Back-door internet TV services this week defied a ‘cease and desist’ order from the country’s biggest broadcasters. Geoff Cumming considers what happens now.
It's the drawn-curtain revolution allowing mums and dads to do in the lounge what their kids are doing in the bedroom.
For two years, before Netflix's New Zealand launch and Sky's Neon streaming offering, a clutch of internet service providers, including Slingshot and Orcon, have provided Global Mode - technology allowing customers to watch programmes on overseas video streaming sites, sometimes months before they are shown by New Zealand broadcasters.
In contrast to tech-savvy youngsters' use of torrenting sites and other shady methods to "unblock" trending programmes in the United States or Britain, Global Mode came with at least a veneer of legitimacy. While the tool is offered free, viewers still must subscribe to the overseas screening site - such as US Netflix or BBC iPlayer - satisfying customers with scruples that the content creator isn't losing out. Nor does it require technical smarts: there's no software to download or configurations to change.
The claimed world-first technology for internet service providers (ISPs) gets around geoblocking technology, which restricts viewing to the country or region for which the site has screening rights.
Devised by a couple of tech geeks on the fringes of Auckland's CBD, it works by tricking the overseas site into thinking your internet protocol address is within their jurisdiction.
Their company name is instructive: Bypass Network Services.
Encouraged by marketing that promotes it as legal, tens of thousands of New Zealand households have expanded their viewing horizons using Global Mode, watching either on their laptop or plugging it into their smart TV, from premieres and exclusives to the latest Game of Thrones.
Now, broadcasting behemoths TVNZ, MediaWorks and Sky have joined forces with Spark (which both supplies broadband and on-demand product Lightbox) in a bid to squash the upstart. On April 2, they sent "cease and desist" legal letters to BNS and its customers giving them until Wednesday to close the service down. Some smaller internet providers folded; BNS and Call Plus (owner of Slingshot and Orcon) stared them down. Court papers are due to be served and, to no one's surprise, Hollywood studios are joining the action.
The test case looms as pivotal not just for the protagonists: it promises to shape mainstream viewers' in-home entertainment experience, by either hastening or postponing the rise of internet-sourced film and video and the demise of "catch-all" TV channels.
The battle draws BNS and local ISPs into the global guerrilla war between film and television moguls - we'll call them Big Media - and internet users, which has seen ISPs in many countries forced to block piracy sites only for newcomers to emerge. The big difference here is Global Mode's claim to legitimacy.
Big Media say the technology breaches exclusive rights licensing agreements between overseas content-holders and local broadcasters. They claim this breaches copyright law; that the streaming rights of offshore providers such as Netflix US, Hulu, Amazon Prime and BBC iPlayer do not extend to New Zealand.
Those behind the technology say Big Media need to "wake up and smell the internet - it's called the worldwide web for a reason".
Slingshot chief executive Taryn Hamilton says internet viewing options make the broadcasting rights model of selling the same product multiple times in different territories "completely out-of-date. The music industry were kicking and screaming about this a decade ago; they wised-up and changed their business model and now there's a thriving economy for music.
"The broadcasters need to go back to the rights-holders and say exclusive geographic content is a failed model."
Hamilton and others argue the technology is the digital equivalent of parallel importing.
"Global Mode has allowed New Zealanders to watch Netflix as a US citizen would, instead of someone like MediaWorks or Sky putting a premium on it."
BNS commercial director Matthew Jackson says geo-unblocking is not illegal and the product provides access only to legitimate subscription services.
"The accusation is that we are breaking an exclusive agreement - but that's between [the NZ broadcaster] and the content owners," Jackson says. "We are not a party to any of their agreements. We are not trying to get around some loophole in the internet or circumvent laws - we don't need to. It's more about the fact people can choose what they want to watch, when they want to watch it."
The upstarts got eyebrow-raising backing this week from Consumer NZ CEO Sue Chetwin, who branded the legal threat "simply protectionism of old content distribution models".
Consumers could end up paying more, Chetwin warned. "Consumers will always look for the best deal and if that isn't offered by a New Zealand company, then they shouldn't be stopped from looking overseas for a better deal."
