Piracy: It’s A Service Problem

Do people turn to piracy when the movies they want to watch are not available legally?

This is the premise of a research site, Piracy Data, whose stated goal is to utilize data and statistical analysis to answer that question. Piracy Data uses TorrentFreak’s effective “Top 10 Most Pirated Movies of The Week” list , in addition to Can I Stream It, who provide an effective search engine for movies that are available for legal streaming, rental, or purchase on the Internet.

The results of this data are intriguing. Just over half — 53% — of the most pirated movies have been made available legally. Over that same three week period, only 20% of the top ten most pirated movies have been made available for digital rental. And if you wanted to stream even just one? No luck: not a single movie in this category can be streamed. To take a historical example, in a week in early 2013, only six out of ten top films were available for online purchase; thus if you want to somehow watch any of “White House Down,” “Elysium,” “The Mortal Instruments City of Bones,” or “2Guns,” pirating is your only option.

For what it’s worth, the MPAA has responded to the early press around Piracy Data in a Washington Post story, saying that, “Today there are more ways than ever to watch movies and TV shows legally online, and more are constantly being added. If a particular film isn’t available at a given moment, however, it does not justify stealing it from the creators and makers who worked hard to make it.” The founders of Piracy Data see it differently, however; they are of the opinion that instead of complaining about sites like Google showing infringing search results, the MPAA should take action and provide for more legal avenues to access the content that users are clamoring for.

The data, unfortunately for the MPAA, supports Piracy Data’s claims. Because recently released titles aren’t made available digitally soon after their theater release (say, within days instead of within weeks or months), users who don’t want to go out to theaters but still want to see the movies when they’re released often have no other option but to stream or download the films illegally. What’s more, since these movies are only available illegally, Google has very little option but to display the only search results that that, for example, “Stream Elysium” would return: illegal streams. Because there are no legal sources available to display, Google’s hands are tied.

It’s a circuitous problem: because films aren’t released digitally soon after their theater release, users who expect to be able to stream the content that they want are faced with no other options but to stream or download illegally. The Internet using populace wants to be able to stream video content across mediums, conveniently and immediately. The digital availability of all forms of media has fostered this attitude, but the film industry hasn’t really responded. Right now, most movies that are in theaters require lengthy waits, sometimes even months after their theater releases, before they’re available for legal streaming on the Internet.

Although it seems like this battle is set to go on for the foreseeable future, can we creatively think of a way out? I would argue that yes, we can, and that we can use two categories as case-studies: TV shows, and PC games. Looking to the former as a guide, it’s clear that users are more than willing to pay for quality content. This isn’t to say that Internet-savvy TV-show watchers are all innocent; Game of Thrones is the most-pirated show on the Internet, and it’s showing no signs of stopping.

At the same time, however, services like HBO Go and Netflix have helped to stem that tide. Netflix has 29.2 million paid subscribers, is rated as being worth double-digit-billions by Forbes and Google; their 2013 Q1 Revenue was $1 Billion, and they made a profit of $3 Billion. Indeed, more users than ever are flocking to the streaming service, now that it’s the exclusive place to watch Emmy-winning, original programming. Breaking Bad’s director, Vince Gilligan, even went as far as to thank Netflix for saving his show, which was slipping in the rankings and was cancelled in the UK before exploding online.

And as the show made its episodes available on Netflix rapidly, so too did viewers respond: in the weeks leading up to the final season, the pilot of the show was the most watched episode of Breaking Bad on the platform, as users tried to watch the whole series from start to finish in advance of the final season.

Perhaps the most telling statistic is that during peak Internet usage hours, 30% of all American Internet traffic is dedicated to Netflix. It’s not just Netflix, either. Streaming service Hulu has 4 million paid subscribers, and is available on over 120 million devices around the world. And at the same time, Amazon Instant Video, in combination with Amazon Prime, allows users to stream videos where they want, across devices and platforms; the service is undeniably on the up, particularly with those who use A.I.V. on physical devices like Apple TV and TiVo.

