How Netflix wants to end geoblocking

Netflix is negotiating its content deals now in a way that will mean people outside of the US will no longer need to use VPNs to access the shows and films they want to watch.

Netflix wants to stop its customers from using virtual private networks (VPNs), but not through blocking the services; instead, it plans on signing content deals on a global basis, meaning customers anywhere in the world can get the same TV shows and films at the same time.

(Image: Screenshot by Josh Taylor/ZDNet)

In its Q4 results released on Tuesday, video-streaming giant Netflix announced aggressive plans to complete an expansion across the entire globe in just two years. First off the rank are Australia and New Zealand in March, where the company has been fairly coy in revealing the price, or exactly what shows will be on the service at launch time.

There has been fear that the content offering on the Australian service will be inferior to the US service, because much of the content has already been snapped up in exclusive agreements with Foxtel, or other local players like Quickflix or the upcoming Fairfax-Nine venture Stan.

The company is also currently refusing to confirm that Netflix-produced content House of Cards and Orange is the New Black will be available on the Australian service at launch, because of pre-existing deals signed with Foxtel prior to the company's plans to enter the Australian market.

It is believed that Netflix will have House of Cards at launch due to the rights expiring with Foxtel at the end of last year.

It is unknown exactly how many Australians are accessing the US Netflix service today via a VPN. However, a moment of panic set in amongst Australian Netflix users in early January when a minor change with Netflix to use Google DNS for the company's Android app led to some users' access to Netflix via a VPN to be disconnected.

Almost all other VPN users were still able to connect to the service, and Netflix said that its policy on VPNs has not changed. However, the company's policy specifically states that it may "terminate or restrict" access to Netflix for users in violation of the terms of use around accessing content where Netflix does not have the rights to that content.

It is an uncomfortable position for Netflix to be in -- to have customers willing to pay for the service, but film and TV studios unhappy with Netflix gaining revenue in markets where it doesn't have the rights to that content.

While the company is not talking about whether it plans to block VPN users, it is increasingly addressing the underlying problem, rather than just the symptom.

In a results call on Tuesday, Netflix CEO and co-founder Reed Hastings said that having global content deals is the goal of the company.

"[We] had the vision to start to figure out how to get global rights for some of the content by moving up the food chain," he said.

"And we have been pushing on that dimension, where we can get the global rights and we don't have to go country by country across 200 countries, but instead can provide the producer upfront money, guaranteed money, and get great access."

Netflix chief content officer Ted Sarandos said that this has already been negotiated for Gotham and the Breaking Bad spin-off Better Call Saul, which is licensed to Stan in Australia.

"Instead of having to go country by country to pile up those deals, and line up those windows, this enables us to make the service, the selection far more global for viewers around the world who increasingly know exactly when these shows began, and are hungry to see them as soon as they can," he said.

Sarandos said that global deals would increasingly become more appealing to the studios looking to "streamline" their operations.

"I think really the truth of it is it doesn't make it harder, as it makes it more attractive for studios as they streamline their operations," he said.

Netflix is also planning on releasing 320 hours of original content this year, increasing the ability for the company to offer content in all regions it operates in at once.

On the looming launch of the HBO stand-alone streaming service, Hastings said it is unlikely that HBO would want to disrupt its own cable subscription service by offering it at the same price point as Netflix, but, if it did, it would be complementary to Netflix.

"I think even if they were to match us in pricing, it's just going to be a lot of people subscribing to both. If they do great work, people will additionally subscribe to them. It's definitely not a zero-sum situation."

Hastings also welcomed US President Barack Obama's moves to uphold net neutrality, stating that the US is increasingly viewing the internet as a utility. He also said that the Federal Communications Commission's move to class broadband at a minimum 25Mbps download speed is the right decision.

"Once you've got an ultra HD video stream, that's 15Mbps for just a single stream, and you're going to want video conferencing, you're going to want online learning, you're going to want all kinds of applications, monitoring of homes," he said.

"25Mbps is kind of a baseline for the next five years, as opposed to the last five years."

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