Netflix drawing criticism from TV industry

[hugh]

Netflix Inc., in manoeuvring to become a sustainable player in the Canadian market, is drawing the ire of some within the domestic television industry and perhaps the attention of regulators.

"Netflix is now securing exclusive distribution rights to content in Canada, and it's selling subscription-based access to this content to households. Therefore, they are acting as both a pay TV operator (such as Astral) and a cable company (such as Rogers). Fine and dandy, except that in Canada both pay TV operators and cable companies need to be Canadian-owned and licensed by the CRTC," one Bay Street source said.

[hugh]

Interesting.

Is Astral really any different than Netflix except the means by which they deliver their signal?

[cambo]

The CRTC needs to get their heads out of you know where and realize that you cannot isolate the Canadian market anymore to protect existing entities.

The internet is Global. And it is gaining steam. Either play ball or get off the field.

[North_of_Calgary]

From the article:

"Selling old movies is one thing, but competing directly for first-run movies and TV shows will surely put Netflix in the line of fire of the CRTC," one industry watcher said. "At a minimum they will incur extra costs to comply with Canadian regulations, and they will need to set up a Canadian subsidiary that is controlled by Canadians."

Apple sells iTunes rentals of first-run movies so how are they any different?

Netflix's services are only an arms reach away from Apple's or for that matter YouTube. Or similar "adult" streaming services.

So if the CRTC opens that door it might be a floodgate.

Seems to me that it's time for a complete overhaul of the CRTC.

[nakedgord]

In theory how is Blockbuster different? The store could be compared to a BDU entity and the stock as a "channel".

Besides how can the CRTC procede? All that's really being done is not geo-blocking Canadian IP addresses from their US servers, working out content agreement with American rights holders and allowing processing of Canadian credit cards to handle payment.

I really like Astral and it's actually the last Canadian company I'd like to see taken on Like this but whatns the CRTC to do really? Try to regulate the internet? Will this extend to forbidding me from buying DVDs from *********** or Barnes and Noble?

That all seems rather far fetched. The distro network likely can't be controlled by the CRTC, the content deal they have no part of, and could they actually forbid Mastercard Canada from processing Netflix payments? The most I could see them doing is going after the netflix.ca domain so they'd have to switch to netflixcanada.com

[MarcP]

An old business model on its way to become outdated is fighting back by convincing law makers instead of trying to compete. Typical.

[hugh]

I disagree.

In this case its about tax and regulatory fairness.

The government imposes numerous taxes and expensive regulations on Cable and Satellite tv providers in this country.

While I agree that that the level of taxes and regulations is far to onerous, I would also argue that Netflix should be subject to many of those same taxes and regulations since they are, in many ways, offering a similar service.

If cable and sat companies have to pay a tax for Canadian development funds when they charge for a movie or show, then isn't reasonable that Netflix or any other Internet television provider do the same. Why should Rogers or Bell pay but not Netflix?

Again, I AM NOT ARGUING for more regulation or taxation, just looking at it from an equity perspective.

[nakedgord]

Originally Posted by MarcP

An old business model on its way to become outdated is fighting back by convincing law makers instead of trying to compete. Typical.

Convincing lawmakers to do what tho? If Netflix said "the hell with you" and kept operating as normal what could they do? Go after their ICANN listing? Stop Visa/MC from processing payments?

Then what? Netflix gets a domain outside control of Canada and perhaps sell top up cards for Netflix at Loblaws? Will they go after Loblaws then? Allow Canadian ISPs to block access to Netflix from inside the border?


That could be a huge mess that'd get international attention like when other countries shut off parts of the internet like China.

[MarcP]

Originally Posted by hugh

Why should Rogers or Bell pay but not Netflix?

Then why not also go after Apple? Why just Netflix?

[Jake]

They don't see Apple as a threat ... yet.

[hugh]

MarcP, who said anything about "going after" companies. This isn't the wild west or a witchhunt. I'm simply saying that this is an equity issue and that rules should apply evenly.

Personally I see a difference between iTunes and Netflix. IMO, iTunes is a retail store like Blockbuster selling and renting movies whereas Netflix is more like a cable company delivering multiple channels and shows.

You can argue all you want whether you want on how this companies should be categorized but I think its wrong if you don't treat the companies on an equal basis WHICH is the whole point of the debate.

[Jake]

Netflix is more like a cable company delivering multiple channels and shows

Sorry Hugh I don't follow your reasoning. If you count actual titles I think Apple come out ahead.

[MarcP]

I don't see the logic either. Netflix doesn't have channels. You select what you want to watch (TV or movies) and you get to watch it. iTunes has movies and TV shows as well (and much faster too).

You can argue for equality, but if only Netflix is the catalyst for this movement, it is a valid question why iTunes never raised the alarm bell. Why has iTunes been able to operate so freely for so long... and PSN and XBox marketplace... but here comes Netflix and the bullseye is on them.

[hugh]

Guys, actual titles and Apple is a red herring. See the quote in post #1

"Netflix is now securing exclusive distribution rights to content in Canada, and it's selling subscription-based access to this content to households. Therefore, they are acting as both a pay TV operator (such as Astral) and a cable company (such as Rogers). Fine and dandy, except that in Canada both pay TV operators and cable companies need to be Canadian-owned and licensed by the CRTC," one Bay Street source said.

To argue that Netflix shouldn't have to pay or be constrained by the CRTC means you must argue that Netflix is NOT "securing exclusive distribution rights to content in Canada, and it's selling subscription-based access to this content to households"

The moment it bought rights to programming for distribution, it became a pay tv operator and as such should be constrained by the rules that govern pay tv operators.

A pay tv operator buys exclusive rights to content that it can distribute over a regional area and then sells subscriptions to it. This is what Astra does and what the industry argues Netflix is doing.

[travisc]

I tend to agree with hugh. The distribution medium is irrelevant. The CRTC will try to make them play by the same rules as others in the industry - whether they can do anything to enforce the rules, I'm not sure.