Netflix and the absurd realities of building a global network

At a time when we are seeing the development of a global content production and distribution industry, Netflix’s commitment to redefining television makes it clear that this is a company we’re going to be seeing and hearing a lot more of. Its announcement in January that it is expanding aggressively into 190 countries — which is pretty much the entire world minus China, North Korea, Crimea, and Syria — sent its share price up by 9 percent. It now has around 80 million subscribers worldwide. At present, Netflix is growing much faster internationally than in its home US market: it now aims to access a global broadband audience of some 540 million people, and hasn’t ruled out entering China in the medium term. The best performer in the S&P 500 last year, this is a company with enormous potential.

The company’s approach to growth is simple: Netflix is playing a long game that has included free subscription trials, allowing subscribers to share codes, as well as accessing content from other countries through proxies and VPNs, secure in the knowledge that this is the basis of sustained growth. What’s more, Netflix understand that the future of the audiovisual sector is simultaneous global premieres: it has already run into opposition from distributors over its screen-agnostic policy of broadcasting films that are still out on distribution.

So what to make of Netflix’s decision to start trying to block access to its content through VPNs and proxies? If there is one thing that anybody with a minimal understanding of the internet knows, it’s that this won’t work and will simply become another whack-a-mole game it will lose in the end. It has picked Australia for the first round in this fight, a country where more than 200,000 people use VPNs and proxies to access content from other countries. Netflix has fired its opening salvo, but this has been laughed off by the providers of such services, who have quickly come up with new solutions in a matter of hours.

Why would Netflix bother to start a war it knows it cannot win, and that it doesn’t even want to wage anyway? The company’s announcement explains everything: not only is it is not going to use any kind of technology other than old IP address lists, but it has also said that the company hopes to be able to offer all its content everywhere and that consumers are able to enjoy Netflix without a proxy: this is the company’s longer-term goal. To quote Netflix CEO and founder Reed Hastings:

“The basic solution is for Netflix to get global and have its content be the same all around the world so there’s no incentive to use a VPN”

The way it is going about achieving that goal may seem paradoxical, but it makes perfect sense. On the one hand, making life difficult for people who try to access other countries’ content means more subscribers in those countries, given that VPN access has accustomed these audiences to the idea of paying for content. Sure, a small number of subscribers are threatening to cancel their subscriptions or to use pages such as the unofficial Netflix online Global Search, or uNoGS, which provide the company’s complete catalogue, including information about dubbing and subtitles, along with the VPNs, proxies, or DNS to access each movie or program, as said, the company is playing a long game, and eventually, as we have seen before, distributors will come round to its way of thinking.

But the reality today is a hugely fragmented global market with enormous differences between each country regarding availability of content, which means Netflix will have to convince content providers it still has deals with that it is cracking down on people accessing content without paying for it. On the one hand, it is trying to reach its goals by offering a single global catalogue; on the other, it is trying to keep the distributors happy and prevent them from going elsewhere.

In other words, the whole thing is a charade: the company has no choice, it seems, but to enter a conflict it knows it will lose, just to keep up appearances. The internet is global, even if some people out there still refuse to accept it, as evidenced by these kinds of situations.

(En español, aquí)

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