Could Blocking VPNs Eventually Be Netflix's Downfall?

Netflix's stock has dropped 13 per cent, inspiring speculations about the reasons of the sudden dive. A recent price hike for the service has been quoted as the main reason for the drop, resulting in a much slower client acquisition than has been predicted (only 1.7 million last quarter instead of 2.5 million expected subscribers).

VPN (Virtual Private Network) provider NordVPN has another theory, though.

NordVPN says based on client comments and requests, it is safe to assume that the major reason for Netflix failure to deliver expected results was its crackdown on VPNs — even though Netflix CEO Reed Hastings had previously called VPNs "a very small but quite vocal minority; really inconsequential". Was he mistaken in his assumptions about the significance of VPNs?

Since Netflix content is not uniform around the globe, it was common for subscribers to connect to American Netflix by using a VPN. Netflix has started a VPN crackdown half a year ago as it hasn't secured streaming rights for its American shows abroad.

As a result, NordVPN says it has experienced an overwhelming amount of user inquiries about its VPN services and Netflix streaming in various countries.

Here are a few trends it has noticed:

Unsubscribing from Netflix rather than quitting VPNs

People have discovered diverse benefits of VPNs, and chose their privacy over streaming. One customer is quoted as saying "Privacy first! Netflix last. I wonder how the CEO of Netflix, Reed Hastings would feel if his subscribers got to follow him everywhere he went! You can most assuredly bet that he would hire his own security team to keep his affairs private".

A return to P2P file sharing

An old and tried technique of file sharing had started to quiet down thanks to Netflix and other streaming programs that were giving people access to a wide variety of options to watch for a comparatively good price. Or rather, many Netflix and other streaming service subscribers around the world were using VPNs and proxy servers to access shows on Netflix USA that has by far the most options and were paying to do so.

Since that is not an option anymore due to Netflix crackdown on VPNs, users are reporting the trend reversal. "People are simply reverting back to P2P, reversing all the good Netflix brought," said one user on Reddit.

A move to local streaming services

For example, Australia's local Stan and Presto provider has been growing, while Australian Netflix has been losing subscribers. Hulu, Amazon Prime and multiple smaller streaming providers have also seen an increase in users in the past quarter.

"By limiting people's freedom to watch their shows Netflix seems to be hurting their own sales as well as the profit of the studios which it is trying to protect," NordVPN said in a statement. "In the meanwhile, the users are making their own decisions and choosing alternatives."

What about you guys? Have you moved away from Netflix since the crackdown on VPNs began? Tell us in the comments!

This article originally appeared on Gizmodo Australia


    It's entirely plausible, what sense is there paying for a service that has been deliberately neutered?

    Last edited 26/07/16 10:09 am

    It's easy to paint Netflix as the villain here. But they are at the whims of licensees.

    I'm sure I recall hearing Hastings say he'd like to offer uniform content globally and not have to block anyone, which would be simpler for them too. Though as long as FTA and the Murdocracy still have sew up deals with the majors, this isn't going to happen.

    It would be a pity if the likes of Netflix die as these streaming services seem to be the only way to move the dinosaurs away from their obsession with advertising driven scheduled broadcasting.

      Spot on.

      While VPN's are currently a gray area when it comes to legal issues, companies like Foxtel will continue to throw money at the problem until they can find a reason that will force Netflix to enforce geoblocking.

    I did cancel after getting booted from other countries, then they released some more originals. Couldn't be bothered torrenting them so signed up again. The originals are the best part of Netflix imho

    No. people are still accessing US Netflix with some vpns which are working fine like purevpn

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