They are required to per the licensing deal they made with the content owner.
On another note, some companies like this. Take Valve with Steam. They are definitly in a position to dictate "no region lock bullshit", yet they still make them available. Because it means more money.
The deal can include whatever the content owners want it to include. And the content owners want it to include strict enforcement.
They can specify the specific technical details of enforcement, if they want. That's a legal contract, and one that they have a financial incentive to offer. Or they can specify an acceptable level of enforcement failures, or they can specify financial penalties for insufficient enforcement, or they can specify Netflix carries liability for infringement that it allows.
Or they could leave Netflix to do as they will, but threaten to pull their content or to sue Netflix for contributory negligence or whatever if Netflix doesn't comply. The fact of the matter is, the content owners have leverage and Netflix is not (yet?) in a position where they can blow off such concerns. Netflix is trying to get into that position, by creating its own content, but right now the majority of their content is dependent on other parties finding Netflix an acceptable content partner.
However, in reality, the content owners really aren't that dumb and incompetent. There are very punishing legal implications to breaking the contracts, especially your relationship with others. And the content owners don't just do nothing; there's quite detailed questions and requirements they give when you renew their content, and they very often discover things they want to change after.
It's obviously a problematic enough relationship that netflix doesn't want to be a part of it anymore. More power to them; I wish this could be done for all industries as easily/well.
In the EU most people have identity documents... and enough services that provide identity verification. The said verification is mandatory in some industries like online gambling.
There is no intrinsic hurdle to remove the retarded IP block. Using VPN to bypass it is just yet another step away but again, why bother with VPN when I can get it via torrent?
I think they might be getting there - they've shown they can generate their own content that people want to watch and that they're a "destination" site - both pretty big sticks to wield at the next relicensing discussion.
(Imagine trying to explain to your investors that your next 10 years of films won't be on Netflix...)