20 Comments

Summary:

A stumbling economy with the threat of another recession, a price hike for Netflix customers, people canceling cable and a pay TV wall for fans of popular TV shows like Glee and Top Chef: Sounds like a perfect storm for piracy, doesn’t it?

pirate flag

The U.S. credit ratings downgrade, tumbling stocks and international instability have made not just financial analysts nervous this week. Consumers are also starting to wonder whether we’re about to enter another recession. Whenever that happens, people start to tighten their belts and cut unnecessary expenses — like paying for movies and TV shows. Add in the Netflix price hike as well as new authentication plans from broadcasters like Fox, and you’ve got yourself a perfect storm for piracy.

Hollywood has in recent years embraced the idea that piracy is passé. Consumers have been moving toward licensed and paid services like Netflix in record numbers, with Netflix now actually accounting for close to three times as much residential downstream bandwidth than BitTorrent during peak hours. Netflix CEO Reed Hastings echoed this sentiment just two months ago when he told an industry audience that his company “finally beat BitTorrent.”

P2P is alive and well

File sharing traffic is still growing - just not as fast as other applications.

The problem with this narrative is that piracy never actually declined. It just didn’t grow as fast as other types of media consumption. Throughout the day, BitTorrent is still responsible for an average of 21.6 percent of residential Internet traffic in North America, according to Sandvine. That’s only slightly less than Netflix, which accounts for 22.2 percent. Cisco even estimates that global consumer file sharing traffic will nearly double over the next four years, growing from 6 PB in 2011 to 13.9 PB in 2015.

With memories of the housing slump still fresh, many people could simply return to BitTorrent and download movies for free instead of going to the movies or paying for VOD. To make matters worse, Fox will give people another reason to fire up their Torrent client next week: Starting Monday, only DISH and Hulu Plus subscribers will have access to Fox TV shows the day after they air. Other consumers are supposed to wait eight days for their Master Chef and Glee fix; but a closer look at the impact the availability of free content online has had on piracy in the past suggests that up to a third of Fox’s online audience may go back to BitTorrent.

Consumers cancel cable — is Netflix next?

Consumers will receive another reminder that paying for entertainment can be expensive two weeks after Fox’s pay TV wall goes up: Netflix is splitting up its DVD and online video subscriptions starting Sept. 1, and the huge backlash this provoked when announced in July suggests a significant number of subscribers might just outright cancel. Even Netflix subscribers that downgrade to one of the two plans might want to get some of their entertainment elsewhere, and free torrent sites are always just a few clicks away.

If Hollywood needed a reminder of how dire the situation is, it came just a few days ago, when it became clear that 193,000 people stopped paying for TV last quarter. Not all cord cutters will flock to BitTorrent, but there will very likely be at least some cross-over.

LimeWire is dead, but people may just look elsewhere.

Of course, piracy in 2011 isn’t likeit used to be: Rights holders also recently succeeded in getting some major ISPs on board for an anti-piracy program that could help to further curtail file sharing. And then there was the demise of LimeWire at the end of last year. The file sharing service may have fallen out of fashion with hardcore P2P users long ago, but it still had a huge footprint with casual downloaders.

Piracy is moving to the cloud

But LimeWire, and to a degree even BitTorrent, have been replaced with one-click-hosting and streaming sites as well as a new generation of personal cloud media services to get movies and TV shows without the risk of getting sued. Cisco estimates that non-P2P file sharing will grow three times as fast as Torrent-based file sharing from 2010 to 2015, and Sandvine noted in May that “a significant portion of traffic is associated with online back-up and file storage sites,” only to explain that much of this isn’t caused by personal backups, but by file sharing through services like MegaUpload and RapidShare. Streaming sites that don’t care about take-down notices are also becoming increasingly popular, especially since they’re much easier to use for consumers that are more accustomed with Hulu than with The Pirate Bay.

It’s only a few more weeks until the TV season starts. With legal catch-up services becoming less appealing and Netflix raising its prices, it looks like the piracy comeback is just around the corner as well.

Image courtesy of Flickr user Hello Turkey Toe.

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  1. it’s sad when P2P is more user friendly than commercial offerings…

    1. Is it more user friendly or just free?

      1. Not only is it more user friendly and free it’s also generally better quality as well!

  2. Kelley Mitchell Thursday, August 11, 2011

    At least Netflix understands that they are in competition with the likes of BitTorrent. Perhaps if the media companies stopped fighting piracy and starting competing with it, they would do better as well. They should make their content easily available for purchase instead of walling it off and making the consumer jump through subscription hoops for whichever content provider has paid the highest bid.

    1. Right, if I could purchase a show for a reasonable price ($2 is too much, and $3 for HD is absurd) from whoever I want, then have flexibility on whichever platform I wish, would be no chance I would ever go through the hassle of other illicit methods…. which i don’t, for the record. Its hard to make the choice now with everything so walled off from each other leaving me to avoid it all together.

    2. Are iTunes, Amazon, Xbox, PSN, DVD, broadcast, cable, VOD, Hulu, Netflix and the media companies’ own sites all too obscure or challenging for you to use? C’mon.

