When Netflix arrived, a bomb went off in Aotearoa’s streaming wars. Photo composite: Tina Tiller
When Netflix arrived, a bomb went off in Aotearoa’s streaming wars. Photo composite: Tina Tiller

BusinessOctober 18, 2021

The day Netflix rolled into town

When Netflix arrived, a bomb went off in Aotearoa’s streaming wars. Photo composite: Tina Tiller
When Netflix arrived, a bomb went off in Aotearoa’s streaming wars. Photo composite: Tina Tiller

Six years ago, the world’s biggest TV service launched in Aotearoa, changing our viewing habits forever. Chris Schulz looks back and asks, what happens next?

We stare at screens all day and all night. Is this good for us? We’re going to talk about that. Read more Screen Week content here.

Rod Snodgrass could see it coming. Content was king and he wanted the throne. At the end of 2013, chess pieces were being moved around the board. Netflix was preparing to expand into New Zealand, and Sky TV was rumoured to be launching its own streaming service. 

Snodgrass, Telecom’s chief product officer, was desperate to be ahead of the game. So, after the business rebranded and morphed into Spark, he began work on launching the telco’s first ever attempt at an online entertainment platform. 

We knew Netflix was coming,” he told me over Zoom recently. “We wanted first-mover advantage in the New Zealand market.”

The race to launch was on. Snodgrass and his Spark Ventures team worked quickly, and quietly. They contacted overseas TV networks, signed contracts, and locked in content. By August 2014 they were ready to launch with a slick digital app and a solid slate that included exclusive new seasons of Suits, Vikings and Outlander, as well as back catalogues of Breaking Bad, Mad Men and Doctor Who.

Ironically, they’d also purchased New Zealand screening rights for some of Netflix’s tent pole offerings: House of Cards and Orange is the New Black. 

Snodgrass knew, long term, they could never beat Netflix. “They’re a global player and heavyweight,” he says. “They buy content on a global basis and create it with the same scale.”

Yet it was obvious TV streaming was on the rise – the tens of thousands of New Zealanders getting around geo-blocking to use Netflix’s US service proved it. “If you saw Netflix back then you knew that that was where the future was heading.” 

But Snodgrass had a window. Netflix hadn’t launched in Aotearoa so the market was wide open. He had a platform, and he had content. What he didn’t have was a name. His working title, ShowMeTV, had to be scrapped over a rights issue. 

Over beers and pizza late one night, he had a brainwave, stumbling across something that was both simple, and easy to remember. “We were just throwing ideas around,” Snodgrass says. “We said, ‘What we’re building here is a replacement for ‘the box’ which has light coming out of it … and people watch it.”

On August 28, 2014, Lightbox was born. With a 30-day free trial offer, and a $15-per-month fee, Aotearoa’s first subscription streaming service landed with a flurry of press releases and positive news stories. 

Lightbox
Lightbox was the first local subscription streaming service to arrive. Photo: Spark

I was working as part of NZ Herald’s entertainment team back then, and at home one night, a knock on the door surprised me. A full meal including slow cooked beef cheeks and salad, a branded wooden tray, porcelain bowl and giant caramel-chocolate tart was delivered, along with a Lightbox subscription pass. 

The gift, a TV dinner for the 21st century, was sent to win over many local TV critics. It worked. In a review written after an evening binge of Better Call Saul and way too much tart I praised the new streaming service, writing: “It sure as hell feels like a step in the right direction.”

A few days later, at a Lightbox launch party at a swanky inner-city bar, waiters dressed in Walter White costumes served blue drinks in beakers. Others dressed as characters from the shows Lightbox was offering: inmates from Orange is the New Black, pirates from Black Sails. In photo booths dotted around the venue, guests could snap themselves dressed as Jamie from Outlander. 

Aside from two small Australian streaming offerings called Quickflix and Ezyflix, Lightbox’s only real competition was YouTube. DVDs were hanging in there, and TVNZ had its free, but ad-fueled, OnDemand platform. For a very brief period, Snodgrass and his Lightbox brainwave had the pay-TV market to themselves. 

It was never going to last.

