A comprehensive study by Ampere Analysis, commissioned by the content protection and anti-piracy solutions provider Synamedia, reveals the true cost of sports piracy and, refreshingly, provides a realistic judgement on who can be converted from pirate services to legitimate ones rather than assuming the value of piracy equals the total of lost revenue (because some people would simply stop consuming if it were not free). The figure they have calculated is $28.3billion per year. That is new revenue that the television industry (whether it is Pay TV operators, league rights holders with D2C services or born-digital sports curators) can recoup if they can persuade users of pirate services to switch to legitimate ones.
The study, called ‘Pricing piracy: the value of action’, identifies the demographics, characteristics and motivations of the illegal sports content consumers that are most likely to convert to legal services, and what will lead them to switch (including their reaction when illegal viewing is disrupted). So, as Synamedia makes clear, this is not an academic exercise but a call to action. The conclusion is that 74% of sports fans are willing to switch from illegal streams if a legitimate alternative is available and if the illegal streams become unreliable.
It is worth pointing out that the people this study addresses are not shadowy figures and dangerous criminals: Ampere Analysis finds that 57% of what it calls the ‘converter cohort’ (those using pirate services who can be switched to paying) already pay for legitimate sports services – so some of them are existing customers of Pay TV platforms and streamers.
The study also finds that 52% of the ‘converter cohort’ also pay pirates for sports content. Thus, this is not purely an exercise in trying to convert people who are used to free content to paying for content.
Ampere Analysis surveyed 6,000 sports fans aged 18-64 in in ten markets (Brazil, Egypt, Germany, India, Italy, Jordan, Malaysia, Saudi Arabia, UK and the USA) during March 2020 (so before the coronavirus-related lockdown and event suspensions) to understand their behaviour and how viewers of illegal services respond to anti-piracy measures. As Synamedia explains: “Converting pirate customers to legitimate ones requires service providers to address the triggers that encourage consumers to seek out illegal services in the first place.”
The triggers for using pirate services include:
- Flexible access to content without complex installations or long contracts
- Ease of use
- The availability of content on every device in any location
- A price point that is often much lower than a traditional Pay TV service with premium sports tiers included.
Some of these can be addressed as part of the overall Pay TV user experience while others, like price point, are much harder to adjust. So perhaps the best news from the report is the extent to which conversions (from pirate to legitimate) can be driven by the disruption of pirate streams.
Fear of arrest and fear of malware are other factors in persuading sports piracy users to ‘go legitimate’, but according to Yael Fainaro, Senior Vice President of Security at Synamedia, “The overriding reason to convert is if they know the service will be disrupted – either the content is not available via the pirates or there are quality problems.
“It is clear that successful anti-piracy action can lead to successful revenue gain for the sports industry. For many years, [media and rights owners] asked how they can see the return [on their anti-piracy investments]. This report clearly shows that there is the potential for conversion.”
The study finds that the converter cohort tends to be younger and are often families with young children. They are avid sports viewers with many watching ten or more different sports using connected devices.
60% of the converter cohort say they would subscribe to traditional Pay TV services, particularly those that offer exclusive sports rights, and the vast majority of the new $28 billion per year would find its way to Pay TV operators if conversion measures were successful. For pirate users who already take Pay TV, this would include upgrades to top sports tiers. The other 40% of the pirate users surveyed say they would subscribe to OTT streaming sports services, including single-sport services run by rights owners.
According to Ampere Analysis calculations, OTT sports streaming services stand to gain $5.4bn, or 19% of the total new revenue that is available. The inconsistency between the proportion of people and the proportion of money that would convert to sports streaming services is explained by their lower ARPU compared to Pay TV.
Synamedia declares: “These insights give the industry the power to transform piracy from a cost centre into a revenue opportunity with measurable ROI.”
Here is how Ampere Analysis worked out the addressable market for piracy conversions:
- Of all illegal sports viewers, 52% pay for some or all illegal services and 48% consume illegal content only when it is free.
- Of those who pay for pirate access, 18% say they would not pay for a legitimate provider (9% of the total cohort), even if they lost access to the pirate service. This group is therefore discounted as a potential revenue source.
- From the group that never pays for its illegal access today, around one-third have no intention of paying in future (17% of the total cohort). This segment is also discounted as a revenue opportunity.
According to Yael Fainaro, “While previous attempts to value the revenue leakage from sports streaming piracy took a crude approach, we now have the detail to develop targeted approaches and the tools to deliver quantifiable results, ensuring every investment hits the jackpot.
“After years of growth, a recent downturn in rights fees has been exacerbated by the pandemic, hitting sports rights hard. But just as the value of rights is being eroded, there is now the prospect of creating new revenues by converting illegal viewers into paid subscribers.”
Synamedia is a leading provider of content protection and anti-piracy solutions for television. The company protects around $70 billion in Pay TV operator revenues every year. Products include Streaming Piracy Disruption (SPD), CSFEye Credentials Sharing and Fraud Insight (focused on casual password sharing and the sale of passwords), OTT and broadcast security solutions.