Netflix stumbles as it launches in Canada

Netflix launched with a splash in Canada on Wednesday – but stumbled out of the gate.

The video-streaming service announced that, starting immediately, Canadians will be able to stream an unlimited number of movies and television shows from Netflix’s library, for a flat fee of $7.99 a month.

It closed down part of John St. in downtown Toronto and attracted a crowd to the launch event, but neglected to say that many of those in the crowd were actors paid to be there.

An information sheet handed out to the paid extras said: “Extras are to look really excited, particularly if asked by media to do any interviews about the prospect of Netflix in Canada.”

After word of the ruse spread on Twitter, Netflix apologized and said the extras should not have been talking to reporters.

A spokesman for Netflix said the handout for extras was required to obtain a film permit for the launch. The instruction sheet referred to Wednesday’s event as a “corporate documentary.”

“I was unaware that script was handed out to extras and that was not supposed to happen,” said Steve Swasey, vice president of corporate communications for Netflix. “Some people got carried away and it’s embarrassing to Netflix.”

At the event itself, the first time the service has launched outside the United States, the CEO of Netflix said the $7.99 a month price in Canada is “the lowest, most aggressive price we’ve ever had anywhere in the world.”

Reed Hastings, CEO and co-founder of the company, said: “People ask, ‘oh you mean $7.99 a movie’ . . . And no, no, no, it’s $7.99 for unlimited TV shows and movies per month, which is just a phenomenal deal.”

Netflix is entering an increasingly crowded market for online video content, competing with established cable and satellite TV companies as well as services such as iTunes.

The company’s video can be streamed onto TVs, computers and devices like the iPhone and iPad. It said users can try out the service now at Netflix.ca for free for one month to see if it fits into their media diet.

While there is much glee that a service that has not been available in the Canada is finally here, don’t go looking for something like Glee on it. Netflix’s library, while vast, is not a direct competitor to cable or even newly released DVDs. Studios and networks often delay making their content available on Netflix, so as not to erode revenue from those sources.

For example, the first three seasons of Mad Men are available, but none of the episodes from the fourth. Glee isn’t available at all. As well, the first five seasons of Trailer Park Boys are available, but the final two seasons are not.

There are some interesting Canada-only exclusives. The new Fox series Running Wilde, starring Will Arnett and Keri Russell, will stream in Canada but not the U.S. on the day it airs on U.S. network television, but Hastings said that is probably because there is no Canadian broadcast partner for the series.

“We’re not really an effective competitor to cable, because we don’t have sports. We don’t have the vast majority or programming that cable has, but we have a much lower price point,” he said. He described the service as “a supplement for people that are really into movies and TV shows.”

Netflix built its company and reputation on DVDs mailed to people’s homes, and a recommendation engine that suggested videos based on consumers’ viewing history. That service is not available in Canada, though the streaming option will still suggest shows or movies based on your preferences.

As well, while the streaming goes to your computer, you can also access the service via Apple’s I-devices, videogame consoles or Internet enabled Blu-Ray players. The latter two will enable watching on your TV.

The PS3 requires a downloadable add-on, while Wii owners need to fill out a form on the service and get a disc mailed to them. The Xbox 360 does not support the service yet, but the company says it will later this fall.

The quality of the picture depends on the horsepower of the device. The PS3, for example, can support an HD picture.

One of the possible issues with the service is that shortly after Netflix declared it was coming to Canada, Internet service providers announced lower bandwidth caps on their existing level of services. That potentially could be an issue since heavy users of the service might exceed those caps and then be billed for the excess.

“Netflix streaming is very efficient in how little data it uses,” he said.

“We’ve always done that because not everyone has very strong broadband. We hope it won’t be a very significant problem. We don’t anticipate one upfront, but certainly we’ll take it month by month, and we’ll see what comes up.”

Hastings said a good ballpark figure is one hour of video equals 1 gigabyte.

Netflix is entering the Canadian market at a time when streaming is available in several ways. Rogers has on-demand on television and online, and several stations stream their new series on their websites.

As well, Canadian mail-to-door DVD service Zip.ca says it plans to offer streaming in the coming months.