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.

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.

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 ...

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

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?