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Piracy – an intractable problem?

pirate flagA couple of reports this week, in Arstechnica and MediaPost, discussed findings from Sandvine about piracy by streaming. They estimate 6.5% of broadband homes used “pirate” sites over a thirty day period in August and September.

Over many years, we tracked piracy in an annual report which is published by my former employer, GfK. This report, Over-the-Top TV, has tracked “ever pirated” levels in recent years at about 20 percent – so six-to-seven percent in a given month would seem to be a reasonable number.

As with all passively measured or metered data, Sandvine’s gives no insight as to consumers’ reasons for piracy. From the consumer survey research that is the basis of the GfK report, over the years the general answer is convenience – either consumers want to watch theatrical movies they can’t go and see in a cinema; or they want television content they do not have access to for a variety of reasons.

Sandvine did go further in terms of extrapolating the potential cost of piracy to be up to four billion dollars to US pay TV providers. Since Sandvine, a vendor that sells equipment to consumer broadband providers to help them manage network congestion, has a vested interest in emphasizing the size of the issue, we need to take their estimate with a grain of salt. But either way piracy does add up to a notable level of foregone revenue.

Some initiatives to address piracy, like day-and-date release of theatricals, may increase at-home convenience but are likely to make much of a dent in the problem due to the proposed prices – $40 or more instead of standard VOD movie pricing of $4-5. People who may not be able to afford getting a babysitter and attending the cinema are unlikely to pay a similar amount for at-home convenience.

Piracy has been an issue going back to the emergence of the VCR, and there are no easy answers. There may never be one answer, just a series of initiatives to mitigate the losses.

David Tice is the principal of TiceVision LLC, a media research consultancy.
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