Geoblocking, Licensing, and Piracy Make For Tough Choices at Netflix (thestack.com)

An anonymous reader writes: If Netflix's promise to invigilate users' IP addresses and block VPNs is more than a placatory sop to the lawyers, and if the studios would rather return to fighting piracy by lobbying governments to play whack-a-mole with torrent sites, the streaming company's long-term efforts to abolish or reduce regional licensing blockades could falter this year. This article examines the possible hard choices Netflix must make in appeasing major studios without destroying the user-base that got their attention in the first place. I wonder how long VPN vendors will keep bragging that their services provide worldwide streaming availability, and whether some of them will actually do a decent job of it.

Comments

There are a lot of IP addresses out there

[elrous0]

Can't block them all.

Re:There are a lot of IP addresses out there

[BradleyUffner]

Can't block them all.

iptables -A INPUT -j DROP

Re:There are a lot of IP addresses out there

[MightyMartian]

I can't think of a worse test of geographical distance than latency. There are many reasons why people even a few miles from each other night have high latency.

Why not just a divining rod?

Re:Netflix? Try the studios instead

[AK Marc]

Yup. Netflix gains nothing from this. They get a subscription for about $10 for a streaming account no matter where you are (at least from what I've seen, they aren't discounted greatly in poorer countries). So if they block VPNs, they'll lose subscribers (thus income). And the studios will lose because those who cancel will fall back to piracy. Only if the studios think they can win against piracy would they think this is a good idea. Do they still think they can win against piracy?

The Netflix model should run like iTunes. I'm multi-national in iTunes. My US account uses a US address and US credit card. My non-US account uses non-US card and address. I can play from both anywhere in the world. I can download to/from both anywhere in the world. The account is billing linked, not location linked. Netflix should move to a similar fashion, and the studios clamp down on international transactions from US addresses as a money laundering and stop worrying about where someone is, but where their money comes from. Works for iTunes (who has lots of content), and much easier than region coding things based on IP of the user.

Depends on the hardware

[AHuxley]

Will HD and 4K networks need a per user dongle sent out to users who send in REAL ID Act details?
Activation after a call centre makes direct voice contact and tracks the dongle to a US location in real time?
A good VPN could still shield the origins of most of its east and west coast users at the EU and oceania entry points into the USA.
The US exit ip shows up from a US based network a bit further than a network-neutral centre with interconnection services.
Or have the VPN pop up in some fly over state with low taxes, really cheap networking and power costs as part of a massive ip range sold to a walled community.

The studios may not have a choice

[jonwil]

If a TV network (free to air or pay) has spent the money to buy the local rights to a TV show, the deal they signed with the studios will generally include a clause prohibiting the studio from releasing that show via other means (such as DVDs or streaming) in that country until after the TV network has finished airing it.

I dont have any specific examples but I would be willing to bet that there are shows available on Netflix USA where the rights in other countries are held by someone else. If you can watch those shows on Netflix USA from one of those other countries, the local entity that has the rights will get annoyed with the studio (and so they should given how much they would have paid for exclusive rights)

Re:The studios may not have a choice

[Anonymous Coward]

If you can watch those shows on Netflix USA from one of those other countries, the local entity that has the rights will get annoyed with the studio (and so they should given how much they would have paid for exclusive rights)

Basically this is a bit like saying, ``We'll divide up the city. You sell your stuff in the north an west. We will sell in the south and east.'' Isn't that kind of collusion and market manipulation supposed to be illegal?

Put another way, suppose Walmart.com purchased the rights from Amazon to serve your particular state exclusively and then jacked up their prices a bit? Is that right?

Of course IP rights makes things arbitrarily more complex, but do they really have to be? I'm just not convinced that arbitrarily limiting competition is a good thing. Of course international packets likely run on more expensive infrastructure. It might be necessary to pay your isp more money if those are heavily used, so they can pass it on..

Re:The studios may not have a choice

[RubberDogBone]

Not only is this not illegal, this is how it's been done as far back as there have been TV shows and movies. But it is also done with books, music, video games and board games, computer software, and so on. It the US, the markets are as small as major cities. So a TV station in LA pays for rights to Seinfeld and another station in San Francisco pays again, perhaps not even the same price. This goes on across the US in city after city. And TBS pays for a national cable license.

And in the end you get the program sales copy bragging about how the show has been cleared in 9 of the 10 top markets and 45 of the top 50, plus countries. Add to that streaming services around the world -Netflix isn't the only such streaming company.

The bottom line is that the companies who make this stuff have an interest in getting as many separate buyers to pay as much as possible for every single piece.

It's been this way forever. It isn't going to change now because untold sums of money are vested in keeping it the way it is. Just as an example, back in the day Carsey-Warner made well over $1 billion dollars selling reruns of Roseanne to TV stations around the US. Each station paid up to millions of dollars PER episode. Likewise, reruns of the Cosby show sitcom (once THE powerhouse show, hard as that may be to believe now) also went for in excess of a billion dollars.

Now, there is no way a Netflix or anyone else can possibly top that kind of money. Why should a Carsey-Warner settle for a percentage of that money from Netflix when they can get it all? Do you know how many salespeople made huge commission off that, and how many TV stations were able to sell massive amounts of commercial time on those shows? If you want to be on Cosby, you gotta buy a whole package of ads to run around the clock, you see,

Syndication isn't that valuable any more in the US but there is still a lot of money in it outside the US.

Re:Netflix? Try the studios instead

[the_Bionic_lemming]

Wait , What?

I like netflix because I pay for no commercials while watching TV.

That's why I don't pay for cable or satellite or watch broadcast television.

Sounds to me like I'm supposed to cheerlead against netflix providing me that because there's region codes and regulatory stuff. I'm not going to do that. I get the fact that I can't have what europe watches because I live in the US.I also get the fact that europe might want to watch a show the US puts out.

