"Wp piracy continuum" by Irdeto


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"Wp piracy continuum" by Irdeto

  1. 1. WP_PIRACY_CONTINUUM_EN_2012 WHITE PA PER The Piracy Continuum™ A framework for understanding consumer media consumption in the evolving world of digital distribution. September 2012www.irdeto.com ©2012 Irdeto, All Rights Reserved.
  2. 2. The Piracy Continuum™ - White Paper Table of Contents Introduction 3 1. Criminals 5 2. Hackers 7 3. Casual Pirates 10 4. Frustrated Consumer 14 5. Confused Consumer 16 6. Consumers 20 Conclusions 23 2
  3. 3. The Piracy Continuum™ - White Paper Introduction Content owners, content distributors and security vendors have traditionally characterized digital “pirates” as a single group of criminals with ill intentions. This, however, is a serious mistake, not only in understanding the reasons behind why people turn to piracy, but also when identifying methods to mitigate the threat and potentially learn lessons to generate unforeseen profit. Imagine a doctor who only ever prescribed one medicine, regardless of the patient’s actual condition. They might be able to address one of the patient’s symptoms this way, but they’ll never cure the disease until they look at the problem more holistically. This is the same type of situation that many in the media industry are encountering; thinking that to protect their business, they need to fight a single, monolithic “pirate” with an arsenal of weapons intended to stop malicious activity. And until now, there was not a framework for looking at the true nature of the piracy problem, and how to effectively manage it. The industry’s over-generalized characterization of pirates has led to a mindset where security has become nothing more than a line item cost of business; just one of many on an overall bill of materials required to deliver media to consumers. This approach and the ensuing decisions on security budgets, technology and service choices, policy, lobbying, business and legal decisions and other aspects of content delivery has led to an approach that doesn’t allow content owners or platform operators to fully unleash their content’s potential. Within an organization there are a number of different departments that all deal with piracy issues in some way, including legal, operations, marketing and distribution among others. Depending on their role, each group focuses on a 3
  4. 4. The Piracy Continuum™ - White Paper specific aspect of piracy that is most relevant to their function. For example, legal teams might be concerned with protecting intellectual property and trademark rights, while operations take a view of protecting the actual asset through content protection security, and business divisions make decisions about release windows and channels of distribution. Due to their different areas of concern, each has their own perspectives on piracy. Often working independently, these groups must work together to manage piracy and understand that, ultimately, it is impossible to stop all piracy from happening. However, smart steps can be taken to increase the likelihood of consumers accessing legitimate content and to manage piracy in an effort to reduce the pace at which it proliferates. Interest in video is at an all time high. A few years ago there were a number of challenges in getting high quality video content such as low Internet bandwidth and a lack of media playback-enabled devices. Today, however, things have changed drastically with consumers demanding more, both in terms of content availability and breadth of accessibility due to more ubiquitous bandwidth, easier tools to rip physical discs, as well as for uploading and downloading content from various Internet sources. Put quite simply, piracy has gotten much easier and is now completely mainstream. Understanding where the threats lie – and what can be done to counter them – is pivotal to successfully growing in the future. To Irdeto, piracy is not a single behavior, but rather a continuum of behaviors that make up The Piracy Continuum. Within The Continuum, there are six groups of distinct pirates: 1. Criminals – “I make money on your content” 2. Hackers – “Let’s see how fast I can crack the security” 3. Casual Pirates –”I’m only doing this once in a while... who’s it going to hurt?” 4
  5. 5. The Piracy Continuum™ - White Paper 4. Frustrated Consumers – “I want to buy it but it’s not available” 5. Confused Consumers –”It’s legitimate... isn’t it?” 6. Consumers – “I’m happy with the content I already pay for or get for free.” The Piracy Continuum™ Throughout this white paper readers will learn the distinct and subtle differences between the various categories of pirates, understand consumer drivers for piracy, and what opportunities are available to successfully turn pirates into paying customers. 1. Criminals “I make money on your content” GOAL: Deploy renewable content security to prevent piracy and criminals effectively gather information for legal actions to take place. Steal content for commercial gain 5
