PVOD Blog Series - Part Two: Mastering the Metrics - Understanding the potentially significant implications of piracy

By Rafael Rivera, Solutions Marketing Manager

As a life-long baseball fan, I remember a time when player metrics were pretty simple. Batting average, runs batted in, earned run average, hits, and home runs. Time and innovation have brought along completely new ways of thinking, with Billy Beane of the Oakland Athletics utilizing a sabermetric approach to scouting and analyzing players to field competitive teams with a limited budget.

Now many teams employ statisticians to calculate and evaluate player performance. Statistics such as wins above replacement to weighted on-base average are factored into player decisions and contract negotiations. Quite the change and the explosion of statistics now extends beyond teams to new endeavors such as fantasy sports and online betting.

With the evolving entertainment landscape, one could draw a parallel to new ways of measuring investment decisions in creating and distributing content. We can certainly quantify that the economic damage of PVOD piracy to businesses is real, with tens of billions of dollars of content value disappearing every year.

Today 8% of US households subscribe to an illegal IPTV service. For pirates, efforts are lucrative, with $1 Billion in annual revenue attributable to illicit IPTV subscriptions.

We can further follow the metric trail to examine the significant implications piracy can have for content owners and distributors. Let's consider potential impacts to subscription figures, churn, and the cost of acquisition.

It could be argued that you don't lose revenue that you could not earn. So growing revenue by say, 18% a quarter with piracy happening in the background, is still earning 18% more subscribers than the previous quarter. But crucially, what is the size of the missed opportunity?

When a new SVOD service launches, subscribers increase rapidly, but due to piracy, the service still falls short of its business goals. Customers seeking out alternative streaming options take their money elsewhere, and the legitimate service starts to lose subscribers and revenue faster than they can gain new ones.

What the metrics are telling us here is that a revolving door of customers means you have to work twice as hard and spend twice as much on new customer acquisition. Without an anti-piracy program in place, you inadvertently run the risk of promoting pirate service alternatives.

Ultimately, an investment in anti-piracy is an investment in protecting profit margins and securing markets. A successful fight against piracy will reduce customer acquisition costs and increase total lifetime customer value.

As in many sports, offense is the best defense. Download our eBook to learn more about how NAGRA works with studios and content creators to fight against content and service piracy. We can provide depth of experience across technology, law enforcement, and intelligence gathering with a proven track record to ensure that your next movie or series release doesn't become a revenue victim.

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