Do we know from where cord cutters are watching TV?

What if the common belief that the losses in traditional pay TV subscribers are due to mainstream video streaming services is wrong? Or, that belief is an oversimplification of a complex problem?

Not only is there an increase in video-streaming subscriptions for SVoD services like Netflix and “live streaming” services such as DirecTV Now, there is also an increase in subscriptions to illicit streaming services, which we recently covered here. Without the ongoing attempts via anti-piracy technology, copyright policy work and enforcement, the illicit services might be keeping the legitimate streaming services up at night along with their traditional pay TV cousins.

Except for getting caught in the middle of a “take down” of the illicit service providers, some of the pirates give consumers what they want:

  • Abundant high-quality programming
  • Convenient access to individual programs/titles/networks
  • No ads
  • Low cost access to content

New methods of operating a streamed content service can mirror the legitimate streaming business in a way that may give consumers the idea that they are using a legitimate service. These methods include direct internet marketing, acquisition and distribution of copyrighted works without customers’ explicit knowledge of their origins, and the use of standard internet tools and infrastructure to deliver the content.

Last year, Dish Network won a case against Shenzhen Lool Tech that placed a spotlight on how closely the pirates’ services resemble legitimate services. The $1 million judgement and the injunction against Shenzhen Lool Tech effectively shut down its business.

The complaint, however, illustrated the level of sophistication and use of internet services from legitimate companies.Lool built a direct connection to their clients by selling branded STBs for an IPTV service. The following is a summary from the complaint:

The protected channels were retransmitted through a feature called “Live TV.” Lool captured live broadcast signals of protected channels, transcoded signals into a format for streaming over the internet and then uploaded and transferred the transcoded content to their servers. Delivery to the Loolbox was over P2P networks. (STB got the IP addresses of the peers and received the channel. The peers, however, are servers that belonged to Lool. Loolbox users then served as a peer and retransmitted that channel to other users who requested it.) Lool contracted with a hosting company, but when that hosting company received takedown notices and complied, Lool contracted with a different hosting company and continued doing business.

Historically there has been a level of comfort for content owners licensed distributors. That comfort? Those who consume pirated content are willing to sacrifice the high quality and easy access for “free.” In addition, in the pre-internet streaming services days most piracy was transparent. In other words, those consuming the content knew they weren’t supposed to. But now, illicit streaming services look a lot like the legitimate ones.

That similarity, along with the opaqueness of how these latest “services” function, aids users in rationalizing their use even though many suspect that they aren’t legitimate. Hear no misdeed, see no misdeed, do no misdeed.

The narrative that cord cutting is solely fueled by a switch from traditional pay TV services to legitimate pay streaming services is probably an oversimplification of this trend. It may only be a drop in the bucket of video viewership, but the evolutionary ease and opaqueness that characterizes today’s piracy threatens more than just the traditional pay TV business.