Netflix CEO Says Annoyed VPN Users Are 'Inconsequential'

from the you-mean-nothing-to-me dept

When Netflix recently expanded into 190 different countries, we noted that the company ramped up its efforts to block customers that use VPNs to watch geo-restricted content. More accurately, Netflix stepped up its efforts to give the illusion it seriously cracks down on VPN users, since the company has basically admitted that trying to block such users is largely impossible since they can just rotate IP addresses and use other tricks to avoid blacklists. And indeed, that's just what most VPN providers did, updating their services so they still work despite the Netflix crackdown.

Netflix's frankly over-stated "crackdown" is an effort to soothe international broadcasters, justly worried about licensing content to a company that is demolishing decades-old broadcasting power centers. But even superficial as it may be, Netflix's crackdown on VPNs still managed to erode user privacy and security, since obviously there are countless people using VPNs for reasons other than engaging in global Netflix tourism.

With that in mind, Netflix CEO Reed Hastings probably didn't win any new friends this week when stated on the company's latest earnings call that VPN users are loud but, ultimately, "inconsequential":

There was uproar from customers, some of which simply use VPNs to protect their privacy, with a petition calling for the ban to be lifted attracting over 40,000 signatures. But it seems Netflix, which generally cherishes its user experience, doesn’t seem fussed by this uprising.

“It’s a very small but quite vocal minority,” CEO Reed Hastings said during this week’s earnings call. “So it’s really inconsequential to us, as you could see in the Q1 results.”

And, if looking solely at growth, he's not wrong; the company reported that it now serves 81.5 million members, 42% of whom are now outside of the United States. That's 44,740,000 TV subscribers in the States alone, double Comcast's latest tally of 22,347,000 TV customers. While investors are worried about growing competition from Amazon and grandfathered customers' reaction to next-month's price hike (actually announced two years ago), most customers, VPN or otherwise, aren't leaving.

And while Netflix may be annoying some VPN users now, the company has repeatedly stated that its ultimate goal is to eliminate geographic broadcast restrictions entirely. That not only makes it so Netflix tourism is unnecessary, but it should reduce piracy -- something Netflix Chief Product Officer Neil Hunt reiterated earlier this year at CES:

“Our ambition is to do global licensing and global originals, so that over maybe the next five, 10, 20 years, it’ll become more and more similar until it’s not different”... “We don’t buy only for Canada; we’re looking… for all territories; buying a singular territory is not very interesting any more.... When we have global rights, there’s a significant reduction in piracy pressure on that content. If a major title goes out in the U.S. but not in Europe, it’s definitely pirated in Europe, much more than it is if it’s released simultaneously,” Mr. Hunt says.

In other words Netflix's long-term vision may be to eliminate fractured broadcast licensing so users don't need to use VPNs. But in the short term Netflix should probably try a little harder to avoid alienating its more technically savvy customers. They may be "inconsequential" now during Netflix's heyday, but may prove important once Netflix's streaming battle against Amazon, Hulu, Apple, and countless other companies starts to heat up.

Filed Under: customers, geo blocking, geo restrictions, reed hastings, security, vpn, vpns
Companies: netflix

Kiwi ISP Offers Service To Get Around Geoblocking As A Standard Feature

from the good-idea dept

One of the most idiotic aspects of the internet these days is geoblocking -- the practice of certain websites only being available in certain countries. Nothing seems to get internet users angrier than going to any particular piece of content online, knowing it exists on an easily accessible server... and being told "screw you, because of the patch of dirt you happen to physically be sitting on at this moment, you can't see this content." The standard way around these things has been to use proxies or various VPN services that allow you to route your traffic through other countries. However, an ISP in New Zealand (a country frequently beset by "not available in your territory"-type messages) has decided to add a geoblocking-workaround service as a standard feature for all its users. The ISP, Slingshot, has a pretty straightforward explanation for its new "Global Mode" offering:

Ever tried to go to a website, only to be told you can't see it because you live in New Zealand? We think that's bizarre, and it's why we have introduced Global Mode.

Global Mode is a brilliant service that lets you visit a range sites that are normally blocked to people from New Zealand. And it's free for Slingshot broadband customers.

We think it's pretty awesome - and lets you surf and view the sites that you want to see.

