Netflix doesn't challenge the Hot-Yes duopoly - yet

Li-or Averbach

The advent of the US streaming VOD service in Israel isn't a game changer, but it will awaken Israeli viewers to the possbility of choice.

Since late yesterday evening, the telephones have not stopped ringing at the offices of the cable and satellite television companies. No, the calls are not from subscribers excited about the advent of Netflix in Israel and leaving in droves, but mainly from people in the media intoxicated by the buzz created by the content provider brand in the past few years and wanting to know - has the broadcasting revolution in Israel started?

Months of anticipation came to a head in that moment yesterday, around 9 pm Israel time, when, during the CES tradeshow in Las Vegas, Netflix CEO Reed Hastings announced that the opening of the sought-after content service to Israeli viewers. To start from the conclusion, it can be said that this is indeed an important precedent, but it is still hard to declare it an earth-shaking event for the players in Israel's multi-channel television industry, which is dominated by DBS Satellite Services (1998) Ltd. (YES) and Hot Telecommunication Systems Ltd. (TASE: HOT).

What is Netflix?

Netflix is a US content company that transmits over the Internet, that is, a streaming service. Four years ago, the company, which for years had been based on libraries of older movies and television series, started to produce its own content. Among other things, it managed to create outstanding series such as "House of Cards" and "Orange is the New Black", with which Israeli viewers are familiar.

Apart from the attractive content it has produced, winning the admiration of critics and discerning audiences, it has also created a new way of viewing. The seasons of the series that were produced were made available all at once, and the entire concept of viewing on the basis of a set broadcasting schedule and looking forward to a new episode each week was undermined. Netflix's policy gave rise to binge viewing, the swallowing of an entire season in one marathon, riveting sitting.

Netflix does not have linear scheduled channels, but VOD (video on demand) libraries, and as time went by it made the technological means of accessing them more sophisticated. From registration via a web browser requiring a computer connection, it has advanced to an app that can be used on the television screen, or on a tablet or smartphone, more easily. According to official figures, the company currently has 45 million subscribers in the US and 26 million in the rest of the world.

What changed yesterday>?

Yesterday, the company announced that it would be accessible in 130 more countries, among them Middle Eastern countries, including Israel. The worldwide offering is uniform, so that whether you are in Israel, Kuwait or Greece you will see exactly the same content, which is not adapted to individual territories or local tastes.

The service will be based on fairly inexpensive subscriptions, and will include hundreds of titles, most of them not new. Subscriptions range from $7.99 to $11.99 monthly. Three different VOD packages will be available, including HD quality transmission, and the possibility of viewing downloaded content on different screens simultaneously.

Is any special technology required?

The ideal situation is a smart television to which the app can be downloaded. However, simply connecting a computer to the television, or using a streamer or Chromecast, enables you to cast from the device to the screen and view content easily and without disturbance.

So is this an alternative to Hot and Yes?

Not so fast. Around the world, Netflix serves as an extra only, and does not replace the cable or satellite services consumers have at home. At the moment, given the already high prices of multi-channel television packages, it's hard to see people wanting to add this content service as well, and, by the same token, given the limitations of the new platform, it's hard to see a Hot or Yes subscriber replacing their current provider with Netflix. With all due respect to VOD, which Israel was a pioneer in implementing, 90% of viewing in Israel is still of the established channels with their scheduled broadcasts. 75% of the customers are families with children and the average household views 22 channels. Netflix is therefore not yet an alternative.

The question now is whether the platform will attract fans of international content, most of whom traditionally are with Yes, or have Idan Plus and download pirated content from the Internet. It seems that, for now, they too will not find Netflix to be the answer. Subscribers to Cellcom TV, the newest competitor, can relax, since Netflix does not provide a solution for Israeli Hebrew-speaking children or for sports fans, who represent a substantial proportion of multi-channel television consumers.

Netflix is not opening offices here. At the moment, it's a matter of a US site that has become available to us, almost incidentally. But there's no doubt that this is just the beginning. It is not just Netflix that is testing the Mediterranean water and how Israelis feel about it. Netflix will gradually broaden its offering and examine expansion that could include original content. Although Hot and Yes are radiating calm, they are certainly concerned at what might come in the wake of Netflix, which perhaps isn't setting off a revolution now, but is undoubtedly beckoning Israeli viewers to venture a little beyond the local content duopoly and for the first time gives them, like their brethren around the world, real choice.

Published by Globes [online], Israel business news - - on January 7, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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