Tobold's Blog
Tuesday, January 19, 2016
Netflix VPN blocking

Shelves and shelves full of legally bought DVDs in my house demonstrate that I rather buy video content legally than to pirate it. On the other hand I *do* use a virtual private network service to rather watch US Netflix than my local version. Not only are there about twice as many films and episodes on US Netflix than on the local version; but also in the US I can always get English subtitles, while local Netflix frequently only offers the local language as subtitle, which isn't ideal for expats. Certain TV executives would thus consider me a "pirate", although philosophically speaking and using Kant's categorical imperative as measure for what is good or evil, I'm pretty certain that I'm not doing anything wrong.

Nevertheless there is an ongoing discussion about Netflix blocking VPN access in the media. Despite the doubtful headline the Guardian regarding this possibility, I am in no doubt of the technical possibility, provided that Netflix is serious. While making the difference between somebody using a VPN and somebody actually traveling may be hard, you can always arrive at a perfect VPN block by simply restricting service to travelers. The competitors of Netflix will only show you the local content from your country of residence written on your credit card, so you'd need a far more complicated service creating a false address including credit card to for example watch HBO over here. Netflix could just do the same and give travelers either no service at all, or a very limited selection consisting of only films available both in the country of origin and in the country the traveler is now. I doubt many people would cancel their Netflix subscription just because it won't work any more when they are on holidays abroad.

Where Netflix really would lose a lot of business is with their over 30 million customers in whose country of residence there actually isn't any Netflix offered at all. It is a safe bet that these people all would unsubscribe from Netflix if they couldn't use VPN any more to watch, as that is actually their only option. The fact that Netflix lets you subscribe from a country with no Netflix service pretty much proves that they consider using a VPN to be acceptable behavior. With verifiable numbers like the use of BitTorrent dropping 14% in Australia the month Netflix launched in that country it is very obvious that there is a large population that are quite willing to pay for legal access to films and TV series and only pirate when there are no legal options. And even those TV executives complaining about "VPN piracy" are at the same time receiving licensing fees from Netflix from those people they just called pirates. They just believe that they would make a bit more money if they could use regional barriers to extort local TV companies. Something which in a globalized economy should be outlawed anyway.

Economically speaking, under the current system a Netflix with VPN option is more valuable than a Netflix without that option. That is not just a consumer surplus for those who use a VPN, but there are definitively a certain percentage of Netflix customers where this added VPN option is the deciding factor in whether they subscribe at all. So Netflix profits as well, especially since it gives them a competitive advantage over the many competitors who aren't as permissive. So maybe Netflix really is just trying to placate rights holders. A bit like Captain Renault in the film Casablance, Netflix says "I'm shocked, shocked to find that VPN use is going on in here!", while cashing in their winnings. They might even go as far as installing a completely ineffective "industry standard anti-VPN solution". But if they really wanted, they *could* stop VPN use completely, at the cost of millions of dollars to them. I would guess they would much rather arrive at the point where there are absolutely no regional differences between Netflix offers in different countries, because that must be both more profitable and a lot easier to manage for them.

"Something which in a globalized economy should be outlawed anyway." By whom? Some global government that administers this "globalized economy"? Are you advocating the global dismantlement of the Nation State and national sovereignty? Good luck with that.

Also the concept of a company having 30 million "customers" in territories where it is not officially selling a product or service would seem to stretch the definition of "customer" to breaking point. I'm not sure what the word for such people ought to be but "customer" definitely isn't it.

You're second point is outdated. I regularly buy stuff on mail order from England, even though I live in Norway.

Am I then not a customer for these companies?
By whom?

Usually that would be the WTO. The existence of global organizations doesn't "dismantle" the nation state, but is a necessary component for treaties between nations. You can't have free trade agreements without an organization like the WTO as judge.

Sometimes I believe there are deliberate disinformation campaigns at work in order to keep Americans uninformed about international organizations like that.
I think there were attempts within the EU to normalise web services (tax-wise and restriction-wise).

But of course allowing regional markets allows for better optimisations. So you can charge in a rich country (say Belgium) more than in a poor one (say the West Bank).
You could even argue that some markets couldn't be served unless you artificially separate them to allow cross-financing.

... that in real life, the low-margin markets (and ones with a high entry threshold ... say expected Flemish dubbings) are not served at all, is of course making it a bit more difficult to argue.
I don't see the issue. Are you paying for your netflix account? Then it's not pirated. What difference does it make how the data is routed to your house?

Now, your payment options may be convoluted, or have an extra fee attached. But that's just a penalty you pay for not being interested in the local offerings.
Smokeman, netflix itself doesn't give a fuck from where you watch as long as you pay them. It is the content industry that requires netflix to enforce geoblocking. The content industry sells the rights in every country which from their point of view makes financial sense because obviously selling something 190 times makes a lot more money than just selling it once globally.

But of course geoblocking goes against customers common sense, because for people on a global internet is doesn't make any sense at all. Netflix is trying to negotiate global licenses where it can. They should be strong enough now to threat dropping the entire catalogue of a media corporation to get global licenses and I hope they have the balls to do that.