All I can say is please don't screw up my paying for a service because it gets shut down by people breaking the rules. I'm content with what I get.

Fucking media companies

[Anonymous Coward]

The TPP and TTIP set up the regulatory frameworks for the IP and media industry to shut down the torrent sites pretty much for good. They won't go after the sites themselves, they'll just keep suing little people into bankruptcy until the rest of them learn to stay away.

The US media companies have spent a lot of money and time setting up the whole TPP and TTIP deal. They weren't doing it for the fun of it. In the future, if you don't have a licence for the stuff your watching, they'll be coming for ya. I think the next step is to 'fix', via some aspect of those agreements, the displays that are sold to the public so that unlicensed media can't be played.

Re:Fucking media companies

[AK Marc]

TPP and TTIP should have shut all that down. Sell content in the US? Then it's available in all the T*P countries. That's what "free trade" is about. Not using "free trade" agreements to further restrict trade.

Re:Regional blocking is just inaccurate at best

[Mashiki]

I'm not actively trying to bypass their geolimits and apparently my living room, according by google is in sweden and by netflix it's ca, us. No VPN connections in use.

Fun, google is reporting I'm in Norway and "netflix is not available at your location." I'm sitting ~170km outside of Toronto, in Ontario. Geoblocking is garbage, the only thing it does is push people to piracy.

Netflix's biggest challenge

[whoever57]

Data caps. I expect that's what keeps Reed Hastings awake at nights. When people expect 4K streams but their ISP charges an arm and a leg for the data in those 4K streams, Netflix becomes less viable.

Re: Netflix? Try the studios instead

[guruevi]

Why would you accept that you can see different content based on your location? You wouldn't accept Wikipedia or news sites to return different content shaped by your government based on your location? There is no reason that Netflix can't sell their services in other markets, you wouldn't want your business' customers to be artificially limited by the government?

Re: Netflix? Try the studios instead

[Z00L00K]

The whole region restricting scheme is just stupid and is much like the prohibition of alcohol in the US in the 20's - it feeds crime.

Add to it that it also discriminates - you can't bring movies with you that's only available in your home country if you live in another country in another region.

Re:not illegal. Different countries have different

[zyzko]

Companies have tried that with physical goods also - when "region locking" has not been possible manufacturers have tried all kinds of soft tricks (making sure official manuals are not available in many languages to prevent "grey imports" as they call it in one package, placing selling restrictions "suggestions" to retailers to prevent selling to exporters) and not-so soft tricks (refusing to honor warranties on products not imported via "authorized" channels per serial number etc.).

Some practices have been disbanded as being illegal from consumer protection or anti-competitive point of view, some tactics can be still used - the most common being that if use do not honor manufacturers wishes regarding what you sell (you want to import a new product from another country not yet on "official" catalog for your country) or at what prices you can lose all kinds of perks associated with "official" status and suddenly there are all kinds of difficulties getting stuff for resale for you and you have to resort to using "side channels" for all of the inventory of that brand.

Nearly all "luxury brands" from toys (Lego) to fashion (nearly all high-end clothes brands, bags and jewelry, watches) and electronics (camera manufacturers were the traditional bad guys here, I do not know what is the status nowadays with Canon and Nikon, Apple is quite "sensitive" on pricing). The goal here is the same as with TV - selling "exclusive" rights means more money for everybody because margins are higher and prices can be adjusted market by market. The producer also gets control of their brand (only available from X!). They also like to pretend this is a win for consumer (scare-ads of portraying buying from non-official sources as illegal and shady - from "Official" sources you get the best service and genuine product, guaranteed!), but ultimately losers are consumers and retailers who would like to sell as many brands as possible (like Netflix, although they also have their own exclusive production now so they are also a producer...).

Typical corporatist trickery

[Argos]

Globalization is good!... Except when is bad for *our* bottom line.

Re: Netflix? Try the studios instead

[khchung]

There is no reason that Netflix can't sell their services in other markets

Except the part where Netflix didn't want to pay for global distribution rights (and do the necessary localization such as subtitles, for every regions they sell to) from the studios?

If Netflix bought and paid for only US distribution rights, and then take subscriptions around the world and stream the movie worldwide, then the studios would have a hard time finding distributors in, say, Asia. Who are willing to invest in the effort to do the localization and when a portion of the market had already seen the movie directly from US Netflix?

Why else would the studios bother to pressure Netflix, which is basically their reseller?

If, instead, we are talking about Nike shoes, and the US distributor take direct orders from, say, Japan, then that distributor would be getting pressure from Nike pretty soon to stop. Same thing.

Re:Netflix? Try the studios instead

[Dunbal]

at least from what I've seen, they aren't discounted greatly in poorer countries

You're missing the point completely. If I am accessing Netflix through a VPN I am subscribing as a US user and paying US rates, because the VPN lets Netflix think I am a US customer. It doesn't matter how much Netflix might cost in Burkina Faso. The whole point of this is not to try to save a buck or two on a monthly sub - people in the third world who can afford computers, high speed internet and a VPN service can also afford to pay US rates. It's about content, because what companies like Netflix do when they geo-block is restrict your access to "local" regional content, which means you end up with the same shitty choices you've always had from your local cable provider.

Re:DRM

[zyzko]

What, when Apple has dropped DRM from videos bought / streamed from iTunes?

Re:Netflix? Try the studios instead

[zwarte piet]

It's not about the rates silly, it's about the content. US customers get MUCH more content. Here in France many series are just not available thru netflix or have reduced option. For example dr who season 8 was available 8 months later. When I visited Holland I could just watch them already with a choice of about 6 different subtitle languages. In France I had to wait till December 2015 before it was available and then I could only choose French subtitles or no subtitles.