I reported on the pressure Netflix was under to do this last year, but at that point it was merely conjecture, now it has been officially included in the conditions of service which was pointed out by Reddit user CrypticCraig.
So what exactly is the problem here? Well, I don't really think Netflix cares if once in a while a US Netflix user connects to a UK-based VPN to watch an episode of Doctor Who, or a movie that happens to be available in Britain, but not America. I'm going to stick my neck out and say that UK users watching Friends on US Netflix isn't a major concern for anyone either. But users jumping on VPNs is hardly an epidemic anyway, it's a minority pursuit.
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Nor, I suspect is Netflix worried about people who subscribe from countries where its service isn't available. This had been a problem for Australian users who have, for a long time, been using VPNs to stream US Netflix because the service wasn't available in their country. Netflix will be launching there soon, and Reed Hastings gave a good interview to Gizmodo Australia about his hopes that one day all content will be global, and geo-restrictions will be a thing of the past.
Netflix might be making noises about banning VPN users, but it doesn't really care - image credit:... [+]
The terms and conditions are actually very clear, for which Netflix should be applauded. In summary it says that you will see different content when you are not in your home country, Netflix reserves the right to use "technologies" to determine where your account is held, and perhaps if you are connecting via a known VPN provider. Later on things get a little bit more dire, "we may terminate or restrict your use of our service, without compensation or notice if you are, or if we reasonably believe that you are (i) in violation of any of these Terms of Use or (ii) engaged in illegal or improper use of the service."
That's right, Netflix can cut your account off if it detects that you're being naughty.
But will it do that? I really doubt it. You'd have to be pretty incompetent at running a business to willfully cut off paying customers who are operating in a somewhat grey area of the law. This whole thing reads very much like lawyers had a team-building day where they went for a hike somewhere, played a couple of trust exercise games and then bulletpointed a list of new things to bully people about.
I suspect even the TV and movie studios don't care about this sort of thing either. Let's be honest, people bypassing geo-restrictions to watch Friends is an order of magnitude more preferable than them jumping on a torrent site and downloading every episode in HD without paying a penny.
But even ignoring all of that, there's another issue here - legitimate VPN use. The Reddit user asked a Netflix support agent to confirm the situation, and the reply he got read: "all I can tell you is Netflix opposes the use of VPNs".
Again, I think this is somewhat alarmist in tone, in fact I'm quite sure Netflix doesn't really mind VPN use, but it is trying to keep Hollywood's attack lawyers happy by at least taking the right steps to make it appear that it may take action.
So what are the arguments for using a VPN anyway? Well, CrypticCraig explains best when he admits to using Hola to get around his ISPs slowdowns. His speed testing of Netflix show that without using the Hola VPN he's only able to stream Netflix on very low quality, when he uses Hola, he is able to get 3000kbps (the maximum for in-browser streaming).
I approached Sunday Yokubaitis, president of Golden Frog (which operates VyprVPN), for his take on this, and he also raised the more important issue of connection security.
“It’s perfectly legal to watch Netflix over a VPN service. In fact, many VyprVPN customers around the world connect to an in-country server location to get past an ISP throttling their streaming traffic. These VPN users aren’t accessing any geo-restricted content, they are simply being proactive in taking steps to optimize their Internet experience.
To date, we have not heard of any instances of VyprVPN users having any issues with their Netflix account. However, when I read reports about Netflix taking a closer look at VPN users, it concerns me because VPNs are an important encryption tool for online privacy. Any time VPN use is discouraged, even subtly, it carries cybersecurity risks.
For example, If I’m travelling and planning to watch a Netflix movie in my hotel room, it would be very foolish of me to turn off my VPN and open myself up to the dangers of hotel Wi-Fi.”
He shares a link that's very similar to the story of CrypticCraig, where a man called Colin Nederkoorn was suffering with Verizon's peering with Netflix being substandard. This caused him to run a speed test via VyprVPN and determine that his connection was capable of delivering full speed, but only if he tunneled through the VPN.
And yes, there is a security issue. I try to use a VPN if I'm using any public Wi-Fi at all, because to allow your machine on an open hotspot with little or no security is really asking for trouble. Were Netflix to somehow ban all VPN use then that would put a stop to this, and as Yokubaitis says, that's just bad practice.
It's important not to panic about any of this. After all, what Netflix says in public is a message designed to keep everyone happy, especially those lawyers in Hollywood. Ultimately, if you're paying for Netflix then you're doing nothing wrong using a VPN to both secure and guarantee your connection speed.
