Daniel sent us this one, and it's one of those questions where the more you think about it, the more absurd the whole situation gets. He's asking why the content industry still uses territory-by-territory licensing in an age of globalized internet, why we're all stuck with VPN workarounds just to watch shows that technically exist on the same platforms we already pay for, and whether there's any serious proposal to make this whole fragmented system a relic of history. There's a lot to unpack here.
Before we dive in, quick note — today's episode is being written by DeepSeek V four Pro. So if the script feels unusually sharp, now you know why.
I was going to say, you sound more articulate than usual.
I'll take that as a compliment even though I know it wasn't one. But seriously, this territorial licensing question is something I've been digging into, and what's striking is that the system actually makes perfect economic sense once you understand how content gets financed. The problem is that the economic sense it makes is increasingly at war with technical reality.
That's the paradox, right? Technically, Netflix could serve the exact same library to every subscriber on earth tomorrow. The infrastructure exists. The bits don't care about borders. And yet here we are, with Slovakia getting over eight thousand five hundred titles on Netflix while India gets fewer than two thousand, according to Statista's twenty twenty-five data. Same subscription price, radically different product.
That's the point where most coverage just says "licensing is complicated" and moves on. But the actual mechanism is worth understanding. Let me walk through a concrete example, because once you see it, you can't unsee it. Imagine you're a producer trying to make a mid-budget thriller — say, a forty-million-dollar film. You don't have forty million dollars. What you have is a script, maybe a lead actor attached, and a sales agent who works the international markets. That agent goes to the Berlin film market and pre-sells the German rights to a Munich distributor for four million. Then they go to a Japanese broadcaster and pre-sell those rights for three million. Brazilian rights go for two million. French rights for five million. You stack up enough of these territorial pre-sales, and suddenly you've got your forty million. The film gets made. Without those individual territory deals, you never reach the number.
The financing model literally depends on slicing the world into pieces and selling each slice separately.
And here's the part that really drives it home — those pre-sales happen before a single frame is shot. The German distributor isn't buying "a completed film that they happened to see and liked." They're buying the right to distribute something that doesn't exist yet, in a specific territory, based on the package. That's the engine that funds independent cinema and a huge chunk of studio production.
Without territorial fragmentation, the financing model collapses.
That's what the industry argues, and there's real truth to it. The IIPRD, which is the Institute for Intellectual Property Research and Development, published a legal analysis in February 2026 that put it bluntly: regional rights pre-sales fund big movie and TV productions. Without that system, a lot of films simply wouldn't get made. Or they'd be made with much smaller budgets.
I get the logic, but here's what bugs me. This model was built for a world of physical distribution — shipping film reels to theaters, pressing DVDs for different regions, broadcasting over airwaves that stopped at national borders. The internet doesn't work that way. So we're essentially using a financing model from the analog era to govern digital distribution, and the mismatch is creating all these absurd workarounds.
The workarounds are genuinely massive. SQ Magazine's VPN statistics for twenty twenty-six show that forty-two percent of VPN users worldwide are using VPNs specifically to stream geo-blocked content. That's the primary reason. The video streaming VPN market hit two point five billion dollars globally. This isn't a niche thing — it's a huge parallel economy built entirely around circumventing a system that the industry insists is necessary.
Here's what makes it even stranger. These are paying customers. These aren't pirates trying to avoid payment — they're people with active Netflix subscriptions who are technically breaking the terms of service to access content that Netflix already has the rights to show somewhere. The IIPRD analysis actually raised an interesting legal argument here, that punishing users for bypassing region locks when they're paying subscribers might itself amount to unfair commercial practices.
That's a fascinating angle, and it hasn't been tested in court in any serious way yet. But it points to a real tension. From a consumer rights perspective, if I'm paying the same subscription fee as someone in Slovakia, and the technical capacity to serve me the same library exists, what's the legal justification for giving me a dramatically worse product?
Price discrimination, basically. That's the quiet part said out loud.
It is, and price discrimination isn't inherently evil — it's how a lot of markets work. But normally there's some physical basis for it. A bottle of water costs more at the airport because the rent is higher, shipping is more expensive, whatever. With digital content, the marginal cost of serving one more stream is essentially zero regardless of where the viewer is sitting. So the price discrimination is purely contractual.
Can I push on that comparison for a second? Because the airport water bottle analogy actually helps clarify something. If I buy a bottle of water at the airport for five dollars and my friend buys the same bottle at a grocery store for two dollars, we're both getting the same physical object. The price difference reflects real cost differences in the supply chain. But with streaming, I'm in India paying the same subscription price as someone in Slovakia and getting four thousand fewer titles. It's not that I'm paying less for a smaller library — I'm paying the same for less. That's not price discrimination in the traditional sense. That's just... a worse deal.
