Netflix, Disney Battle Pirate Sites That Rip Off Their Content
(Bloomberg Businessweek) -- Julius is an avid Netflix viewer. Whether it’s old movies, anime, or hit releases such as The Queen’s Gambit, the 28-year-old banker from Manila, who gives only his first name, is glued to his laptop. He just doesn’t pay for any of the content. The moment a show starts trending on Netflix’s Top 10, he catches it on an unlicensed streaming website or downloads an illegal copy from a file-sharing app. “It’s always available somewhere,” he says. “If I can save a few hundred pesos a month, I’ll take it.”
Julius and millions like him across Southeast Asia are becoming a headache for Netflix, Disney+, and Chinese streaming giants Tencent and IQiyi, which are waging an intense contest for subscribers in the region. Thousands of illegal websites streaming the latest hit shows and movies—content cribbed from legitimate services—cater to viewers from Vietnam to the Philippines, while other operators sell cheap hardware that allows access to pirated content. Shutting them down is a cat-and-mouse game made harder by governments that don’t consider the theft a high priority, according to the industry.
“Before, piracy was seen as a nuisance, a cost of doing business,” says Neil Gane, head of the Coalition Against Piracy in Hong Kong, which includes foreign and local industry members. “Now pirated content is in direct competition with legal services. Piracy has evolved—it’s international, sophisticated, and it’s high on the list of challenges for streaming services.”
Piracy will cost TV and movie providers almost $52 billion in revenue worldwide in 2022, according to Statisa.com. It remains a daunting problem in big markets such as China and Russia, the sites of prolonged battles to curb digital theft. But it’s the rising demand in Southeast Asia, home to more than twice the population of the U.S., that’s raising warning flags. In the past two years, Indonesia, Vietnam, and other countries have been added to the U.S. trade representative’s “notorious markets” list, an annual compilation of the worst intellectual-property abusers and counterfeiters.
Even before the pandemic, piracy was taking over. In five out of six Southeast Asian nations, more than half the respondents to a survey sponsored by the Asia Video Industry Association (AVIA) said they accessed illegal streaming sites in 2019. It was highest in the Philippines, where 66% admitted doing so. In Indonesia, 62% of those who accessed the sites said they’d canceled subscriptions to paid services. Visits to pirated sites increased by a third globally when lockdowns began last March, according to Muso TNT Ltd., which tracks piracy; in India, access to pirated movies jumped 63%, according to one of its surveys.
By the end of this year only 6.5% of households in Southeast Asia will have the streaming services of Netflix Inc. or Walt Disney Co., according to consultant Media Partners Asia. So countering piracy before it becomes further entrenched could be key to their long-term growth in the region. “It’s still early days,” says Vivek Couto, who runs Media Partners Asia. “The industry needs government policy that criminalizes the act and cracks down on operators.”
For now, viewers in Vietnam can watch hits such as Netflix’s Bling Empire and Disney’s WandaVision almost as soon as episodes come out. One popular pirate site even uses Netflix’s distinctive red typeface for its own logo. Consumers can also use illegal streaming apps and devices, available at local electronics marts, to view premium content.
At the Metro Manila Film Festival in December, officials at Globe Studios, a local production company, were hoping to get a few days of sales for their entry, Fan Girl, before the pirates caught up. The studio, which makes movies bought by Netflix, charged viewers 250 pesos ($5.15) per download during the virtual festival. But by the second day pirated sites were screening the romantic comedy, with some charging just 10 pesos a view. “We were glued to our computers, watching 10 links pop up every hour—giving the movie away. Some had 45,000 views,” says Quark Henares, head of the studio, a unit of Globe Telecom Inc. “We were supposed to lean back and enjoy the box-office success. Instead, we were tracking down websites and couldn’t shut them down.” Henares says Globe lost millions of pesos of festival revenue. Theft is making it impossible to produce content profitably in the Philippines, he says.
Pirate sites in Asia often have links to illicit online gambling, says Gane, whose antipiracy group is part of AVIA. Offering free entertainment allows pirates to draw customers to gambling sites and gain revenue from other questionable advertising there. Some websites offering pirated movies have ties to organized crime groups who use the proceeds to fund serious crimes and engage in money laundering, according to Interpol.
To hinder illegal distribution, streaming services employ technologies such as watermarks, either visible to deter piracy or invisible. Digital fingerprinting helps broadcast platforms such as YouTube identify if material is copyrighted. But the most popular weapon against video piracy is to block websites, and that requires government cooperation. In most Asian countries a site can be shut down by law enforcement only if there’s a criminal case against its operators, according to AVIA. Even in nations that have passed laws to allow courts or government agencies to block offending sites, the process is often slow.
In Indonesia the association sends a list every 10 days of 50 illicit websites identified by its automated software to the government for rapid blocking. AVIA says more than 3,000 illegal sites have been shuttered since mid-2019. But a follow-up survey the group sponsored last year showed that, while the number of Indonesians accessing illicit websites fell 55%, only 16% of those who formerly accessed the pirate sites went on to subscribe to a paid service. “It’s a whack-a-mole game,” says Chand Parwez Servia, head of the Indonesian Film Board. “The problem is they are faster. What we need is enforcement and court action to go after the operators.”
Indonesia’s minister for communications and information technology didn’t respond to requests for comment. The Intellectual Property Office of the Philippines recommended provisions for speedy site-blocking at a congressional committee hearing in February, according to Director General Rowel Barba, who says the agency currently has neither enforcement mechanisms nor the legal authority to take down websites.
The heart of the problem, though, is the attitude of viewers, many of whom see nothing wrong in downloading movies. “A lot of users believe that since they’re paying for internet access, whatever is on the internet should be free,” says Maria Yolanda Crisanto, chief sustainability officer at Globe Telecom. “Changing that mindset has been slow.” —With Shirley Zhao
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