Netflix CEO says torrent piracy in Canada down 50 per cent

Jesse Brown on the video streaming service’s impact on illegal downloads

(Mike Cassese/Reuters)

Netflix CEO Reed Hastings dropped a surprising statistic during an interview with Dutch website Tweakers last week, as he made the rounds promoting the launch of Netflix Netherlands.

When asked if Dutch viewers would switch from piracy to Netflix, Hastings said sure, some will switch, and that piracy helps “create the demand” for easier, legitimate ways to watch video through the Internet. Pressed for examples of markets where Netflix has actually brought about a decrease in piracy, Hastings pointed to Canada. Here, he claims, “Bittorrent traffic’s down by about 50 per cent since Netflix launched three years ago.”

I asked Netflix where Hastings got that figure from, and while they declined to confirm it as his source, their press flack did point me to Sandvine, a Canadian firm that researches such things (Sandvine, it should be noted, also make software that lets ISPs throttle Bittorrent traffic).

I couldn’t find any Sandvine research supporting Hastings’ numbers. But there is a 2012 report, which some interpreted as a sign that torrent traffic is dropping as services like Netflix rise, a conclusion others in turn disputed.

What is indisputable, though, is that Netflix is a huge success in Canada. Three years after its launch, 20 per cent of English-speaking households subscribe to the video streaming service. Exactly what this means is, again, a disputed matter.

Yesterday morning on CBC’s The Current, CRTC head Jean-Pierre Blais was asked why traditional broadcasters should be forced to kick back a third of their profits into CanCon TV when Netflix does not. The CRTC wisely decided not to regulate Internet content (how on Earth would you?) and must therefore dance a jig to explain how this new kind of TV is not like the old kind. Nobody suggested to Blais that Canadian viewers are dropping cable for Netflix, but he went ahead and answered that question anyhow:

“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’. “

This is an evasion at best. It’s true that cord-cutting hasn’t occurred en masse as some have predicted; those with cable or satellite subscriptions rarely forego them, although this has begun. The real trouble for our cable and satellite providers are those who never had cables to begin with. Young consumers, taking on their first apartments after streaming and pirating video in their bedrooms and dorm rooms, are ignoring the existence of $100+ premium cable bundles.

So, once the boomers are gone, who will subsidize The Bachelor Canada? Or better yet: why should anyone? Have the intentions of mandatory CanCon TV spending drifted so far from the reality that the whole scheme should be scrapped? And if they are scrapped, shouldn’t we also kill the laws that prevent foreign broadcasters from owning Canadian channels?

These are the questions that nobody in the system—not the broadcasters, not the production companies, not the CRTC—wants to ask or to answer. Ignore them for long enough, and services like Netflix and Bittorrent will render them all moot.

Follow Jesse on Twitter @JesseBrown

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