How piracy can destroy the film industry

How piracy can destroy the film industry

The film market is dominated by a few players, surrounded by a multitude of very small structures. Similarly, the big budget movies make the most profit and views, but the number of small productions is almost infinite.

The market is thus divided between these mainstream blockbusters and independent movies.

Film piracy takes place in the following forms 

The IMPACTS OF DIGITAL VIDEO PIRACY ON THE U.S. ECONOMY report  commissioned by the U.S. Chamber of Commerce, estimates that 80% of film piracy occurs on illegal streaming platforms. 

Revenue loss on the rise

As with any illegal activity, exact figures are hard to find. However, reports made for a few countries - the US, France, Australia -  allow us to draw an image of the worldwide consequences of piracy for the industry.

In 2019, there has been about 230 billion views on illegal streaming services, 15 billion views came from the US. About 30% of these views are of movies, the remaining part being TV show episodes.

(source: Statista)

Online piracy generates losses in the US are estimated  to at least  29  billion dollars, but since the estimates are hard to calculate, it could also be closer to 70 billions per year  (10 to 24% of the industry's revenues). These figures have been published in 2019 in the report commissioned by the U.S. Chamber of Commerce and projections show that in 2022 this loss will be at least 51 billions - a 21% per year increase, if  based on the 29 billion of 2019.

For the television industry, this loss is estimated to at least 39 billon dollars, but might be as much as 95 billions.

With revenue loss, jobs are also lost or not being created. The damage from piracy is estimated to at least 260,000 jobs in the USA alone.

In France, according to the consulting firm EY  the French film industry was already losing nearly 1.4 billion euros in 2016. This figure was a steady increase over the previous two years, so it is reasonable to assume that this trend will continue. EY states that this estimate is very conservative, and that the actual loss to the industry is probably much higher. Even so, this represents about 15% of the industry's revenue, which is consistent with the study published by the U.S. Chamber of Commerce. 

It therefore seems reasonable to think, if we cross-check these two studies, that piracy represents at least 10 to 15% of the turnover of a country's film industry.

One in three Internet users also consumed films and series illegally in France in 2016. As this figure is based on declarations, it is reasonable to think that it is actually much higher. 

In 2015, an Ipsos report conducted on behalf of the Australian Federation

Against Copyright Theft (AFACT)  also revealed that 45% of  people pirating movies would have paid to watch a legal version if they did not have access to an illegal one.

ID sharing explosion in 2021

Once again, the data is mostly available for the US but can be extrapolated to the rest of the world.

About 80% of adults use legal streaming services (Netflix, Amazon prime and others) - about 214 million users in the US alone.

88 million of these users borrow the credentials of friends or family members to connect to these legal streaming services

This loss of revenue would represent 4 billion dollars per year in 2021. In 2020 the loss was estimated at 2.6 billion.

Despite some difficulty in finding figures, the trends identified all seem to confirm a few assumptions

Big companies are the most affected, because the most pirated movies are mostly blockbusters. However, their financial health allows these companies to survive despite the loss. 

Independent film producers, on the other hand, can suffer much more from such a loss of income. For this business model, piracy is particularly damaging and strongly harms the diversity of the sector's production. Any loss of revenue is money that will not be invested  into a future production. 

It seems clear that the film industry needs to find solutions to limit the piracy of their products, in order to avoid huge revenue losses.

A company specialized in the protection of audiovisual content can be of precious help. Don't hesitate to contact us, an expert will help you define the ideal solution, whatever the size of your company. 

Next week we will see what solutions can be applied to reduce the impact of piracy on the film industry. 

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