How exactly the "Netflix Question" will be solved remains to be seen, but it's part of a much larger issue, the collision between the existing economy and society, and the internet. Photo / Bloomberg
How exactly the "Netflix Question" will be solved remains to be seen, but it's part of a much larger issue, the collision between the existing economy and society, and the internet. Photo / Bloomberg
Imagine you run a company that has plenty of very desirable products and services to resell that people worldwide want, you get ready for global domination and then you're told "look here, you're not allowed to do that."
That's exactly the situation video streaming giant Netflix is in at the moment.
Having launched in 130 countries worldwide, it is now forced to limit what's available to viewers in certain countries, because that is what movie studios and other rights holders want.
Blocking access to content on a platform that was designed to make it as easy as possible to share material - and copy it - is of course a fool's errand. There is no effective way identify where exactly an internet-connected computer (or TV) is, physically. Internet protocol addresses can be allocated to anyone and work from anywhere.
Netflix has agreed to such restrictions, or geoblocking, in its contracts with content rights holders, and it must make an effort to enforce those agreements.
In doing so, Netflix risks alienating and enraging paying customers who all of a sudden can't, at least temporarily, access the latest episode of the series from US, UK or another country that they're addicted to.
I can't vouch for the accuracy of the numbers, but unblocking service Unotelly reckons Netflix has over 14,000 unique titles in its catalogue; thanks to geoblocking however, only a fraction of those movies are available to say, New Zealanders who pay for Netflix.
Graphic / UnoTelly
Geoblocking is annoying customers everywhere however, and there are signs that governments are considering putting the brakes on those artificial restrictions, especially for internet-delivered content and services.
The European Union for instance, which clearly isn't the single market you might think it is, a round of public consultation on geoblocking has finished. Only the preliminary results are available but to nobody's surprise, nine out of ten people in the EU oppose "unjustified" geoblocking.
It's not a black and white issue however.
If the likes of Netflix and other internet giants are given free rein, especially in small markets like NZ, it could damage local business. As we've seen over the years, internet economy players grow gigantic fast (think Facebook and Google) but contribute very little in the markets they earn money in - they don't employ many staff outside the US, and pay little or no tax in the overseas countries they operate in.
Furthermore, taking away geoblocking would in fact limit the freedom of businesses to decide where they want to sell material, and to whom.
There can actually be good reasons to limit access in some countries: certain territories could be blocked because there are no support mechanisms for the area, even though the law of the land there says there has to be, if you wish to trade there.
How exactly the "Netflix Question" will be solved remains to be seen, but it's part of a much larger issue, the collision between the existing economy and society, and the internet.
In the case of Netflix, you can't just set up a worldwide video streaming service, sign global licensing agreements for content, and hope everything will be fine. Different countries have different ideas as to freedom of expression (or the lack thereof) and impose censorship to varying degrees.
New Zealand has an official censor that Netflix has to defer to. Indonesia, a much larger market with over 250 million people, has officially very strict censorship and did not appreciate Netflix ignoring that. Although the Indonesian government later said it had nothing to do with it, the decision by the country's state-run telco and internet provider Telkom to block Netflix most likely came from upstairs, perhaps to put pressure on the video streaming company to come up with a way to geoblock non-censored content for Indonesia.
How exactly the "Netflix Question" will be solved remains to be seen, but it's part of a much larger issue, the collision between the existing economy and society, and the internet.
My money is on the internet; there's overwhelming demand, a highly efficient distribution channel and commercial incentive for providers and third-parties such as unblockers to take the money and give people what they want.
Drastic measures to limit access include large-scale blocking, like Pakistan, which blocked over 400,000 websites recently, but that's unlikely to work.
Criminalising users to bypass geoblocking and other content access restriction measures is another way to do it. It'd be a brave government to effectively enforce such law though, and take tens of thousands or more citizens to court for something nobody in their right mind considers a crime.
I would expect that rights holders have to mostly fold, and global licensing deals becoming the norm - perhaps with subscribers paying more for better or full access to content catalogues.
Neither Netflix nor rights holders can be happy with seeing subscriber money they could have being spent on unblockers and virtual private network providers, which is another incentive to end geoblocking for them.
One thing is clear: the Netflix saga is definitely worth following if you're a New Zealand organisation wanting to build an internet-scale business (because that's what you have to do in 2016), so keep an eye on how it's resolved and learn from it.
