The Pirate Streaming Market is Booming, and Creators and Consumers Alike Are Its Victims
Operators of what is known as pirate subscription Internet Protocol Television (PS IPTV) provide a familiar service: stream television channels and movies to users (often on a subscription model, but sometimes as a free-to-use platform that has advertisements). The content on PS IPTV services is of course stolen, however. But because the streaming apps and storefront websites look and feel like legitimate platforms, with sleek designs that mimic those of legal services, many consumers may simply not know that they are using an illegal service.
Whenever entertainment programming is distributed legitimately using new technology, pirates are not far behind in finding a way to redistribute that content illegally through the same technological channels. This is nothing new. But what makes this different is the sheer size and growth of this dark streaming industry, which is nothing short of extremely alarming. In Money For Nothing: The Billion-Dollar Pirate Subscription IPTV Business, a report that was released on August 6th, Digital Citizens Alliance (DCA) along with NAGRA, the digital TV division of the Kudelski Group, detail the massive ecosystem that PS IPTV operators have built. In the U.S. alone, PS IPTV services generate subscription revenues of $1 billion every year. And this is a conservative estimate that excludes the sales of piracy devices, the possibility of households subscribing to multiple pirate subscriptions, and other considerations. Whether they are aware that these services host pirated content or not, a staggering 8% of all households across North America use one of these services.
There are 3,500 identified pirate retailer storefronts that sell subscriptions to U.S. consumers, and it is not difficult to imagine why there are so many. They’re relatively easy to set up, and they’re lucrative. For one, the pirates of course pay nothing for the programming that makes up their product. Also, the cost to run the illicit operation is relatively low. For example, the TBS2650 is a product sold for $3,000 that is capable of simultaneously acquiring 20 HD live channels from the local market and re-encoding them for IPTV re-streaming. With subscriptions running mostly in the range of $10-$15 per month, a low price that undercuts legitimate competitors, providers operate with wide profit margins that range from 56% to 85%.
Notably, pirates often use legitimate services to aid their illegal activities. Common payment processors and credit card companies are used to collect the subscription fees. Website services and hosting providers are used to create, manage, and support the PS IPTV domains and storefronts. The pirates also utilize social media platforms, where the illegal products and services are predominately advertised. It is unclear whether or to what extent these legitimate services and platforms that help facilitate these illicit IPTV services are aware that they are supporting illegal activities, but it’s a problem that should be further explored and scrutinized in the future.
PS IPTV services cause obvious harm to copyright owners by siphoning away a large chunk of revenue that would otherwise be made through legal channels. It is also important to note that this black market can also be tremendously harmful to consumers as well. One of these dangers is malware, which is something the DCA has reported on before. Some pirates generate additional revenue by partnering with hackers to install malware within their apps, which exposes users to, among other things, risk of theft of personal and financial data. Those who had a piracy device in the home were three times more likely to have dealt with malware issues in the last year than those who did not have such a device, a May 2020 DCA survey found.
Even more disturbing are the pirate services that have their subscribers, either knowingly or unknowingly, turn over their home internet connections to be used by others who may be looking to use the connections for illegal activities, such as accessing child pornography, committing fraud, and launching cyber attacks. The perpetrators of such activities stand to benefit because these crimes are more difficult to detect when conducted through a residential internet connection, as opposed to a datacenter. Pirates are not only selling stolen programming for a profit, but also their consumers’ safety.
The Money for Nothing report is an enlightening one, but the DCA acknowledges that much more research is needed. Future studies should focus more on ad-financed services (rather than subscription-based services, which this one covers in-depth), other potential consumer risks involved, and the complicity or non-complicity of legitimate services like social media platforms and payment processors. This should stand as “the beginning of the inquiry to better understand the illegal PS IPTV services sector,” the DCA says, “not the end.”