Simon Brydon, Senior Director, Security – Sports, Media & Entertainment, Synamedia
Oh no, back to haunt you….. the thorny subject of piracy keeps rearing its ugly head again. Attracting and retaining viewers, increasing market share, keeping all those digital plates spinning, lowering TCO – if you are running a streaming service, there are any number of other pressing priorities. And surely it should be job done tackling streaming piracy provided basic security provisions and contractual obligations are in place, right?
You must be joking. Streaming pirates are not only stealing content but stealing entire streaming services including hosting super aggregated rival services of their own and, as our latest research conducted by Ampere Analysis reveals, they are laughing all the way to the bank as they spirit away over $30 billion rightfully belonging to video service providers.
Investigating the financial impact of sport, movie and TV piracy on the entertainment and subscription TV business across Brazil, Germany, India, Italy, Thailand, UK and US, the latest Ampere research finds the value of entertainment piracy is three times bigger than sports piracy. And who would have thought that comedy is the most pirated genre of entertainment?
Driven by titles including Ghostbusters: Afterlife, it was surprising to find that half of all consumers of pirated content stream comedy illegally. Also popular are the action and adventure genre, and the crime and thriller category respectively.
But every pirate cloud really does have a streaming silver lining. By gaining insight into how consumers would behave if piracy was blocked, based on the local availability of content and the cost of those services, streaming providers can calculate accurately how much tackling it is worth to the business and get the last laugh recouping billions of dollars in lost revenue.
Seeing right through to the detail
Unlike other surveys on the scale of TV and video piracy that use broad-brush extrapolations to calculate how much piracy costs the industry based on the number of pirate viewers, the Ampere survey takes a targeted and nuanced approach. By analysing how consumers of illegal content would behave if piracy was blocked at every buying decision, it achieves much more accurate predictions.
Examining household demographics for each of 16,000 respondents across the seven surveyed markets and delving into what pirate consumers watch – including specific entertainment titles in US – the research uncovers what consumers of pirated content would do if they could no longer access illegal streams, and how many would buy services legally based on the availability and cost of specific content in their local market.
So, instead of simply counting the cost of piracy for all users, the survey drills down to uncover the true convertible value if piracy stopped. For example, our sample of 4,000 US users found that 3,211 pirated content, 2,057 pirated sport, and 3,164 movie and entertainment. Of these, 597 watching pirated sport said they would be prepared to pay legally, with 1,631 illegally watching movies and entertainment willing to do the same.
As well as the immediate revenue derived from a new subscription to a service or channel, the research also takes into account the customer value over years using accurate churn information.
Sports piracy overshadowed by entertainment
Eliminating sports piracy in the seven surveyed markets would create $9.8bn in new revenues but a further $21.8bn is up for grabs by converting movie and TV entertainment pirates to legal services. And, by measuring the impact of individual movie titles and TV shows on consumers’ interest in signing up, the survey also reveals how piracy of some of the biggest movies robs studios and content creators of long-term value.
Stopping piracy of a single Hollywood major movie release can trigger revenues of between $130m and $280m in the US alone, with a super-hero blockbuster like ‘Spider Man: No Way Home’ leading to potential revenue for a studio streaming service of over $400m, based on the true annual lifetime value of streaming subscribers taking churn into consideration.
Spooking the streaming pirates’ business model
The research conjures up plenty to think about on big issues such as how to deliver content to the intended audience using the appropriate business model and at which price point.
It uncovers that a greater proportion of viewers using both free and paid for pirated aggregated content are parents with young children, whereas, for live sports, viewers of illegal content are more likely to be higher income households.
The research also finds that as consumers increase the number of legal subscriptions they have, they are also more likely to watch pirate content: 91% of respondents who have access to five or more legal video subscription services have also watched illegal content.
And with a massive proliferation and fragmentation in video services, households – even those on much higher incomes – are increasingly looking to aggregated pirate entertainment services in a bid for a one-stop shop that helps cut costs. This is also true for younger, less affluent, and more geographically mobile viewers in the 16-25 age bracket who feel alienated by business models which require committing to multiple ongoing subscriptions.
Meanwhile, with no content or rights costs to shoulder, streaming pirate organisations can offer super-aggregated illegal premium content services at fiendishly low price points, banishing legal providers into the shadows.
Ghost in the machine
Piracy is not a new phenomenon but the shift to streaming technology, which was never designed with security top of mind, means it is now incredibly easy for pirates to exploit streaming delivery technology loopholes to steal, aggregate, sell and deliver content illegally. By stealing content directly from a legitimate provider’s CDN, streaming pirates are adding insult to injury by having the legal service provider foot the bill to deliver the pirated content to the pirate viewer.
Materialising in the shady depths of cybercrime, the escalation in the scale of piracy has been voiced by the likes of beIN against beoutQ. Just as organisations are proactively protecting their systems against malware, ransomware and other hacks, video operators and content owners need to work on the assumption that their technology will be compromised.
The positive flipside to the piracy coin
Stopping revenue leakage isn’t the most glamorous of streaming business priorities. It involves a multi-faceted and holistic approach ranging from proactive and protective securities such as headend watermarking to track the content across the distribution chain and optimising CDN security, through to human operational intelligence teams with eagle expert eyes and ears on the ground to track and disrupt pirate hackers.
And it requires collaboration across the industry, including working with legislators and law enforcement authorities to gather the evidence required to orchestrate technical and legal takedowns.
But by taking effective action against these TV and video pirates, streaming providers have a golden opportunity to profit from revenue that is rightfully theirs and lay the ghost of piracy to rest.
- Business Models
- Rights & Legal
- Consumer Habits & Experiences
- Security (e.g. Cyber, Encryption, Conditional Access etc)