Piracy of ICT services and equipment, a longstanding problem for the industry in Latin America, has grown to new levels with the transformation of the audiovisual sector and the widespread use of OTT and streaming services.

In the world of streaming, most of the piracy – as well as anti-piracy solutions – are much more closely related to cybersecurity and technological issues than was the case with traditional pay-TV piracy.

Digital piracy of audiovisual content is responsible for annual losses of US$733mn for the industry in Latin America, according to a recently released study by the Latin American telecom study center, Cet.la. At the same time, pirate websites earn an estimated US$675mn a year with ads, payments from customers and other revenue sources.

The study was carried out for Cet.la by tech consultancy Ether City, which uses big data to analyze supply, demand and the impact of piracy from the perspective of the user searching for content or equipment online.

“Piracy is much more advanced, distributed and accessible. Our work seeks to be as proactive and as little reactive as possible. The entire flow is accompanied by machine learning robots,” Rodrigo Arrigoni, CEO of Ether City, told BNamericas.

The study tracked 10 countries from November 2019 to March 2020: Argentina, Brazil, Chile, Colombia, Mexico, Paraguay, Peru, Uruguay and Venezuela. Brazil and Mexico are the piracy in Latin America.

In addition to tracking pirated content, Ether develops anti-piracy solutions and serves 40 global brands directly or indirectly, according to Arrigoni.

Based on the “observational” analysis the company carried out, there were at least 15.6bn visits made in the region to ‘illegal’ online websites with pirated content, mostly for streaming, live TV and download, during the period examined.

The findings show that the main sources of access to pirated content for users are search engines, social media and online marketplaces.

Furthermore, websites with pirated content use different techniques to remain relevant in search engine results.

In Latin America, 35% of the URLs on search engines analyzed that are related to audiovisual content online lead to illegal services or content, according to the study.

For example, if a user searches in Google Brazil for keywords such as “watch movies online” (15mn searches last year), 9 of the first 10 results are deemed illegal.

"We examined about 1,091 pirate websites – they’re live content sites, classic streaming and also traditional torrent websites, which remain a widespread type of piracy in the region," said Arrigoni.

To calculate the figures of losses and revenues from audiovisual piracy, Arrigoni explains that Ether estimated an average price of OTT plans at US$6.50 per month, taking into account Netflix, Amazon and HBO services.

The company then “discounted” a bouncing rate (users who enter, but do not remain on the website for more than a few seconds), among other metrics.

"If a website has 100,000 visits and a 30% bouncing rate, we count 70,000 visitors," he said.

MPA

A separate study by the Ipsos MORI Institute, at the request of the Motion Picture Association (MPA), estimated that piracy generates annual losses of 4bn reais (US$770mn) in Brazil for the audiovisual industry, the number estimated by the Cet.la study for the entire region.

According to Brazilian pay-TV association ABTA, the estimated losses for the Brazilian audiovisual chain are even bigger at approximately 10bn reais per year.

Unlike Ether's big data tracking methodology, the Ipsos MORI study directly surveyed 2,400 internet users aged 11 years or older in the last quarter of 2018. The findings were only disclosed in March this year.

Around 470mn movies and 538mn episodes of TV series and programs were not legitimately purchased, directly affecting the productive chain of the audiovisual sector (cinema, open TV, closed TV and OTT), according to this study.

INSUFFICIENT CRYTPOGRAPHY

“The pirate will always try to dodge the system in the easiest way. Therefore, whoever produces and distributes content needs to look at the source of piracy through protection devices and essentially from a technological standpoint," said Danilo Almeida, head of systems integration at NAGRA, at a recent event on the issue promoted by the Tela Viva website.

Like Ether, Nagra also develops anti-piracy solutions.

However, according to the specialist, cryptography is no longer a sufficient resource to prevent pirates.

“We found that over 70% of pirated IPTV sources are lawful and come from a valid subscription. Even the end-to-end encrypted content is not immune to the action of pirates, who can invade the content in different stages of production and distribution,” Almeida was quoted as saying by Tela Viva.

He said that a more effective tool is the use of watermarks, which is a technology capable of identifying the user leaking the content.

CULTURAL ISSUE

The fact is that piracy is a chronic problem in Latin America, as well as being a widespread cultural phenomenon.

In 2019, Brazil lost an estimated 291bn reais (US$41.2bn) to all types of piracy, ICT and audiovisual, but also fake brand-name products and the like.

The figures come from the national forum against piracy and illegality (FNCP) and refer to the losses made in 15 industrial sectors in terms of taxes that were not collected.

In Mexico, the American Chamber of Commerce (AmCham) estimates that the piracy industry moves around 43bn pesos (US$2.15bn) annually. It also claims that 8 out of 10 Mexicans consume products without paying for the property rights.

According to the Latin American anti-contraband alliance (ALAC), the illegal market is equivalent to 2% of the GDP of Latin American countries. In Brazil, meanwhile, that figure is thought to be as high as 7.85%.