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As Netflix goes global, it cracks down on location-faking tools

Netflix announced this week that it will block VPN proxies, tools used to watch movies and TV shows available in other countries. For now, Netflix will continue to license different content for different countries, but it's working toward making content available everywhere.

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Netflix CEO Reed Hastings delivers a keynote address at the CES 2016 technology conference in Las Vegas on January 6, 2016.

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If you live in the United States, the catalog of movies and TV shows you can stream from Netflix is pretty robust. If you live in Canada, the selection is more anemic. If you live in Japan, you won’t be able to stream most American TV shows, but you’ll have a wider selection of Hollywood movies.

Because the Netflix catalog is so fragmented in different parts of the world, lots of people have ended up using Virtual Private Network proxies, or VPNs, as a way of streaming other countries’ content.

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A proxy works by bouncing your Internet traffic through a server located in a different part of the world, tricking Netflix into thinking that you’re actually located in, say, France, where "The Dark Knight Rises" is available to streaming.

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Until now, Netflix has turned a blind eye to this practice. But this week, the company announced in a blog post that it will begin blocking proxies.

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

Netflix has to negotiate deals with TV networks and studios to be able to include content in its catalog, and generally those deals only cover certain geographic areas. A studio might be fine with allowing a movie to be streamed in certain countries, but might forbid Netflix from making it available in others where it expects to make money from DVD and Blu-ray sales. Now that Netflix is available in almost every country (except for China, North Korea, Crimea, and Syria) those content negotiations are more complex than ever.

But Netflix isn’t just cracking down on VPN proxies – it’s also looking ahead to a future in which its catalog won’t vary from country to country.

“We are making progress in licensing content across the world,” Mr. Fullagar wrote in the blog post, adding that in the meantime, Netflix would respect “the historic practice of licensing content by geographic territories.” In other words, the company is willing to continue negotiating content deals region by region for now, but in the future TV and movies will be available to stream worldwide.

Netflix’s new, nearly-worldwide geographic reach may give it an edge in negotiations with networks. Content creators are compensated every time their videos are streamed on Netflix, and studios stand to make a lot of money by having their content available around the world. Netflix may push harder for global licensing deals going forward, arguing that it’s now essentially a worldwide TV network. And in the meantime, Netflix’s own original series such as "House of Cards," "Narcos," and "Orange is the New Black" (which the company can choose to stream wherever it wants) may find new audiences in countries where the third-party catalog is meager.