According to Torrentfreak and CNET, the Australian rights holders of US-produced shows and movies are trying to put a stop to the use of
Banning all VPN access is, however, totally impossible. Netflix could, if it wanted, stop people connecting from IPs known to be associated with VPN services. Hulu has recently done something similar, in a move that apparently affects US users of its service too. Additionally, cutting out VPN use will also block US subscribers who travel for work and like to watch their local version of Netflix. While this might not be strictly allowed, it's a harmless process that's totally different to a resident of a non-US region accessing the US service.
More than that though, there is no way to prevent people from accessing their own server on US soil and using that as a VPN. Shared VPS (virtual private server) boxes are incredibly cheap these days, and allow a vaguely competent user to build their own VPN with free software. This would allow you to freely access any geo-locked US service, as if you were in the States yourself. Of course, you'd need to be pretty dedicated to the cause of streaming TV and movies to bother with this, but there are plenty who are, and many who would do it just for the challenge.
So, what exactly is the problem here, given that anyone accessing the service has to be a paying member of Netflix? Well, it comes down to the complicated way that rights are handled for TV and Movies. Firstly, these are negotiated per-country with distributors. So Netflix might have a deal to show all films from studio X in the US, but only for residents of the US. That might be to reduce the licensing cost, or it might be because studio X only owns the rights to that library in the US, while some or all of it might be handled by studio Y outside of the United States. To some extent too, the Australian companies that own the rights to sell US content are cross, because they aren't making money when people watch these shows and movies, which they would if Netflix ran a local service for Australians.
The BBC has also weighed in on this recently too, with its commercial arm - BBC Worldwide - claiming that ISPs should block users who use a VPN and download a lot of data through it. The firm has a vested interest of course, as it sells access to the international version of iPlayer to non-UK residents, including Australians - although not the US for some reason. But asking ISPs to block heavy VPN users is absurd, as many use these services for perfectly legal pursuits, like work where they are used to keep corporate networks secure, by only letting staff access services when connected directly to the network, rather than hosting things online.
Netflix does also have something of a reputation for being especially easy to spoof into believing that you are in a different country. It's easy for a UK resident to watch US library content by simply using a browser plugin that makes them appear to be in the US. From then on, you can watch what you want with no problems. That's a loophole that also applies to
Ultimately, TV and Movie studios need to remember something. Netflix customers are paying for the service. Every Netflix user, whether they are connecting through a VPN or not has made the conscious decision to pay for entertainment rather than to download it from a torrent site. If rights-holders force Netflix to shut the door on these subscribers then it will simply force them to get the shows and movies they love in another way, with zero potential profit for anyone.
UPDATE: After I published this article VPN firm Golden Frog got in touch with a quote from its President Sunday Yokubaitis which pretty much agreed that VPN users are, for the most part, using these services to protect their privacy above all else. He said: "When accusations are made against VPN users without any basis, this only discourages the use of VPN services and it puts people at increased risk. In an online world that is increasingly less private and secure, we’d hope the organizations would encourage privacy tools and stop inaccurately stereotyping VPN users. It is privacy - not piracy - that drives the popularity of VPNs. The perception that an internet user that desires privacy and security is a pirate needs to be changed."
