Is digital piracy the iceberg waiting to sink the streaming industry’s Titanic, or are these concerns overblown?

In an era when content is king, big names like Netflix and emerging ones like Triller Corp are sounding the alarm louder than ever in their financial disclosures to the Securities and Exchange Commission (SEC).

They’re united by one common issue: the rise in popularity of digital piracy. This means that people can easily watch shows and movies for free, which is huge competition for these companies.

This article looks into these claims and a few related oddities such as how all these companies seem to be forming something almost like a cartel, saying pretty much the same thing about piracy in their reports. We aim to unpack whether this shared concern is as dire as it seems or an exaggerated fear, by evaluating how piracy affects streaming services and what it means for the whole world of online media.

Echoes of Concern: The Streaming Industry’s Unified Voice Against Piracy

According to Bloomberg, since trying to compete with Netflix, streaming services from traditional Hollywood companies like Disney+, Peacock, and Paramount+ haven’t made much money. They lose billions every year, making people wonder if streaming can ever be as profitable as cable TV was.

However, this situation has helped pirates who illegally copy movies and TV shows from legal sites and put them on their own sites.

Netflix isn’t showing signs of failure, yet it’s worried about piracy, a concern it has repeatedly expressed in its official financial reports to the SEC. This report aims to inform investors about the challenges Netflix faces from piracy, among other competition.

In its latest SEC report, Netflix discusses how piracy, by “offering virtually all content for free,” is a significant competitor. The company is worried about piracy growing quickly and possibly harming its business.

The various economic models underlying these channels include subscription, transactional, ad-supported, and piracy-based models.

Triller Corp also noted how it is navigating through the increasing issue of piracy in its latest SEC filing. It states that this growth in piracy poses a risk to the business because it provides a tempting option for viewers to get content for free. Consequently, the money streaming platforms might pay Triller for its content could drop if piracy cuts into their profits.

The value that streaming services are willing to pay for content that we develop may be reduced if piracy prevents these services from realizing adequate revenues on these acquisitions.

This concern about piracy is common across many companies, as shown in financial reports with remarkably similar language.

In fact, both filings for Netflix and Triller Corp contain this exact phrasing:

in light of the compelling consumer proposition, piracy services are subject to rapid global growth…

It seems there’s a lot of copying in these reports, with several companies using the same phrases to describe the threat of piracy.

There are mentions of this exact phrase across different companies and various years:

It’s unclear where the original phrasing started or if they are in fact organizing with (and not just copying) each other.

The discovery of identical passages in the SEC filings of various streaming platforms raises some questions. It’s curious to see the same language used across different companies, hinting at a common view of piracy as a big threat.

This similarity could be due to a few reasons. First, it might show a strategic move within the industry, with companies coming together to highlight the serious problem of piracy to regulators and the public. This united front could make their case for tougher anti-piracy laws stronger.

On the other hand, the identical wording might simply suggest a lack of creativity or dependence on legal and consulting firms that reuse language in their documents. This method might make addressing common problems easier but also brings up concerns about how deeply individual companies understand the impact of piracy on their own situations.

The effects of these identical passages are complex. On one side, they underline the big challenge piracy presents to the streaming industry, pointing out how it can reduce earnings and shake up how content is shared.

On the other side, this situation might show the need for more specific and detailed ways to talk about and fight piracy, taking into account the different strategies and experiences of each platform.

The Current State of Digital Piracy

It’s hard to argue that piracy isn’t a major problem for streaming services and media companies in general.

Research by MUSO and Kearney shows online video piracy costs the global media sector $75 billion annually.

After a drop in 2020 due to reduced content production because of the pandemic, piracy site visits are now above pre-pandemic levels and are expected to be 13% higher in 2023 than in 2019. This makes it the busiest year for video piracy ever since MUSO started tracking video piracy data in 2017.

The data for 2023 is expected to show that there were 141 billion global piracy visits, with most coming from Europe (44 billion) and the Asia-Pacific region (43 billion). North America is estimated to make up 20 billion visits.


Bar graph showing billions of visits to piracy website over the years

As companies like Walt Disney Co. raise their streaming service prices to as much as $20 a month to make more money, more people are turning to piracy. The Motion Picture Association (MPA) has found that in the U.S., there are about 130 sites offering pirated content, with the three biggest ones having around 2 million users. These users pay $5 to $10 a month for access to movies, TV shows, and sports.

So ultimately, this increase in piracy is directly linked to the higher prices of official streaming services. When these services charge more, pirate sites become more attractive to users.

Another driver of digital piracy is the rise of streaming piracy. Instead of finding sketchy sites to download TV shows and movies from, which may contain malware or may put the downloader into legal jeopardy, they can simply watch it on a different (but still sketchy) website. Variety found that 95% of pirated TV content and 57% of pirated movies were accessed through these illegal streaming sites.

The MUSO report also notes that piracy is not just a pastime, but a key operation for global criminal groups involved in various illegal activities.

In fact, the MPA reported that Russian criminal groups have been paying people to secretly record movies in AMC theaters in Los Angeles using camcorders. These recorded movies are then put online with special marks that link to illegal online casinos run by the same criminals. This is done to get people watching the movies to gamble on their websites.

Piracy Is Undoubtedly a Major Problem for Streaming Services

It appears that the fear of digital piracy among streaming companies like Netflix is real and justified.

With piracy sites getting more visits than ever, especially as streaming prices rise, this issue threatens the future of streaming. High subscription costs drive people towards free pirated content, affecting not just profits but the entire process of making and sharing movies and TV shows. Efforts to fight piracy must involve legal actions and better pricing strategies from legal services.

Additionally, fighting piracy also means tackling organized crime groups that run these illegal sites. To solve this, streaming services, law enforcement, and even viewers need to work together.

By making legal streaming more affordable and educating people about the harms of piracy, the industry can fight this threat. The challenge is big, but with a combined effort, it’s possible to protect creative content and keep the streaming industry strong.