Piracy to cost $9.1bn in US OTT revenue in 2019

OTT and pay-TV companies will lose out in around $9.1 billion of revenue due to piracy and account sharing in 2019 alone, according to a report from Parks Associates.

The 360 Deep Dive Account Sharing and Digital Piracy report from Parks Associates found that this number is set to grow by 38% to $12.5bn by 2024.

• Read more: Digital piracy costs US economy $30bn annually

The report, which looks at US households, found that 27% of US broadband households engage in some form of piracy or account sharing. However, consumers who report viewing an OTT video service for free but without ads are 22% more likely than average broadband households to subscribe to OTT services, it said.

“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, 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.’”

Growth in connected device ownership has shifted the focus of pirates towards the online video ecosystem, the report says, with 20% of US broadband households using a piracy app, website, or jailbroken device.

• Read more: How broadcasters are confronting the threat of piracy

The report also looked at the demographics of piracy, finding men, consumers under age 35, and households with low annual incomes pirate content at a disproportionate rate. Those are also the demographics that most often subscribe to OTT services.

Overall, 13% of consumers report using a piracy website or app, while 19% of US broadband households experience account related issues linked to an online video service. Parks Associates also found that penetration of paid OTT services was up by 13% over the past year, while free services take up has grown by 23%.

“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 said. “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.”

The study echoes a recent report from the US Chamber of Commerce which found that online piracy costs the US economy almost $30 billion a year, with pirated videos viewed over 200 billion times.