The point, here, is eloquently summarized by Kevin Spacey. Talking about his experience with House of Cards, he said, “Clearly the success of the Netflix model, releasing the entire season of House of Cards at once, proved one thing: the audience wants the control. They want the freedom. If they want to binge… we should let them binge…. And through this new form of distribution, we have demonstrated that we have learned the lesson that the music industry didn’t learn: give people what they want, when they want it, in the form they want it in, at a reasonable price and they’ll more likely pay for it rather than steal it.” To his point, the number of Netflix unpaid subscribers has rapidly dropped off since House of Card’s inception, from 1.7 to 1.1 million over the course of 2013, and according to a recent LSE dissertation, “unpaid forms of film consumption do not necessarily displace paid consumption forms, i.e. they do not always act as a substitute.”

It’s not just TV shows though. PC game piracy has also been affected by this concept, specifically upon the advent of Steam. For those that are unfamiliar with the service, Steam is a game distribution, game rights management, and multiplayer gaming platform developed by Valve Corporation in the interest of distributing games and other, related forms of media online. It’s distributed through a free software interface that allows users to sign into their accounts from the PC and access their games from the cloud.

The capabilities of Steam don’t end there, though. The medium allows users to log into their accounts on a friend’s computer, and access their game libraries from other devices. One account can only be logged into from one computer at a time, of course, but it’s a system that allows users to access gaming content where they want it, when they want it. And according toForbes, who cited a Northeastern study, “the actual number of illicit digital copies of computer games accessed on BitTorrent is nowhere near as high as claimed, with only around 12.6 million unique peers worldwide sharing illicit copies of games.”

Forbes goes on to point out that, both at present and in the future, cloud-based gaming (in a not-so-subtle reference to Steam) is a deterrent to Piracy because of the structure of the platform and because the user is locked into the software system. Indeed, in a separate piece, Forbes cites Valve and Steam’s valuation as somewhere between $2 and $4 billion. At any given moment, there are, on average, 4.59 million users on the platform. And in an interesting case study, a game called The Witcher 2 sold around 35,000 physical copies and 10,000 digital copies, while on Steam the game was purchased over 200,000 times.

So what are the implications of these nebulous platforms and programs for the film Industry? The CEO of Steam, Gabe Newell, thinks that Piracy can be, at least in large part, curtailed by a change in philosophy. “Piracy is almost always a service problem and not a pricing problem. For example, if a pirate offers a product anywhere in the world, 24 x 7, purchasable from the convenience of your personal computer, and the legal provider says the product is region-locked, will come to your country 3 months after the US release, and can only be purchased at a brick and mortar store, then the pirate’s service is more valuable.” Internet-savvy users tend go agree. To cite the “Best” (or most up voted comment) in a Reddit thread on Piracy: “I used to pirate video games, then Steam came along and I stopped … I used to Pirate movies, then Netflix came along, and well, I still kind of pirate movies because I find the cinema to be a poor experience and don’t want to wait.” It’s almost a poetic response to Spacey’s thoughts on Netflix. If you give the people the quality content they want, when they want it, they’re happy to pay for it.

Of course, the logistics of movie distribution and industry standards are large obstacles, and Piracy will remain on the Internet; people still break the law on a regular basis even with the threat of the police and jail time. But if the film industry, or a third party for that matter, wants to get out ahead of Piracy, look no further than a Steam-meets-Netflix-like service for films and shows, with a robust ownership system and multi-device software platform that allows people to access their content when they want it, where they want it, on whatever screen they want it on. If the MPAA, and the film industry at large, decided to use their massive political and financial clout to develop such an affordable, sustainable system, the data from other, similar industries struck by piracy suggest that users would be ready and willing to pay for it.

N.B. This is an edited version of a piece written in 2013 — reproduced here as it retains importance moving towards the new year, when piracy remains as rampant as ever.

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