Netflix is currently available in 190 countries. However, a large number of users in 189 of those countries have been using VPNs to access content only available in the United States.
Netflix’s big crackdown on VPNs began last January when they wrote on their blog that they would be implementing measures to restrict users who were using proxies to access content available outside their region. In doing so, they targeted VPN use, resulting in a large loss in subscribers by the summer.
A virtual private network (VPN) is a network that creates an encrypted connection over a network. It masks user identity, allowing individuals to access networks blocked to their IP address. A private network enables users to extend their access, sharing and receiving data publicly as if they were directly connected to a private network. It allows someone from say Mexico City access a network as if they were physically located in New York or London, changing their IP address to reflect that of the VPN’s private server.
VPNs aren’t just used to access movies in different regions. VPNs are often used in countries with strict censorship laws to access websites like Facebook that are otherwise denied. They also are favored by individuals and companies who seek more privacy online, as it encrypts internet traffic.
The Netflix users, who had been previously using VPNs to stream content from the United States or countries with larger selections, were also paying subscription fees in their countries. Many of those who could no longer use VPNs decided to do away with Netflix altogether, leading to a loss in profit for Netflix.
During that period, Netflix also reduced its content significantly and introduced a price hike on the basic online-streaming plan. Though the loss in subscribers cannot be completely tied to their VPN crackdown, their stock took a hit. In December, Netflix’s stock was selling at nearly $131, and fell to $85.33 by the end of June.
Netflix had previously said that it was a wasted effort to monitor VPNs; however, companies selling rights to their titles began putting pressure on Netflix. Many other sites, like Hulu, have attempted with little success. These efforts have not totally restricted users from accessing restricted content and VPNs have found ways around Netflix’s efforts. As certain networks are blocked, others find loopholes to work around them. However, the largest ones, like Hola, are no longer able to perform the service.
Regardless of Netflix’s loss of users internationally, Netflix is winning. Many argue that Netflix does not have to worry with appeasing its VPN-using users, as the general trend shows viewers moving away from cable TV to online streaming sites.
A decade ago, tianguis in cities like Mexico City were filled with pirated movies and television series, now users find all their content online, making efforts to enforce copyright laws more difficult.
Netflix’s efforts cannot completely dissuade viewers from accessing content. Instead of going through more secure VPNs to access site-based content, they will presumably torrent the videos leading to an increase in pirating, exposing users online.
While Netflix may be enforcing their licensing agreements with other companies, by moving users away from legal channels, users will undoubtedly find their content in other ways, creating more risk online.