According to Parks Associates, in 2019 OTT and pay TV companies will see $9.1 billion in lost revenue due to piracy and account sharing. The research house expects the number to grow to $12.5 billion in 2024, a growth rate of 38%. Currently 27% of U.S. broadband households engage in some form of piracy or account sharing, Parks says.
"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 at 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.'"
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, three times as likely to use ad-supported services, and twice as likely to use transactional online video services. Growth in connected device ownership has shifted the focus of pirates toward the online video ecosystem - 20% of U.S. broadband households are using a piracy app, website, or jailbroken device.
"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."
Demographics that most often subscribe to OTT services are also those who most often engage in piracy or account sharing. Men, consumers under age 35, and households with low annual incomes pirate content at a disproportionate rate.
Additional research indicates:
- 13% of consumers report using a piracy website or app.
- 19% of U.S. broadband households experience account-related issues with an online video service.
- Penetration of OTT paid services was up 13% over the past year, while free services increased 23% over 2018.