Does Netflix’s VPN Ban Really Matter?

Film Trooper Blog - Does Netflix's Ban on VPN Matter?
Film Trooper

First off, what the hell is a VPN?

VPN is a VIRTUAL PRIVATE NETWORK.

According to Life Hacker (dot) com, they've described it as follows:

"Put simply, a Virtual Private Network, or VPN, is a group of computers (or discrete networks) networked together over a public network—namely, the internet."

"When you connect to a VPN, you usually launch a VPN client on your computer (or click a link on a special website), log in with your credentials, and your computer exchanges trusted keys with a far away server. Once both computers have verified each other as authentic, all of your internet communication is encrypted and secured from eavesdropping."

Using a VPN sounds like a pretty good deal, especially if you want protection ... and offering a VPN service is big business.
Film Trooper Blog - Does Netflix VPN Blocking Matter? Learn more at http://filmtrooper.com

Why Does Netflix Want To Ban VPN Access?

Besides using a VPN to protect your online footprint, there are Netflix subscribers who use their VPN to log into their U.S. based accounts to watch content when they are overseas.

Seems harmless ... correct?

If you have a Netflix account, which you are paying for, then you should be able to access your library of content wherever you are ... right?

This is the world we live in ... and many of us expect to consume content in this fashion.

But alas ...

Netflix must continue to FEED THE BEAST.

Film Trooper Blog - Does Netlfix's Ban on VPN Matter?

Who is the Beast?

Netflix's business model revolves around subscriptions.  Netflix is reported to have over 75 million subscribers worldwide.

What does these subscribers want?

CONTENT!

And good content at that 🙂

Netflix needs to FEED THE BEAST ... An that "beast" being their subscribers.

Although, Netflix has jumped into the original programming business, they still rely on making deals with other license holders, which are all the major Hollywood Studios.

Again, why would Netflix enact a ban on VPN access?

Here's the secret sauce of how Hollywood Studios make money selling their films.

LICENSING ...

Hollywood is NOT in the film business ... They are in the business of LICENSE EXPLOITATION.

Film distribution companies sell the licensing rights to various foreign territories at different prices.

  • $2M to Germany,
  • $1M to Korea,
  • $3M to Brazil, etc.

And this works for film financing as well ...

Film Trooper Blog - Does Netflix Ban on VPN Matter?

How to Finance Your Film with Foreign Pre-Sales

In an excerpt from the book, "How to Make and Sell Your Film Online and Survive the Hollywood Implosion While Doing It" ... here is a quick summary of how the foreign pre-sale model works when raising finances for your independent film.

Pre-Sales ...

Majority of independent film financing revolves around the world of foreign pre-sales.

This is how it works ...

  • If your film project has a well known and marketable "star" ...
  • And if your film project is a genre which matches your "star's" marketability ...
  • And if your film project has a proven director in that genre ...
  • You, as producer of the film, will attempt to raise financing by getting a number of foreign distribution companies to commit to buying the film before it's ever made ...
  • Your goal is to raise enough pre-sales to cover the cost of your production budget ...
  • This is referred to the foreign pre-sales commitment, or a form of a promise note ...
  • You, as the producer, would take this promise note and get a loan from a bank that matches that note ...
  • With the loan in your hand, you can now make your film ...
  • You can also make up any financing gaps through state tax incentive programs ...
  • Or private equity partners (the rich dentist who want to be a movie producer) ...
  • You make the film, deliver the product to the foreign buyers, pay back the loan, and collect on your producer fees ...
  • Remember those "fees"?  This is how everyone makes their money regardless if the film is successful or not.

What are those "fees"?  Pick up a copy of the book here: http://survivetheimplosion.com

Film Trooper Blog - Does Netflix Ban on VPN Matter?

What Happens When the Pre-Sale Model Implodes?

Netflix is actively moving into foreign territories.  What will the role be for the foreign film buyer if audiences can access a huge film library with a single subscription to Netflix?

This is what Netflix customers thought they were getting ...

Does a subscriber to the U.K. Netflix library get the same value as the U.S. Netflix subscriber for the same $8/month?

This is why Wired (dot) com has reported that ...

But as Netflix has aggressively pursued an ever-bigger global audience, simmering unhappiness over the ban is reaching a boil. An online petition demanding that Netflix change its policy has more than 36,000 signatures. And a new survey reveals that the crackdown may lead to piracy.

Customers want this VPN policy changed ...

If Netflix allowed this to happen, then it would implode the infrastructure of the film financing industry.

If Netflix has over 75 million subscribers, and only 36,000 people are upset ...

That's less than 1% of their customer base that might cancel their subscriptions.

Hardly a concern for Netflix.

For the time being, the old system is winning out ... Keeping the traditional film financing and selling at bay.

But ...

Audiences don't want this ...

And this is why consumers will turn to piracy, if content is not easy to access.

So, in the end ...

Does the banning of VPN access really matter to Netflix?

Film Trooper - Filmmaking Freedom for the Independent

EERRGGHH!!!

I finished my film ...

But now what?

You're in luck!

This FREE video series can help.

blue bar thin

Was this post helpful?

If you've found value in this post, please share it!

Follow Film Trooper at ...

 

mm

About 

Scott McMahon is a Fellow Film Trooper at Film Trooper, a website for helping filmmakers attain filmmaking freedom. Scott recently made a feature film for $500 with no crew called, The Cube. Want to know what equipment was used to make that film? Grab a FREE gift at www.FREEGEARGUIDE.com

  • Great article!!!

  • Jim Henson

    Scott once again and forevermore, you are the man.

  • Ben Yennie

    Overall very good, and excellent point about VPNs. However that’s a slightly outdated notion of Presales.

    These days ore often than not a sales agent issues the presale in the form of a bankable MG. Not all sales agents are bankable, and generally that MG will be 20-40% of the budget. The rest should come from equity, brand integration, tax incentives, and gap debt if neccessary. May seem like semantics, but they’re important differentiators.

    • Thanks for the input, Ben. Good point. Are most reputable sales agents independent? Or do they operate under the guise of a reputable distribution company? I’m assuming that if a sales agent is able to offer MG’s they must be doing so on behalf of a company that has the capital to do so?

      • Ben Yennie

        Just because you’re an independent company doesn’t mean you’re not reputable. A lot of these sales agents are far from household names, but they have not small bank accounts and connections to make it profitable.

        Loose and not entirely accurate rule would be that if they have an office on the 7th or 8th floor of AFM, there’s a decent chance they could be bankable. Although really, the only way to ensure ifv they’re bankable is to talk to anentertainment banker.