That's a fair push. And it gets to something subtle about how territorial licensing actually works in practice. The subscription price isn't being set purely by the size of the library — it's being set by what the local market will bear, what the local competition looks like, what the local cost of acquiring rights happens to be. In some markets, Netflix might actually be paying more per-title for a smaller library because the local rights are more expensive to acquire, or because a competitor is bidding them up. The consumer sees "same price, fewer shows," but the platform sees "higher cost per subscriber in this market, so we can only afford to license this many titles.
That almost makes it worse from a consumer perspective. "We can't afford to give you the full library because we're paying too much for the scraps we do have.
It's not a great look, I'll grant you. And it creates these bizarre situations where the content that's most restricted is often the content that would benefit most from global exposure. Independent filmmakers get hit especially hard here. There was a 2025 analysis from Mark Litwak's blog — over ninety percent of independent films don't reach mainstream theaters, and the independent sector's box office share dropped to eighteen point five percent in twenty twenty-four. These filmmakers rely on split-rights deals, licensing different territories individually. They can't afford not to.
Let me give a concrete example of how this plays out for an independent filmmaker, because I think it's worth making this vivid. Imagine you've made a documentary about a specific subculture — say, competitive goat yoga in rural Oregon. It's niche, but it's got a passionate audience. You get into Sundance. You get great reviews. And then you try to get it onto streaming platforms globally. But you can't just sell it to Netflix for worldwide distribution because Netflix doesn't want to pay a global fee for a niche documentary — the audience is too scattered. So instead, you sell the North American rights to a small distributor for fifteen thousand, the UK rights to another for five thousand, the Australian rights for three thousand. Each deal is tiny, but together they recoup your production budget. If you were forced to sell globally or not at all, no single buyer would offer enough to make the film viable.
Right, and that's the cruel irony. The big studios could probably transition to global licensing more easily — we've actually seen Netflix and Sony do exactly that. In January twenty twenty-six, they announced a multi-year global licensing agreement for exclusive Pay-1 streaming rights to Sony films across all international markets. Estimated to be worth over seven billion dollars. Full global coverage expected by early twenty twenty-nine.
It's possible. The biggest players can do it. But that deal is notable precisely because it's so unusual.
It's the exception that proves the rule. Most deals remain territory-by-territory, and for independent filmmakers, the fragmentation isn't a choice — it's survival. If you can't pre-sell German rights and Japanese rights and Brazilian rights separately, you can't raise the money to make the film at all.
Which brings us to the uncomfortable question. Are we basically saying that the global internet has to remain artificially balkanized so that independent cinema can exist?
I think that's too stark, but there's a grain of truth in it. The financing ecosystem evolved around territorial exclusivity. You can't just pull that out without replacing it with something else. The question is whether that something else could actually work better.
What would "better" even look like in practice? Because I can imagine a world where all content is globally licensed, but then the pre-sale market evaporates and the only films that get funded are the ones that a handful of global platforms decide to bankroll. Is that actually an improvement?
That's the tension. Global licensing sounds great from a consumer convenience standpoint, but it concentrates gatekeeping power in a way that could be worse for cultural diversity. Right now, a German distributor can decide "we think German audiences will respond to this weird little film" and put up money for it. In a fully globalized system, that decision gets made by a much smaller number of much larger entities, and they're going to optimize for global appeal, not local taste.
Which is how you get a world where everything feels like it was made for everyone and therefore feels like it was made for no one. The algorithm-friendly, broadly palatable middle.
So the fragmentation has this accidental cultural benefit — it creates multiple independent decision points about what content gets funded. That's not nothing.
Let's talk about what's been proposed. The EU tried to tackle geo-blocking with their 2018 regulation, right?
Yes, and this is where it gets really revealing. The EU's Geo-Blocking Regulation prohibits unjustified geo-blocking in e-commerce. If you're selling physical goods or digital services like web hosting, you can't discriminate based on where the customer lives within the EU. But they explicitly exempted audiovisual services. Streaming platforms are legally allowed to maintain territorial restrictions even within the EU's own Digital Single Market.
They carved out the exact industry that causes the most consumer frustration.
They did, and the rationale is exactly what we've been discussing. The audiovisual sector argued that territorial exclusivity is fundamental to how content gets financed, and the EU bought that argument. The European Parliament's 2023 copyright reform report did recommend what they called a gradual step towards pan-European licensing, particularly for digitally born material freed from analog-era limitations. But nothing concrete has come of it in twenty twenty-four through twenty twenty-six.
