Netflix’s VPN crackdown backfires in Australia as subscribers flood to local services

CRACKING down on Australians with American Netflix accounts appears to be backfiring on the company, as subscribers head elsewhere.

Local content a killer ... Australian video-streaming services Stan and Presto are growing faster than market leader Netflix, a Telsyte study says, with Netflix’s VPN crackdown and local content from the other services, like Wolf Creek, behind the move.

AUSTRALIA’S homegrown video-streaming services are outpacing multibillion-dollar import Netflix as viewers reject its crackdown on overseas content and embrace the locally made shows of its rivals, according to a new study.

Research firm Telsyte also found Australians took out almost one million more TV-streaming subscriptions over the past year, and forecast the number of subscribers to double and exceed four million by 2019.

But the growth of streaming video has not improved the fortunes of all Australian services, with Queensland-based music service Guvera going into voluntary administration yesterday.

The streaming-media study’s author, Telsyte managing director Foad Fadaghi, said 2.7 million Australians will have subscribed to video-on-demand services by the end of this month, with the average household signed up to 1.7 services.

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Streaming video subscriptions grew by almost 900,000 during the last financial year, he said, and not everyone was signing up to multinational market-leader Netflix.

While the company had a “rapid” growth due to “pent-up demand” for its launch, Australian based services Stan and Presto were seeing the biggest rise in users, he said, potentially due to Netflix’s moves to stop Australians accessing its larger US content library.

The company began cracking down on Australian subscribers masking their locations with virtual private networks (VPNs) earlier this year, forcing them to use its more limited Australian offering.

“It could be some of the changes to Netflix VPN policies as well as the increased number of local shows and content deals on other providers such as Stan and Presto,” Mr Fadgaghi said of Presto and Stan’s greater growth.

“Local content is starting to make a difference. It’s definitely a drawcard, and stitching up more content deals has been a big push from the providers.”

Stan, created by Nine and Fairfax, has produced local content including TV series No Activity and Wolf Creek, while Presto, created by Foxtel, part-owned by News Corp, has commissioned two more Home & Away specials after the launch of one-hour special An Eye for an Eye in December.

Netflix has yet to product any shows in Australia, though at launch chief content officer Ted Sarandos said the company would do so “at some point”.

Telsyte predicts more than 4.1 million Australians will subscribe to streaming-video services by June 2019.

But the success of streaming media does not extend to all Australian services, with two subsidiaries of Gold Coast-based Guvera, including Guvera Australia, going into voluntary administration yesterday owing creditors more than $20 million.

The Australian Stock Exchange recently blocked its public listing designed to raise at least $50 million, though the company said it would continue to operate in Australia and focus “on the high growth, emerging markets of India and Indonesia as well as the United Arab Emirates”.

Originally published as Netflix’s VPN crackdown backfires in Australia as subscribers flood to local services