Content piracy is big. It’s costly. And it’s a growing ROI problem for content owners and distributors across the globe. Due to its clandestine nature, as well as wide-ranging touchpoints, establishing solid numbers for piracy and the financial impact it has is difficult, leading to disparities in estimates. But one thing is clear — the numbers are high. A June 2019 study (conducted jointly by the U.S. Chamber of Commerce, the Global Innovation Policy Center and NERA Economic Consulting) looked at the impact of global piracy of paid digital TV and movie content on the U.S. economy and estimated at least $29.2 billion in lost revenue every year — and maybe much more — with over 80% of that piracy happening via streaming. And while lost revenue is the most obvious result, the study notes that piracy also leads to job losses and reduced GDP, potentially displacing hundreds of thousands of jobs across the video content, production and distribution value chain in the U.S. alone.
Top Five Countries by Online TV & Movie Revenues Lost to Piracy: Change in Loss and Top-Five Ranking from 2016 to 2022
Source: Online TV Piracy Forecasts Report, Digital TV Research, October 2017
Content piracy is big. It’s costly. And it’s a growing ROI problem for content owners and distributors across the globe.
Unlike previous, closed systems, today’s digital delivery system makes it easier for pirates to steal and re-stream illegal content anywhere in the world, using the same type of infrastructure used by the service providers themselves.
Total potential online TV & movie revenues: Legitimate online revenues + piracy losses
Another estimate by Digital TV Research predicts that piracy of online TV and movie content across 138 countries will nearly double from 2016 to 2022, reaching as high as $51.6 billion in lost revenue for content owners.
According to a recent presentation by our partner Friend MTS, the most impacted segments from piracy are premium sports and entertainment — with TV revenue loss estimates approaching $35bn in 2018 (based on a Digital TV Research estimate of 2018 global TV revenues). Given the magnitude of these losses, it is not surprising that advertising revenue is also suffering: “It’s a worldwide problem that affects the whole chain from rights owners to pay-TV platforms. Piracy is now a sophisticated, industrial scale problem, with more than 3,000 black market pirate services. Recent estimates show the top 600 pirate sites generating $260 million of advertising revenue.” That’s revenue lost by legitimate sources.
Piracy Forcing Changes
Content piracy is so big that its impact is felt beyond the bank account — it’s changing business models. In the traditional movie business, new releases often stayed in theaters for months to maximize revenues. As digital downloads, and now streaming, have made it easier for content pirates to obtain and distribute illegal copies, movie studios have continually shrunk the release window over the last several years, moving to get their latest blockbuster online before pirates gain traction with their illegal copies and eat into ROI. With secondary release windows now down to weeks (or even less in some cases), studios must focus on protecting their investment inside and outside the theater.
The Value of OTT Live Sports Is on the Rise
Protecting the Bottom Line
While many things have changed in the content world, the need for content owners and distributors to protect their bottom line remains the same. Content piracy is a serious threat to ROI, requiring a holistic solution — spanning the delivery chain — to protect their investment. In our next blog post in this series we’ll start to assemble the full “puzzle of tools” needed for combating piracy.