do.

“What we are really trying to do is to have a great service in Australia so there is no reason to go to the complexity and cost of a VPN. By having a great service in Australia there won’t be people who feel there is a need to go to a VPN.”

Amid a blaze of media and the formal launch of Netflix’s Australian marketing campaign the company has moved to hose down concerns about its decision not to employ any local staff, questions about the creation of local content and concerns about it refusal to pay the goods and services tax – giving it a competitive costs advantage on local competitors Stan and Presto.

On the GST issue Hastings was coy, following recent comments by senior members of the government that Netflix should be charging consumers and paying tax, saying only: “Every nation is trying to figure out how do they want to tax their citizens when their citizens buy global good and we follow the laws in every nation.”

While on the issue of how many Australian jobs would be generated by the launch Hastings responded: “We are all out of California we don’t have employees around the world.”

Earlier in the week assistant treasurer Josh Frydenberg said he was concerns about rules which allowed Netflix a $US20 billion US corporation with hundreds of thousands of Australian customers not to be considered for tax purposes a “local entity” in Australia.

Australia is due to release a white paper on tax laws next week which is expected to recommend tightening up loopholes in that area.

Netflix has moved to address these concerns by highlighting how they are creating local content in Australia, citing its production of Mako Mermaids, which is produced by Netflix but refusing to be drawn on whether they would commission any more programming.

“H2O is great show for teenagers,” Hastings told Dalley. “That is Mako Mermaids is now in its second season produced in Australia and available to a global audience.”

“We are searching the globe to find the best stories that we can and to get them produced anywhere that we can. We are wide open to that, but there are no announcements today.”

The statements came on the same day that Screen Producers Australia welcomed the arrival of Netflix but urged them also to invest in Australia’s production industry.

“We are pleased to see a new player like Netflix enter our expanding market and we trust that this will not just provide an avenue for imported content and local catalogue titles, but also will result in a valuable contribution to Australian screens through original local production,” said Matthew Deaner, CEO of Screen Producers Australia.

Screen Australia and Fremantle Media have also created a new grant program to give producers more resources to pitch show ideas to services like Netflix.

Hastings also spoke about the importance of internet service providers providing unmetered access for video streaming, meaning users did not breach their data caps.

The Netflix CEO cited the Canadian experience as an example of what may occur in Australia: “Many countries like Canada used to have low internet caps – like 20GB – and as the Netflix grew they just expanded their caps and if you think about here in Australia over the last seven years they have risen significantly and eventually there just won’t be any data capping.”

On the broader piracy issue Hastings said he believed the Australian launch of Netflix would help combat piracy in Australia, which is among the highest in the world. 

“What we have found with piracy is that if you have a legal and affordable service that is very convenient, some people – young people – might pirate, but for the most part people are honest and they would like to pay for the service and have it be legitimate,: he added.

Watch Hastings’s full interview with Sky News Business here. 

Nic Christensen 

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