Netflix's VPN Ban Isn't Good for Anyone—Especially Netflix

After expanding to nearly every country in the world, Netflix is already in danger of alienating its international audience.

Earlier this month, Netflix made its service available in 130 new countries—that is, almost everywhere around the globe with the notable exception of China. But fast on the heels of its expansion, the company last week shocked international users by announcing plans to crack down on the millions of people estimated who access Netflix via what's known as a proxy server or virtual private network (VPN), which allow users to mask their locations.

The outcry was swift:

Now Netflix is saying, no longer. The company plans to begin blocking VPN proxies in the coming weeks in an effort to show studios and networks that it will, in fact, protect their content and abide by licensing deals. International Netflix users are furious, and proxy service providers are already preparing for the worst. (Some providers, in fact, blatantly advertise that their service is for watching Netflix's U.S. version.) Netflix will likely be able to restrict some access, providers say. But motivated users may still find ways around the ban. And, for Netflix, it might not be worth fighting that hard anyway.

After all, Netflix's international audience is the key to the company's future growth. As investors scrutinize Netflix's strategy after its quarterly earnings report next week, Netflix will likely facing questions about how expanding its service internationally will work on the ground. The real question isn't whether Netflix is available in 190 countries. The question is when all 190 countries will get the same Netflix.

Netflix's upcoming strategy for blocking those who use proxies is not yet clear. "Some members use proxies or 'unblockers' to access titles available outside their territory. To address this, we employ the same or similar measures other firms do," David Fullagar, the company's vice president of content delivery architecture, said in a blog post. "This technology continues to evolve and we are evolving with it."

A Netflix spokeswoman told WIRED she could not share further details “for obvious reasons.”

“People will always try and find ways to get the content they want no matter the technological barriers,” she said. “We recognize that, and that’s why we are trying to offer our content to members globally at the exact same time.”

But even if Netflix says it will be blocking VPN users, can it? “There’s some low hanging fruit they can get," says Karl Kathuria, the CEO of Psiphon Inc, which runs proxy technologies for users in countries that censor the Internet like Iran and China. "If it’s a standard VPN with one or ten servers, then it can be pretty easy for them to see what the IP addresses are and block them.”

Netflix could also track whether individual users are regularly logging in from different locations, Kathuria says, which could signal they're using a VPN.

“But once you get past the standard VPN, the ones that have a limited infrastructure, after that, it’s going to start to get a bit more difficult,” he says. And the question is whether it will be something they could enforce.

Netflix is also not the first company to try to restrict access to its content. “Back in 2014, Hulu tried to cut off access for people living outside the US by blocking VPNs and proxies,” says Faraz Ali, digital marketing manager for PureVPN. “But they did not succeed because many VPN providers found other ways to bypass the restrictions. Everyone knows that Hulu failed."

Ali and other VPN providers were confident that workarounds could be set up within just a few weeks. “[If] Netflix blocks our server's IP addresses, we are able to replace our server IPs just as readily," Ali says. "And if they have a plan to block the entire network, we are able to replace it in matter of days to get around the blockage."

If providers are able to build workarounds, Netflix will have to commit significant energy (and money) to fighting off users who try to keep using them. “It is more or less a game of cat and mouse,” says Andrew Lee, a digital rights activist and the founder of provider Private Internet Access. “The cat catches the mouse. The mouse, in order to get around this, creates 1,000,000 mice and becomes anonymous due to the sheer number of mice."

"Go in the sewer in New York and you’ll see that you can’t tell one mouse from another," he adds. "They all seem the same. However, they are all different.”

The Catch-22 is that international users do want Netflix, and they’re even willing to pay. “The irony is that we, and all the other proxy services, built up the international user base, and Netflix knowingly did not aggressively block us from doing it,” Robert Stone, a partner at unblocker MediaHint, says.

"The backlash is already growing and users are going to realize very fast that the service they pay 8 Euros for is nowhere as complete as the $8 in the U.S. service," Stone adds. "Same price, lousy catalog."

International users want Netflix the way it was intended to be—a mix of originals, Hollywood films, and TV shows. A splintered service doesn’t work. It needs all the stuff to be good—to be Netflix. “We have seen massive growth in VPN sales since right after the launch of Netflix across the globe because people are aware that VPN means access to the entire Netflix library,” Ali says. “In my opinion, blocking VPN services might affect Netflix regional profits because less content is available.”

The thing is, a truly global service is what Netflix wants, too. Its subscription model guarantees that its interests and the interests of its audience are aligned. The more Netflix is able to offer what viewers want, the more who will subscribe to Netflix.

But for now, even if we idealistically think of the Internet as border-free, the reality is that content isn’t free to roam. Movies and TV shows are still bound by licensing restrictions tied to deals inked years ago, creating a fragmented global landscape to serve studio and network distribution strategies.

“We think the only solution for them is to offer all of their content everywhere,” Ali says. That's what everyone may want, including Netflix. But for now at least, even Netflix can't always get what it wants.