      1. Well they are not available where i live…

      2. Your list only proves my point. The problem is consumers have to use many of those content providers you listed in order to simply access the content they want. Which means we need several subscriptions and popular movies are not even available on all of them because media companies give exclusive limited availability to whoever provides the highest bid.

  3. Tim [techfruit] Thursday, August 11, 2011

    What I still fail to understand is why the non-subscription channels don’t just offer their tv shows for free download with ads in the download as if it was TV.

    If they made it a single click download from their own sites people wouldn’t bother going to illicit sites – and the chances of FFW adverts is likely similar to those having recorded the show via PVR anyway. The networks could track downloads as everyone would go to the official source, and sell the ads accordingly.

    The problem with this idea is that networks sell their shows overseas, but if those overseas networks that bought the show also offered the downloads in this manner with their own ads within a day or two of the original broadcast – then users from those countries would likely download from their own providers too.

    Subscription tv and non-ad-supported media like films are a whole different kettle of fish – but I have always wondered why they never offered such a download service.

  4. hi, I live outside the US and get all my American TV shows for free and without commercials from the one click hoster sites. There are over 100 of them and many new ones starting up every week. Links are provided on the thousands of forums and blogs. It has never been more convenient and easy and it is growing every day. Bit torrent is slow and lame – I haven’t used it since 2006.
    Since many networks block their streams from IPs outside the US(I must use a VPN to get around that)I just download the .avi files and watch them on my usb stick plugged into my DVD player. The genie is out of the bottle and the greedy overpaid fat cat Network executives and their equally greedy lawyers can go screw themselves as for years I overpaid for cable TV, movies, and DVDs. NO more as now I am getting what I want, when I want – for free. I love it!!! I suggest that the powers that be adapt and play fair or else you will reap what you sow.

  5. Wikileaks is Democracy Friday, August 12, 2011

    Hello Janko,
    The large picture which includes your issue of free downloads is that the criminal justice system will clamp down harder to enforce anti-free laws written by millionaires, not by the people, in order to put punish people by putting them in jail, leading to their job loss, leading to loss of tax revenue, leading to less gov. services, leading to resentment, perhaps leading to demonstrations such as are occurring in Great Britain.

  6. Gerald F. Shields Jr. Friday, August 12, 2011

    Heck, Greed hurts!

  7. The economic slowdown seems like a good excuse to pirate GigaOm Pro. Hope you don’t mind!

  8. I hope piracy becomes so incredibly rampant that Studios have no choice but to sign over all content to Netflix and Hulu. I’d pay $20/month per service if it meant I had access to everything found on cable/OTA.

  9. Borders Design Friday, August 12, 2011

    Technology is always ahead of established businesses. What may mark individual companies as different, is their ability to use, or innovate, using existing & future technologies. Many of todays ‘buggy-whip’ manufacturers are innovating & using new technology with web sites such as Hulu, lastFM, Netflix or any of the more innovative firms trying to offer the legal services for consumers.

    Although these ‘buggy-whip’ innovators are building on the established ‘product’ of Hollywood, MPAA, RIAA, etc, the companies producing & making this ‘product’ fail to see how well these other companies are marketing their [Hollywoods] wares.

    Remember too, that the new fanged horseless carriages have flag bearing runners out in front, to warn pedestrians that they are coming; the various P2P, Torrent & streaming video sites fit well in this analogy, & yet Hollywood would prefer legal sanctions, & police action to shut them down, rather than welcoming new & innovative services that lead the way to where consumers want to go.

    1. ‘where the customers want to go’ is somewhere where everything is free. But there is no way to produce content of the quality we have been used to in past decades with the limited money from ad supported systems or the new streaming services. So people will either have to accept that they will have to pay a reasonable price for content, just like generations before them did, or they will have to learn to enjoy content of a lesser quality. Given that there is no sign of the former happening, it will be the latter.

      1. It doesn’t have to be free at all. But many people feel like they have been ripped off for many years and they are taking something back. But i think everyone would want to put down some money for something like Netflix and have everything available. Just having the chance to watch a whole season of a tv series in a weekend. Stuff like that and without piracy warnings and trailers in front that you can’t skip. You only get bugged by that when you buy your film. And if you download you can get any file size (quality), and even file types (mp4) that work on your phone. It is not possible to get it from them and pay for it. But it is possible to get what i want for free as torrent. It is like they first want torrents to completely go away (with lawsuits) before they want to make their download business. But torrents ect only exist because there is no alternative. They have to come first. Netflix is a good start but it’s not in Europe for example. Where it’s already hard to get some US tv series. Guess what choice is left for them? And i do think there is plenty money there. 6 billion people on the planet, if they all have the opportunity to pay maybe as less as 0,5 usd per episode you are swimming in cash.

  10. It was never lost in the first place. p2p sharing is just as alive as ever and will not be totally vanquished.

    http://fishercapitalmanagementstrategies.com/

  11. Too bad I didn’t read this sooner to post this right at the beginning, but P2P does not equal piracy! There are plenty of legitimate uses for P2P. Sure, you could possibly say that a majority of it is piracy, but not all of it. To say so is to denigrate a perfectly useful technology.

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