Sony execs lobbied Netflix to stop VPN users

In emails leaked from Sony Pictures, executives have expressed their frustration at Netflix for not stopping users in Australia and elsewhere from bypassing geoblocks to access the streaming video service.
Written by Josh Taylor, Contributor

In emails leaked from Sony Pictures following a cyber attack, it has been revealed that Sony Pictures has lobbied Netflix into cancelling customer accounts associated with users accessing the service from places where the streaming video company has not yet launched.

WikiLeaks published on Thursday a trove of searchable emails and documents believed to have been obtained as a result of a massive cyber attack on the studio in 2014. More than 30,000 documents and 170,000 emails belonging to Sony Pictures were leaked as a result of the attack.

Sony has slammed the whistleblower website for publishing and indexing the "stolen employee and other private and privileged information".

The documents and emails range from financial information to negotiations between the company and its distributors -- including Village Roadshow and Foxtel in Australia -- and also revealed the company's delicate relationship with streaming video service Netflix.

In one email published by WikiLeaks on Thursday, Sony Pictures' president of distribution, Keith Le Goy, discussed meeting with Netflix in November 2013 to complain about the company not moving to stop customers in places like Australia from accessing the service by using virtual private network (VPN) services.

Le Goy said that Australia in particular -- prior to Netflix launching in Australia in March 2015 -- was a concern for the company.

"We have asked Netflix to take steps to more closely monitor circumvention websites, and to restrict methods of payment to more clearly weed out subscribers signing up for the service illegally. This is in effect another form of piracy -- one semi-sanctioned by Netflix, since they are getting paid by subscribers in territories where Netflix does not have the rights to sell our content," he said.

Australian Communications Minister Malcolm Turnbull has said that the use of VPN services is not a breach of Australian copyright law.

Le Goy said that Netflix was "heavily resistant" to enforcing stricter controls on geofiltering, stating that limiting the ways people can pay for Netflix would "present too high a bar" for legitimate subscribers.

Le Goy said studios in Australia in particular were unhappy with the situation.

"We are now hearing from clients in Australia, South Africa, and Iceland (to name a few), where significant numbers of people are able to subscribe to Netflix. Netflix of course get to collect sub revenues and inflate their sub count, which in turn boosts their stock on Wall St, so they have every motivation to continue, even if it is illegal," he said.

"This issue is almost certainly going to get more heated, since our goal and Netflix's are in direct opposition."

On Wednesday, Netflix's chief content officer Ted Sarantos said he is in frequent discussion with the studios over customers using VPNs, but said it is an issue that would reduce significantly once the company completes its global expansion at the end of 2016, and signs more global content agreements giving the company rights to films and TV shows in every region.

Well-known anti-piracy champion Village Roadshow co-chair and co-CEO Graham Burke is also mentioned in several emails, including one that boasted of receiving AU$40 million in taxpayer funding for The Great Gatsby without the taxpayer getting a payment in return.

"Given our Australian ownership is a master in getting films classified, and when you think on Gatsby we got a partner putting up 40 percent of the budget and getting zero dollars in return, it is pretty amazing," he said in the leaked email to one Sony executive.

Burke told the Sony executive that Attorney-General George Brandis had "laid down the gauntlet" on online copyright infringement in early 2014, and despite "blistering fire from the ISPs" said he was confident of a "positive outcome" for rights holders.

The government is now in the process of passing legislation that would force ISPs to block infringing websites under court order, and the Australian Communications and Media Authority (ACMA) is now assessing a three-strikes code that will see customers' details ultimately handed over to rights holders if they infringe on copyright more than three times in one year.

Burke has warned that the Australian film industry will struggle if piracy is not addressed.

"It is really expensive [to make TV shows and films], and if there aren't business models that can make that work, if we're relying on advertising-supported YouTube to support the content industry, it is going to be a very, very, very different type of content," Burke said last year.

"There will be a lot more cats on skateboards; we'll have a lot less Game of Thrones."

But in one email, Robert Kirby, the other co-CEO and co-chair of Village Roadshow, said that Australia is a very profitable place for companies to make films.

"Quite apart from all the joyous $$ incentives [in Australia], the sheer historical profitability track-record of these big films produced here 'down under' has been ('touch wood') quite quite phenomenal!"

Sony Pictures co-chairman Amy Pascal stepped down in the wake of the hacking scandal, which centred on the controversial North Korea satire The Interview.

WikiLeaks, a website known for publishing classified US government information, said it believes the documents belong in the public domain.

"This archive shows the inner workings of an influential multinational corporation," WikiLeaks founder Julian Assange said on Thursday.

"It is newsworthy and at the centre of a geo-political conflict. It belongs in the public domain. WikiLeaks will ensure it stays there."

The Hollywood studio vehemently disagreed with that argument, and said it "will continue to fight for the safety, security, and privacy of our company."

With AAP

Editorial standards