Netflix and the war for content

The Netflix headquarters in Los Gatos, California, USA. Photo / iStock

Netflix put a wet blanket on its announcement of expansion to 130 countries by following up with a blog post stating it will begin a clampdown on virtual private network (VPN) users.

The company has resisted such a move for years, probably because of the massive damage it would do to profit and subscriber numbers. After all, if users sign up to the service to use the US or UK version of the site, Netflix still profits; it doesn't matter if they're based in the country or not.

Speculation points to pressure from major media companies such as Sony, who were revealed in a leaked email in 2013 to be infuriated by Netflix's languid approach to VPNs and proxies.

Sony pointed to Australia as an example; there, subscribers were using VPNs and proxies to access material which their country did not have the rights for.

The email ended with this ominous line: "This issue is almost certainly going to get more heated, since our goal and Netflix's are in direct opposition."

Netflix, possibly capitulating to pressure, says it will start taking measures in the next few weeks - but how it enforces the blocking depends on how willing it is to alienate its subscribers. If it takes a low-level approach, workarounds and updates to VPN providers will allow users to continue with Netflix and chill as usual.

How VPNs work

VPNs link two partnering IPs together to re-route connections to the users' desire. There has been much debate over the legality of the use of VPN technology due to its potential uses, which infringe copyright.

The ambiguity stems from many basic providers advertising to users that they can watch their favourite US shows and movies by using a VPN.

VPNs have been used regularly for more than 10 years to provide encryption for businesses, governments and home users. People in countries such as Iran and China, where internet access is regulated, can use a VPN to gain access to banned websites.

Imagine, for instance, an American diplomat or journalist based in Iran - it would be unthinkable for them not to have access to international media.

Netflix, strictly speaking, uses a VPN itself in order to protect content through encryption.

Popular VPNs, which can be used as simple browser extensions, are difficult to target, but not impossible. When Hulu began a crackdown on VPNs, it targeted only well-known providers and the corresponding IP addresses, while lesser-known VPN providers remained untargeted, allowing users to continue streaming as usual.

Outrage over Netflix geo-blocking could lead to a VPN arms-race, with providers vying for competitive advantage by working around the technologies and discovering loopholes to exploit.

The enforcement of VPN blocking will almost certainly focus on basic and popular VPN services. Others - for instance, ones that charge only a small fee - will be harder to detect and block, mainly due to their lack of popularity.

The good news is Netflix hopes to make all of its content available eventually.