Pirate IPTV services in the US generate $1bn in revenues annually

By Emmanuel Legrand

Faced an an increasing amount of pirated video streaming content, operators of video streaming services have asked digital security experts Nagra Kudelski to estimate the revenue and the profit margins of pirate subscription Internet Protocol Television (IPTV) Services, which offer video streaming signals to consumers for a monthly subscription.

  Pirate subscription of Internet Protocol Television (IPTV) Services generate revenues of $1 billion annually in the US alone, according to the report titled 'iMoney for Nothing: The Billion-Dollar Pirate Subscription IPTV Business', released by the Digital Citizens Alliance in partnership with Nagra Kudelski.

 High profit margins business

  "The basic model for the operators of these services is not complicated," reads the report. "They take stolen content and distribute it via the internet directly to consumers. Since these providers pay nothing to the people who create and own the programming, this is, to quote the rock group Dire Straits, truly 'money for nothing'.” 

  The report estimates that since the providers of these services do not license programming, they operate with estimated profit margins that range from 56% (retailers) to 85% (wholesalers). According to Nagra Kudelski, there are an estimated 9 million fixed broadband subscribers in the US using a pirate subscription IPTV service. The market is served by at least 3,500 storefront websites, social media pages, and stores within online marketplaces that sell pirate subscription IPTV services to the US market.

  "At the heart of these activities – $1 billion in illicit revenue for subscription IPTV, diverted residential Internet connections, and banned content – is a well-organised and profitable industry with low entry costs and high margins, and, as an illegitimate business, one that pays nothing in federal, state, or local taxes," reads the report.

 

  The authors of the report note that they do not believe that all participants in this ecosystem "are knowingly engaged in illicit pirate activity," but instead raises the issue "of how payment processors, website services, hosting and CDN providers, and other legal businesses interplay with a billion-dollar illegal market."

 

Call for action

 

  They conclude: "Ultimately, the sheer scope and size of the streaming piracy ecosystem should trigger alarm among policy-makers, law enforcement, consumer protection groups, and the technology and financial services industries, and spark a serious discussion about what efforts are needed to diminish this growing problem." 

 

  The Digital Citizens Alliance is a Washington, DC-based nonprofit organisation focused on educating the public and policy-makers on "the threats that consumers face on the Internet." It is supported by health, pharmaceutical and creative industries as well as online safety experts and other communities focused on internet safety.