Netflix, Inc. (NASDAQ:NFLX) CEO Reed Hastings was recently making the rounds of the Netherlands following the company’s offering of its streaming service to Dutch residents and dropped a bit of a bomb shell in an interview with the Dutch website Tweaker. Hastings was asked if he thought Dutch users would switch from torrent piracy to Netflix, and he answered in the affirmative saying that piracy “creates the demand” for more legitimate means of watching your favorite shows. When asked for a specific example he said that Canada has seen “Bittorrent traffic down by about 50 per cent since Netflix launched three years ago.
When Jesse Brown of Maclean’s asked Netflix, Inc. (NASDAQ:NFLX) where Hastings got that figure from, the company’s press flack pointed him to Sandvine Corporation (LON:SAND) (TSE:SVC), a Canadian firm that researches traffic.
Netflix enjoying success
Whether or not this torrent use figure is accurate is a subject filled with contention. That said, Netflix, Inc. (NASDAQ:NFLX) has enjoyed tremendous success in the land of our northern neighbors. It’s estimated that around 20% of English-speaking households shell out the Netflix subscription fee each month; a number that Netflix would love to duplicate in larger markets.
Despite this subscriber base few people are cutting the cord on their cable or satellite plans. Once people install a plan, they rarely retreat on their investments. One place, however, that cable providers are failing to sell their $100+ channel bundles is with those in their 20’s. For many who just finished school and are technically savvy, it’s a tough sell given the price and their comfort with both streaming and torrent use (piracy).
Traditional broadcasters forced to reduce profits
Presently, traditional broadcasters are forced to kick back a third of their profits into CanCon TV, Netflix, Inc. (NASDAQ:NFLX) is not charged this fee. There are numerous reasons for this but topping that list is the fact that it’s near impossible to quantify the amount a YouTube, Hulu, Amazon Prime, or Netflix would have to pay CanCon TV.
CRTC head Jean-Pierre Blais also claims that Netflix, Inc. (NASDAQ:NFLX) shouldn’t have to pay because, “The fact is, we have found no evidence that it’s displacing (cable and satellite). It’s from people who are doing ‘double screen’ or ‘enriching’ or ‘catching-up’. “
While many may take issue with that statement, that’s the way it is for now.