That's almost certainly a requirement from the crusty content owners, not Netflix. They get the final say for the broadcast rights.

Because the person who owns the content sold exclusive distribution rights in that country to another distributor.

Yep. Paramount announced Paramount Plus in New Zealand and Australia. Then the failing pay TV monopoly paid up a bunch of money to make the content exclusive to their terrible 720p streaming service. No Paramount Plus for New Zealand!

To add insult to injury, they don't even bother showing the movies and shows that they lock up this way. It's just about exercising monopoly power.

Ok, but why can't netflix apply the geo restrictions based on the payment and not the incoming IP address? I'd prefer to use a VPN for all of my traffic, and I'll gladly stay region locked to the region I reside in. But forcing me to go outside the VPN is something I'd rather not do.

True, that's a good point. Has it been confirmed that they're just blanket-blocking VPN IPs rather than specifically blocking cases of a customer's region shifting/not matching their registration details?

If the VPN node's public IP matches the country in the subscriber's registration details, then it seems pretty unfair that they'd still restrict their account when accessed from that VPN IP. But I suppose from a technical standpoint it's probably far simpler for them to just find VPN IPs/subnets, add them to a database, and restrict content for any account accessed from any of those IPs, regardless of the account, IP, or content regions.

Yes, they block known VPN IPs even if it matches the customer’s home country. If a VPN IP is detected, only globally licensed content will be visible.

The copyright applies to a specific viewing of a movie, not the purchase of a license. They can't enable their users to break license or they'll loose their right to distribute content.

But Netflix also has an agreement with whoever owns distribution rights in the other country though... that's why the VPN trick works. Just let me pay extra for the other country, what would be the problem there?

Your suggestion makes "common sense" but probably would cause legal issues.

Suppose you are Canadian. Netflix has permission to sell Americans "Media Package A" and Canadians "Media Package B". They don't have permission to sell Canadians "Media Package A". You are saying "just let me buy both" but Netflix does not have permission from media companies to sell you both.

I would assume the content owners are demanding the Netflix to stop the VPN trick. I would assume the distributors in other countries are telling content owners they will not pay a certain price if Netflix is allowing people to use VPNs.