The cost of piracy in a crisis

The global number of confirmed coronavirus (COVID-19) cases continue to rise, one thing is certain; life as we know it has changed significantly.  Many states have closed non-essential businesses such as bars, theatres, and restaurants for the foreseeable future to contain the spread.

Based on an analysis of media usage during two previous crisis events, Hurricane Harvey (2017) and the Northeast blizzard of 2016, Nielsen predicts an increase of almost 60% in streaming consumption due to the coronavirus pandemic. This comes at a time when streaming consumption was already experiencing exponential growth.

In February 2020, Nielsen reported that streaming usage grew from 10% in the first quarter of 2018 to 19% in the last three months of 2019.  And according to the Digital Media Trends Survey, in 2019, there were already more than 300 streaming video services in the United States alone.   And that number is set to grow even more this year with major studios and tech giants adding new over-the-top (OTT) services every month.

Early estimates are predicting that the coronavirus pandemic will result in $5 billion in lost revenue for the entertainment industry due to diminished box office revenue and production delays.

However, the entertainment industry is adapting to the increased demand for in-home entertainment.  Some studios are skipping, or reducing, the theatrical window and going straight to digital.  For example, Universal Pictures and Warner Bros are releasing movies like Emma, Trolls World Tour, The Hunt, The Invisible Man and Birds of Prey on digital platforms during their theatrical windows.

Unfortunately, while streaming services stand to benefit from increased demand during this crisis, piracy eats into precious revenue.

Reports over the last year illuminated the significant negative economic impact of piracy on the television and film industry.  In June 2019, Parks Associates estimated that piracy and account sharing would result in a $12.5 billion annual loss to Pay-TV and OTT providers by 2024.  Similarly, a study released in June 2019 by the US Chamber of Commerce’s Global Innovation Policy Center found digital piracy costs the US TV and film industry anywhere from $29.2 to $71 billion annually.

And that was before the current crisis.

Pirates have a prime opportunity to lure subscription-weary, home-bound consumers to their illegal platforms.  This is particularly likely given the probability that many households are now closely monitoring discretionary spending.   Pirates offer a huge variety of easily accessible content, for little to no cost, and all in one place.

The magnitude of potential loss to the industry will be amplified during this current situation.  Protecting valuable assets and streaming revenue from piracy will be crucial to minimizing the impact on content owners’ bottom line.