  6. 6. The Piracy Continuum™ - White Paper Criminals set up networks of employees to actively attack protection that is guarding content with the intention of selling either the mechanisms for getting around the security, such as set-top box smart cards, or the content itself. In some cases, criminals even set up rings within Hollywood to capture a pristine digital copy of a movie and then sell bootleg copies on the street of major cities, creating a substantial revenue stream. Compared to Hackers, the Criminals are organized as opposed to ad hoc and keep their methods to themselves so that they can generate revenue by selling their piracy solutions. Finding evidence against a criminal and gathering enough incriminating proof to launch legal actions can be difficult and time consuming, although it is not impossible. Criminal activity is an industry issue for pay TV operators and it is hard to stop with conditional access or DRM systems because the content can be streamed after it is decoded in the set-top box or on computer. In addition, there are often multiple providers offering the same content, so identifying where the pirated content is coming from can be a challenge unless a technology like watermarking or fingerprinting has been used. A real-world case is when Irdeto worked with operators in China to identify pirated pay TV content. Criminals had intercepted satellite broadcasts, encapsulated them in IP streams and rebroadcast them over the Internet for commercial gain. Injured operators and Irdeto worked with legal authorities by gathering evidence and submitting an official complaint to the local enforcement agency. A plan was created to conduct simultaneous cross- province joint enforcement raids which successfully located an array of pirate equipment. The end result of the raid was the seizure of the confiscated equipment, closure of the pirate network and a maximum fine under the Administrative Penalty Provisions of China. 6
  7. 7. The Piracy Continuum™ - White Paper Picture taken of confiscated piracy equipment 2. Hackers “Let’s see how fast I can crack the security” GOAL: Increase the security put in place to slow down their progress. hackers Steal content and distribute it over the Internet Hackers actively try to break down the protection that is securing content to gain access to it. However, the ultimate goal is not the content itself, but the intellectual satisfaction of finding ways to bypass the security. They view this as a challenge to test their skills against professionals in order to gain 7
  8. 8. The Piracy Continuum™ - White Paper reputation with their peers. There are a number of tools that have been created to bypass security measures, and if those do not work, the Hackers will modify them or create new ones. Ultimately, there is no such thing as a completely secure system. The DeCSS protection on DVDs was cracked by DVD Jon in 1999. High definition discs were promoted as being uncrackable, but in 2007 both HD DVD and Blu- ray™ discs were cracked and their contents proliferated on the Internet. Of course, back then file compression was rudimentary with the first HD DVD movie “Serenity” being 19.6GB and the first pirated Blu-ray movie “Ice Age 2” was 22GB. Today, a high definition movie is around 4GB which makes it faster to download over the Internet. If the content that an operator is offering is of value then the system they are using will be under attack. Many Hackers communicate with their peers to work together to bypass different parts of content protection schemes. Alone, few Hackers could penetrate all of the defenses that are put in place, but working together they are able to find ways to access the content. There are groups formed, often online, with message boards and sites focused on how to overcome the challenge of attacking a secured system. However, due to the increased visibility of hackers over the recent year, more underground and private channels are being used to reduce their visibility. 8
  9. 9. The Piracy Continuum™ - White Paper Screen shot of RankMyHack, a website for hackers to post their “accomplishments” Though the Hackers motivations are entirely different than Criminals (they don’t seek commercial gain from their activity), the economic impact on the Content Owner and their distribution chain can be equally as damaging as Criminal activity. This is because once the hacker removes the protection and makes it available online a snowball effect can occur as the content can be made available throughout a number of different online locations. While the tools that hackers develop are not created with the intent to commercialize or spread beyond their relatively small community of like-minded individuals, that work can be easily adopted by Criminals who do seek to exploit hacks for commercial gain by making them more consumer friendly and spread to a wider audience. It should be noted that the separation between the Hacker and Criminal groups does not imply that copyright infringement is acceptable. It is simply a way to qualify their motivations to better understand what drives them to circumvent content security. 9
