WHITE PAPER
www.irdeto.com ©2012 Irdeto, All Rights Reserved.
The Piracy Continuum™
A framework for understanding consumer media consumption in the
evolving world of digital distribution.
September 2012
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Table of Contents
Introduction 3
1. Criminals 5
2. Hackers 7
3. Casual Pirates 10
4. Frustrated Consumer 14
5. Confused Consumer 16
6. Consumers 20
Conclusions 23
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Introduction
Content owners, content distributors and security vendors have traditionally
characterized digital “pirates” as a single group of criminals with ill intentions.
This, however, is a serious mistake, not only in understanding the reasons
behind why people turn to piracy, but also when identifying methods to mitigate
the threat and potentially learn lessons to generate unforeseen profit.
Imagine a doctor who only ever prescribed one medicine, regardless of the
patient’s actual condition. They might be able to address one of the patient’s
symptoms this way, but they’ll never cure the disease until they look at the
problem more holistically. This is the same type of situation that many in the
media industry are encountering; thinking that to protect their business, they
need to fight a single, monolithic “pirate” with an arsenal of weapons intended to
stop malicious activity. And until now, there was not a framework for looking at
the true nature of the piracy problem, and how to effectively manage it.
The industry’s over-generalized characterization of pirates has led to a mindset
where security has become nothing more than a line item cost of business;
just one of many on an overall bill of materials required to deliver media to
consumers. This approach and the ensuing decisions on security budgets,
technology and service choices, policy, lobbying, business and legal decisions
and other aspects of content delivery has led to an approach that doesn’t allow
content owners or platform operators to fully unleash their content’s potential.
Within an organization there are a number of different departments that all
deal with piracy issues in some way, including legal, operations, marketing and
distribution among others. Depending on their role, each group focuses on a
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specific aspect of piracy that is most relevant to their function. For example, legal
teams might be concerned with protecting intellectual property and trademark
rights, while operations take a view of protecting the actual asset through content
protection security, and business divisions make decisions about release
windows and channels of distribution. Due to their different areas of concern,
each has their own perspectives on piracy. Often working independently, these
groups must work together to manage piracy and understand that, ultimately, it
is impossible to stop all piracy from happening. However, smart steps can be
taken to increase the likelihood of consumers accessing legitimate content and
to manage piracy in an effort to reduce the pace at which it proliferates.
Interest in video is at an all time high. A few years ago there were a number of
challenges in getting high quality video content such as low Internet bandwidth
and a lack of media playback-enabled devices. Today, however, things have
changed drastically with consumers demanding more, both in terms of content
availability and breadth of accessibility due to more ubiquitous bandwidth, easier
tools to rip physical discs, as well as for uploading and downloading content from
various Internet sources. Put quite simply, piracy has gotten much easier and is
now completely mainstream. Understanding where the threats lie – and what
can be done to counter them – is pivotal to successfully growing in the future.
To Irdeto, piracy is not a single behavior, but rather a continuum of behaviors that
make up The Piracy Continuum. Within The Continuum, there are six groups of
distinct pirates:
1. Criminals – “I make money on your content”
2. Hackers – “Let’s see how fast I can crack the security”
3. Casual Pirates –”I’m only doing this once in a while... who’s it going to hurt?”
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4. Frustrated Consumers – “I want to buy it but it’s not available”
5. Confused Consumers –”It’s legitimate... isn’t it?”
6. Consumers – “I’m happy with the content I already pay for or get for free.”
The Piracy Continuum™
Throughout this white paper readers will learn the distinct and subtle differences
between the various categories of pirates, understand consumer drivers for
piracy, and what opportunities are available to successfully turn pirates into
paying customers.
1. Criminals
Steal content forcommercial gain
criminals
“I make money on your
content”
GOAL: Deploy renewable content
security to prevent piracy and
effectively gather information for legal
actions to take place.
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Criminals set up networks of employees to actively attack protection that is
guarding content with the intention of selling either the mechanisms for getting
around the security, such as set-top box smart cards, or the content itself. In
some cases, criminals even set up rings within Hollywood to capture a pristine
digital copy of a movie and then sell bootleg copies on the street of major
cities, creating a substantial revenue stream. Compared to Hackers, the
Criminals are organized as opposed to ad hoc and keep their methods to
themselves so that they can generate revenue by selling their piracy solutions.
Finding evidence against a criminal and gathering enough incriminating proof
to launch legal actions can be difficult and time consuming, although it is not
impossible. Criminal activity is an industry issue for pay TV operators and it
is hard to stop with conditional access or DRM systems because the content
can be streamed after it is decoded in the set-top box or on computer. In
addition, there are often multiple providers offering the same content, so
identifying where the pirated content is coming from can be a challenge
unless a technology like watermarking or fingerprinting has been used.