Matthew Jackson (left) and Patrick Jordan-Smith of Bypass Network Services. Photo / Jason Oxenham
Both camps concede there are grey areas around the legality of Global Mode: it's not possible for copyright laws to keep up with technological advances. But Tech Liberty co-founder Thomas Beagle says copyright law becomes useless if consumers can't access things.
"Parallel importing is legal and it says New Zealanders have the right to access the same items for the same price as those overseas," Beagle says.
"Is there still a real market for New Zealand suppliers to sell content produced overseas to New Zealanders? In 20 years time we won't be having this discussion."
Industry insiders, including Netflix CEO Reed Hastings, believe on-demand screening will usher in an even shorter sunset for traditional networks but Big Media aren't letting go just yet. One key distinction between, say, the music industry and film and TV is the vastly different scale of production costs: this transition could be even more calamitous.
Sky TV and other broadcasters pay big money to secure the local rights to air overseas and local content; they admit geo-unblocking technology threatens the sustainability of their businesses. That could flow on to local content producers and to the Government tax take, says Sky spokeswoman Kirsty Way.
"This product threatens the livelihoods of the thousands of Kiwis employed by our companies and our investment in local content," Way says. "If our investment in content cannot be recouped, we are not in a position to support the local production industry."
That raises the question of who would pay for local productions if everyone's using a global service: "I wouldn't expect NZ On Air are going to fund content for foreign platforms." Way says the technology threatens local production revenues as viewers watch them on overseas streaming services.
"Global Mode is created and marketed to specifically trick software to lie about a person's whereabouts in order to access overseas content, we believe illegally."
For good measure, she adds, Global Mode clips the ticket just as local rights-holders do.
Using legal avenues to clamp down on competitors is, of course, a time-honoured corporate recourse and Big Media have copped a vicious social media backlash. Why single out an open target when the volume of clearly pirated traffic is far greater?
As Jackson maintains: "Global Mode decreases piracy and increases consumer choice."
Way: "We acknowledge other forms of piracy are of concern but this is focused on Global Mode."
But even those who merrily watch and download programmes via illicit channels feel sympathy for the networks - well, some.
"If they've paid for the rights it seems a no-brainer to try to close it down," says music production whiz Josh, who accesses both music and video by fair means and foul.
Josh is an elder statesman of the generation who grew up with the internet; for them, tools such as Global Mode which require a fee to be paid are anathema.
It's become progressively easier to get around geoblocking, he says, by accessing torrent files or streaming sites. "People know it's technically illegal but we are so used to it; it's normal. Occasionally, sites like Pirate Bay get closed down but they soon pop up again. They can only clamp down on it so far."
At the younger end of the internet generation, university student Murdo Mackellar downloads everything from the latest blockbusters to timeworn classics his mother likes ("It's how we watch TV," he says). Internet users learn to judge which sites are safe - the overriding drive is that it's free.
Though there's a smidgen of guilt that content producers may suffer financially, Mackellar, 18, says people are "a bit cynical about internet companies nowadays. Eighty per cent of people on the internet use ad-blockers, so the idea that it's generating revenue [for copyright-holders] doesn't really work."
Big Media may be defending a still-valid model; they may find a helpful clause in the Copyright Act - but it looks to be a finger-in-the-dyke stance. Tech commentator Peter Griffin says the only real option for the networks is to make content easier to access.
"The companies will say they are still the simplest way to access content, but viewer demographics are changing and viewing habits are changing."
Griffin says the options now available with smart TVs, including streaming and on-demand services, didn't exist two years ago. In a couple more years, accessing worldwide content could be just a click of the remote away. Even Global Mode will become redundant as geoblocking collapses, he says.
Sky's attempt this week to live-stream the first episode of the latest Game of Thrones as it aired in the US (though thwarted by gremlins) points to where broadcasters must head, Griffin says. "International simultaneous release on both broadcast and digital platforms, potentially with the same company doing it - that is the future. It becomes irrelevant where you are in the world and what market it's serving."
The big question, he says, is the future of free-to-air channels. He believes their only option will be to offer high-quality local content instead of paying big dollars for overseas shows. "There could be a renaissance for local content because that's their only point of difference."
