Piracy, Password Sharing to Account for $12.5 Billion in Lost Revenue

Parks Associates is forecasting that in 2019, OTT and pay-TV companies will see $9.1 billion in lost revenue due to piracy and account sharing, with that number growing to $12.5 billion in 2024.

According to the 360 Deep Dive: Account Sharing and Digital Piracy report, this is a growth rate of 38 percent. Currently, 27 percent of U.S. broadband households engage in some form of piracy or account sharing.

“Piracy is a complex issue that cannot be addressed with a single solution or by targeting a single-use case,” said Brett Sappington, senior research director and principal analyst at Parks Associates. “Most pirates also subscribe to at least one OTT service. They are not simply thieves looking to steal content but are video enthusiasts who engage with many different services. OTT services could better reach these consumers through ad-based content, which also aligns with these users’ general belief that movies/music should be given away for free.”

Consumers who report viewing an OTT video service for free but without ads are 22 percent more likely than average broadband households to subscribe to OTT services, three times as likely to use ad-supported services, and twice as likely to use transactional online video services.

Growth in connected-device ownership has shifted the focus of pirates toward the online video ecosystem, Parks Associates finds: 20 percent of U.S. broadband households are using a piracy app, website or jailbroken device.

Demographics that most often subscribe to OTT services are also those who most often engage in piracy or account sharing. Men, consumers under 35 and households with low annual incomes pirate content at a disproportionate rate.

“Growing subscriber numbers and an increased number of services signal a very healthy OTT market, but more services and aggressively promoted content could incite more piracy over time,” Sappington added. “Consumers will hit an upper limit to spending eventually. When that happens, they will resort to pirate tactics to get the content that they want, particularly for sports and other content where trials are not available.”