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Pay TV’s Piracy Pain: 6.5% of North American Households Stream Illegal Services, Study Finds

Add piracy to the factors inflicting woe on the traditional pay-TV ecosystem: About 6.5% of all households in North America access illegal television-streaming services each month, according to a new study.

Illegal TV-streaming outfits may generate upwards of $840 million in fees from consumers who pay for their services, which average around $10 per month, according to the study by bandwidth-management systems vendor Sandvine. The company said it collected the data for the study from North American wireline broadband service provider customers. According to Sandvine, it examined the activity of dozens of illegal TV-streaming sites that charge for access, including Germany-based NecroIPTV.

The 6.5% usage rate of illicit TV-streaming services suggest potential lost revenue of $4.2 billion for traditional cable, satellite and telco TV providers, per Sandvine’s estimates (using $50 per month as an approximation for the price of pay-television service). Of course, there’s no guarantee that consumers who are tapping cheap piracy services would fork over money for legit pay-TV or over-the-top services.

However much piracy is hurting pay TV, there’s no question traditional subscription television is under pressure — with cord-cutting and lower-cost OTT services taking their toll. Comcast, AT&T (which owns DirecTV) and Charter Communications each reported accelerating losses of subscription-TV customers in the third quarter of 2017.

That’s partly from consumers switching to services like Dish Network’s Sling TV, which starts at $20 monthly, YouTube TV ($35 per month) and Hulu’s live TV service ($40 per month). According to AT&T, about 10% of DirecTV Now’s subscribers are those who have switched from traditional satellite or U-verse TV.

Sandvine is promoting the findings to make the case that its network-management tools can help service providers identify and curtail access to illegal pirate services. “Continued adoption of pirate video and television streaming services could lead to increased cord-cutting and create ‘cord-nevers,’ people who never sign up for a standard TV subscription,” CEO Lyn Cantor warned.

Sandvine’s study also found that users of pirate TV services may be unwittingly streaming illegal video continuously — whether or not they are actually watching — resulting in many users generating over 1 terabyte of “phantom bandwidth” each month. Pirate TV streaming services account for more than 6% of downstream traffic in peak evening hours on North America fixed-line networks, Sandvine found.

Nearly 95% of streaming-TV piracy traffic is driven by purpose-built set-top boxes from manufacturers including Infomir and Dreamlink that are designed to recreate the experience of a traditional cable or satellite TV set-top, according to Sandvine. Another finding from the study: Piracy of the Floyd Mayweather Jr.-Conor McGregor fight in August accounted for 80% of all pirate video streams the evening it occurred, representing around 1% of all North American households.

The company’s Global Internet Phenomena Spotlight report on illegal TV-streaming services is available to download on the Fraud Trends page of its website.

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