Netflix success depends on blocking proxies: analyst - TechCentral

Netflix success depends on blocking proxies: analyst

Steven Ambrose

Steven Ambrose

US video streaming service Netflix has to move to block subscribers from using proxy technologies to access its service if it wants its global launch to be a success.

This is the view of Steven Ambrose, CEO of local technology research firm Strategy Worx.

Netflix has announced plans to block proxies and unblockers in the coming weeks after the video service launched in South Africa earlier this month as part of a global launch in 130 countries.

Proxies and unblockers help users “fool” services like Netflix into thinking that they’re using the Internet from locations within countries such as the US or the UK.

For years, this has allowed some users in countries like South Africa — where Netflix was previously unavailable — to access the video service. The activity, though, is expected to continue as Netflix’s full range of television shows and films are not available in all parts of the world owing to content rights.

“There’s a lot of pressure on Netflix to clean this up, especially now,” Ambrose said of the company’s plan to block proxies and unblockers.

“As much as Netflix has got the power to go global and to deliver content everywhere, by the same token the studios now are in a position to say we’re happy for you to go global but please will you respect our rights globally, otherwise we’re in trouble with all the various people we signed deals with,” Ambrose explained.

Ambrose explained that Netflix has to strike a balancing act between expanding its content to all regions but respecting its partners in order to stay in business.

“If they disrespect the entire industry, they could go out of business tomorrow,” Ambrose said of Netflix.

The move by Netflix to announce plans to block proxies and unblockers has sparked a reaction from the likes of TorGuard VPN, a popular anonymous proxy service.

“For those of you who rely on TorGuard VPN service to unblock Netflix content unrestricted, you don’t have to worry,” TorGuard wrote in a blog post.

“Netflix will be pushing this plan forward soon, and when that happens, TorGuard will immediately deploy new server IP (Internet protocol) addresses so users can still bypass blocks,” the VPN service provider wrote.

Ambrose explained that it could become a cat and mouse game between Netflix and proxies like TorGuard, which may see technology improvements as well.

“Technology is going to advance to the point where they’ll hide even more effectively from Netflix and it will open up again,” said Ambrose.

In the meantime, Netflix said in its blog post last week that these technologies continue “to evolve and we are evolving with it”.

“That means in coming weeks, those using proxies and unblockers will only be able to access the service in the country where they currently are,” wrote David Fullagar, who is the vice president of content delivery architecture at Netflix.

“We are confident this change won’t impact members not using proxies,” Fullagar wrote.  — Fin24

15 Comments

  1. It’s not often that I disagree with Steven, but this is one of those times. Netflix’s success in the global stage is dependent on it offering a similar calibre of service everywhere. As long as it isn’t, acquisition of new international subscribers will be difficult.

    The content owners can huff and puff as much as they want, the fact is that Netflix is a big, big customer. None of the studios can afford to alienate them. A boycott by Netflix of all of a studio’s offering will hurt the studios more than a selective withholding of titles will impact Netflix.

    Content owners need to accept that the the decision of many international subscribers isn’t between US Netflix and a local version – it is between US Netflix and piracy. My advice to content owners – you’re being paid for content, be happy because the alternative isn’t pleasant.

  2. Greg Mahlknecht on

    It’s not as simple as that – the content providers will have existing and long-standing contracts with other broadcasters/streamers all over the world. They need to enforce regional licensing to uphold those contracts. They can’t sell to company X and then be complicit in offering the same content via a VPN from themselves.

    I’m not saying it’s right, it’s just how it is. Regional licensing will go, but we’re looking at a decade+ before it works its way out of the system. There’s a lot to change here.

  3. I’m saying that those geographical regional licenses are anachronisms. Content owners can fight for them as much as they like, but they’re destined to fail. Content providers should be exiting those agreements, or at the very least grandfathering the exclusivity clauses. It is simply bad business to continue to attempt to enforce regional licensing. In a hyper-connected world you simply can’t succeed by balkanising content. A decade to sunset on regional licenses is simply too long.

    If you don’t make the content that people want available for a reasonable fee, they will find a way to get it – legally or illegally.

    The studios really need to learn from the music industry. The biggest reduction in music piracy didn’t come from DCMA laws and piracy prosecutions, it came because legal download and streaming services offered a more convenient solution than piracy.

  4. Greg Mahlknecht on

    Couldn’t agree more – I’m not defending regional licensing, it’s just there’s a reason it is how it is, and it’ll take a while to work its way out of the system.

  5. The content owners don’t have such a simple decision.

    They can’t just globally licence their content for streaming at the drop of a hat.

