Caught in the stone age - Australia too

I'd wept a couple months ago seeing the gap between the US and NZ widening.

Josh Gans is on sabbatical at Harvard and is having the same experience:

In Australia, TV is dictated at the behest of four networks and one cable provider. There is nothing reliable on the internet and paid for services like iTunes are crippled. In contrast, in the US, I subscribe to a single provider, Comcast, for all television, internet and phone requirements at the home. The television comes over a DVR that runs Tivo and so can be programmed from anywhere. But who cares about programming? They actually have an ‘On demand’ service that has all of the main programs you may have missed. And, of course, all of this is in real 1080i HD. And you can use the same service to watch and pay for new release movies so we don’t even own a DVD (that technology lasted less than a decade in our household).

But wait, there’s more. Not satisfied with that and you can watch much of the stuff online anyway. Hulu is a well designed service that really works. Of course, you can’t skip through ads but who cares. There is just one per break and they tell you how long it will last! And add to that that I face no download caps and you have all you want. (Oh yes, if you think I am stuck with US programming and that is a minus — not from my perspective but others might think so — then think again. I got to see Doctor Who the day it aired in the UK.)

Finally, the phone on top of this costs pretty much nothing. I can call anywhere in the US and Canada for the cost of a local call — which turns out to be $0 per minute. The voice mail is accessible online so I don’t have to be at home to pick up. In any case, I use Google Voice which calls all my phones and so I don’t really have to be worried about receiving calls at home. In any case, if I’m watching TV and there is a call it will tell me who is calling on the TV. Now that is a benefit of an integrated communications service.

Australia puts up with continual crap on this front. None of the technology here is monopolised and non-transferable to Australia. I fear we will get a shiny new NBN with none of this and wonder why consumers don’t want to pay much to use it. It is like strapping a jet engine on to a horse buggy. Our persistent lagging on this suggests that we need government review to understand what is holding Australia back. At the moment, I don’t want to come home.

I still say it's mostly a problem of fixed costs. Getting the rights to air each separate item in the Hulu library outside of the US? Fixed cost. Getting the rights to distribute movies outside the US (for Netflix)? Fixed cost. Population in NZ isn't high enough to justify it; apparently it isn't for Australia either.

Caught in the stone age

Wired's new September piece on Netflix business strategy is leaving me, well, somewhat shellshocked. Of course I couldn't have expected that the US would stand still since we left there. But wow.

A lot of US debates on traffic shaping suddenly make sense.

Things I didn't know:

• Tons of media devices, from XBox to TVs, have a Netflix card now built in that let the devices stream movies


• Netflix uses data from customer DVD rental queues to prioritize movies to purchase for online streaming. It's basically Moneyball applied to movies: Netflix goes for the ones that did poorly in theatre, so streaming rights will be cheaper, but where Netflix expects high customer demand.


• $9 per month gets you unlimited streaming of 17,000 movies. If you don't already have a Netflix enabled device, their set-top player costs $80.

I'd figured that relatively few folks would be downloading movies: the hassles of downloading and then getting them onto the TV seemed sufficiently large that all the traffic shaping stuff seemed absurd on the face of it. But if it's built into your TV!

Closest NZ equivalent: the newly released TiVO box. You can either pay $200 upfront and then $30 per month on a 24-month contract, or pay $920 upfront. That gets you a TiVO box that'll let you stream old movies at $5 a pop or new(ish) releases for $7 each. If you're a Telecom subscriber, it at least doesn't count against your 20GB monthly data allowance ($60/mth) or your 40GB limit ($80/mth). All of that's in $NZ, so multiply by $0.74 to get the current $US equivalent.

Tyler Cowen warned me that New Zealand would teach me the importance of fixed costs. Fixed cost here would have to be the streaming rights for New Zealand; otherwise, we could just jump onto the Netflix service, albeit at a much higher price to account for capacity issues on the pipes series of leaky tubes that service NZ from overseas.

I'm going to go weep off in the corner for a while.