Netflix Not Entering New Zealand29 Nov, 2011 By: Erik Gruenwedel
Low broadband penetration and prohibitive content costs cited as significant challenges
Netflix’s burgeoning streaming empire is bypassing New Zealand’s 4.4 million inhabitants due to poor broadband household penetration and digital content rights, among other issues, a company executive said.
Speaking Nov. 25 at a technology confab in Aukland, Brent Ayrey, VP of product innovation with Los Gatos, Calif.-based Netflix, told attendees that just 66% of the country’s homes have high-speed connectivity, in addition to an Internet infrastructure he said was incapable of handling the requisite streaming data.
Indeed, Netflix streaming in the fall accounted for 32.7% of peak download traffic in the United States, according to the latest data from Sandvine, with real-time entertainment applications representing 60% of peak downstream traffic. That’s up from 50% in 2010.
“It's really a function of, do people watch TV? Do we have the content? Does the internet infrastructure work? The answer for at least the last question for New Zealanders is no,” Ayrey said, according to a report in ComputerWorld.com.
Netflix, which launched streaming service in Latin America, the Caribbean and Mexico this year, is bowing service in the United Kingdom and Ireland early next year.
In addition to connectivity, Ayrey said Netflix would face significant challenges wresting movie and TV programming rights from studios, which already have deals in place with several Sky satellite TV properties, including a majority-owned by-mail DVD and Blu-ray subscription service called Fatso.
He said as the global market for Web-enabled TVs grows (expected to reach 500 million homes by 2015, Ayrey said), delivering subscription video-on-demand across international borders will become more realistic.
“The dream for us is to get to scale and buy some of that content globally, but today the structure is very much geographically determined,” Ayrey said. “Different markets have different sets of rules, different structures, different players and different distributors. It's fairly complicated.”