Even if content license holders don't require Netflix to go above and beyond, building sophisticated DRM is a moat against other streaming services. If Netflix can build a sophisticated VPN-detection service, copyright holders will be much less willing to license their content to upstarts who can't match its capabilities.

In the same vein, it can be rational behavior for a market leader who deals in private information (most online advertising companies) to advocate for consumer privacy protections. It "hurts" them, but if the resulting regulations are so onerous that only incumbent(s) can comply, it can restrict the competitive landscape and paradoxically be advantageous to the existing leaders.

Fun fact: the EU funded a study which ended up showing piracy has no effect on sales, then tried to bury it.

https://juliareda.eu/2017/09/secret-copyright-infringement-s...

There is a different incentive at play here. Netflix wants to track individuals. I wouldn't be surprised if some other agreement were behind this move, perhaps like other secret agreements:

https://www.theguardian.com/world/2013/aug/23/nsa-prism-cost...

> There is a different incentive at play here. Netflix wants to track individuals.

Maybe this is naive, but doesn't Netflix already have enough information from the account already? Credit card info, name, address… what does having an IP address get them in addition to all that?

It gives you a lot more information. Where you travel, who you travel with, what types of content you associate with different regions, how much you share with friends, how your preferences change as you hang around different areas and individuals.

Information is deceptive because it's exponential. Detectives often make or break cases on a single lucky clue. Data mining on the Internet is no different. Information goes massively further than most people realize.

The study you linked was a survey, not an experiment. Why would you take into account what pirates tell strangers they would do?

Excellent point, but if you spend time looking into this area, you will find there is not a lot of good research published.

Yes, and Netflix knows about that report,too.

No, the second idea is silly. They already have buckets of information. In fact, they have a whole team dedicated to making sure they don't hold onto certain types of PII (Personally identifiable Info)

They have their flaws, but they don't waste time doing useless shit (once they have figured that out).

I mean, obviously they notice which accounts are breaking whatever rules are currently in force.

And of course, extensive DRM and geo-blocking drives people to pirate.

>If Netflix can build a sophisticated VPN-detection service, copyright holders will be much less willing to license their content to upstarts who can't match its capabilities.

Have you missed the events of the last few years? Netflix's future competition isn't going to be scrappy startups, it's going to be content providers with their own streaming service.

This is a super interesting take and I wonder how closely this reflects Netflix's actual strategic thinking. If so it's an interesting game theory question, because the whole reason rightsholders would want this is to guarantee the value of splitting up distribution to multiple local distributors, most of whom would be well outside the realm of matching Netflix capabilities. But if those players can't match Netflix's DRM and thus rightsholders won't license to them, then all they are doing is giving Netflix is a discount for restricted rights without any additional profit.

Many VPN providers advertise themselves specifically as being able to get around Netflix restrictions, or if not directly they pay YouTubers or websites to mention it in an ad.

VPNs are definitely making heavy use of residential IPs now, they often have routing rules in place that use non res IPs for most traffic, but traffic to Netflix, Prime, iPlayer etc. get routed via a res IP.

Also have no idea why they're cracking down on it so hard, thought it'd help them retain customers if anything.

Not that I want to give them any ideas, but surely the best solution would be to just lock the account down to the region the billing account is from? Although I think you can sometimes get a payment through with a fake address, it'd at lest mean people can't jump between countries at will.

> Not that I want to give them any ideas, but surely the best solution would be to just lock the account down to the region the billing account is from?

I'm pretty sure (based on dealing with DRM/geoIP restriction requirements in other spheres) that it's because the media companies are incredibly anal about enforcement on strict geographic lines. They don't care if your account is linked to a US credit card at a US billing address, despite how effective that is at ensuring that you are a US user (and how difficult it is to spoof). They are hellbent on the idea that no US-only content should ever be streamed to an IP address terminating at a non-US location. For them it's absolutely not about people or accounts - it's entirely a matter of geography.

Netflix could easily apply a rule based on the region of the billing account, and I am sure it would be vastly more effective than playing whack-a-mole with individual IP addresses. However, the media companies would undoubtedly still insist that they do strict geoIP restriction as well. And if Netflix did both, anybody who is traveling outside of their home country would find Netflix to be bereft of content; anyone who travelled frequently would find Netflix to be perfectly useless. By going all-in on geoIP, Netflix keeps the geoIP-fixated media companies happy, while ensuring that users see plenty of content even as they move from country to country.

