Cries of jubilation in Israel that US-based content streaming company Netflix would be locally available starting Wednesday were cut short upon revelation that the catalogue would be severely limited.
On Tuesday night, Netflix CEO Reed Hastings announced at the CES event in Las Vegas that the company would begin operating in 130 new countries, including Israel.
“Today you are witnessing the birth of a new global Internet TV network,” said Hastings. “With the help of the Internet, we are putting power in consumers’ hands to watch whenever, wherever and on whatever device.”
But several factors, including its limited selection, are keeping Israeli content providers such as HOT, Yes and Cellcom from worrying too much.
For example, Netflix’s first original hit series, House of Cards, and the latest season of Orange is the New Black, are absent from its Israeli offering.
In previous years, Netflix licensed its original content to the local providers, who still have the rights to show the series. In an odd twist, Netflix in Israel will not be able to show the upcoming seasons of some shows it produced, meaning fans will have to turn to local television competitors to see new episodes when they debut.
The film selection available is also limited. In Israel, the service doesn’t offer any of the seven films nominated for the Best Picture Academy Award last year or the year before.
It does, however, include some less recent classics and blockbusters such as Grease, American Beauty, 300, the Lord of the Rings trilogy and the Shrek movies. The made-for-TV Mean Girls 2 is available, but not the original Tina Fey hit.
Netflix is banking that its more recent original offerings, which it has stopped licensing abroad, will offer enough of a draw to users to get them to sign up for their $8-a-month plans.
Shows such as Jessica Jones, Making a Murderer, Master of None and Narcos will be available exclusively through the streaming site.
A second potential source of discomfort to local providers is that Netflix’s system is not available in Hebrew, nor are its subtitles. Without local channels, sports and kids programming in Hebrew, Israeli users will be hard-pressed to use Netflix as an alternative to their television packages, analysts say, though all those factors may change down the line.
“Israelis don’t like to compromise,” said UBS analyst Roni Biron. “Five years from now, the pay TV market may not be dominated by Yes and HOT, but it will be gradual.”
According to a Panels survey conducted for TheMarker in August, Internet- based viewing was far more popular than cable or satellite television among 21-30 year olds.
Cellcom tried to tap into that market when it began offering an Internet- based, on-demand television experience that appeals to younger viewers, but also streams Israel’s live “Idan Plus” Channels 1, 2 and 10.
Yet thus far, Cellcom has only managed to find its place with around 3% of Israeli pay TV users, and it may be the company that most-directly will compete with Netflix.
Savvy Internet users in Israel have long been able to access Netflix with tools such as IP scramblers or VPNs, which make it appear that they are accessing the site from the US. Several Facebook commentators said they could simply continue using such tools to maintain access to the larger content library Netflix offers in the United States.
But the company may face another challenge in Israel: its target audience has grown used to watching content on demand, for free, through pirating.
Torrenting, content-streaming apps like Popcorn Time and Kody, and websites like Project Free TV are ubiquitous among young Israelis, many of whom are foregoing traditional television subscription packages altogether.
“Maybe I’m missing something, but why use Netflix at all? Why not watch anything you want for free online? You have literally thousand[s] of sites that have every show or movie ever filmed, most of them in good quality and with subtitles if you want them,” wrote Shahar Tenenbaum, a commenter on the Facebook group Secret Tel Aviv.
The aforementioned Panels survey found that 52% of Israeli Jews over the age of 18 used direct viewing sites to get content from the Internet. Of that, the report deemed, the only legal site in use was Netflix, which 2% of respondents said they used.
But Ilanit Sherf, head of management research at Psagot Investments, says that people used to pirating may simply be waiting for a legal option.
“The people that today use streaming on Popcorn time will, I think, help Netflix, because they are already used to watching television content from the Internet. The problem is the people who use Yes and HOT who can’t let go of the old technology.”
Despite its shortcomings, Israelis may find that Netflix’s low price and its original programming make it a worthwhile add-on, if not a replacement to their regular television subscriptions.
Until it manages to adapt to the local market, says Sherf, the HOT-Yes duopoly that dominates the pay TV market should have little to worry about.
“I think that the impact will be in slow-motion. If they improve the product and add translation it may be better,” she said.
In the meantime, neither HOT nor Yes are preparing to lower their prices.