If there is one word that strikes fear for most Australian media companies these days, then that word is "Netflix". This is despite Netflix not having an Australian presence and having made no announcements on the entry into the local market, at least not officially.
It's Netflix's unofficial status in Australia however that's the main cause of concern for local companies. A recent survey revealed that up to 200,000 Australian households are already using Netflix, via services that removes geographical restrictions that otherwise prevents access to Netflix. Once these restrictions are bypassed, users can sign up and use their Australian credit cards to pay for the service.
While bypassing geographical restrictions is something that is completely legal in Australia under current copyright laws, local media companies feel that they are missing out on potential licensing payments for content that, under normal circumstances, should have been licensed from them. Local streaming operators also feel that Netflix is abusing their access to cheap content overseas (in particularly, the US) by not clamping down on Aussies who access the service. Critics say Netflix should at the very least block Australian credit cards from being used to subscribe to the service.
The same critics are also calling on the Australian government to step in, to make bypassing geo-restrictions illegal, despite legal precedence in Australia's high court saying otherwise.
This issue may become moot by this time next year, however, as all rumours suggests that Netflix will make its official Australian entry in 2015.
And it's not just the direct competitors, and those missing out on licensing payments, that are losing sleep over Netflix's official and unofficial presence in Australia.
A monopoly of sorts currently exists in the pay TV market, where nationally, there is only one operator, Foxtel. Foxtel has been accused of abusing its market position to lock up programming, such as new episodes of 'Game of Thrones', exclusively to their network. While many of these shows will remain exclusives with Foxtel even if/when Netflix Australia debuts, the core of Foxtel's programming will find itself replicated on Netflix, in a consumer friendly all-you-can-eat on-demand fashion, for possibly 80% cheaper than Foxtel's most basic package. Netflix will be Foxtel's biggest competitor, and may already be so unofficially, and this has the cable network worried.
So worried that this week, the company announced a comprehensive re-organising of their pricing structure, resulting in the basic access price being halvedfrom November onwards. The company is also introducing more on-demand features for both its set-top-boxes as well as app offerings, to placate subscribers that feel the traditional broadcast model has become outdated.
While the current intense debate over what to do about the piracy problem in Australia may result in some big changes to the home entertainment scene in the near future, it could be that Netflix's moves locally could prove to be the far greater game-changer.