I'd guess that Netflix is only upping their game on residential IPs etc now because the media companies are no longer happy and are leaning on them - VPN services are simply becoming too brazen about advertising the ability to bypass Netflix geo restrictions by clicking flags. Whenever it becomes this obvious to the media guys that anyone with a pulse and a credit card can circumvent Netflix's controls, they'll be pressed to 'do better' or lose their rights to content. Netflix takes some steps, catches some backlash, and the media companies are placated for a while.

It's about the physical location of the eyeballs that are ingesting the content...

I wouldn’t be surprised if these competing media conglomerates think Netflix is magic and are requiring they block these big Netflix-evading VPNs.

> Why should I have to jump through hoops just because I happen to be located abroad for a week?

I could easily see a gray market in, essentially, location-specific "rebilling" springing up the same day as this. Want to watch a show that's not available in your country? Sign up here for an account billed through an address that can watch that show, with a small convenience surcharge.

The proper way to implement this restriction would be to only accept payments from a list of approved BINs (the first 6 digits of the credit/debit card). These numbers are strictly tied to the bank that's issuing the cards, the list is publicly available, and bypassing it is incredibly difficult. At the very least this control alone would be (very close to) ensuring that the card holder who's paying for the account has a legal right to live/work in the country in question (which is a requirement for opening a bank account in most places).

There are some BINs which you could associate with a territory, but don't provide this level of assurance about the card holder (those "burner" credit card providers for instance), but the list of exceptions is short enough to manage quite easily.

There are already service providers that implement this, f1.tv does for instance. Another peculiar example is India, where they just use phone numbers, because getting a phone number in India requires a KYC process, non-residents are only entitled to temporary services, and it's very hard to maintain your service if you leave the country.

Isn't the better question to ask if geographically restricted broadcasting rights aren't simply obsolete ?

Like, it possibly made some sense back when the stuff was actually broadcast via terrestrial TV to the given area (and even then it was normal to watch TV across national borders, even over the Iron Curtain!) but it really does not seem to make any sense what so ever in modern global world.

It rather seems like yet another case of someone clinging to and enforcing by any means available an outdated concept because it just so happens to bring them more money if they keep it alive.

It's not obsolete because as a content producer the global players are not always willing to pay top dollar for your content. In many cases you can get more money by selling to multiple local players with single language, geo-restricted distribution rights. And this is the tip of the iceberg because you also have different types of rights for theatrical vs streaming distribution, and your strategy could interleave them in multiple non-intuitive ways.

I understand there is a long running system in place, but from the point of view of a modern viewer/customer it all just looks like a mess.

Basically, there should be a place where you click on a button, pay some money and play the thing anywhere in the world.

Like even some possibly inflated/default price. Like this way you would get something from each viewer in geos where you have not actually sold the rights & nothing really says you can't rise or lower the price if you see demand or lack there of.

Anything else frankly looks like excuses to a normal viewer/customer in the year or 2021.

How long the system has existed has nothing to do with it. It's pure economics. If you owned content rights would you sell it for $1M when you get split up rights and get $2M for partial rights and still have upside for the remainder? If someone on the internet said "it just doesn't make sense to a viewer" would that change your mind?

No it wouldn't. The dollars don't lie. The viewers opinion is reflected in what they pay for, and that is reflected in what distributors are willing to pay. These things do change over time as the landscape shifts and new business model possibilities show up (eg. Disney+ day and date streaming releases), but it has absolutely nothing to do with your armchair notions of what makes sense to a "normal viewer". They pay or they don't, businesses are rewarded by figuring out the aggregate implications.

Selling content for different prices in different markets:

- increases revenue

- relies on being able to separate those markets effectively

It's not obsolete, because it still works.

And it's not a historical accident resulting from past business models.

Content providers with no 'analogue' history also have geographical pricing. Example: Wes Bos' excellent JavaScript courses are priced differently depending on your country.

This makes sense, but it doesn’t make sense why a content seller would want to prevent someone from a cheaper market from appearing to be from a more expensive market. If the subscriber is paying the higher price because they are pretending to be from that country, why wouldn’t they just let them? I can see trying to stop the reverse, but not that.

One classic example from microeconomics textbooks is child/adult admission tickets for cinemas. The cost to provide the service (and the constraints on capacity) are the same for both types of ticket. But children have less money than adults (in general) and it's easy to stop an adult posing as a child (by checking ID).

The Netflix example is more complicated, as there are transactions happening at two levels:

* studios are selling content to distributors in different markets

* Netflix is selling subscriptions to consumers in different markets

Also, unlike the single-event case at the top of my post, the service being provided isn't identical for all buyers. Folks in the UK don't get the same bundle of shows as folks in the US.

