February 28, 2024

Streaming was supposed to kill media piracy. When services like Netflix and Spotify first popped up, they offered subscribers access to thousands of movies, films, TV shows, and songs all ad-free for a relatively low monthly fee.

But visits to media piracy websites were on the rise in 2023, according to a new industry report by data firm MUSO. And as piracy shoots up, streamers’ subscriber bases are dropping. Services like Disney+ and Hulu are steadily losing customers, with paid subscriptions down by as much as 7% by the end of the year.

Changes in piracy consumption and in the streaming landscape can explain the reported uptick in the practice, which costs the US entertainment industry between $29 billion and $71 billion a year.

“It’s hard to get people to pay for something that they know they can get for free,” said Michael D. Smith, a professor of information technology and public policy at Carnegie Mellon University. A shift from download-based piracy to streaming-based piracy, he added, can mean that consumers are visiting piracy websites more often to access the same media.

MUSO recorded 229.4 billion visits to piracy websites in 2023, an increase of 6.7% from the previous year. TV accounted for most of the visits at 103.9 billion, up 4% from 2022. It was followed by film at 29.6 billion visits, an increase of about 7%. Music piracy saw the highest growth in media pilfering, a 13% increase with 17.1 billion visits in 2023.

The pull of piracy

One standout reason why piracy is on the rise: The rise in exclusive content tied to streaming platforms, according to MUSO. A previous survey from the firm finds that, unsurprisingly, people are more likely to pirate media when the movies, shows, or music they’re looking for is difficult to access or unaffordable. Users are tired of being forced to sign up for additional streaming services just to gain access to a single film or show they plan to watch.

MUSO also anticipates piracy to continue to grow as their surreptitious sites become more sophisticated and user-friendly “Piracy audiences, like legal audiences, have continued to adapt and for most media sectors grow,” the report wrote. Smith also warned that if piracy becomes more prevalent, it will be harder for streamers to keep their subscribers.

The streamers losing subscribers

The (legal) streaming industry isn’t necessarily helping slow the flow, especially as streamers push up their prices. Netflix, Disney+, Hulu, and Spotify all hiked their rates in 2023, with Netflix and Disney+ adding ad spots to some of their formerly commercial-free plans in late 2022.

Disney+ and Hulu finished 2023 with a paid subscription loss. Subscribers to Disney+ fell 7% to 150 million in the three month ending Dec. 30, from 160 million, while Hulu’s subscribers in the fourth quarter fell 3% to 48 million.

It wasn’t all bad news. Netflix and Spotify gained subscribers in 2023. Paid subscribers to Netflix and Spotify both grew 13% in the fourth quarter to about 260 million and 236 million, respectively.

Smith acknowledged that lowering prices is not an ideal solution for businesses. Instead, he suggested making it harder for consumers to access piracy websites in the first place. He pointed to regulation in the UK, where piracy website-blocking policies gave a 7 to 12% boost to legal subscription sites.

“Research has consistently shown that those you know that blocking is an effective strategy to get pirates to switch back over to legal channels,” Smith said.

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