Netflix in South Africa: be careful what you wish for

Netflix recently confirmed that its plans for global domination expansion include South Africa, which it said it intends to serve by the end of 2016.

Understandably, this news was met with jubilation and dancing in the streets. Or as close to it as people can get on Twitter (and in the MyBroadband forums).

South Africans are being oppressed by underwhelming and/or overpriced pay TV and Netflix will deliver us!

Except Netflix is no saviour. It’s just a media company playing by the same rules as other media companies, but which offers a high-quality service while doing so.

US Netflix vs everywhere else

If you look at media coverage in countries where Netflix has launched (outside the United States), you’ll find quite a bit of negativity.

For example, when Netflix arrived in Canada and the United Kingdom during 2012 there were complaints its catalogues were much smaller than that of the US service.

There are still major discrepancies between the libraries, with some enthusiast blogs and other services counting that Netflix UK has over 3,000 movies and TV shows, while its US counterpart has over 8,000.

Similarly, news that Netflix will launch in Australia has not been met with much positivity either.

From conspiracies that the service was doing stricter enforcement of its geoblocking policies ahead of the launch, to pre-emptive complaints that Australians will be made to pay more for access to fewer titles than they could get before.

Regional licensing: how it works

The reason for the difference in Netflix library sizes from one country to the next, according to video on demand (VOD) industry insiders in South Africa, is because of the way content licensing works.

Unlike normal broadcast TV, there is no regional exclusivity on VOD content, but the rights to offer video content on-demand are still sold per region (with a few exceptions) and are quite pricey.

This means that even though Netflix has the rights to offer a show or movie to its US subscribers, it often has to pay for the rights to stream that same content to a different region.

There are exceptions, and Netflix referred to them in its latest earnings briefing with shareholders while discussing its plans for China:

“We’ll learn a great deal if we can successfully operate a small service in China centred on our original and other globally-licensed content,” CEO Reed Hastings and CFO David Wells said in a letter to shareholders.

“Small service” is the key phrase in the quote above. Globally-licensed content is the exception that proves the rule.

Add to this that subscription VOD services currently lack live sports and typically offer much older content than broadcasters, and Netflix South Africa may not be the cure-all for the pay TV woes so many have complained about.

That doesn’t mean it’s not a good service or that it won’t have a compelling offering when it launches in South Africa, but expecting a local VOD offering — even if it is Netflix — to be comparable in library size to US services is sadly not realistic.

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Netflix in South Africa: be careful what you wish for