That "digitally born" distinction is interesting though. Content created for streaming from day one — Netflix originals, for instance — already gets near-global simultaneous releases. Squid Game drops everywhere at once. The fragmentation mostly applies to older licensed content, stuff that was produced under the old model with pre-existing territorial deals.
Which suggests one possible path forward. As legacy contracts expire, and as more content is produced directly for global streaming platforms, the fragmentation might naturally decrease over time. Nobody's signing a twenty-year territorial deal for a Netflix original. Those deals are global from inception.
That only works for platform-owned content. The vast library of existing films and shows — that's still locked up in territorial deals that could run for decades. I mean, think about the classic film catalog. Casablanca is over eighty years old and still subject to territorial licensing. These contracts don't just expire on a convenient timeline.
Here's where the consolidation angle gets complicated. FilmTake published an analysis in April twenty twenty-six that pointed out something counterintuitive. The number of meaningful buyers in the global streaming market is not expanding — it's contracting. The proposed Paramount and Warner Brothers Discovery combination would further reduce the number of independent platforms competing for premium content. Each consolidation removes a negotiating counterparty.
Fewer buyers means less competition for rights, which could actually reduce the incentive to license broadly.
Or it could go the other way. If there are only three or four global platforms left, they might find it easier to negotiate truly global deals, like the Netflix-Sony arrangement. The direction of travel is uncertain.
It's one of those situations where the same trend could produce completely opposite outcomes depending on which dynamic dominates. If consolidation leads to fewer but bigger deals, we get more global licensing. If it leads to less competition and lower license fees, we get less content being made, which nobody wants.
There's a fun fact buried in this that I stumbled across while researching. Did you know that the whole concept of territorial copyright licensing has roots in the stationers' monopoly in sixteenth-century England? The Stationers' Company controlled who could print what, and they divided up the rights to print different books among their members. When the modern copyright system emerged with the Statute of Anne in 1710, it inherited that territorial thinking. We're literally dealing with the conceptual descendants of a system designed for hand-operated printing presses.
That's wild. So the architecture that's preventing me from watching a show on my phone in twenty twenty-six traces back to guys in wigs arguing about who gets to print pamphlets.
Path dependency is a powerful thing. Institutions and legal frameworks outlive the conditions that created them. The printing press territorial model survived the transition to film, then to television, then to home video, and now it's surviving the transition to streaming. Each time, people predicted it would collapse, and each time, the industry found ways to adapt the old model to the new technology.
What about the legal foundation? How deeply embedded is territorial copyright?
copyright system, through the Digital Millennium Copyright Act and Title 17, firmly supports the territorial model. The EU's InfoSoc Directive restricts copyright exhaustion to physical media, meaning digital distribution doesn't benefit from the first sale doctrine. There were key cases — Coditel One and Two — that denied exhaustion in audiovisual transmissions. And UsedSoft versus Oracle applied exhaustion only to software resale, not streaming.
The courts have consistently said: physical media, yes, once you buy the DVD it's yours and you can resell it. But digital streams? The rights holder retains control.
And that's not an accident or a loophole. It's a deliberate policy choice embedded in multiple legal systems. Changing it would require statutory reform, not just a clever court case.
Can you explain the exhaustion concept a bit more? Because I think it's one of those legal ideas that's actually really intuitive once you understand it, but most people have never heard the term.
Exhaustion — sometimes called the first sale doctrine — is the idea that once a rights holder sells a copy of a work, their control over that specific copy is "exhausted." You buy a book, you can resell it, lend it, give it away. The publisher can't stop you. That's exhaustion. It applies to physical books, DVDs, CDs. But courts have consistently ruled that digital transmission doesn't involve a "sale" of a "copy" in the same way. When you stream a movie, you're not buying a copy — you're accessing a performance. So the exhaustion doctrine never kicks in, and the rights holder retains full control over where and how that stream can be accessed.
Which is how they can legally say "you can watch this in Germany but not in France" even though it's the exact same stream hitting the exact same servers.
The legal fiction is that streaming isn't a sale of goods — it's a licensed performance. And performances have always been territorial. A theater company touring a play can perform in London and not in Paris. The law treats digital streaming as more like a theater tour than a DVD sale.
Which brings us to the VPN arms race. The industry knows people are circumventing the restrictions, and they've been trying to block it for years. Netflix's big crackdown started in twenty sixteen with IP-based blocking.
Users immediately found workarounds. Obfuscated servers, residential IPs, dedicated streaming VPNs. It's a classic cat-and-mouse game, except the mice are paying customers and the cat is spending resources to make their experience worse.
