Why piracy is the biggest threat to our industry at the moment

In this House View piece, iSportConnect CEO Sandy Case tackles the complex issue of piracy and tries to find a one-size fits all solution.

The problem.

• At a recent iSportConnect event over 70% of attendees said they had illegally watched sport in the last year on at least one occasion and research from Omdia highlighted 1/3 of Gen Z regularly pirate live content. This is not a small number. It’s a giant problem.
• A report released by Synamedia and Ampere Analysis in March 2021 revealed that sports piracy is costing the industry as much as $28.3 billion a year. This is all money that could be finding it’s way back into sport. Of course, not all of it would as it assumes everyone currently using an illegal stream pays full price in their region but it’s still s chunky number. 
• With less revenue, organisations risk losing control of their IP meaning it becomes harder to market a league/organisation leading to further decreases in revenue and reputational decline.

Why is it happening?

Too many sports, too many channels and too high a price

• We have talked many times about the fact that 10-20 years ago there were your core traditional major sports and a select number of channels to consume them on.
• Every Federation is now looking at whether it is commercially viable to create their own streaming service.
• The proliferation of new sports that have emerged in the last decade that are all vying for attention includes: All Women’s sport, Parkour, XFL, eSports, PTO, Kings League, T10 & T20 cricket, Airspeeder, eSkootr, eBikeGP, Ultimate Frisbee, Floorball to name a few. 
• To watch all this new content means taking out multiple services and this just forces people to find ways around paying for multiple subscriptions.

The market is broken.

• Just looking at some recent Broadcaster financial results and it doesn’t look great – look at these Q1 losses.
• I realise the bare numbers don’t tell the story as the major players are switching stance from PayTV to streaming but they make horrendous reading.

• Netflix lost $1.4bn on $8.0bn revenue.
• Disney+ lost $1.1bn on $5.1bn revenue.
• Paramount + lost $750mn on $1.8bn revenue.
• Discovery + lost $1.0bn on $1.7bn revenue.
• Warner Bros lost $1.1bn on $10.7bn revenue.

What does it cost the consumer?

I was listening to a podcast that compared the average cost of watching sport across Europe. This was to effectively watch all your domestic topflight football, Champions League and national sport of that country.  

• starts from £20-£30 per month in countries like France and Spain 
• All the way up to £60-£80 in the UK. 
• India is sitting at around £20 as well (see more on that later) 
• The UK sits as the most expensive exclusively due to the current premier league rights value being as high as they are and the need for services to recoup that money.

The legalities

• Piracy is pretty much illegal all over the planet but the enforcement hasn’t always been easy
• Pirate streams of sporting events are not difficult to find on the internet and shutting these down has proved to be an impossible task for sports leagues. While legal action has been successfully brought against several illegal streamers, many are still fully operational. When one stream gets taken down, more pop up in its place. It was interesting to see the recent success in the UK with illegal streaming of the Premier League seeing various prison sentences handed down in a landmark case. 
• Although previous attempts to introduce an anti-piracy bill in North America were effectively stopped by tech giants.

Bundling

This is where it gets confusing for the consumer – another reason people give up and head for the illegal sites

• “Disney Bundle” customers who take Hulu and ESPN+ along with Disney+ get an attractive bundled price,
• Comcast alone you can subscribe to NBCU’s Peacock, Xumo, and Now TV
• To watch the Champions League semi finals in Italy you needed x2 separate services
• To watch the next 5 Yankees matches you would need x4 different services 
• David Zaslav (Warner Discovery) recently stated that bundling is the only option remaining and went on to talk about the fact that only high quality content would survive https://deadline.com/2023/05/david-zaslav-streamers-max-bundle-1235371789/

Solutions

• Stricter laws against piracy making it more difficult for people to pirate sports content without fear of punishment. The recent action in the UK over Premier League illegal streaming is a case in point 
• Working with social media platforms that are used to share pirated content to remove these links. 
• Using technology to make it more difficult to pirate sports content such as watermarking, encryption, and content protection systems. Blockchain technology probably has the answer and this is likely to be the single source of optimism for any sports or entertainment business looking to solve the problem
• Education: Educating fans about the negative impact of piracy 

• Illegal streaming boxes and apps usually lack parental controls meaning children are exposed to explicit advertisements or age-inappropriate content.
• Where legitimate devices and power cables will have been tested, some illegal devices have failed safety standards so could be a real danger to you, like causing a fire in your home.
• Every time you access illegal content you are infringing copyright and may be committing a crime. 
• You risk being exposed to dangerous malware and/or the risk of fraud and data theft. This risk increases significantly when you exchange credit or debit card information to view content on unregulated and pirate-run websites.
• The creative industry offers employment for more than 1.9 million people and contributes £84.1 billion to the UK economy. You are depriving industry of the money it needs to fund the next generation of TV programmes, films and sporting events.
• Buying and using these devices and apps funds organised crime
• Making sports content more accessible and affordable:

•  If fans can easily and affordably access sports content, they are less likely to pirate it. This can be done by making sports content available on more platforms and by reducing the price of sports content. India is a great example where there were many issues with piracy but this changed significantly recently when many of the services like Netflix, Spotify were bundled together as part of the domestic wifi offer for somewhere in the region of £20 pcm. A clear case of “if you get the price right then people will pay”
• Cable’s biggest problem was the inflexibility of the bundle. Any streaming bundling will require multiple price points with multiple content choices. Some content and some networks won’t make the cut for enough consumers to be viable, but this is the only way