Canadians stuck with Netflix lite for foreseeable future

From low monthly usage allowances to poorer selection than in the United States, Netflix has become something of a poster child for internet and media issues in Canada.

With a host of announcements at the Consumer Electronics Show this week in Las Vegas, it appears that’s not going to get any better.

Netflix subscribers are now able to access a new category of video – super high-definition – which features sharper resolution than regular HD offerings. The super HD content is made possible through better encoding on the company’s end.

Netflix also announced that it is now streaming 3D video to subscribers, but only in the U.S.

The problem with both options is that they will result in subscribers using up more of their monthly data allowance, since the streaming files are considerably bigger than standard resolution.

Super HD may be problem for Canadian users

Super HD requires a constant internet connection of at least six megabits per second, which means it will ultimately use up about 2.7 gigabytes of data per hour. The 3D content is even more bandwidth-heavy, requiring a constant throughput of at seven megabits, but it works best at closer to 12 megabits.

At that speed, 3D videos will chew through about five gigabytes of data in an hour. That’s not a big issue for U.S. subscribers, who are typically allowed hundreds of gigabytes of usage per month, but it will be if the service is expanded to Canada, where caps are lower. Most Canadian internet subscribers are on plans with 80 GB of monthly usage or less.

Netflix has been vocal about the low caps, with chief content officer Ted Sarandos last year saying, "It’s almost a human rights violation what they’re charging for internet access in Canada."

In 2011, the company introduced lower-quality streaming in Canada so that subscribers could better manage their caps, an option it eventually extended into the United States.

One hour of standard resolution video at the best quality eats up about one gigabyte of data, while HD uses up 2.3 GB. The lowest-quality option uses up only about a third of a gigabyte.

Still a ‘killer app’ for broadband

In an interview at CES, Netflix spokesman Joris Evers said that while Canadians aren’t complaining about the lower-quality streams, it’s clear that they would like to be able to use the service fully and as much as they want.

"We would love for Canadians to be unshackled of their bandwidth caps and stream as much as they want and have unlimited internet access," he said. "Netflix is a killer app for broadband and because people want it, ISPs will sell larger packages to people and faster speeds. We drive a lot of demand for ISPs and we think they like that."

The new 3D feature in the U.S. is "essentially a test," he added. Netflix currently has about 60 3D titles, which are accessible only to subscribers running the service on a PlayStation 3 or newer LG televisions.

Whether or not the option is expanded to Canada will depend on its reception down south.

"We’re just going to see whether people are going to want to watch 3D. We don’t know how the take-up is going to be."

Netflix is also working to improve its content offerings in Canada, which have been roundly criticized as worse than what’s available in the United States. The situation is complicated by having to negotiate with an extra layer of rights holders in Canada, some of whom also offer online video and are therefore competitors to the company.

Trying to improve Canadian offerings

"This model was created for a jigsaw puzzle world based on geographically restricted broadcasters, not a global network like the internet," he said. "That kind of model only helps piracy, it doesn’t help anyone."

The licensing difficulties are part of the reason why Netflix is getting into developing its own content, such as the Kevin Spacey drama House of Cards or the update of the cult comedy Arrested Development, which is now set to debut in May.

Such content is being made available to subscribers around the world at the same time, Evers said.

Despite the obstacles it is facing, Netflix still manages to resonate with Canadians. The Canadian Radio-television and Telecommunications Commission last year estimated that about 10 per cent of adults subscribed to the service since its launch in 2010. Analysts believe that number is actually double.

Halifax, in particular, is a Netflix stronghold, with 40 per cent of households subscribing, Evers said.