Olympic winners: How NBC’s authentication helped VPN providers

NBC (s CMCSK) is streaming some 3,500 hours of video live from the London Olympics — but access to the live streams is restricted to pay TV subscribers who have access to MSNBC and CNBC as part of their TV bundle.

That leaves out quite a few viewers. Cord cutters, for example, but also subscribers to low-cost satellite bundles have to follow the games on TV, where coverage is limited and tape-delayed.

Or they have to look elsewhere — and a number of more tech-savvy viewers are turning to VPN providers to access live streams from the BBC or other foreign media organizations. One provider told us that installs of his software tripled since the games started.

From security to free TV

Virtual private networks, or VPNs, have been around for a long time. The corporate world uses this technology to offer remote workers secure access to PCs in their office. Security-conscious web workers have been paying for VPN services to encrypt the traffic they’re sending over public Wi-Fi hotspots. And an increasing number of TV fans have been using VPNs to access foreign streaming services.

The technology behind these different use cases is fundamentally the same: A user connects to a remote server, which then forwards the traffic to other servers. One benefit can be that the connection between the user and the remote VPN server is encrypted. Another is that to other servers, it looks like the user is accessing them from a different IP address.

That second part is what a number of VPN providers have been cashing in on. Video services like Hulu or Netflix (s NFLX) regularly block all traffic from countries they’re not officially launched in yet. Users can circumvent this by accessing a VPN provider that offers them an IP number from the same country as the service they’re trying to access.

Suddenly, we all want to be British

The BBC blocks access to its Olympics live streams to anyone who doesn’t have a U.K. IP address.

Usually, this means that users in other countries access VPNs to pretend that they live in the U.S. Hulu is especially popular with foreign VPN users, and some have even figured out how to pay for Netflix with a U.S. credit card and then access it from abroad. But during the London games, this trend was suddenly reversed — and everyone wanted to be British.

Case in point: VPN provider AnchorFree, which targets foreign Hulu fans with a special offering called Expat Shield, usually serves 93 percent of its software downloads to users outside of the U.S. However, during the Olympics, 46 percent of all new users came from the States.

But Americans weren’t the only ones looking for access to the BBC’s streaming offering. Business was up across the board for Expat Shield during the games. A company spokesperson told us that the service usually registers around 3,400 new users per day. During the games, that number went up to almost 10,700.

VPNs are here to stay

Of course, those are small numbers, which might explain why NBC doesn’t care about the money VPN providers are making with the circumvention of its pay TV authentication wall. (AnchorFree’s offering is ad-supported, but many other companies are charging between $5 and $15 for access to their servers.) Even if tens of thousands of viewers were paying for VPN services, it would still be a drop in the bucket compared to the hundreds of millions NBC makes with retrans fees they’re charging cable providers.

The same is true for foreign rights, which is why territorial restrictions for services like Hulu and Netflix aren’t going to go away anytime soon. Of course, that also means that people who are tech-savvy enough are going to use VPNs to access foreign video providers. And the Olympics likely helped to introduce a whole bunch of new users to this idea.

Image courtesy of (CC-BY-SA) Flickr user mark sebastian.