Video piracy already eats into potential revenues for OTT services like Netflix and pay TV providers like Comcast, and the problem will likely get worse in the years ahead.
Parks Associates estimates that video piracy this year will cost pay TV and OTT providers $9.1 billion in lost revenue. That number will swell to $12.5 billion by 2024, representing a 38% growth rate. According to the research firm, 27% of U.S. broadband households currently engage in some form of piracy or account sharing.
"Piracy is a complex issue that cannot be addressed with a single solution or by targeting a single use case," said Brett Sappington, senior research director and principal analyst at Parks Associates, in a statement. "Most pirates also subscribe to at least one OTT service. They are not simply thieves looking to steal content, but are video enthusiasts who engage with many different services. OTT services could better reach these consumers through ad-based content, which also aligns with these users' general belief that 'movies/music should be given away for free.'"
Parks’ figures come from the firm’s new report, 360 Deep Dive: Account Sharing and Digital Piracy. The new research found a correlation between pirating video and subscribing to OTT and pay TV video services. Consumers who report viewing an OTT video service for free but without ads are 22% more likely than average broadband households to subscribe to OTT services, three times as likely to use ad-supported services, and twice as likely to use transactional online video services, according to a news release.
The study also found that 20% of U.S. broadband households are using a piracy app, website or jailbroken device.
"Growing subscriber numbers and an increased number of services signal a very healthy OTT market, but more services and aggressively promoted content could incite more piracy over time," Sappington said. "Consumers will hit an upper limit to spending eventually. When that happens, they will resort to pirate tactics to get the content that they want, particularly for sports and other content where trials are not available."