A real-world case is when Irdeto worked with operators in China to identify
pirated pay TV content. Criminals had intercepted satellite broadcasts,
encapsulated them in IP streams and rebroadcast them over the Internet for
commercial gain. Injured operators and Irdeto worked with legal authorities
by gathering evidence and submitting an official complaint to the local
enforcement agency. A plan was created to conduct simultaneous cross-
province joint enforcement raids which successfully located an array of pirate
equipment. The end result of the raid was the seizure of the confiscated
equipment, closure of the pirate network and a maximum fine under the
Administrative Penalty Provisions of China.
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Picture taken of confiscated piracy equipment
2. Hackers
Steal content anddistribute it over the Internet
hackers
“Let’s see how fast I can crack
the security”
GOAL: Increase the security put in
place to slow down their progress.
Hackers actively try to break down the protection that is securing content to
gain access to it. However, the ultimate goal is not the content itself, but the
intellectual satisfaction of finding ways to bypass the security. They view this
as a challenge to test their skills against professionals in order to gain
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reputation with their peers. There are a number of tools that have been
created to bypass security measures, and if those do not work, the Hackers
will modify them or create new ones.
Ultimately, there is no such thing as a completely secure system. The DeCSS
protection on DVDs was cracked by DVD Jon in 1999. High definition discs
were promoted as being uncrackable, but in 2007 both HD DVD and Blu-
ray™ discs were cracked and their contents proliferated on the Internet. Of
course, back then file compression was rudimentary with the first HD DVD
movie “Serenity” being 19.6GB and the first pirated Blu-ray movie “Ice Age 2”
was 22GB. Today, a high definition movie is around 4GB which makes it faster
to download over the Internet. If the content that an operator is offering is of
value then the system they are using will be under attack.
Many Hackers communicate with their peers to work together to bypass
different parts of content protection schemes. Alone, few Hackers could
penetrate all of the defenses that are put in place, but working together they
are able to find ways to access the content. There are groups formed, often
online, with message boards and sites focused on how to overcome the
challenge of attacking a secured system. However, due to the increased
visibility of hackers over the recent year, more underground and private
channels are being used to reduce their visibility.
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Screen shot of RankMyHack, a website for hackers to post their “accomplishments”
Though the Hackers motivations are entirely different than Criminals (they
don’t seek commercial gain from their activity), the economic impact on the
Content Owner and their distribution chain can be equally as damaging as
Criminal activity. This is because once the hacker removes the protection
and makes it available online a snowball effect can occur as the content can
be made available throughout a number of different online locations. While
the tools that hackers develop are not created with the intent to commercialize
or spread beyond their relatively small community of like-minded individuals,
that work can be easily adopted by Criminals who do seek to exploit hacks for
commercial gain by making them more consumer friendly and spread to a
wider audience.
It should be noted that the separation between the Hacker and Criminal
groups does not imply that copyright infringement is acceptable. It is simply
a way to qualify their motivations to better understand what drives them to
circumvent content security.
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To counter this group and prevent their work from becoming commercially
exploited, content providers should use dynamic security systems (whether
conditional access or DRM-based) that are renewable and capable of adapting
quickly to unforeseen threats.
3. Casual Pirates
Download contentfor personal use
casual pirates
” I’m only doing this once in a
while... who’s it going to hurt?”
GOAL: Remove content that is being
illegally accessed from the Internet.
A Casual Pirate is someone who knows how to download illegal content and
occasionally chooses to do so. The challenge when dealing with this group is
that they do not believe they are doing anything wrong, that their individual
activity will have impact or worse yet, that they may not care that it is illegal.
According to a study by Advanced Television, 70% of people do not believe it
is wrong to download content as long as they are not making money from
selling it to others.
The Casual Pirate is often a voracious consumer of video, and uses a variety
of easily available resources on the Internet to find and obtain the content
they want to consume – whether from Peer to Peer (P2P) sites, Cyberlockers,
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Usenet newsgroups or streaming sites. They don’t perceive a need to pay for
it, even if it’s easily available at a reasonable price. They download it because
the can, and because it satisfies their personal or family content consumption
needs at a price that can’t be beat: free. Increasingly, they use VPN proxies
to defeat geographic restrictions and to hide their activities from their ISPs,
which is especially important in regions where piracy activity is monitored
and punished. The Casual Pirate does not attack content protection systems
to gain access to content, so if the content is not available from pirate sources,
they may turn to legitimate sources for the content.
