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'Fighting Windmills'

Account-Sharing No Longer a Welcome Marketing Tool, Parks Event Told

Piracy is a double-edged issue for the video streaming industry, leading to lost revenue and other concerns but also being a form of marketing, panelists said on Parks Associates’ virtual Future of Video event Thursday.

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Streaming services such as Netflix are starting to crack down on password sharers, one type of video piracy, as demand for traditional pay-TV and streaming service subscriptions declines, said Steve Hawley, managing director-Piracy Monitor and Parks contributing analyst. A Q1 Parks survey showed consumer intent to subscribe to a pay-TV service in the next six months slipped 5% year on year to 14%, while intent to subscribe to a VOD service fell from 40% to 22%, he said.

Some streaming media providers treated credential-sharing as a “marketing expense,” said Marty Roberts, Brightcove senior vice president-strategy and marketing. Roberts referred to an industry joke that 15 million viewers watched the last episode of Game of Thrones, when HBO only had 9 million online subscribers. “It was clearly something they saw the benefit of in their business,” he said.

But as services are topping out subscription counts and customer acquisition is becoming more difficult, providers hope to increase average revenue per user by “clamping down on a bit of that credential-sharing,” Roberts said. One way is to prevent concurrent account log-ins from different places or establishing concurrency caps; another is urge customers to get a family plan, he said: “It depends on how draconian you want to get.” He acknowledged the nuances involved, such as when legitimate customers face concurrency issues when accessing their account from a vacation home or while on a business trip.

Parks Associates President Elizabeth Parks noted the costs involved in setting up the infrastructure to track accounts. “You have to introduce new models to be able to cover a family-share plan,” which can be “a lot of work to invest in the different technologies that would enable new ways to log in,” she said. Further complicating the process is the emergence of hybrid models coming out with different tiers of pay and ad-supported models, she said.

Parks research found unlicensed video media usage had a “large increase,” with one in four internet households believing movies and music should be available to everyone for free, a “huge risk for video providers,” Hawley said. Reasons cited were the amount of revenue brought in by media companies, the feeling that “as long as somebody else is paying for the service” it’s OK to get it for free, affordability, occasional use and the exposure services get from people who wouldn’t have otherwise listened to or viewed the services, Hawley said.

IPTV websites that look like legitimate pay-TV streaming sites, giving consumers access to “a thousand channels and tens of thousands of movies on demand for a small price per month,” or free, are a growing problem, Hawley said. He also referenced illicit streaming devices or a software media client such as Kodi that can be installed on a PC for free access to movies. Consumers also use “jailbroken” streaming players or phones to pass authentication for viewing subscription-based content, he noted.

Even advertising is subject to piracy, Hawley said, citing a Digital Citizens Alliance report saying as much as 40% of legitimate advertising was appearing on nonlegitimate consumer endpoints. “If I have a $100 million ad budget, and $40 million of that is disappearing into piracy applications, that should be a big concern,” he said. Pirates also can penetrate content providers’ content delivery networks.

It’s not just ad revenue that is at stake, said Matthew Fite, chief technology officer of content security company Verimatrix. "There are so many attack vectors that pirates have," he said, including the ability to "replace your ads with their ads.” Not only do providers lose ad revenue, "but your subscribers are getting the wrong ads that fit your brand.”

Consumers often can't distinguish between a legitimate and nonlegitimate streaming app, Hawley said, describing a reverse-engineered app that’s sent in an email pitch. The consumer clicks on a link in the email “and down comes an app that looks just like” a pay-TV provider or streaming service app, he said. “It’s actually an illegal app and possibly a way for the pirate to download malware to your computer,” he said. In that scenario, a consumer may get a message saying she can’t unlock her computer without paying a ransom.

The harm of piracy to video providers extends beyond loss of revenue to contractual considerations, such as violation of an exclusivity window or blackout restriction in a sports broadcast, or the release of a movie on a piracy site a week before it’s released in theaters or a certain territory. Hawley also cited protection of reputation as a concern, if a video provider is associated with the downloading of harmful content.

Piracy is an ecosystem that occurs before, during and after distribution, Hawley said, saying anti-piracy is also an ecosystem. Anti-piracy protections include making sure connections, sources, destinations and IP addresses are known; “you’re able to identify the content and streams that you’re distributing"; making sure current infrastructure enforces limits on the number of household members who can watch a program; and ensuring that digital rights management and conditional access are in place, he said. He also advocated consumer education and collaboration among industry groups to fight piracy.

The streaming industry is “waking up to security,” said Sebastian Kramer, senior vice president-product management, of digital security company Nagra. In the early days of streaming, “people didn’t really care about service protection,” he said. “Even the biggest streaming companies saw account-sharing as marketing.” Now that the services are maturing, streaming video companies “are discovering that service protection is important to protect their business.”

Kramer pegged the size of lost revenue due to streaming piracy at up to $1 billion in the U.S. market, citing a 2019 study; a similar study for the advertising market pegged lost revenue at $1.5 billion, he said. Many piracy sites look professional and bring a good quality of service, and they charge subscription fees and run advertising that undercut the revenue of legitimate service providers, he said.

Steve Epstein, engineer at video technology company Synamedia, said losses are even higher. His company's data values revenue losses due to piracy at $13 billion just for the U.S. market. Live sports is the biggest category for piracy “because it’s expensive, and there’s almost an addiction to live sports,” Epstein said. A Synamedia study estimated global revenue losses due to piracy in sports at $28 billion.

Rights fragmentation across multiple services and providers is contributing to piracy, said Chris White, operations director of content protection firm Friend MTS. White noted the different providers for MLB programming in the U.S., with Apple TV having Friday night baseball rights, ESPN owning Sunday night rights and Peacock showing exclusive Sunday morning games. “If you’re a baseball fan, you’ve got to subscribe to multiple services and multiple platforms to watch the content you want to watch,” he said: Pirates are “getting wind of that and seeing themselves as the aggregators of that content."

To combat the piracy, White suggested automated monitoring of activity on social media and community chat boards where pirates share their intent. “You need technology such as video fingerprinting to identify what content is so you can narrow it down quickly and focus on that content,” he said.

When one piracy site is shut down, another starts up, said Nagra's Kramer, calling the situation “fighting windmills.” He cited watermarking as a deterrent, saying if a content provider can detect a livestreamed watermark, “you can shut down the source in real time” so the pirate can’t run the service.