Netflix Is Not Going to Kill Piracy, Research Suggests

Netflix and other on-demand streaming services barely help to curtail piracy, new research shows. While legal streaming services are commonly used nowadays, the limited availability of recent content and the associated price tag are serious hurdles for many pirates.

There is little doubt that, in many countries, Netflix has become the standard for watching movies on the Internet.

Generally speaking, on-demand streaming services are convenient alternatives to piracy. However, millions of people stick to their old pirate habits, Netflix subscription or not.

Intrigued by this interplay of legal and unauthorized viewing, researchers from Carnegie Mellon University and Universidade Católica Portuguesa carried out an extensive study. They partnered with a major telco, which is not named, to analyze if BitTorrent downloading habits can be changed by offering legal alternatives.

The researchers used a piracy-tracking firm to get a sample of thousands of BitTorrent pirates at the associated ISP. Half of them were offered a free 45-day subscription to a premium TV and movies package, allowing them to watch popular content on demand.

To measure the effects of video-on-demand access on piracy, the researchers then monitored the legal viewing activity and BitTorrent transfers of the people who received the free offer, comparing it to a control group. The results show that piracy is harder to beat than some would expect.

Subscribers who received the free subscription watched more TV, but overall their torrenting habits didn’t change significantly.

“We find that, on average, households that received the gift increased overall TV consumption by 4.6% and reduced Internet downloads and uploads by 4.2% and 4.5%, respectively. However, and also on average, treated households did not change their likelihood of using BitTorrent during the experiment,” the researchers write.

One of the main problems was that these ‘pirates’ couldn’t get all their favorite shows and movies on the legal service, which is a common problem. For the small portion of subscribers who had access to their preferred content, the researchers did find an effect on torrent traffic.

“Households with preferences aligned with the gifted content reduced their probability of using BitTorrent during the experiment by 18% and decreased their amount of upload traffic by 45%,” the paper reads.

The video-on-demand service in the study had an average “fit” of just 12% with people’s viewing preferences, which means that they were missing a lot of content. But even Netflix, which has a library of thousands of titles, only has a fit of roughly 50%.

The researchers show that the lack of availability is partly caused by licensing windows, which makes it hard for legal video streaming services to compete with piracy.

“We show that licensing windows impose significant restrictions on the content that can be included in SVoD catalogs, which hampers the ability of content distributors to offer catalogs that cater to the preferences of pirates,” they write.

However, even if more content became available, piracy wouldn’t magically disappear. In the experiment, subscribers were offered free access to a video on demand service. In the real world, they would have to pay, which presents another barrier.

In this study, the pirate households were willing to pay at most $3.25 USD per month to access a service with a library as large as Netflix’s in the United States. That’s not enough.

This leads the researchers to the grim conclusion that video on demand services such as Netflix can’t significantly lower piracy rates. They could make a dent if they increase their content libraries while lowering the price at the same time, but that’s not going to happen.

“Together, our results show that, as a stand-alone strategy, using legal SVoD to curtail piracy will require, at the minimum, offering content much earlier and at much lower prices than those currently offered in the marketplace, changes that are likely to reduce industry revenue and that may damage overall incentives to produce new content while, at the same time, curbing only a small share of piracy,” the researchers conclude.

While Hollywood maintains that people can get pretty much anything they want legally, the current research shows that it’s not as simple as that. Most people are not going to pay for 22 separate subscriptions. Instead of more streaming services, it would be better to make more content available at the ones that are already out there.

The research was partially funded by the Carnegie Mellon University’s IDEA, which receives an unrestricted gift from the MPAA, so Hollywood will likely be clued in on the results.

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