The content release window is one reason why this group chooses to pirate
content, as copies are available online well before they can be legitimately
purchased. For example, the movie “Sherlock Holmes: A Game of Shadows”
was released on disc June 12, 2012. However, a high-quality DVD rip was
already available online on April 15, 2012. This was nearly two months before
it was legally available and potentially resulted in a reduction of the total
revenue generated by the movie.
A DVDRip was available on April 15, 2012 on Pirate Bay while the DVD release was scheduled for June 12, 2012.
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Another example would be movies that are still in cinemas. Though the
quality of the download will not be DVD or Blu-ray quality, it can be “good
enough” for those not wishing to spend the time and money required to see it
on the big screen. The Hunger Games made box office records in 2012, at
the time making the third highest opening weekend of any film in history. The
movie was released on March 23, 2012 and video camera-recorded torrents
were available the next day.
A CAM version was available on March 24, 2012 on Pirate Bay – the day after the movie hit theaters.
Though Casual Pirates will not create new ways to circumvent content
protection schemes, they have the potential to grow very quickly as broadband
speeds increase and the tools become increasingly easy to use. Some
programs, like Vuze, allow consumers to subscribe to an RSS feed that
automatically downloads all their favourite content, transcodes it to a variety
of mobile device-friendly formats and automatically exports it to popular
programs like iTunes – creating a kind of automated multi-device BitTorrent
PVR. The skill required to do this has decreased markedly over the last
several years, while consumer knowledge of the internet, especially among
the younger generations, has increased.
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In a world where operators worry about cord cutters there is another growing
threat that they are facing which is more difficult to quantify and convert to
paying subscribers. This threat is the generational cliff jumper. These are the
young people, most often the student population, who grew up downloading
and trading music with their friends, and have never subscribed to a pay TV
service. They’re technologically savvy and have already found alternative
methods to access the content they want. They are equipped with the devices
and Internet connection needed, in a setting where they can get information
on how to access content online from other students, such as in a dorm room,
and are empowered with a sense of online anonymity.
It is difficult to measure the impact of generation cliff jumpers on the pay TV
business, but they may be part of the reason that subscriber rates are falling
in many parts of the world. For example, Convergence Online predicts 112,000
new pay TV subscribers were added in 2011 compared to 272,000 in 2010,
showing a decline in new subscriber traction.
To address this part of the Piracy Continuum, a variety of measures must be
taken, using technologies like watermarking to identify the source of content
leakage, piracy management services to track down illegal content on the
Internet and get it removed and legal measures to address to worst offenders
and educating the Casual Pirated about the economic impact of their “casual”
activity. In addition, Over-the-Top and TV Everywhere services like Comcast
XFinity TV, ViaPlay, Mediaset Premium Play and many others offer consumers
a legitimate alternative to piracy that they may even get at no additional cost
beyond their basic pay TV subscription, reducing their overall need to commit
piracy.
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4. Frustrated Consumer
Can’t get whatthey want legally
frustrated consumers
“I want to buy it but it’s not
available”
GOAL: Provide the content and
services that consumers are
demanding so that they will not turn
to other providers.
The Frustrated Consumer is exactly what it sounds like. This is someone who
is looking for something and is frustrated because it is not readily and legally
available. In some cases, this can be an accessibility issue, such as streaming
video content to a particular tablet that is not supported. In other cases it is
the lack of content availability, most often due to geo-restrictions. If operators
are not offering what consumers want, they are going to look for alternative
methods to access it, including going to a competitor or moving up The Piracy
Continuum and becoming a Casual Pirate.
Geo-restrictions and release windows are often difficult for consumers to
understand. The Internet has broken down walls making it easier for digital
content to flow anywhere. In a global, Internet world, there is an increasing
lack of understanding and acceptance of the geographic boundaries
associated with traditional content distribution schemes, especially as content
is a major topic of conversation on global social networks like Facebook and
Twitter.
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One common example of geo-restricted content was anime. These shows
were predominantly created in Japan and were difficult to obtain in other parts
of the world. There is a very dedicated fan base but, until recently, they could
only purchase if they ordered them from Japan and had DVD players that
could play region code 2 protected discs. Geo-restricted content is still
happening today as content is not released at the same time worldwide, or
released in certain region at all.
Today, one of the most common examples of this issue is popular U.S. series,
which are eventually distributed to individual TV stations globally, but can
take months if not years to subtitle or dub and work into a regional broadcast
schedule. This has created a booming market for illegally distributed TV
shows, which usually become available (with advertising removed) within
hours of their first broadcast – especially if they are the most popular ones.
