Thursday, April 20, 2023
The Customer Un-Satisfaction Index: Netlfix has become the latest Digital Bully
Cutting the chord is no longer a trend as internet streaming is now mainstream for people to watch movies and tv. The market is now cluttered with many choices with major studios in the USA entering the market. The category was created by Netflix, that started as a video/DVD rental mail order company in 1997. In 2007 Netflix introduced streaming video on demand in the USA and it was launched in Canada in 2010

As of January 2023, Netflix had over 230 million subscribers worldwide, including 74.3 million in the United States and Canada; 76.7 million in Europe, the Middle East and Africa, 41.7 million in Latin America and 38 million in the Asia-Pacific region. It is now the second largest media/entertainment company globally and its arrogance in how they treat their customers driven by their blind ambition to meet Wall Street expectations will be their downfall. 

The latest business decision by Netflix, using a business practice seen in the cable industry, to create new revenue streams is based on the location of the user, not the number of users that needs to be called out. If you were a current subscriber like me who had 4 user agreement and then be asked to pay extra if they are in different locations breaks new ground for tech/media companies to maximize revenue.

 

They want to more than double my rate in a big cash grab from $20/mo (that started at $13) to $44!!! This has only been done in Canada and not in the USA. Canadians are the guinea pig for this as we tend to take a “meh” attitude toward things like this, except in Quebec. Their dis-information campaign that Canadians are a bunch of digital theft artists is just camouflage, just like greenwashing that is everywhere today by oil companies.

According to a post on the Daily Hive, Netflix’s statement on the new measures, password sharing is inhibiting its ability to make money.

“Today, over 100 million households are sharing accounts — impacting our ability to invest in great new TV and films,”  Chengyi Long, director of product innovation at Netflix. 

But the platform reported a whopping US$7.8 billion in revenue in the third quarter of 2022. That’s nearly CA$10.5 billion.

The blowback to Netflix’s decision in Canada seems like a boon to the domestic streaming companies as I have switched to Crave, ya I am making a plug for Ma Bell. It seems I am not the only one, in an online March 2023 poll by mobilesyrup.com -  46% of respondents said that they have switched to a new service provider (Sampe Size 7,267). 

 

After a month on Crave, there is no going back to Netflix. I can still have a 4 user agreement (but not based on location) plus the collection is better as there are more current titles plus HBO is included. The Netflix collection in Canada is not the same as in the USA (more current shows to choose from) and Crave has some of the Canadian rights like all the latest Star Trek Collection that is not on Neflix Canada. Telus not to be outdone offers a bundle package that includes Netflix, Apple TV and Discovery. Depending on your budget there are free options in Canada too.

The CBC GEM (ad supported model) has a good collection of Canadian talent and has created some major hits like Murdoch Mysteries and Heartland. Pluto.com is a new free streaming service with popular re-runs like Walker, Texas Ranger, Happy Days and Love Boat. Asian Crush is another site for Asian titles that offers old spaghetti martial movies as part of their collection. There are also many free torrent sharing websites for the latest movies, tv shows and live sports that you can find on Reddit that are shared amongst their users as part of the digital gray market. I got to watch the Latest Top Gun movie this way.

USA based Global digital companies like Google, Facebook, Amazon and Netflix dominate the digital ecosystems and have been able to do business without collecting sales taxes that gives them a competitive advantage with domestic players in Canada large and small. (Remember we are 10% the size of the USA, as we are just another 10 states in the North American Economic landscape). The dominance of USA based companies in Canada in the digital arena is not sustainable for a vibrant local industry, Netflix is just the latest global company to treat their customers like a profit widget that they can gorge on at will. 

How do we level the playing field for Canadian content producers in Canada? This will never happen, we are too small of a country, but we need the state to take assertive action like tariffs on foreign digital ad companies who are ad dumping at $2CPM in the Canadian market that is unprofitable for Canadian content producers to compete. The programmatic ad market drives the CPM under $2 and USA titles dominate this market also as they have the scale to be profitable. The big banks in Canada advertise here and that money should be going to Canadian publishers. 

Canadian publishers do need protection just like the history of television, that prevented USA border stations from getting any Canadian advertising as it was not tax deductible. If you purchased an ad on one of these stations you could not write it off. If we did this now this will discourage companies from advertising and move that money to Canadian publishers. The days of free access to the Canadian market is over. At the end of the day, we need to create digital borders so we can protect the local industry. 

I have called out Google and Facebook in a May 2018 blog posting of the questionable business practices of big business.  The Rise and Fall of the Digital Titans - Will history repeat itself again? The next chapter is to unfold with the latest legislation on digital rights of Canadian publishers. 

 
 
- Martin Seto
About Me
Martin Seto

 
Martin Seto is the producer of the Canadian Online Publishing Awards (COPAS) with 30 years of life expereince in technology, advertising, media and creative exploration. He can be reached at marty(dot)seto(at)
reflexmediasales.com or 416-907-6562, and on LinkedIn.

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Lorene Shyba says:
Full of terrific information, Thanks!...
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