Video piracy has become a real issue for OTT services and pay-TV providers and the problem will only get worse in the years to come.
Brett Sappington, senior research director, and principal analyst at Parks Associates explained: “Piracy is a complex issue that cannot be addressed with a single solution or by targeting a single-use case…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“
According to The 360 Deep Dive Account Sharing and Digital Piracy report from Parks Associates, it is estimated that video piracy will cost pay-TV and OTT companies $9.1 Billion as an annual loss this year. By 2024, this sum is expected to grow by 38% to reach $12.5 Billion, which is an alarming threat to the industry.
The same research showed that consumers who report viewing an OTT video service for free but without ads are 22% more willing to subscribe to OTT services, x 3 times as likely to use ad-supported services, and x 2 times as likely to use transactional online video services.
Moreover, growth in connected device ownership has shifted the focus of pirates towards the online video ecosystem—with one-in-five U.S. broadband households using a piracy app, website or jailbroken device.
Additionally, men, consumers under age 35, and households with low annual incomes are more likely to pirate content at a disproportionate rate.
Overall, 13% of consumers admit using a piracy website or app, while 19% of US broadband households experience account-related issues related to an online video service. Parks Associates also found that penetration of paid OTT services rose up by 13% over 2018, while free services part has grown by 23%.
“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 stated. “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.”
Source: Parks Associates