Within hours, many of them get downloaded by tens of thousands of consumers
worldwide.
Fortunately, this group is willing to pay for content and will seek out legitimate
means to acquire it if it is readily available at a reasonable price, within a
reasonable period, and on their devices of choice. One way to do this is to
offer content over broadband to connected devices so that they can view it on
the device and at the time of their choice.
The problem of geographic restriction fuelling piracy will however continue to
remain until content owners change their distribution strategies to meet
changing consumer needs. Some are already doing this. American Idol is
broadcast the same week in both the U.S. and the U.K., the popular British
science fiction series Doctor Who is broadcast nearly simultaneously on both
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continents, and the global finale of the TV series Lost was broadcast at the
same exact moment in eight countries around the world (regardless of time
zone) to try to give global fans the opportunity to all experience the end of the
series at the same time as American fans did.
Location of downloaders of a live event using BitTorrent in 2011
5. Confused Consumer
Unknowinglyconsume illegalcontent
confused consumers
“It’s legitimate... isn’t it?”
GOAL: Eliminate pirate business
models that present confusing sites
to unknowing consumers”
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The Confused Consumer is starting to find video online but is not aware that
the content may be illegally placed on the site they are visiting. There are a
number of sites that stream content but do not have the legal rights to do so.
In most cases the content is uploaded by users, but in an increasing number
of cases this content is rebroadcast by Internet criminals seeking to profit
from their activity.
One of the most confusing aspects of online video for consumers is when
they search for popular content and end up on sites that appear to be legitimate
– including banner advertising from reputable companies – but are actually
set up by illegal re-broadcasters seeking to profit from ad revenue generated
on their sites. An innocent consumer may search for their favorite sports team
and accidentally happen upon a streaming site with a live broadcast of a
match in progress. Or they may search for their favorite TV show and end up
at a site that is streaming it at the same time that it is playing on a pay TV
channel.
From a Confused Consumer’s point of view, they were simply lead to a
streaming website through a common Internet search, found a piece of video
they wanted to watch and pressed the play button. The average consumer
has no idea whether the videos were legally posted or not. Many others sites
operate in a similar vein by having content available with the consumers not
being aware of the source.
In January, 2012 the Megaupload site was taken down for copyright
infringement and conspiracy to commit racketeering. Megaupload had over
50 million visitors per day hosting 12 billion unique files for over 100 million
users. Without a subscription, visitors could watch 72 minutes of video and
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then have to wait for a half hour before watching again. However, the content
was uploaded by individuals and was not always legitimate, and according to
the indictment Megaupload made no significant effort to indentify users who
were using the Mega Sites or service to infringe copyrights, to prevent
uploading of infringing copies of copyrighted materials or to identify infringing
copies of copyrighted works.
Streaming video sites with infringing content like Megaupload, and there are
many, cause a great amount of confusion for consumers. Visitors do not have
to download anything, so to some this may not feel like piracy because they
do not have anything after the session is over. As well, advertising on these
sites can make it appear to be legitimate. In some cases, the advertiser may
not even be aware that they are supporting a pirate site, and thus supporting
the activity. For example, SideReel streams content and has advertisements
from Comcast, Hulu, ABC, iTunes, Rogers, the University of Liverpool for
Masters and Doctoral Degrees as well as others. This gives the impression
that the site is legitimate as reputable companies are “sponsoring” it.
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Screen capture of a streaming website with advertisements making it appear legitimate
The Confused Consumer group is starting to become aware of alternative
content sources that are available but are still willing to pay for the content
they view. However, as they are now able to find content from alternative
sources they may look at reducing their subscription package. To counter
this trend operators and studios have to mark content so that it can be
identified and issue takedown notices to remove the content that is made
illegally available. They also have to attack illegal streaming by working with
advertisers to remove their ads from streaming sites, thus breaking the pirate’s
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business model. As well, content has to be made available to the Confused
Consumer in the way they want, and they must be effectively educated on
how to access it. This provides the opportunity to expand beyond broadcast
transmission to offer broadband services providing additional value to the
consumer.
6. Consumers
Buy content throughlegitimate channels
consumers
“I’m happy with the paid access
I have today”
GOAL: Continue to give consumers
what they want so that they stay loyal,
and be prepared to meet their
changing demands in the future.
The final group is the Consumer. These are what would be considered
“traditional” pay TV subscribers who have access to content solely through
legitimate means, and are satisfied with what is offered. Pay TV services
have grown dramatically since they were launched in 1948. Within the first
four years there were 70 operators serving 14,000 subscribers. Today, there
are around 1000 operators with over 700 million subscribers world-wide, not
to mention dozens of over-the-top (OTT) providers with more being launched
all the time.
