Jobs fail with "The host is not licensed for this feature" error message after upgrade to Veeam Backup & Replication Update 4

Challenge

After updating Veeam to 9.5 Update 4, backups of VMs from ESXi 5.0 and 5.1 licensed with VMware Essentials licensing starts to fail with the following error: "VDDK error: 16064 (The host is not licensed for this feature)"

Cause

Regression in the VMware VDDK 5.5.5 specific to vSphere ESXi 5.0 or 5.1 hosts which are licensed with the VMware Essentials license.

Solution

Veeam is currently in the process of developing a hotfix for this issue. As a workaround, applying an Evaluation License on the hosts, will allow backups to resume normally until a hotfix that brings back an earlier VDDK version is created.