Extent of TV piracy unclear, might be rising among youth

On Wednesday, the Australian government said it would allow the blocking of foreign websites that offer illegal downloading and streaming, the same day that the file-sharing website Pirate Bay was taken offline after a raid by Swedish police. They’re only two of the latest headlines about an international issue that also affects the Canadian TV industry. But despite its high profile, the extent of the problem is, perhaps surprisingly, hard to detail. For various reasons, it’s hard to determine how much piracy is actually going on, Duncan Stewart, Deloitte Canada’s director of technology, media and telecom, said in a phone interview. Stewart noted that young people are watching less TV than they used to. As he pointed out on his blog recently, live and time-shifted TV viewing fell almost 25 per cent among those aged 18 to 24 in the United States over the last three years. While some of that could be measurement error and some could be movement to streaming video-on-demand (VOD), “almost certainly that decline … mathematically, a portion of it has to be piracy.” “Therefore, piracy in that age group is large and it appears to be growing,” he said. “But we can’t prove it.” It’s an opinion held by many Canadian, European and U.S. TV executives, said Duncan, who believe that the pirating of “an extensive amount of video” is one of the reasons for the drop in youth viewership. “The problem is we don’t have good data,” Stewart said. For one, it’s hard to get people to talk honestly about illegal behaviour. “When you ask people, ‘Hey, how much do you steal?’ they tend not to answer truthfully,” Stewart said. He noted that in two focus groups he held in Toronto with millennials, “of the 12 people I interviewed, all 12 regularly pirated television and movies.” Barry Logan, the managing director of forensic copyright company Canipre Inc., which tracked illegal filesharing in the court case between Voltage Pictures LLC and Teksavvy Solutions Inc., said in a phone interview that the way people get pirated content has evolved. “Several years ago, BitTorrent data distribution technology was the most popular way to exchange large amounts of data, i.e. a movie file,” while recently, illegal streaming video has been gaining in popularity, especially for sporting events and movies, he said. There is “a heavy migration of users into the streaming arena,” he added. Logan said in a followup email that “Canipre collects, retains and manages an extensive database of end-user filesharing transactions that has now aged over three years. These transactions occur by the thousands each day, every day, in all regions across the country. These are real metrics —not aggregated calculations —and the numbers are simply astounding.” “Piracy is alive and well in Canada,” he said. Game of Thrones has been recently named as the top illegally shared TV show. German piracy-tracking company Excipio GmbH provided a list of the most-pirated movies in Canada this year. It said in an email that The Wolf of Wall Street was shared an average of 7,230 times a day, Frozen was shared 6,779 times a day and American Hustle an average of 6,501 times a day. The fourth-most pirated movie, 12 Years A Slave, was shared 6,101 times, and The Hunger Games an average 5,716 times a day. Sandvine Inc. said total filesharing fell to a seven per cent of overall fixed-line Internet traffic in North America in the second half of this year, down from more than 30 per cent in 2008. Stewart said data showing filesharing is dropping has caused many people to say that “piracy is not in fact that big of an issue. If you give people a legal alternative, such as Netflix, such as YouTube … they will cheerfully move their video viewing habits from the illegal version to a paid-for legal one.” It’s a perspective shared by Netflix Inc. CEO Reed Hastings, who said last year that BitTorrent traffic in Canada dropped by half following Netflix’ launch here, though he didn’t name the source of his data, Maclean's reported at the time. In recent weeks, Netflix been joined by streaming services from Canadian telecom and media’s biggest companies. Rogers Communications Inc. and Shaw Communications Inc. launched Shomi in November, while BCE Inc. launched its service, CraveTV, on Thursday. Of the five most pirated movies on the Excipio list, three are available on Netflix’ Canadian service. Michael Strangelove, a lecturer of media studies at the University of Ottawa who is writing a book about cord-cutting, piracy and television, said there are still unanswered questions about how streaming will affect piracy. “There are early indications that streaming does lead to a decline in piracy. We don’t know how steep the decline is, how significant, and we don’t know if it’s going to be a long-term decline or if it’s just an intermediate shift,” he said in a phone interview. “Piracy behaviours fluctuate as new technologies come out, but over time they’re constant in that they’re significant.” Stewart said that when he talks to audiences around the world, most say they have cut out or lessened their pirating as subscription VOD services became more accessible and affordable. But, he noted, “that is not being said by 18-24 year olds that I meet." For instance, when he has had a chance to talk to a mixed group of executives and students, “the executives say, 'Yep, I’ve virtually stopped pirating.' The students look guilty and kind of admit that no, they are still pirating at the same level they did before.” Even many of those who pay for services use VPNs to access content that isn’t available in Canada, he noted. While that’s not a crime in Canada, “it is also something that virtually anybody who has paid for the Canadian rights of those shows would regard … as piracy,” he said. There is also the question of whether the behaviour of the youngest demographic of 16 to 24 year olds is “an age and income effect or is it a cohort effect,” he said. “They don’t make a lot of money,” he said. If that’s the reason for pirating, as they get older and earn more money, they may be more likely to adopt streaming video on demand services. It’s a similar question whether millennials will eventually take up TV service, which the industry has pondered. Stewart cautioned that this was the argument in the newspaper industry five or so years ago, which didn’t pan out. “It turns out that the newspaper aversion that people 18- to 24-years-old developed continued through, and it shows no signs of changing. They will be 50-year-olds who also don’t get newspapers, it appears,” he said. Stewart said that the youth he talked to in focus groups said they didn’t feel like it was stealing. “If you don’t think it’s a crime, you’re not as incentivized to stop when you make more money and get older,” he said. Strangelove said the music industry is an example of the future that awaits television. “Content and audiences will get out of control, the majority of viewing will be outside of the marketplace, and the incumbent industry… is at a great risk of being disintermediated,” in the same way as the publishing and retail industries have been, he said. “That doesn’t mean destroyed,” he said. “They still exist, but they exist in a much more difficult climate.” “Among my own peers and among my own students, when I’m looking at their television behaviour, I’m seeing the same patterns and the same trajectory in terms of strength and growth and desire that I did in the age of Napster,” he said. “Same story all over again.” Stewart noted that there are drawbacks to piracy. It is illegal, even though people aren’t going to jail over it. As well, it can make people exceed their Internet data caps, be a source of viruses and other malware, and piracy websites can be inconsistent in terms of their accessibility. At the same time, it has benefits that can’t be beat, Strangelove said. “There’s no commercial service that’s going to come up with something that’s free, fast, commercial-free and you can do whatever you want with it. That’s piracy,” he said. “You can’t compete against that.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Extent of TV piracy unclear, might be rising among youth

News | December 11, 2014

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