OTT vs piracy: how can sports organizations counteract illegal streaming services?

The history

For obvious reasons, there are significant commercial incentives to counteract piracy. The industry, from legislators to lawyers, rights holders, content owners and so on, have made progress in some areas. However, sophisticated, unscrupulous individuals still employ illegal methods in an effort to access big entertainment and sporting events around the world. In short, this theft of intellectual property stands to undermine the sale of intellectual property and impact the ability for consumers to enjoy a great product at a fair price.

The first examples of piracy date back to the analog age. Think of the era of VHS, illegal duplication and sale of content recorded from different sources in the entertainment industry, for instance. Or, again, think of the widespread parallel market of bootleg albums in the music space. It assumed alarming proportions at the end of the last century when Napster surfaced as a pioneering peer-to-peer (P2P) file-sharing Internet software. Although networks that facilitated the distribution of files across the internet already existed, Napster encouraged sharing digital audio files encoded in MP3 format.

As the software gained popularity among the growing internet audiences (at its peak it counted 80 million registered users), the company faced difficulties due to copyright infringements. With lawsuit after lawsuit, Napster was forced to shut down in July 2001 in order to comply with the injunction. However, the damage was done and the world of music changed forever.

In parallel with the natural evolution of the internet and its still undiscovered opportunities, Napster had in fact opened the floodgates to a world of non-legal (or not yet properly regulated) ways for users to share material protected by copyright.

The music industry was the first main stakeholder to take action against piracy, by reacting to a sustained collapse of sales of physical products. That’s how music downloads started to be treated as an asset to monetize audiences (by several organizations, including Apple, who launched their iTunes platform), rather than a mere threat.

This led streaming services - Spotify, then Apple Music and others - to foresee the opportunity to distribute music from hundreds of thousands of artists all over the globe, in exchange for a fee paid by users within a typical subscription pattern. All from one platform.

Today, streaming video, like music, is largely sold via subscriptions, and such Digital Rights Management tools are critical to ensuring a fair balance between content creation, content distribution, and content enjoyment. In parallel, we have seen a proliferation of dedicated OTT services that broadcast live and on-demand content to keen fan-bases. As technology evolves, so do the methods that cyber-pirates use to circumvent the laws to broadcast sport illegally.

The challenges

In October 2019, a report commissioned by personal finance company Finder.com found that close to one-in-ten (9%) had illegally streamed an English Premier League game within the last 12 months. More generally, 17% admitted to streaming films, movies or sports illegally in the same period. Of course, this is just one survey that emphasizes the scale of the problem, but it is indisputable that this has a severe impact on revenue generated by sports and media rights holders. Recently, Tyson Fury met Deontay Wilder in the second instalment of their World Heavyweight Boxing trilogy. It was reported that between 10million and 20million people watched the fight illegally. The fight was marketed at $79.99.

The problem is exacerbated by the belief that in most cases, those streaming illegally know that they aren’t allowed to do so. It isn’t a case of ignorance or a lack of knowledge which could be tackled with marketing or educational campaigns. So there has to be another solution. For the most part, we know that most users will pay for content that they deem to be of sufficient value.

The role of OTT – providing value and an experience which justifies the price

A natural development of incredibly sophisticated anti-piracy technologies has accompanied the rise of OTT services. From forensic watermarking (the imperceptible embedding of information within content both video and audio that identifies the source or intended recipient of the content) to IP blocking (an approach that acts both on visible piracy, what users actually do on the internet, and commercial piracy, related to services that deliver actual pirate streams for live events), there has been continuous effort to disrupt the illicit distribution of content.

What more can OTT services themselves do to help to stem piracy, then? There is an innate difficulty in persuading those who are accustomed to not paying for something – albeit not by fair means – to now pay for it. We believe that this falls into two areas – price point and user experience.

As the so-called ‘streaming wars’ continue to escalate – there will be a greater breadth of choice for consumers. And with it, you’d also expect the quality of offering to increase too. Whether that relates to the design, user experience, video player, interactivity and so on.

Modern, state-of-the-art streaming services provide users with an experience that goes above and beyond what they were accustomed to. In sports, in particular, successful and well-built OTT platforms invest significantly to create, distribute and provide tremendous video quality (HD, 4K, etc) - that may include multi-angle replays, 360-degree cameras and real-time data at the user’s fingertips.

This is in stark contrast to - and cannot be easily replicated by - pirate streams that are often of lower quality, dangerous for operating systems, interrupted by recurrent adverts, and, most importantly, monitored by special authorities. The quality of the experience is the big dividing line and something which has to be emphasized repeatedly.

Put simply, those not watching on modern services are not experiencing the action in the same way.

Value exchange

Deltatre’s ‘Where the Money is Going: The Future of Sports Entertainment’ report shows that over two-thirds of consumers pay up to $39 per month on sports content. However, 20% of self-described ‘sports fans’ who regularly watch sports content pay nothing for access in any given month. Underlining this whole issue is the need to provide a service fans want, at a price they can afford.

“The data have shown that the majority of users are willing to pay for content that they deem of sufficient value,” said Jeff Volk, Head of Business and Revenue, Americas at Deltatre. “'Providing both core and casual fans with greater control over the specific programming that they want, at multiple price points, is key to both scaling a platform and driving consumer value.''

Added to this, recently we have seen BT Sport announce that it will launch five new packages, including TV, entertainment, movies, and sport, which will now be offered on a monthly subscription basis – another example of the easing around long-term, lock-in pay-TV contracts. This move aligns this network and content provider with the likes of Sky’s NOW TV, DAZN, Netflix, etc., which operate with fine-tuned monthly, no-contract billing system.

WWE Network has announced new AVOD packages that look to maximize the value from users who want free content, while also providing SVOD packages that maximize the value from users with price elasticity. Those who disrupt this value exchange risk affecting the whole model for everyone by preventing content creators from recouping such investments.

One reason people turn to illegal streams is affordability. Giving the fan greater control over the specific content they really want, at a price they feel is achievable, is key to this. Operators looking to minimize the effects of illegal piracy should invest in understanding what combination of packages and at which prices will resonate with the broadest spectrum of their audience. Creative thinking, alongside user research, is needed. What about a discount for those joining after half-time or a certain round in a boxing bout, for example?

While there is an option simply shut down an account that has users logged in from different geographic regions (e.g. password sharing). Some models have shown that it may be far more effective to identify and track these users, notify them that suspicious activity has been detected and then offer them a deal to purchase directly.

Closing thoughts

There will always be a minority of people who will seek out illegal streams, no matter how good a legitimate service is provided. Where there is technology, there’s always going to be part of a fraction of the audience who look outside the system. Technology is getting better and better at identifying these users and making it more difficult for them to watch with any quality or for any sufficient length of time.

Clearly, there is no single ‘silver bullet’ to solve the issue. However, affordability seems the key driving force. On the other hand, rights owners and holders are working hard to provide users with unprecedented experiences when it comes to consuming sports content across multiple platforms and devices.

A powerful enough USP in regarding functionality or interactivity can justify streaming service price. Give the customers what they want at a price they can afford and they will follow.

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