Tobold, I read your blog for quite some years now and there was a time when you would have been pretty certain that you are doing something morally wrong.
The funny part is that this is basically Netflix asking the VPN services to step up their game and become harder to ID. That's what is ultimately going to happen. People are going to start using e.g. a bittorrent equivalent of VPN.
there was a time when you would have been pretty certain that you are doing something morally wrong.

I don't think so. For me it is pretty much the same case as ordering drugs in the US from a Canadian online pharmacy. Even economists talk of "grey markets" in such cases, because they are very much on the borderline between right and wrong. As Smokeman said, I am not "stealing" in any reasonable sense of the word, as I am paying for the content. Neither Netflix nor any content provider would have any problem with me taking a plane to the USA and watching exactly the same content on exactly the same device for exactly the same cost there. It is the content provider saying "I will use the fact that you are not living in the USA to extract more money from you, in spite that not causing me any additional cost" that is morally wrong.

That makes more sense, it's not netflix blocking the VPN, it's the assholes that make movies, and have enough money to buy congress that is forcing them to, if it comes to that.
I just remembered a ridiculous example of geoblocking: two years ago I bought "Lazaretto" by Jack White as vinyl. It was sold out on so I bought it on They have a nice feature called autorip which let's you download mp3s of every thing you buy. But... although they happily took my money and shipped the LP to Germany, UK autorip is blocked with a German IP adress.
@bryksom: I even bought DVDs here in Belgium in a shop which had a code for streaming the film to a mobile device, but that didn't work because of regional blocking. And it wasn't even me who imported that DVD, but the shop did!
"Sometimes I believe there are deliberate disinformation campaigns at work in order to keep Americans uninformed about international organizations like that."

No misinformation campaign - Americans just have far less to gain from the WTO than Belgium does. It's not nearly as important to us as it is to you. We lose 90% of the cases; those in the know often view it as just another corrupt foreign organization, dominated by foreign nationals from corrupt places who are only looking out for their own interests.
Yea, Netflix just launched officially here in South Africa, but most were using it via a VPN service (including myself) regardless. The irony of the official launch was:

1. Netflix offers a 10th of the US library here if you go "legit"
2. The cost of Netflix is exactly the same as in US, we pay the sub in $, not in local currency. So we are all arguing why we are paying the same for a 10th of the content.
3. Due to licensing agreements with local cable/tv operators, Netflix can't even show their own shows on the local version of Netflix. Example is series like House of Cards , you have to subscribe to a cable tv to get that OR use a VPN on Netflix.

So even though Netflix is now legally launched, if they block VPN now based on credit card etc, most people here will most certainly cancel their subs and return to torrents/usenet.
@ silvertemplar

Same problem here in Italy, where Netflix landed a month ago. Some content isn't available if it's already offered by SKY (cable tv): House of Cards and Narcos are two good examples of what we can't watch if we go "legit" but there are other missing titles. I was anxious to abandon the expensive cable but I can't.

Agree or not, I still think going VPN isn't the right way: you either use the service under their rules or you simply don't. When you "pretend" to use it with an "alternative" way because "you feel it's legit"... well, that's just an excuse to do what you want.
I'm starting to feel the pain of you guys in Europe.

It's as if in the US, on a STATE BY STATE basis, Netflix were to offer different content and then have absurd "licensing agreements" where, say... in Nebraska, you can't even watch the Netflix original shows on Netflix because those are "licensed" to cable companies.

It's bad enough already... if some show is a "Showtime exclusive", you can't watch it anywhere else, and there is no way I'm subscribing to "Showtime" just to watch one show.

It's like a greedy "Pay to win" scheme. If 1/5 of the players (viewers) pay for all 5 of the venues, that's the same as 100% paying the reasonable rate for all content. Since many of these companies are owned by bigger players, it's an income multiplier where the parent company can charge the same customer multiple times, and sometimes for the same content.
attack and parry in Australia

which quotes the end of the VB article:

Netflix, ultimately, is caught between a rock and a hard place. The company has gone on record many times criticizing the way content licensing deals are negotiated globally. Of course, Netflix would love to be able offer a consistent library of content around the world. But it also has to stay on-side with those who hold the rights to the content, otherwise they may threaten to pull shows and movies altogether.

The result is that Netflix is going through the motions of blocking VPNs, even though it understands perfectly well that these measures are doomed to fail.

@smokeman: Netflix wants as many customers as possible. It's Europe's arcane and incredibly complex laws on copyrights, licensing, and taxation that are driving this.

The United States doesn't have that problem because our laws aren't nearly as fractured. Copyrights work the same way in Oregon as they do in Florida.
As Smokeman said, I am not "stealing" in any reasonable sense of the word, as I am paying for the content.

Yes, you're paying for the content, but you're circumventing additional tolls and restrictions imposed by a third party. You're not stealing the content - you're smuggling it!

Back in the law school, when we had a discussion about the relationship between law and morality, we came to the conclusion that smuggling was pretty much the only activity that has been both outlawed throughout human history and yet was not considered immoral by an average person.
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