    – If a local network (like DSTV) has purchased the regional rights (incl streaming) then they cannot just sell it again to Netflix
    – Even House of Cards (which Netflix owns) has been sold to DSTV cannot be streamed locally by Netflix..
    – The networks still have muscle. DSTV have long term contracts with the content providers. The content is always bundled. They buy the hit shows along with the mediocre shows and they insist on exclusivity.

    Netflix aren’t going to pay for the SA rights what DSTV are willing to pay.
    So the Content Providers sell to DSTV

    In the longer term as Netflix starts giving the Content Providers more and more money (as their market increases), Netflix will have more and more leverage to negotiate

    Eventually we will get global licensing. Wont happen in 5 years probably 10

  6. It is a flawed argument. The content owners simply aren’t able to control the distribution via a regional system. The old system of selling a bunch of shows with exclusivity in a territory is archaic. It doesn’t work when the world is connected.

    Your example of House of Cards is a good example. If I wanted to watch HoC season 1 tonight, there is nowhere to download it or stream it in South Africa. Multichoice have streaming rights… but to stream it I have to have a DStv subscription of R750 per month (assuming it is available). But I can easily watch it on Netflix from the US or UK. If Netflix was to block access to those libraries, my response would be to find where I could get it… and that would be a pirated version that nobody got paid for.

    It’s no good hiding behind the adage that “that’s how it has always been done that way”, the world has changed and content owners cannot expect a window of 5 – 10 years to resolve the legal quandary that their greedy business models has got them into.

    Dstv might be a big customer with a thirty year history with the studios. Watch how much loyalty that buys them when global players like Netflix, Google, Amazon and Apple start flexing their muscles.

  7. Vusumuzi Sibiya on

    >>Dstv might be a big customer with a thirty year history with the studios. Watch how much loyalty that buys them when global players like Netflix, Google, Amazon and Apple start flexing their muscles.

    The loyalty that they probably could perhaps count on is from their customer base; but for that to work for them, they’ll need to change that attitude of taking customers for granted and begin to offer real choice asap.

    I just don’t get why they wouldn’t have Showmax, Boxoffice and catch-up working as one unit towards the same goal; and then un-bundle those archaic mentality bouquet offerings…

    …Eish, they’ll probably wake-up when it’s too late and also run to uncle Sam for some protection measures.

  8. Customer loyalty? To Multichoice? hmmm.

    I don’t think that there is one person that I know (anecdotal, I know) that hasn’t mentioned their desire to cancel their subscription. SuperSport is Multichoice’s only differentiation point at present, and as sports administrators figure out the value of separate streaming and broadcast rights, that differentiation will end. Multichoice continues to invest in acquisition marketing when they should be consolidating, improving services, offering innovative packages, and basically acting less arrogantly in order to RETAIN some of the customers that they already have.

  9. Vusumuzi Sibiya on

    >>SuperSport is Multichoice’s only differentiation point at present,

    I would say, key differentiation point but it’s certainly not the only one – they should’ve long explored venturing into the mass market and are only now beginning to have some properties that can compete with the likes of a Generations on SABC1.

    In the global content space – being niche, is what actually brings in the numbers and they can capitalize on the niche they dominate which is Africa – to do that; customer loyalty will definitely be key.

    They do have enough time, if they act asap in;

    >>consolidating, improving services, offering innovative packages, and basically acting less arrogantly in order to RETAIN some of the customers that they already have.

  10. You’re right. Multichoice do have some production assets and afrikaans assets. Those cannot be ignored.

  11. The Emperor has no clothes... on

    Agree 100%. After several issues with my account, poor service, and several billing/service errors, not to mention the programming & incessant repeats, I cancelled DSTV after approx 20 years (more if you count MNET). They didn’t make a single attempt to try to get my business back or even contact me to try to find out why a long term loyal customer just cancelled after 2 decades. Worse CRM than the MNOs and arrogance unprecedented in SA.

  12. Greg Mahlknecht on

    >It’s not often that I disagree with Steven

    He’s using his patented Ambrose(R) Death Stare in the picture above .. it might not be a good idea to disagree with him.

    Well, either that or he left his glasses at home and he’s squinting.

  13. Netflix had the best free marketing campaign ever. They allowed the unblocking services to do the free marketing for them. This helped them gain worldwide recognition. You wouldn’t buy a coke if you never tasted it correct? Now that most people have heard or used Netflix and they have conquered the globe except for China they say thank you very much for the free marketing now we blocking you. Well done Netflix , I wouldn’t be surprised if the content providers also turned a blind eye to regional restrictions either. In the end of the day local broadcasters will lose rights to Netflix . China was the only country that saw this coming.