It’s not Netflix’s fault…

It’s not Netflix’s fault…

… like you and I, they are just being squeezed by bigger players.

Everyone is blaming Netflix for shutting down VPN access and crimping viewers ability to get the best catalogue of programs. But it’s not their fault, a point which most people don't understand. And why should they? All you want to do is turn on the TV and have the program you want appear on the screen. But how it gets there is very complicated.

Sony makes a show. They may sell it to a US network and for a lot of viewers it becomes an ABC show. But ABC doesn't own it or make it. The merely license it for broadcast TV in the US. Making and selling shows to US networks rarely covers cost of production so Sony will probably sell the same show again to a Canadian broadcaster, one in the UK and so on around the world with local licensees doing dubbing where needed. Back in the US, Sony is also going to sell the syndication rights to local TV stations and eventually to US Netflix. Sony is also going to want to sell it to Netflix Canada and Netflix UK and Netflix Germany, all for separate fees. In some countries, the local owner for streaming might be another company none of us know about.

For a lot of shows, all these regional licenses are set and paid for while a show is in preproduction. Even if a country broadcaster hasn't yet purchased it, middlemen you've never heard of often have blanket catalog licenses, and they then proceed to go country to country reselling the local licenses. Rarely is a show ever unlicensed for a territory. There's always local or regional sales involved trying to resell it. Meanwhile, they own it. Until they sell it to someone who will put it on TV or whatever.

So now Sony has sold this show over and over and over and they've got revenue coming in and they are beholden to the show buyers to maintain the exclusivity. When people can get around that and go to Netflix US, this means Sony has a lot of trouble selling the show in these other countries. The middlemen fume. Nobody wants to bid on something that people can VPN around. So there is a huge incentive on Sony to ensure this doesn't happen.

Now that Netflix can in fact support 130 countries, Sony expects 130 licenses (well probably not one for one in reality). Netflix probably doesn't want to bid on all of those licenses and Sony is fine with that as long as Netflix prevents people from accessing it from outside the licensed areas Netflix has bought.

If you the viewer had been able to get around this, good for you. But the party is over. If Netflix doesn't do this, Sony and the other companies will not license content to them and lack of content will hurt or even kill Netflix. And Netflix would not mind selling extra subscriptions in all these new territories too. So they win when they enforce their own contracts.

Getting mad at Netflix isn't the answer. They're not the problem. Nor is Sony. The problem is the onion-layered way TV shows are sold around the world.


Credit to lasterror via @CNET

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