Netflix: A case study in global commerce
As I spend the stormy Saturday afternoon binge watching “Bloodline” on Netflix and procrastinating about this blog series. Netflix came to mind as subject for a case study about global commerce. An international leader in streaming digital content, Netflix is providing one service to the world by a monthly subscription. While theoretically the same service is delivered worldwide, due to legal, licencing and taxation this is not the case. It is these differences in policy and procedure that highlight the difficulties in being a global organisation.
Before Netflix was made available for New Zealand, users within New Zealand were able to access the service by using a virtual private network (VPN) to give the appearance they were within the USA. I would like to understand at a licensing, business and technical level, the recent ban on user connecting via VPN. I sight the licencing, it has been discussed that the reason we have reduced content available in New Zealand is due to the licencing for different content. Before there was New Zealand access, the company appear to have no issues with New Zealander’s accessing the service (thought via VPN). Was this a business decision? I would also like to understand on a technical level how they are preventing people from connecting via a VPN, or is a low tech approach of checking the billing address on a credit card?
The launch of the New Zealand access to the Netflix platform, launched a debate over if the NZ Goods and Service Tax (GST) should apply to online services. While tax can be dry and boring, given the media hype surrounding this issue it warrants some further investigations. I’m interested in to understand Netflix motivation to not collect GST in NZ. Was it motivated by tax avoidance, price differentiation in the NZ market or if it is just a reflection of our current tax laws on e-commerce.
Uber, another global commerce has recently been in the media for report that it is not declaring all of the revenue generated in New Zealand. Therefore, they are not paying all of the tax they should be. Please note this is a not a tax law breach but a question of if it was ethical. It will be also interesting to discover if Netflix is a good global citizen and or if they are working within the tax law.
Aside from the local issues as identified above, Netflix runs a different model with the advertisement free, paid for subscriptions. It would be great if global commerce was at point that that no matter where you were, you could access the same content and pay the same amount of money.
Thank you for taking the time to read my blog, do let me know if Netflix raises any questions for you or if you have any feedback on the issues I have identified.
http://www.stuff.co.nz/entertainment/tv-radio/67511578/online-streaming-nz-services-compared
http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11673330
http://www.ird.govt.nz/ecommerce-tax/ecommerce-gst/business-australian-ecommerce-gst.html
http://www.reuters.com/article/us-netflix-results-idUSKCN0UX2NH
http://www.wired.com/2016/03/netflix-discontent-blocked-vpns-boiling/
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