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There could be a number of reasons why this group is content today. The
consumer could simply be satisfied with the offering, meaning that they are
getting the content they want on their device of choice, most likely the TV.
They may have higher tier subscription packages giving them access to more
content, such as live sports or movies. They may also be augmenting their
pay TV subscription with a reasonably priced and easy-to-use OTT offering,
such as Netflix or Hulu, to get the content they want.
Apple already controls 65 per cent of digital movie sales, according to research
by IHS Screen Digest. Digital delivery of content, saw sales rise 51 per cent
to $3.42 billion in 2011, up from $2.26 billion in 2010. Netflix has over 26
million subscribers, and Hulu Plus has grown to more than 2 million paying
subscribers in only a few years.
Consumers may also not be aware of these services, have the devices
required to use them, or possess the knowledge required to do so. For
example, they may not be aware of an iPad app that is available, not own an
iPad, or not understand how to set up a wireless network within the home to
access content on these types of devices. As they say, ignorance is bliss, but
if these consumers become more aware of services, and how to access them,
they will become more demanding and will be looking to their pay TV operator
to meet their need. If the operator doesn’t meet the need, they risk watching
the consumer shift to a more undesirable position on The Piracy Continuum.
Alternatively, this group may not consume much video content and may be
satisfied with little, or no content. This could be a result of them reducing their
subscription to a lower tier package, called cord shaving, or cancelling their
service altogether, called cord cutting. According to Convergence Online
there will be 2.65 million cord cutters in the USA by the end of 2012 with
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nearly half of them coming from the past few years as alternative services
become available.
Recent data from Parks Associates has identified the top TV features that
appeal to households in different regions. Interestingly, catch-up TV content,
either on the TV or on a PC, is the most demanded feature throughout the
world. This shows that consumers want access to the content that is most
interesting to them available at their convenience.
Anytime / Anywhere AccessAppeal of Advanced TV Services"Please rank the top three TV features appealing to you and your household"
3
3D TV / Movies on a PC
3D TV / Movies on TV
Spain
Catch-up TV on TV
Catch-up TV on a PC
View digital photos on TV
Video handoff to CE devices
Music library on TV
Wireless mobile-to-TV photo
transfer
France
Catch-up TV on TV
Catch-up TV on a PC
View digital photos on TV
3D TV / Movies on TV
Wireless mobile-to-TV photo
transfer
Video handoff to CE devices
3D TV / Movies on a PC
Music library on TV
Catch-up TV on TV
Wireless mobile-to-TV photo
transfer
Germany
3D TV / Movies on TV
View digital photos on a TV
Catch-up TV on a PC
Music library on TV
3D TV / Movies on a PC
Video handoff to CE devices
Video handoff to CE devices
Italy
3D TV / Movies on TV
Catch-up TV on TV
3D TV / Movies on a PC
Catch-up TV on a PC
Wireless mobile-to-TV photo
transfer
Music library on TV
View digital photos on TV
U.K.
Catch-up TV on TV
Music library on TV
Catch-up TV on a PC
3D TV / Movies on TV
View digital photos on TV
Wireless mobile-to-TV photo
transfer
Content discovery with mobile phone
Video handoff to CE devices
US
Catch-up TV on TV
Catch-up TV on a PC
Music library on TV
Video handoff to CE devices
View digital photos on TV
3D TV / Movies on TV
Program DVR with mobile
phone
Video games on a TV
Source: Parks Associates Survey© Parks Associates 2012
Appeal of Advanced TV Services from various countries provided by Parks Associates
This group is considered the “bread and butter” for pay TV operators as they
are willing to pay for content and are pleased with what they receive making
them loyal subscribers. However, as new options become available they may
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supplement their subscription with alternative sources which may lead them
to reduce, or even eliminate, their existing subscription.
To keep Consumers happy, operators must offer them the content and
services they want, and educate them on their availability and how to get the
most value from them. The challenge with this group is to offer services
before they start to become dissatisfied and seek out alternatives, which
could move them to become Confused or Frustrated Consumers.
Understanding the patterns of both the Frustrated and Confused and analyzing
it in context with the Consumer gives the greatest business intelligence
insights insofar as programming and other offers.
Conclusions
The industry has traditionally looked at consumers and hackers as singular
groups. This limits the ability to properly address the specific issues that they
create, whether that is understanding what their needs are and how to address
them or to realize the manner and motivation for them access illegitimate
content and slow their progress. By breaking down these groups further,
specific issues and trends can be identified and solutions can be created.