Even if folks in the UK pay more, that doesn't mean Netflix is OK with them watching all the shows that are available to Netflix US subscribers. Because the creators of those shows sold the UK rights to a different company (e.g. Sky TV) that was willing to pay more than Netflix.

Netflix doesn't care about this directly but, if UK customers bypass the restrictions at too large a scale, the creators/studios won't be willing to sell rights to Netflix in future. Because, by selling rights to Netflix for the US, they reduce the value of the rights they sell to Sky in UK.

> Like, it possibly made some sense back when the stuff was actually broadcast via terrestrial TV to the given area

The majority of TV viewing is still via broadcast methods.

What I don't get is why having a German VPN IP with an account that has a German billing address is a problem. The VPN restrictions simply shouldn't be relevant in this case as we aren't trying to access content not available here.

If you are using a VPN how do they know you aren't on vacation in Australia and are trying to watch shows that Netflix doesn't have the rights to in Australia.

I understand that this is about your location while streaming not while signing the contract.

But the location only matters because of where you sign the contract. No one loses money from allowing this to happen, no rights are interfered with. If a resident of Australia vpn’s Into Germany to watch an Aussie programme then an Australian network loses a viewer for at least that content, but a German who’s paid for it in Germany?

I pay for UK Netflix still because where I live the local Netflix only gives me subtitles in the local language. If they lock me out of my VPN then I’ll cancel and just pirate stuff instead. This “edge case” is going to lose them money and retain the viability of the pirate network.

> If a resident of Australia vpn’s Into Germany to watch an Aussie programme then an Australian network loses a viewer for at least that content, but a German who’s paid for it in Germany?

At one point I understand a double digit percentage of Ebay's entire revenue was people selling US Hulu pre-paid cards to viewers outside the US.

Bypassing financial geofiltering is easier than bypassing IP based geofiltering generally. But, ultimately, generally speaking studios nowadays expect you to do both, not one or the other, so Netflix adopting models on payment territory would not mean they didn't have to block VPNs any more, it means they would have to do both like everyone else does.

Also, having spent some time trying to build this product myself and failed, you are vastly overestimating how reliable international payment identification is on country of origin. Like a lot.

For a while I worked for a company that provided a component used by some streaming services on the server side. I never knew how common this was, and how much of it was just because of the weird position we were in, but we'd get some story like "exec at $big.firm has a child that used a VPN to get out of region content, they demand we fix it"

There were other cases like this where it was less about expending the effort to make some contract happy, and doing so to make it look like we were doing so for the sole purpose of making it appear that it was the case to specific executives. Not their team, but them, specifically.

The way this works is, the content provider (actually, someone working on the content provider's behalf) does an independent check every so often.

Then they (the content lawyers) come back to Netflix and say "hey, 10% of these attempts got through, you are breaking our deal.

Obviously, some of these of these service providers are not the brightest bulbs on the internet, but try telling that to the legal department of a media conglomerate.

So, the technical team that handles this at Netflix has to shoot for the worst case, instead of the average case, even if they are already being effective.

Its likely that studios are pushing this requirement into Netflix.

The studios probably have seen the VPN ads everywhere marketing how easy it is to circumvent Netflix’s (and other’s) regional blocks

Funny how ads might backfire this way!

It kind of has to be due to pressure from the people they're licensing titles from, or at least fear they might claim they are violating a contract.

From Netflix's point of view, it's better if everything is available in every region, as it makes their service more valuable.

I also like the theory that it helps Netflix collect data better. I'm sure both elements are at play.

Correct.

Geographic licensing of content was technologically superseded by the internet. It’s an inefficiency that distributors are desperately trying to hold on to so they can leverage a profit from it.

But the fact that it’s an entirely artificial inefficiency, means it’s possible to completely ignore it. If somebody’s geo-circumventions are thwarted, they’re just going to return to old fashion piracy most of the time.

It’s a system that turns some paying customers into slightly higher-paying customers via market segmentation, but it turns a lot of paying customers into entirely non-paying customers. Eventually the TV and Movie industry will get to the point where they no longer think it’s worth it, and go the way of the music industry which doesn’t have a geo-restriction problem, or a piracy one.

There's still plenty of georestrictions on Spotify. As an Aussie, I see heaps of songs on play lists that are greyed out.

My alternative take is it's because they have too many highly paid engineers who need something to do. People overestimate how logical decision-making is at large companies.