Netflix has recently taken aim at users who access the site through VPNs and proxies, blocking many of its subscribers from using the site. The reason? People viewing material in countries where Netflix doesn't have a license.
Normally, content owners can extract a licensing fee for each country their content is available in. This leads to services like Netflix having wildly different libraries depending on which country you access it from. In some countries Netflix is unavailable entirely. They have to balance how much money they are willing to spend on licenses, against how much money they think they can get from a particular country, and for many countries they are unwilling to shell out the cash.
Frustrated users around the world try to circumvent this through the use of VPNs and proxies to try to hide their actual country of origin, and get access to the coveted American Netflix library. This has made certain television networks and movie studios upset, and they are putting pressure on Netflix to crack down on this activity.
Sony pictures in particular may have a hand in this new action by Netflix. A draft of a content protection agreement between Netflix and Sony, that was prepared earlier this year, specifically requires Netflix to determine what country its subscribers are located in.
The blocking of VPNs by Netflix was first noticed a couple of weeks ago, and appears to be limited in scope. So far they appear to be testing out several different blocking methods, on a small scale, to see which ones prove most effective. It is likely that they will be more aggressive with their blocking in the future. However VPNs like TorGuard and Unblock-us are already developing workarounds to get passed the blocking.
While Netflix ultimately has little choice but to work with the companies it licenses content from, these new actions could cast too wide a net. One of the major concerns raised is that many Netflix subscribers use VPNs for privacy purposes, rather than to bypass geographic restrictions on content. Even if they only access content that has been licensed in their country, they could still be blocked from the site due to VPN usage.
Update: A Netflix Spokesman has denied that there is any change in the company's VPN policy. Additionally the Netflix Director of Corporate Communications and Technology, Cliff Edwards, stated that VPNs are against the terms of service, and content owners deserved to be paid for their content. What appears to be new action by Netflix could really just be considered a stricter enforcement of what has long been its official policy, that VPNs are not allowed.
Do you think Netflix is justified in blocking VPNs and proxies from accessing its site? What effect do you think this will have on their business?