Sony Pictures has complained to Netflix over its unwillingness to stop Australians and others sneaking into the streaming giant's United States service, a leaked email has revealed.
The email, from Sony Pictures' president of distribution Keith Le Goy, describes a 2013 meeting in which he told Netflix their stance was damaging his company.
"We have asked Netflix to take steps to more closely monitor circumvention websites, and to restrict methods of payment to more clearly weed out subscribers signing up for the service illegally," Le Goy wrote.
"This is in effect another form of piracy, one semi-sanctioned by Netflix, since they are getting paid by subscribers in territories where Netflix does not have the rights to sell our content."
The contents of the email were first reported by IT news site ZDNet, after WikiLeaks published a searchable archive of documents and emails stolen in the 2014 cyber attack against Sony Pictures.
Le Goy indicated that Netflix was "resistant" to make changes given their ability to capitalise on users' geo-dodging, and said he was getting complaints from rights holders in Australia and elsewhere.
"We are now hearing from clients in Australia, South Africa, and Iceland (to name a few), where significant numbers of people are able to subscribe to Netflix. Netflix of course get to collect sub [subscription] revenues and inflate their sub count, which in turn boosts their stock on Wall St, so they have every motivation to continue," Le Goy wrote.
"This issue is almost certainly going to get more heated, since our goal and Netflix's are in direct opposition."
The revelations come as the Australian federal government considers a new anti-piracy regime that would allow rights holders to request a block on websites they believe are infringing their copyright. Some fear the laws could impact the currently legal use of virtual private networks (VPNs), which are a commonly-used tool to access content blocked in Australia.
A VPN could, for example, allow Australians to pay for and access the US-based Hulu Plus service and watch content that, in Australia, is exclusively available on Foxtel or a free-to-air station. Consumer advocacy group CHOICE says it is concerned the new laws could allow industry groups to block or hinder the use of VPNs
"We know that at least 684,000 Australian households already save money and get better deals by accessing overseas content using tools like a VPN," said CHOICE campaigns manager Erin Turner in a statement.
"Currently, [the proposed bill] is far from clear when it comes to whether using a VPN to access a legitimate service like US-based Hulu is legal or not".
Communications minister Malcolm Turnbull, who is championing the bill, says VPN use will not be threatened by industry groups or rights holders like Sony under the new laws.
"It is not the intention of the amendments to apply to VPNs," Mr Turnbull told Fairfax Media.
"It is difficult to see how VPNs, which are extensively used for a wide range of legitimate purposes, could be said to have a primary purpose of copyright infringement."
The Australian Digital Alliance has expressed concerns that while the original 2014 discussion paper on the amendments said a site would need to have the "dominant purpose" of infringing copyright in order to be blocked, the bill had changed it to say "have the primary purpose of infringing or facilitating the infringement of copyright".
"The addition of 'facilitation' has the potential to encompass sites from VPNs to cloud storage," the ADA said in a blog post.
CHOICE has called on the government to ensure the bill makes it clear that using a VPN to circumvent a geoblock is perfectly legal.
"If the government thinks there's nothing wrong with using a VPN to access competitive overseas markets, they need to make sure this law doesn't inadvertently give rights holders a free kick at blocking consumers from the websites that offer VPNs," Ms Turner said.
with Ben Grubb
