OTT service provider pain points, and their fight against digital piracy

Despite the growth of OTT services, demand for pirated movies and series continues to grow. So, what´s driving consumer demand, and how can it be contained?

90% of respondents pay for one or more official OTT platforms, yet 60% of this group still consume pirated audio-visual content.

The global over the top (OTT) service sector is projected to almost double in value from 81.6 billion US dollars in 2019 to 156.9 billion US dollars by 2024. A surge in mobile technology, data speeds, and more affordable pricing have all contributed to its growth.

When OTT services first hit the scene there was hope that demand for pirated audio-visual content may reduce, and initial indications were positive, however, today the availability and demand for pirated movies and series is as noticeable as ever before. But why?

The rise of OTT

When OTT services first launched, traditional pay TV operators were enjoying a sustained period of success. In fact, according to a study by Leichtman Research Group (LRG) pay TV penetration in the US was at an all-time high in 2008, with 87% of households paying for a service. But this was all about to change.

Over the following years big name OTT service providers such as Netflix, Amazon Prime, HULU, HBO, Apple TV, and Disney+ entered the market. These new services provided consumers with an easy to setup, low cost solution to watch their favorite movies and series where and when they wanted. In fact, all they needed was a device, an internet connection, and a payment method.

Initially, the prospect of accessing a huge catalogue of content for a low-cost monthly fee was an attractive proposition. Over time, as OTT service providers improved their interface, and focused on the user experience, delivering personalized and original content, more and more consumers migrated from traditional paid TV subscriptions such as cable and satellite. This group of people are known as the cord-cutters, with many being under the age of 40. Although paid TV operators are still running today, there has been a significant decline in subscriptions, and a belief that many of those that retain subscriptions do so for access to live sports or are of a certain demographic. In fact, a new generation of “Cord-Nevers” are going straight to OTT streaming service, never having experienced traditional paid for TV subscription services.

Is the competitive OTT market driving digital piracy?

Despite early indications that the emergence of OTT services may result in a reduced demand for pirate content, this has not materialized. If anything, OTT streaming wars are driving piracy. Consumers are discovering the need to subscribe to multiple OTT platforms to gain access to various content, and providers are encountering the challenge of convincing consumers to subscribe to multiple paid platforms.

With over 300 OTT providers in the world today, consumers are left feeling overwhelmed and reluctant to shell out on multiple subscriptions. In our exclusive consumer research study, we discovered that whilst 90% of respondents pay for one or more official OTT platforms, 60% of this group still consume pirated audio-visual content.

There are two types of OTT providers, those that offer a combination of their own content and licensed content, whilst others offer licensed content only. Both are fiercely competing for market share, each battling for the rights to stream the most sought after, exclusive content, whilst keeping subscription fees at competitive levels.

OTT service provider pain points, and their fight against digital piracy.

The cost for exclusive rights to the most popular content is significant. Billions of dollars are spent on productions and media rights for premium content, but the value of this content is negatively impacted by pirate copies which are widely available to stream and download online. Providers find it difficult to retain subscribers long-term, and the constant need to deliver original, and exclusive material is evident. This brings further complications with managing numerous licenses for audio-visual content, and the technical challenges related to delivering large scale video distribution. OTT was born to provide consumers with extensive libraries of content, with easy on demand access, a one-stop-shop for all their viewing needs, but a combination of piracy and competition is making this harder to deliver.

The evolution of digital piracy and impact on the OTT industry

Whilst pirated movies and series have been available via cyberlockers and shared via peer-to-peer (P2P) networks, illicit streaming devices (ISDs) really brought pirate content to the mass market. Set-top boxes, which can be purchased online via well-known digital marketplaces are sold to consumers around the world, often preloaded with channels, providing access to pirate content. These ISDs can be easily connected to televisions.

They are appealing to consumers as they function in the same way as traditional satellite or cable boxes, and can be bought for a low-cost one-time payment, or for a small monthly subscription, and provide access to thousands of channels from around the world. To gain access to such content legally would require countless subscriptions, and in some cases the content would be illegal to stream due to distribution rights.

Both traditional paid TV, and OTT service providers are suffering from the sale of these devices, and the widespread use seems to have made ownership acceptable to consumers, despite the fact they inflict significant financial harm to the media industry.

The growth of digital piracy has even seen price wars between providers of illicit content driving costs down further, making it impossible for legitimate broadcasters to compete. This has seen OTT service providers turn to innovation, technology, and user experience as a unique selling point (USP) which the pirates are unable to compete against. Broadcasting rights, pricing, and subscriptions are all significant issues for official providers when competing against pirate content, so a focus on innovation, whilst fighting digital piracy are important elements of a successful business strategy.

Next steps for OTT service providers

It is reported that in 2022 the digital piracy of movies and TV series is set to cost the media industry a staggering 51.6 billion US dollars. OTT service providers are hoping that they can continue to build revenue by taking advantage of improving worldwide internet connections and expand into emerging markets such as India and China.

Today there are more than 4.5 billion active internet users worldwide, which equates to 59% of the global population, whilst it has also been reported that smartphones ownership surpassed 3 billion paving the way for significant expansion and growth in the OTT sector.

However, OTT providers must remain wary of “a new normal” as more movies are bypassing the big screen due to global issues, the copying and distribution of high value content is made easier for pirates. Controlling the level of digital piracy and attributing budget to protecting content must be made a priority.

Content is effortlessly copied, and made available almost immediately, in high quality. So, make no mistake, pirates are your number one competitor.

Do you want to know if your audio-visual content is being pirated online?

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