Security dot org's twenty twenty-five report found that twenty-three percent of American VPN users cite accessing region-locked streaming as their main reason. That's nearly a quarter of the VPN market in the U.And in markets with strict geo-locks, over thirty-six percent of VPN traffic is dedicated to bypassing these barriers.
Those numbers are astonishing when you think about it. More than a third of VPN traffic in some regions exists solely to circumvent a contractual restriction that has no technical justification. It's pure deadweight loss from an economic perspective.
There's also a cultural dimension that doesn't get talked about enough. South Korea, for example, controls audiovisual material through the Broadcasting Act and the IPTV Act, imposing local quotas and licensing requirements. The IIPRD analysis notes that Korea perceives streaming in a cultural context, with obligatory localization, interface requirements in the Korean language, and approval processes for foreign content.
That's not unique to Korea. Many countries have cultural protection policies embedded in their broadcasting and streaming regulations. France has quotas for European and French-language content. Canada has CanCon requirements. These aren't just commercial licensing issues — they're cultural sovereignty issues.
This is where the global licensing idea runs into a wall that isn't even about money. Even if you could solve the financing problem, you'd still have national governments saying "no, we want control over what content enters our cultural space." France isn't going to give up its right to mandate that a certain percentage of content on French screens is French-language. That's a non-negotiable political position.
Which makes any proposal for a unified global licensing system politically fraught. Even if the commercial rights could be sorted out, you'd still have national regulators insisting on local control over what content enters their markets.
How does that actually work in practice, though? If Netflix operates in France, they have to comply with French content quotas. Does that mean they're required to fund French productions, or just carry them?
It's a mix. The European VOD Coalition reported that video-on-demand services invested approximately five point five billion euros in European content in twenty twenty-four. That includes both direct production investment and licensing fees for existing European content. In France specifically, a percentage of streaming revenue has to be reinvested into French and European productions. So it's not just "you must carry this content" — it's "you must help fund the creation of this content." Industry groups strongly oppose changes that could disrupt these investment flows. They argue that territorial licensing is what makes those investments possible.
We've got a system that everyone agrees is absurd from a consumer perspective, but that nobody has a clear plan to replace. The regulatory consensus, according to the IIPRD analysis, is moving toward what they call a middle ground — distinguishing legitimate territorial protection from abusive behavior — rather than abolition.
I think that's probably the realistic near-term path. Not eliminating territorial licensing, but drawing lines around it. Requiring transparency about what's available where. Making it easier for consumers to understand and navigate the restrictions. Possibly mandating cross-border portability within economic zones like the EU, even if full catalog parity isn't achieved.
The EU has actually done some of that already with the portability regulation. If you're an EU resident traveling within the EU, you can access your home country's library. That's a step. But it doesn't solve the fundamental problem that your home country's library might be dramatically smaller than someone else's.
Right, portability is not the same as parity. It means I can watch my limited Indian Netflix catalog while vacationing in Slovakia, but I still can't access the eight thousand titles that Slovakians get. It solves the travel inconvenience but not the structural inequality.
There's one more angle I want to explore before we move to practical takeaways. The VPN workaround creates this weird moral gray zone. Technically it's a breach of the terms of service. But practically, nobody's been sued for it. The platforms mostly just try to block it, and if they can't block you, they look the other way.
Because suing your paying customers is terrible business. And there's an argument that the platforms don't actually want to eliminate VPN usage entirely. If they truly wanted to, they could probably be much more aggressive about it. The cat-and-mouse game serves a purpose — it lets the platforms maintain the territorial licensing system for their contractual obligations while quietly tolerating a certain amount of circumvention by their most engaged users.
They can tell rights holders "we're doing everything we can to enforce territorial restrictions" while not actually making the experience so hostile that users cancel their subscriptions.
That gets to something I think is underappreciated. The current system isn't a bug from the platforms' perspective — it's a feature. They get to charge different prices in different markets, maintain relationships with local rights holders, comply with local content regulations, and still capture the revenue from VPN-using power users who would otherwise pirate or cancel. It's messy, but it works for them.
But I wonder how long "for now" lasts. The Netflix-Sony global deal suggests the biggest players are already thinking about a post-territorial world. And as more content becomes platform-original rather than licensed, the legacy contracts that enforce fragmentation will represent a shrinking share of the total catalog.
I think there's a tipping point somewhere out there. Once platform-original content crosses some threshold — say, sixty or seventy percent of what the average user actually watches — the licensed legacy catalog becomes less of a competitive differentiator. At that point, the platforms have less incentive to maintain the territorial system for the remaining licensed content. They might just let those deals lapse and not renew them on a territorial basis.