  10. 10. The Piracy Continuum™ - White Paper To counter this group and prevent their work from becoming commercially exploited, content providers should use dynamic security systems (whether conditional access or DRM-based) that are renewable and capable of adapting quickly to unforeseen threats. 3. Casual Pirates ” I’m only doing this once in a while... who’s it going to hurt?” GOAL: Remove content that is being illegally accessed from the Internet. casual pirates Download content for personal use A Casual Pirate is someone who knows how to download illegal content and occasionally chooses to do so. The challenge when dealing with this group is that they do not believe they are doing anything wrong, that their individual activity will have impact or worse yet, that they may not care that it is illegal. According to a study by Advanced Television, 70% of people do not believe it is wrong to download content as long as they are not making money from selling it to others. The Casual Pirate is often a voracious consumer of video, and uses a variety of easily available resources on the Internet to find and obtain the content they want to consume – whether from Peer to Peer (P2P) sites, Cyberlockers, 10
  11. 11. The Piracy Continuum™ - White Paper Usenet newsgroups or streaming sites. They don’t perceive a need to pay for it, even if it’s easily available at a reasonable price. They download it because the can, and because it satisfies their personal or family content consumption needs at a price that can’t be beat: free. Increasingly, they use VPN proxies to defeat geographic restrictions and to hide their activities from their ISPs, which is especially important in regions where piracy activity is monitored and punished. The Casual Pirate does not attack content protection systems to gain access to content, so if the content is not available from pirate sources, they may turn to legitimate sources for the content. The content release window is one reason why this group chooses to pirate content, as copies are available online well before they can be legitimately purchased. For example, the movie “Sherlock Holmes: A Game of Shadows” was released on disc June 12, 2012. However, a high-quality DVD rip was already available online on April 15, 2012. This was nearly two months before it was legally available and potentially resulted in a reduction of the total revenue generated by the movie. A DVDRip was available on April 15, 2012 on Pirate Bay while the DVD release was scheduled for June 12, 2012. 11
  12. 12. The Piracy Continuum™ - White Paper Another example would be movies that are still in cinemas. Though the quality of the download will not be DVD or Blu-ray quality, it can be “good enough” for those not wishing to spend the time and money required to see it on the big screen. The Hunger Games made box office records in 2012, at the time making the third highest opening weekend of any film in history. The movie was released on March 23, 2012 and video camera-recorded torrents were available the next day. A CAM version was available on March 24, 2012 on Pirate Bay – the day after the movie hit theaters. Though Casual Pirates will not create new ways to circumvent content protection schemes, they have the potential to grow very quickly as broadband speeds increase and the tools become increasingly easy to use. Some programs, like Vuze, allow consumers to subscribe to an RSS feed that automatically downloads all their favourite content, transcodes it to a variety of mobile device-friendly formats and automatically exports it to popular programs like iTunes – creating a kind of automated multi-device BitTorrent PVR. The skill required to do this has decreased markedly over the last several years, while consumer knowledge of the internet, especially among the younger generations, has increased. 12
  13. 13. The Piracy Continuum™ - White Paper In a world where operators worry about cord cutters there is another growing threat that they are facing which is more difficult to quantify and convert to paying subscribers. This threat is the generational cliff jumper. These are the young people, most often the student population, who grew up downloading and trading music with their friends, and have never subscribed to a pay TV service. They’re technologically savvy and have already found alternative methods to access the content they want. They are equipped with the devices and Internet connection needed, in a setting where they can get information on how to access content online from other students, such as in a dorm room, and are empowered with a sense of online anonymity. It is difficult to measure the impact of generation cliff jumpers on the pay TV business, but they may be part of the reason that subscriber rates are falling in many parts of the world. For example, Convergence Online predicts 112,000 new pay TV subscribers were added in 2011 compared to 272,000 in 2010, showing a decline in new subscriber traction. To address this part of the Piracy Continuum, a variety of measures must be taken, using technologies like watermarking to identify the source of content leakage, piracy management services to track down illegal content on the Internet and get it removed and legal measures to address to worst offenders and educating the Casual Pirated about the economic impact of their “casual” activity. In addition, Over-the-Top and TV Everywhere services like Comcast XFinity TV, ViaPlay, Mediaset Premium Play and many others offer consumers a legitimate alternative to piracy that they may even get at no additional cost beyond their basic pay TV subscription, reducing their overall need to commit piracy. 13
