The video industry has had a long relationship with video piracy. The “industry” is everyone who creates or distributes video content: the movie studios, video programmers, broadcasters and other creators, through theatrical, pay TV and now OTT distribution; and all the providers of technologies and services that surround them. Because video is valuable intellectual property and because video bits respect no boundaries, the industry also relies upon the legal community, law enforcement and government regulators, both within the boundaries of individual countries and across international borders.
The U.S. Chamber of Commerce estimated in 2018 that global piracy had a $28 billion impact on the U.S. economy. Parks Associates estimated that revenue lost to video pirate operations could exceed $61 billion in 2020.
Where do we begin to get a grip on all of this? The pay TV industry has chosen to focus on an area where it has a good amount of control, which is the abuse of consumer accounts. Credential sharing among friends and family is responsible for infringing behavior that sometimes leads to theft, but the much more frequent abuse of credentials comes from industrial-scale pirates who buy consumer databases from Dark Web sources and then attempt ‘brute force’ logins using automated processes. Often, consumers use the same user IDs and passwords for online access to premium video accounts as they do for their bank accounts and other non-video-related sites.
According to research published by Parks Associates, only about 28% of all video piracy comes as a result of credential sharing or automated account penetration. The rest occurs via other means, which we’ll cover in further installments of this column.
There’s theft by ‘pirate wholesalers’ who host massive stolen content libraries (some of it stolen through credential mismanagement or theft but most of it stolen from elsewhere) and deliver it to consumers using one or more forms of distribution. This includes streaming to Web browsers (which, ironically, is called “IPTV” - a familiar acronym that’s been pirated from the telcos). There’s also streaming to illicit streaming devices and to illicit apps that reside in legitimate devices. Not to mention the theft of programmatic advertising by pirate sites that self-identify as legitimate.
What’s being stolen? Measured in terms of links that are propagated by pirates, more than half of pirated content is television programming, followed by movies (about a fifth of all content), software (about a tenth), games (about a tenth), and published content such as e-books (most of the remainder).
Much of the industry’s relationship with piracy has been below the radar, and for good reason: nobody wants to give any hints as to sources or methods, lest their efforts be compromised by the same pirates who they are trying to foil. Consider the comments made by industry executives. During Netflix’s 2019 third-quarter investor call, Chief Product Officer Gregory Peters said, “…we’re looking at … consumer-friendly ways to address credential sharing without alienating a portion of your user base, but I think we’ve got no big plans to announce at this point in time in terms of doing something differently there.”
Meanwhile, Charter Communications has announced relationships with The Walt Disney Company and Fox. Both Charter and Comcast have joined the Alliance for Creativity and Entertainment (ACE), a community made up of major media providers that focuses on piracy and anti-piracy).
Over the past 20 years, pay TV has gone through three major phases. First, it has transformed from delivering MPEG video to consumers via one-way services over broadcast, cable, satellite to TV set-top boxes, to two-way services over IP to set-tops, and now, interactive streaming services over IP access to pretty much anything that has a screen. Second, it has gone from SD to HD and now, to UHD; with progressively better video quality and improved latency performance. Third, programmatic advertising and analytics have matured. All of them involve delivery, quality and measurement but only indirectly have they been concerned with revenue loss due to piracy, which surely exceeds revenue lost to subscriber churn.
In my new recurring column for FierceVideo, I’ll be taking a focused look at the inner workings of video piracy, how it impacts consumers and the video industry, and what’s being done to stop it. Check back each month for updates.
Steve Hawley is managing director of Piracy Monitor, a free newsletter and information service with the mission to help the media and entertainment industry ecosystem understand and minimize the risks associated with digital media piracy; by raising awareness of the problems, the available countermeasures and best practices. Piracy Monitor is published by tvstrategies (Advanced Media Strategies LLC), which offers research and consulting services to video providers and for suppliers of technology and professional services that serve the video industry. Mr. Hawley is also a contributing analyst to Parks Associates and S&P Global Market Intelligence.
Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceVideo staff. They do not represent the opinions of FierceVideo.