Netflix chief executive Reed Hastings seemed to downplay expectations for his company's video streaming foray into Canada during the Wednesday launch.
Many Canadians were hoping that Netflix, which offers unlimited movie and television episodes over an internet connection for $7.99 a month, would allow them to ditch their expensive cable and satellite connections. That won't be the case, Hastings said, as his service is not "an effective competitor" to traditional television.
"We're like a bicycle compared to their car," he said at a press conference in Toronto. "We're a supplement."
Netflix, which users can watch through a variety of devices connected to their televisions — including most Apple products such as the iPad, iPhone and Apple TV, the Sony PlayStation 3, the Nintendo Wii and, later this fall, the Xbox 360 — offers about 7,000 shows and movies at launch, but the service is light on new releases.
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Hastings said it's impossible to offer the latest content for the low $7.99 price, which means the latest movies on offer are titles such as Superbad, Slumdog Millionaire and The Notebook, while available television shows include last season's Mad Men as well as Trailer Park Boys.
Television offerings at launch are even slimmer in Canada, with many popular shows that are available in the United States — including Dexter, The Office and Breaking Bad — not offered.
Hastings said Netflix, which has about 15 million subscribers in the United States, would be working on expanding its Canadian library.
Download caps a potential obstacle
The service also faces a hurdle in Canada with significantly lower internet download caps than are typical in the U.S. While American broadband subscribers generally have hundreds of gigabytes of usage per month, most Canadians are on plans that allow between 30 and 60 gigabytes.
Some Canadian internet providers have already moved to limit how much their customers can use services such as Netflix. Rogers, the country's largest cable company, lowered download limits on some of its plans in July, just days after Netflix announced it was coming to Canada.
Hastings said Netflix decided to come to Canada because of the high percentage of the population who are subscribed to broadband. The service uses about one gigabyte per hour of content, which he said would probably be manageable for most households.
Netflix chief executive Reed Hastings discusses the disparities in content availability and download limits between Canada and the United States.
"We hope it won't be a significant problem. We'll take it month and month and see what happens," he said. "It's very hard to hold back growth in technology. The internet is going to continue to expand."
The company has signed distribution agreements with Lionsgate, MGM Studios, Paramount Pictures, Sony Pictures Entertainment, 20th Century Fox and Universal Pictures, as well as leading Canadian distributors Alliance Films, Maple Pictures, eOne and Mongrel.
At present, the service is only offered in English but the company plans to add French capabilities soon.
Netflix began in the U.S. as a DVD rental by mail service, but the tipping point for its success was when it began streaming movies straight to consumers' homes via broadband connections.
The original DVD business will not be offered in Canada. The company's success has come at the expense of bricks and mortar rival Blockbuster, which is inching toward bankruptcy proceedings in the United States.
Canadian firm Zip.ca has offered a similar DVD by mail service to Canadians for years, and says it will soon launch an internet-based service.