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Does Netflix Really Have 20 Million-Plus Users in China? Research Firm Projects Massive VPN Base

North of 30 million monthly users access Netflix from countries where it doesn’t even offer service — including 21.6 million in China — if recent estimates from a British online-research firm are to be believed.

Those users would have to tunnel through virtual private network (VPN) services, to trick Netflix into seeing them as legitimately accessing the streaming service in another country (i.e., the U.S.). Consumers use VPNs and other geo-spoofing tech to log in to Netflix either because the service is not available in their country or because content they want is not licensed for their territory. Either way, that’s a violation of the terms of Netflix’s licensing deals with studios and networks.

According to U.K.-based GlobalWebIndex, some 54 million people use VPNs to watch Netflix on a monthly basis. In addition to the 21.6 million estimate for China, Netflix streaming users in India (where Netflix also has not launched) total 6.4 million. Meanwhile, Netflix offers service in Brazil and Mexico, but VPN users in those countries total 4.9 million and 2.6 million, respectively, per GWI. The research firm extrapolated the figures based on surveys of 83,000 people in the second half of 2014.

How real are these numbers?

Netflix reps declined to comment on the GWI research study. But the estimate of 54 million VPN users seems unusually high, given that as of the end of the third quarter 2014, Netflix had a total of 53 million streaming customers worldwide (70% of which are in the U.S.).

The explanation from GWI: There’s a very high instance of users sharing account log-ins. Per its surveys, just 34% of individuals who said they have accessed Netflix in the past month actually pay for the service.

The high level of VPN usage, at least as measured by GWI, gives Netflix a big incentive not to cut off those users, said Jason Mander, the research firm’s head of trends. A recent report suggested Netflix was cracking down on illicit VPN usage, but the company has denied it’s blocking virtual private networks. “I couldn’t believe that Netflix would be doing such a thing — which, as it turns out, they weren’t,” Mander said.

According to Netflix chief product officer Neil Hunt, the company does not block VPN users outright. However, the company says it uses industry-standard methods to prevent consumers from virtually crossing borders in violation of the terms of use.

On GWI’s survey, Netflix users are defined as those who said they have used the service within the last month. The report is based on Q3 and Q4 2014 waves of online research among 83,806 adults aged 16-64 in 32 countries. Within that sample, there were 16,889 Netflix users.

According to Mander, GWI’s surveys have margins of error of less than 3.6%, depending on sample size in each country. The Netflix data is part of the standard questionnaire, to which all of the researcher’s subscribing clients have access.

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