10 things you need to know about Netflix Australia

Netflix has landed in Australia, much to the distaste of companies like Nine Entertainment Co Holdings Ltd (ASX:NEC) Seven West Media Ltd (ASX:SWM), Ten Network Holdings Limited (ASX:TEN) and Fairfax Media Limited (ASX:FXJ).

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Netflix made its long awaited arrival into Australia on Tuesday last week in what was one of the most hotly anticipated events so far this year. While you're probably aware by now that Netflix is a US-based online streaming services company, here are 10 things you might not be aware of just yet…

  1. Free-to-air. Netflix's arrival into Australia could mark the beginning of the end of companies such as Nine Entertainment Co Holdings Ltd (ASX: NEC), Seven West Media Ltd (ASX: SWM) and Ten Network Holdings Limited (ASX: TEN) as advertising dollars and viewing hours are becoming increasingly focused online.
  2. Foxtel is also under threat, although it is better positioned to weather the Netflix storm than its free-to-air counterparts. Foxtel offers sports (which Netflix doesn't) while it also offers some of the world's most popular television shows, including The Walking Dead and Game of Thrones (I know I won't be giving up my Foxtel while it offers those shows).
  3. Competition. Netflix isn't the only online streaming service in Australia. Stan – owned by Fairfax Media Limited (ASX: FXJ) and Nine Entertainment Co – costs $10, while Presto – owned by Foxtel and Seven – costs $9.99. The latter only streams content in the somewhat outdated Standard Definition (SD).
  4. Payment options. Netflix Australia offers three payment options. The most basic option costs $8.99 per month and offers viewing on just one screen. Consumers could alternatively choose to pay $11.99 for access to two screens and High Definition (HD); or $14.99 for access to four screens and Ultra HD.
  5. Strong Start. Although Netflix hasn't yet revealed user numbers in Australia, Netflix is already accounting for a massive 15% of iiNet Limited's (ASX: IIN) user traffic (after just TWO days), as reported by the Fairfax press. iiNet is offering quota-free downloads as part of its partnership with Netflix.
  6. GST. Netflix is not collecting GST, giving it a 10% cost-advantage over its Australian rivals (although the government could act to change that soon).
  7. Subscribers. Netflix could change the entertainment landscape as we know it. Early estimates suggest 200,000 Australians will subscribe to the service, but the company's CEO Reed Hastings has more recently stated that he hopes to be streaming to one in three Australian homes within seven years, according to Business Spectator. That is, expect Netflix to be huge in Australia in the coming years.
  8. Geo-blockers. To extend on the above point, it has been estimated that 200,000 Australians are already bypassing geo-blocking to sneak into the US Netflix service, as reported by the Brisbane Times.
  9. Programs. Netflix offers access to both TV shows and movies. Currently, Netflix Australia is estimated to offer 1,326 titles, according to the Sydney Morning Herald (although that figure has been stated as incorrect by Netflix, which subsequently failed to provide a more accurate figure). This compares to the 8,499 offered in the US and 4,400 in Canada. Netflix's Australian offering will no doubt grow over time.
  10. Piracy. It has been argued that Netflix could be the answer to Australia's huge piracy issues. While it could become an antidote to the problem in the coming years, it's unlikely to just yet given that some of the most pirated TV shows and movies are not yet available through the streaming giant (again, think The Walking Dead and Game of Thrones).

Bonus: How YOU can profit

In order to stream these services, enormous amounts of data must be transferred which is made possible by telecommunications companies. Australian investors can profit from this trend by buying shares in companies such as TPG Telecom Ltd (ASX: TPM) or M2 Group Ltd (ASX: MTU).

Ryan Newman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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