Netflix Cracks Down on Canadian Proxy Access to U.S. Service

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Courtesy of Netflix

The clampdown on Canadians using a VPN to fool the online video giant comes as the 'House of Cards' streamer expands into 130 markets worldwide.

Netflix is making good on its threat to crack down on Canadian proxy users disguising their location to access the U.S. streaming service.

And that's impacted around 2 million Canadians, or just under half of an estimated 4.5 million subscribers of Netflix Canada, who use virtual private networks, or VPNs, to stream movies and TV shows available only on Netflix stateside. The subscription-based VPN services hide a Canadian user's internet address so it appears they are physically located stateside., which launched in Toronto and is based in Barbados, and other for-pay proxy access services are now busy dealing with complaints from customers no longer able to hop a virtual cross-border wall to stream library content on the U.S. Netflix service. did not respond to a request for comment on the VPN disruptions to respect content rights.

David Asch, senior vp and general manager at Shomi, a Canadian streaming service that buys up Hollywood content to battle Netflix Canada, welcomed its U.S. rival moving against VPN service providers. "It is encouraging to see increased respect for content licensing," Asch told The Hollywood Reporter.

"Licensing protection allows us to create and program an SVOD service that brings diversity to the market and offers Canadians the titles they want to see, without an additional subscription to a VPN, proxy, or ‘unblocker’ service," he added. Ariel Thomas, an Ottawa-based copyright lawyer with the legal firm Fasken Martineau, said Canadian copyright law is unlikely to make local VPN users criminally liable for accessing the U.S. Netflix service without authorization.

But VPN pirates could face a lawsuit by copyright owners. "It’s not a crime, but it could result in a court requiring the border-hopper to pay civil damages," Thomas said.

Netflix offered no comment on its clampdown beyond a blog post in January where the U.S.-based streamer warned it would use unspecified high-tech tools to thwart VPNs and close other “geo-blocking” loopholes. But Netflix CEO Reed Hastings on Monday during an analyst call dismissed the VPN blockade as a side issue having little impact on company revenues.

“It’s a very small, but quite vocal minority. So it’s really inconsequential to us, as you could see in the Q1 results,” Hastings said of VPN piracy. Brahm Eiley, president of Convergence Consulting in Toronto, estimates the Canadian VPN crackdown will benefit Canadian broadcasters and streamers like Shomi that buy up local rights to movie and TV shows that appear on the U.S. Netflix service.

And he didn't think many Canadians, who care little about geographic licensing deals for Netflix content, will end their Netflix Canada subscriptions to protest the VPN piracy blitz. "The vast majority of current Canadian Netflix subscribers will stick with Netflix, and Canadian subscriber growth in 2016 will still be strong," Eiley said. 

The Netflix service in the U.S. offers far more movies and TV shows than the Canadian version, even though Netflix Canada occasionally gets the streaming rights to Hollywood fare before the U.S. market, as with the Star Wars: The Force Awakens movie.

Canadian broadcasters have long urged Netflix to block its subscribers from accessing the U.S. service with a VPN. Mary Ann Turcke, president of Bell Media, Canada's biggest media company, in June 2015 told a Toronto telecom conference that her own 15 year-old daughter was using a VPN to stream the U.S. Netflix service.

"We have to get engaged and tell people they are stealing,” Turcke said at the time. The frustration of local broadcasters has only grown as Netflix, which launched in Canada in late 2011, has only moved against VPN pirates after expanding into over 130 countries, with different content for each market based on licensing agreements.

Bell Media declined comment on the VPN clampdown. Hollywood studios have also joined Canadian broadcasters in urging Netflix to target back-door access to its U.S. service.

"The studios have been after them (Netflix) hard for Warner Bros. to make a deal for streaming one of their programs in Canada, on Crave or Shomi or even on network sites, when Netflix lets it leak over the border from the U.S.," said one broadcaster on background. Warner Bros. had no comment on Netflix's Canadian border crackdown.

To stop unauthorized access to its U.S. service, Netflix is taking advantage of Canadians that use for-pay VPN services not being as anonymous as they might have assumed. It turns out geo-blockers leave a data trail Netflix apparently employs to end the practice.

"They (Netflix) are getting more intelligent with detecting, and making decisions on information they get about the IP Addresses that requests are coming from," said one broadcaster privately.