Netflix crackdown: and so it begins

Breathless international reports say Netflix has begun its threatened crackdown on unblockers.

It sounds like a lifeline for Sky TV, and a boost for the likes of Spark-owned Lightbox — and any others who hate to see New Zealanders use so-called "unblocking" software and services to access content around the planet, undermining the value of "exclusive" local rights to movies and TV series.

Yet uFlix, the unblocking service targeted by Netflix, tells NBR it already has a fix — and that it's working for its members.

But there could worse to come. uFlix managing director Peter Dujan's message to media has been: "The blocking is currently not aggressive and we believe for the moment they [Netflix] are only testing the new blocking methods on their customers."

uFlix, a $A2-a-month service that lets Australians access Netflix in the US or elsewhere, sent a mid-week message to its members saying:

Some users are starting to have issues with Netflix blocking non-Australian content when going through uFlix. Though it is only affecting a few users at the moment, we expect this number to grow.

When those affected uFlix users tried to access Netflix US (where more content is on offer), they got the following message:

 "You seem to be using an unblocker or proxy. Please turn off any of these services and try again."

That Netflix message is now being repeated in a thousand articles around the world (it took media a while to clock to it, in part because uFlix seems to be a tiny outfit; it has 124 followers on its Twitter account. The company wouldn't tell NBR its customer number but said it is "in the thousands").

But it looks like uFlix may have already got around the Netflix crackdown. The company's social media manager tells NBR that only 5% of customers were ever effected, and as of this morning, none were having problems. Netflix had not got directly in touch with uFlix.

Late yesterday, uFlix contacted its users saying a fix was in place, and asking for customer feedback on its effectiveness [UPDATE: Via its Twitter account, uFlix has told NBR the fix is working.] That's shades of what Netflix chief technical officer Neil Hunt said during his visit to New Zealand early last year as Netflix ANZ launched: it's very hard to crack down on unblockers. They can quickly re-configure. He likened it to a game of Wac-a-Mole. Netflix may have now developed new detection technologies, as it hinted in the blog post that set off unblocker panic. Or, like HBO Now with its earlier crackdown, it might be using a lower tech solution as a starting point, such as the payment address for a subscriber's credit card.*

The questions now:

Is Netflix using uFlix to trial new unblocking technology, that it will now deploy against unblocking services around the planet (assuming it can get it to work against uFlix).

Or will it be happy that a small provider has been made an example of? And/or that it can say to rights-holders: "Look, we gave it the college try but this experience shows it's just not technically possible. We'll continue to do our best in the future blah blah blah." It's notable that uFlix (like other unblockers also offers access to Netflix rival Hulu, which carries contemporary content from US, UK and other networks. Netflix will be keenly aware that some of its Australian-based users will cancel their subs and turn to Hulu (or Amazon Prime or local SVOD services or piracy) if it takes a hard line.

It's notable that with its quarterly result on Thursday (scroll to the second half of this story), Netflix chief executive Reed Hastings and chief financial officer David Wells use notably vaguer language than the blog post the prior week that set off the unblocker panic. 

It's notable Netflix shares [NAS:NFX] have yo-yo'd over the past fortnight or so, shooting up 10% as it announced its ambition to become a global channel but then falling steadily as it revealed its crackdown plan. It could be investors don't want to see the company at war with paying customers.

But that onscreen message, "You seem to be using an unblocker or proxy. Please turn off any of these services and try again," will send a chill down the spines of millions around the world regardless.

NBR has asked Netflix for comment but is not anticipating a detailed response [UPDATE: A Netflix spokesman said the company has no comment beyond what it stated in its blog post on the issue].

* As VPN-using NBR reporter Campbell Gibson noted after an earlier article on this topic: "When my VPN was playing up one night I got a notification from Netflix saying, 'We notice your country is changing often, is everything okay?' That would suggest Netflix can easily tell who is using a VPN with account information."

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