Entertainment and television players Spark, MediaWorks, SKY and TVNZ have fired a warning shot to Slingshot, Orcon and Bypass Network Services, saying they are breaching copyright and operating outside the law by providing customers access to otherwise blocked international TV and movie services.
In a joint statement issued today, the four companies say they have sent the two telcos and others requests to cease the operation of "Global Mode" or similar services that get around the blocks stopping people in New Zealand accessing certain services.
Slingshot's Global Mode, for instance, has long allowed New Zealanders access to the US-version of Netflix, which only launched here last month.
The country's biggest media players and Spark's Lightbox television streaming service said "companies who set out to profit by marketing and providing access to content they haven't paid for are operating outside the law and in breach of copyright."
"We pay considerable amounts of money for content rights, particularly exclusive content rights. These rights are being knowingly and illegally impinged which is a significant issue that may ultimately need to be resolved in court in order to provide future clarity for all parties involved," the four companies said.
"This is not about taking action against consumers; this is a business to business issue and is about creating a fair playing field."
Sky TV chief executive John Fellet described the legal action as "a big step" for the industry.
He said it was not aimed at the arrival of the Netflix internet TV service which began in New Zealand and Australia last week and he expected Netflix would be concerned also about its New Zealand rights being undermined.
The action was aimed at organisations that were seeking to profit from copyright they did not own.
However, he said changes to the media sector with a Netflix and other internet TV services had made the issue more apparent and led to Sky and other industry players joining together for the action.
"Its getting harder to make money competing in this country with people who are not paying to use our content.
"They want to profit from rights that they do not have," Fellet said.
Sky said that the point of the action was to "get an understanding of what is legal and what is not".
Use of global mode services - allowing back door entry into overseas Pay TV services to access their US rights - has been around for a long time. But the Global mode option has taken on a higher profile and has been marketed as a superior option to services offered by companies.
Sky said that the global mode product is not common internationally and it was only being marketed in New Zealand, Korea and Singapore.
Fellet said he imagined Netflix would be just as concerned as the parties to this action about the breach of its copyright.
However, the mechanism for these global plus subscriptions was that users of Netflix US would be paying the US company.
The Herald asked Netflix last month what it was doing to prevent copyright breaching going through the US, but it said there were limited options.
Asked if Hollywood studios were stepping in to protect rights they had sold to Sky and other New Zealand broadcasters, Fellet said:
"We are just trying to get them to focus. In a lot of countries there are much stronger piracy laws than we have here.
"There is site blocking legislation and here it is much harder to enforce a copyright For the studios it is difficult to focus on any one market."
It is understood that some studios have been more active in policing global mode access to US rights than others.
"We are in conversations with all of the studios," Fellet said.
"They will decide whether to come or not come based on the merits of it."