Which would be a slow-motion unraveling rather than a dramatic policy change. No big announcement, just... gradually, the catalog differences between countries shrink until they're negligible.
That's probably the most realistic scenario. Death by a thousand expired contracts.
Now: Hilbert's daily fun fact.
The average cumulus cloud weighs about one point one million pounds — roughly the same as one hundred elephants floating above your head.
I'm sorry, what? A hundred elephants?
A hundred elephants. The water droplets in a typical fair-weather cumulus cloud have a combined mass of about five hundred metric tons. That's one point one million pounds. It stays up there because the droplets are tiny — microscopic — and spread out over an enormous volume. The updrafts that created the cloud keep it suspended. But the mass is real.
When I look up at a fluffy white cloud on a nice day, I'm looking at the aerial equivalent of a hundred elephants just...
Physics is deeply unsettling when you think about it for more than five seconds.
I'm going to be thinking about that every time I see a cloud now. Thanks for that.
You're welcome.
What can listeners actually do with all this? Let's get practical. First, understand what you're dealing with. The territorial restrictions aren't random technical glitches — they're the visible edge of a financing system that predates the internet. Knowing that doesn't make them less annoying, but it helps you understand why they're so stubbornly persistent.
Second, if you're going to use a VPN for streaming, know the landscape. Streaming platforms are getting better at detecting VPN traffic. Residential IPs and dedicated streaming servers are more reliable than generic VPN endpoints. But also recognize that you're in a gray area — not illegal in most jurisdictions, but definitely against the terms of service. And the platforms can, if they choose, terminate your account for it. They almost never do, but the risk is non-zero.
Third, and this is more of a consumer advocacy point, the more people complain about catalog disparities through official channels, the more pressure builds. The consumer rights argument that geo-blocking may constitute unfair commercial practices hasn't been fully litigated yet. Consumer groups in the U.and Europe have registered complaints. Adding your voice to that matters. When platforms hear from enough paying customers that the territorial restrictions are a source of genuine frustration, it shifts the internal calculus.
Fourth, for independent filmmakers and content creators listening — the system is evolving. The split-rights model isn't going away tomorrow, but the Netflix-Sony deal shows that global licensing is becoming viable at the high end. As the buyer pool consolidates, the negotiating dynamics shift. If you're producing content, think about whether global-first distribution might actually serve you better than territory-by-territory pre-sales, especially for digitally native content. The old wisdom that you have to slice up the world to fund your project isn't necessarily true for every project anymore.
The broader question Daniel raised was whether any proposals exist to make this system a relic of history. The honest answer is: not serious ones, not yet. The regulatory conversation is about reform and moderation, not abolition. The financing ecosystem is too dependent on territorial exclusivity to just switch it off.
The cracks are real. The Netflix-Sony deal. The EU's gradual steps toward pan-European licensing. The growing consumer frustration that's driving forty-two percent of VPN usage. The increasing share of content that's born digital and globally distributed from day one. These are all forces pushing in the same direction.
My bet is that in ten years, the territorial fragmentation will look very different — not gone, but significantly reduced for mainstream content. The legacy library stuff will remain fragmented for much longer, simply because unwinding those contracts is a legal nightmare. But for new content, the economics are shifting toward global deals.
When there are only a handful of global buyers, negotiating a single global license becomes simpler than managing fifty separate territorial deals.
Whether that's good for the broader ecosystem is a separate question. Fewer buyers means less competition for content, which could mean lower licensing fees, which could mean lower production budgets, which could mean fewer ambitious projects getting greenlit. The cure might have its own side effects. And we haven't even touched on what happens to local film industries that currently depend on territorial pre-sales to exist at all.
Which is why I don't think anyone has the full answer yet. The territorial licensing system is deeply flawed from a consumer perspective, but it's connected to everything — financing, cultural policy, competition dynamics, copyright law. You can't just cut one thread without the whole fabric shifting. And some of those threads are supporting things we might actually want to preserve, like cultural diversity in filmmaking and the ability of smaller markets to fund their own stories.
That's a good place to leave it. The system is absurd, but it's absurd for reasons that are hard to solve. Thanks to our producer Hilbert Flumingtop for the daily fun fact, which I am absolutely not going to think about the next time I look up at the sky. A hundred elephants. hovering up there.
This has been My Weird Prompts. You can find every episode at myweirdprompts.
If you've got a question that's been bugging you, send it our way. Daniel did, and look what happened. We spent an entire episode talking about why you can't watch the shows you're paying for. Send us your questions. We'll do our best to make sense of whatever weird corner of the world is bothering you.
