AnfieldBoy: Thank you for some intelligent replys.
To my understanding there are two main barriers to entry for a NZ netflix. The first is the cost to serve, moving data on the sxn is prohibitively high for netflix, also prising the content away from the sky monopoly will be challenging. Only the other week netflix announced that they will not be opening in Aus due to the lockdown on content at foxtel.
Moving large amounts of data on the sxn is achingly expensive, I know I have tried. That is why I made the third world statement.
Very much like Google YouTube (which has local caches inside some NZ ISPs), Netflix also offer a similar service, called Netflix Open Content Delivery Network. It's either a peering service (in the USA/Canada) or, exactly like Google YouTube, an on-premises cache. This automatically negates your theory that international traffic is a problem because movies are moved into the cache once only and served from there. And like Google YouTube the ISPs are the ones footing the bill.
Second, if Netflix were to start a NZ service they would have only to use Akamai to have a level of service similar to Apple iTunes, Microsoft and many other providers. Again this would negate the whole "international traffic thing" because once cached, it's national only.