And, of course, this means that folks in New Zealand using Slingshot can get easy access to things like Netflix and Hulu, which were previously geoblocked. It will be interesting to see how the various content providers respond to this move. So far, the only stated response is that some believe that better licensing in those countries will win the day, but that seems unlikely.

Here's a prediction: if this becomes more common (and other ISPs are apparently paying close attention), expect to see this issue pop up in various trade agreement talks like TPP and TAFTA/TTIP. Content providers will probably seek to insert some ridiculous clause equating getting around geoblocking to getting around DRM, and make it defacto infringement.

Filed Under: content, geo blocking, new zealand, restrictions, vpns
Companies: slingshot

Australian Government Committee Suggests Circumventing Geo-blocking To Combat High Software Prices

from the a-premium-on-ones-and-zeroes dept

Living in Australia means paying more for many things, most specifically software and digital goods. It's common enough that it's known colloquially as the "Australian Tax," an informal system where one country's citizens are asked to pay more -- around 50% more for software from companies like Microsoft and Adobe. This pricing disparity extends to purely digital products, like iTunes downloads and ebooks as well.

In order to prevent Australians from bypassing the high prices by purchasing from another country, software companies have implemented geo-blocking. The normal justifications are in place for utilizing these restrictions in order to maintain the higher prices.

Among the reasons given by company managers to the inquiry to explain price differences were: relative market size, exchange rates, wages, freight charges, local sales taxes, levies, import duties and the need to maintain separate websites and servers for Australian customers.

They also said they were charged higher costs by the entertainment industry for content destined for the Australian market.

While these may all factor into the pricing, Australians have had their doubts for years as to whether these justify such extreme price hikes. And if all of this supports price bumps that double the price of software, you'd think Microsoft, Apple and Adobe would have made more of an effort to attend the parliamentary inquiry into their prices. But this wasn't the case.

Just getting three of the tech industry's heavyweights to the parliamentary inquiry was a feat in itself. Adobe, Apple and Microsoft were all invited to attend the inquiry's earlier public hearings voluntarily. In the end it took a summons to compel the companies to appear. Each had a different reason to explain the pricing disparities.

Adobe said it offered a specialised "bespoke" experience for Australian customers.

Apple blamed local copyright holders for higher prices on its local iTunes store.

Microsoft said its prices were set and customers could vote with their wallets.

Except customers couldn't exactly do that because of geo-blocking.

So, even the companies who feel the price hikes are justified can't agree on their justifications. With nothing further to go on, there's a strong feeling that these companies are happy with the larger profit margin and uninterested in seeing that diminished. Normally, this would have left Australians at an impasse, but this time a government committee took a decidedly pro-consumer stance with its recommendations (following closely with consumer advocate recommendations on IP spoofing from late last year).

"Particularly when it comes to digitally delivered content, the committee concluded that many IT products are more expensive in Australia because of regional pricing strategies implemented by major vendors and copyright holders," said the report by committee chair and Labor MP for Wakefield, Nick Champion.

"While the committee acknowledges that in some cases, geo-blocking is a necessary business practice, it also notes that many IT vendors appear to use geo-blocking as a means to raise prices by restricting consumers' ability to access the global marketplace," the report said.

"The committee considers this form of geo-blocking to be a significant constraint on consumer choice.

The report advised that the Australian government amend the Copyright Act's anti-circumvention provisions to "clarify and secure consumers' rights to circumvent technological protection measures that control geographic market segmentation".

The report also suggests that the government should begin looking at options to educate its citizens on circumventing geoblocking and inform them on how "their rights under Australian Consumer Law may be affected by such actions." Another proposal suggested voiding contracts or terms of service that include geoblocking.

Actually implementing these suggestions would require a rewrite of some areas of Australian copyright laws, which would be no small feat. This may also encourage the affected companies to take more drastic actions to preserve their pricing structures, including the possibility of refusing to provide support to the Australian market. Whether these recommendations will ever go into effect is still doubtful, but at minimum, it forces the issue. Microsoft suggested Australians could vote with their wallets and now it appears the government is moving towards granting permission to its citizens to do exactly that. We'll have to see how these "justified" prices fluctuate in response to Australians "exiting" the market by routing around geo-blocking.

[H/T to velox, who was the first of many to send this news in.]

Filed Under: australia, copyright, digital goods, geo blocking, price discrimination, region locking, software prices