Just six months later, everything had changed. Neon entered the market in February 2015, trumpeting endless binges of Game of Thrones and back catalogues of Californication, Fargo and Girls. Its service was sleek, with an acid-green logo, a smart homepage and a back catalogue of shows cherry-picked from Sky TV’s exclusive HBO deal.

But its lengthy development and high subscription price of $20-per-month rubbed critics the wrong way. For the Herald, Karl Puschmann wrote, brutally, that Sky TV was “rushing to the streaming party late and befuddled like a charmless Hugh Grant”.

Lightbox wasn’t troubled at all. Another competitor was, says Snodgrass, “collectively growing the market”. Around the same time, Spark boosted subscriber numbers by offering free Lightbox with every home broadband package. It expanded its content too, offering customers Lightbox Sport, including live golf and Premier League football. It worked: Lightbox still appeared to have the edge over its rivals. 

But the real competition was yet to arrive. A few weeks after Neon’s launch, I received an email offering plane tickets and accommodation in Sydney for a secretive mission. I wasn’t told what it was, but it sounded important. I got on the plane. 

Once I landed, it soon became clear why I was there. Netflix had rolled into town, cannons at the ready. I was to meet two big wigs: Todd Yellin, Netflix’s vice-president of product innovation, and Sean Carey, vice-president of content acquisition. I Googled the pair and found photos. They looked like brothers, with white teeth, good suits and big smiles.

First, I had to make it through their PR team, the size of which remains, to this day, some kind of record. In an interview waiting room at Pier One, I sat surrounded by tables laden with untouched smoked salmon, cheese and grape platters. During that time, I met no less than four different PR staff. “You’ll like them,” one warned about Yellin and Carey.

Ushered into a second room, I felt like Neo from The Matrix, surrounded by TV screens and tablets all bearing the giant red lettering of what has become a very familiar logo. Yellin and Carey marched in, along with three different PR staff. They sat behind us, interjecting when they felt it was necessary. There were more tables full of snacks. No one touched those either. 

Netflix
Netflix’s New Zealand top 10 list has Squid Game at No. 1.

After firm handshakes, we got down to business. Yes, Netflix was about to launch across Australia and New Zealand. To tell me this, Yellin mashed words together like corporate-speak soup. They aimed to be “global throughout the entire world for all intents and purposes, in every country, within the next two years”. 

I asked him if New Zealand’s Netflix service would offer House of Cards and Orange is the New Black. The answer was no. Hilariously, they’d sold the rights to Lightbox.

Near the end of a tense chat, I asked if the New Zealand market had room for all these newfangled TV streaming services. Through that whitened smile, Yellin replied. “We have launched in very competitive territories and succeeded. We hope to succeed (in New Zealand) as well … The better ones will last and will go on and there’ll be a couple of different choices.”

Ouch. It sounded like a warning shot. Lightbox and Neon were in their sights. 

It remains one of the most imposing interview situations I’ve ever endured, less a simple chat about some cool telly and more like an indoctrination into a cult. Yellin left me with this: “From here on in, New Zealand is part of the Netflix family.”

On the way out, I met another member of the PR team. They corrected a couple of minor indiscretions from the interview, then handed me a bag containing a notebook and a subscription card containing three months of free Netflix.

Like any drug supplier will tell you, you make the first hit free. They pay in full after that.

We’re definitely paying for it now. Here in 2021, it’s easy to see that, back in 2015, Netflix’s arrival changed everything. At $9.99, its subscription prices were lower, and its interface was easier to use. Its algorithm was smarter, learning and predicting what viewers wanted to watch. Its content had bigger budgets, and there was more of it. 

And it just keeps on coming. Every Friday, entire new series and films land on the service, ranging across all genres. Netflix’s content often dominates the pop culture conversation. Making a Murderer. Tiger King. Squid Game. Their films and comedy specials attracted the world’s best directors, and biggest stars: Martin Scorsese’s The Irishman. David Fincher’s Mank. Bo Burnham’s Inside. Dave Chapelle’s The Closer.

Squid Game
Squid Game is among Netflix’s most-watched shows – including New Zealand viewers. Photo: Netflix

In just six years, Netflix and its giant cannons have blown its competition away. Quickflix and Ezyflix are dead and buried. Last year, Lightbox was gobbled up by Sky TV and merged with Neon, the service surviving by lowering subscription rates and continuing to offer HBO’s enticing catalogue 

Since then, more global players have come on the market. Maybe you already subscribe to Amazon Prime Video, Apple TV+ and Disney TV+, but a quick glance at the stats proves this remains a one-horse race. Netflix is the first choice for New Zealand TV fans. It dominates almost every other category. And it’s not slowing down any time soon.

Two graphs, taken from NZ On Air’s latest Where are the Audiences? survey, help tell the story. When researchers asked participants to list their most popular channels, stations and websites, Netflix was bigger than Spotify, TVNZ OnDemand, Three, Instagram and Facebook video. It’s on a par with YouTube, and appears set to topple TVNZ 1 by the next survey.

Every year, the red line keeps  going up.

The second graph, which compares streaming services, is even more stark. Netflix isn’t just the most popular streaming service by a long shot, it’s actually beating many competitors twice. More New Zealanders are using VPNs to get around regional geo-blocking to access the US version of Netflix than are watching Neon, Amazon Prime Video and Spark Sport. Only Disney TV+ is bigger – and it’s still got a long way to go to catch the reach of Netflix’s official New Zealand site.

Again, the red line keeps going up.

So we’re all watching Netflix – but are we seeing ourselves up on screen? Erm, no. Search Netflix for shows and movies from Aotearoa and you’ll be served up this: Taika Waititi’s Boy, the first season of Waiheke cop mystery The Gulf, the documentary Merata: How Mum Decolonised the Screen, and David Farrier’s Dark Tourist, which was mostly filmed overseas. For some reason, Inside the World’s Toughest Prisons makes the top five, even though no New Zealand prisons feature in the show. 

Instead, we’re watching what everyone else is watching. Right now, Squid Game is number one. Overseas dramas Maid, You and Sex Education feature in the top 10. We’re watching what the rest of Netflix’s 209 million subscribers are watching. It’s exactly as Yellin put it: “Global throughout the entire world for all intents and purposes, in every country.”

You only have to listen to this recent interview with outgoing TVNZ boss Kevin Kenrick to understand how Netflix’s screen domination is being felt locally. On The Spinoff podcast The Fold, he pitched a vision of TVNZ that pivots directly to streaming, “the digital version of TVNZ that replaces broadcast”. He also revealed that TVNZ OnDemand would soon launch an ad-free, paid subscription model, a direct rival Netflix. 

“The future is going to require multiple monetisation streams – I think it’s going to be pretty hard to do it solely on any one,” he told Duncan Greive.

Can it survive? Up against a behemoth like Netflix, can anyone?

Since leaving the streaming wars behind to start his own consulting agency, Snodgrass has been watching all this unfold from the sidelines. He remains a committed observer, and doesn’t think Netflix has finished eating up the market just yet. 

Ask him about Neon and TVNZ OnDemand, and he’ll say this: “They are going to continue to be challenged … they’re having to bid for content against guys who have really big budgets and can spread them across large global audiences. At the same time the market will continue to evolve and new global heavyweights … have entered. It’s not in a stable state yet.”

He’s not upset about Lightbox becoming a casualty. In fact, Snodgrass is loving all of the options Netflix’s competition is providing him, saying he subscribes to nearly all available streaming services, including Sky Sport, for “less than $100”. 

Lately, he’s been watching Amazon Prime Video’s The Boys, an ultra-violent comic book caper featuring Kiwi actors Karl Urban and Antony Starr going head to head, and the Israeli spy drama Fauda on Netflix. Snodgrass can’t get enough. “We’re getting awesome content choices along with the flexibility and freedom to watch what you want, when you want, on what device you want and therefore where you want,” he says.

Then he repeats a mantra that he and his team at Spark used to say to themselves around the time they launched Lightbox: “This is TV as it should be.”

Disclosure: Neon (and formerly Lightbox) have had commercial partnerships with The Spinoff, but had no involvement in this story.

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Mad Chapman, Editor
The Spinoff has covered the news that matters in 2021, most recently the delta outbreak. Help us continue this coverage, and so much more, by supporting The Spinoff Members.Madeleine Chapman, EditorJoin Members

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