  14. 14. The Piracy Continuum™ - White Paper 4. Frustrated Consumer “I want to buy it but it’s not available” GOAL: Provide the content and services that consumers are frustrated consumers demanding so that they will not turn to other providers. Can’t get what they want legally The Frustrated Consumer is exactly what it sounds like. This is someone who is looking for something and is frustrated because it is not readily and legally available. In some cases, this can be an accessibility issue, such as streaming video content to a particular tablet that is not supported. In other cases it is the lack of content availability, most often due to geo-restrictions. If operators are not offering what consumers want, they are going to look for alternative methods to access it, including going to a competitor or moving up The Piracy Continuum and becoming a Casual Pirate. Geo-restrictions and release windows are often difficult for consumers to understand. The Internet has broken down walls making it easier for digital content to flow anywhere. In a global, Internet world, there is an increasing lack of understanding and acceptance of the geographic boundaries associated with traditional content distribution schemes, especially as content is a major topic of conversation on global social networks like Facebook and Twitter. 14
  15. 15. The Piracy Continuum™ - White Paper One common example of geo-restricted content was anime. These shows were predominantly created in Japan and were difficult to obtain in other parts of the world. There is a very dedicated fan base but, until recently, they could only purchase if they ordered them from Japan and had DVD players that could play region code 2 protected discs. Geo-restricted content is still happening today as content is not released at the same time worldwide, or released in certain region at all. Today, one of the most common examples of this issue is popular U.S. series, which are eventually distributed to individual TV stations globally, but can take months if not years to subtitle or dub and work into a regional broadcast schedule. This has created a booming market for illegally distributed TV shows, which usually become available (with advertising removed) within hours of their first broadcast – especially if they are the most popular ones. Within hours, many of them get downloaded by tens of thousands of consumers worldwide. Fortunately, this group is willing to pay for content and will seek out legitimate means to acquire it if it is readily available at a reasonable price, within a reasonable period, and on their devices of choice. One way to do this is to offer content over broadband to connected devices so that they can view it on the device and at the time of their choice. The problem of geographic restriction fuelling piracy will however continue to remain until content owners change their distribution strategies to meet changing consumer needs. Some are already doing this. American Idol is broadcast the same week in both the U.S. and the U.K., the popular British science fiction series Doctor Who is broadcast nearly simultaneously on both 15
  16. 16. The Piracy Continuum™ - White Paper continents, and the global finale of the TV series Lost was broadcast at the same exact moment in eight countries around the world (regardless of time zone) to try to give global fans the opportunity to all experience the end of the series at the same time as American fans did. Location of downloaders of a live event using BitTorrent in 2011 5. Confused Consumer “It’s legitimate... isn’t it?” GOAL: Eliminate pirate business models that present confusing sites to unknowing consumers” confused consumers Unknowingly consume illegal content 16
  17. 17. The Piracy Continuum™ - White Paper The Confused Consumer is starting to find video online but is not aware that the content may be illegally placed on the site they are visiting. There are a number of sites that stream content but do not have the legal rights to do so. In most cases the content is uploaded by users, but in an increasing number of cases this content is rebroadcast by Internet criminals seeking to profit from their activity. One of the most confusing aspects of online video for consumers is when they search for popular content and end up on sites that appear to be legitimate – including banner advertising from reputable companies – but are actually set up by illegal re-broadcasters seeking to profit from ad revenue generated on their sites. An innocent consumer may search for their favorite sports team and accidentally happen upon a streaming site with a live broadcast of a match in progress. Or they may search for their favorite TV show and end up at a site that is streaming it at the same time that it is playing on a pay TV channel. From a Confused Consumer’s point of view, they were simply lead to a streaming website through a common Internet search, found a piece of video they wanted to watch and pressed the play button. The average consumer has no idea whether the videos were legally posted or not. Many others sites operate in a similar vein by having content available with the consumers not being aware of the source. In January, 2012 the Megaupload site was taken down for copyright infringement and conspiracy to commit racketeering. Megaupload had over 50 million visitors per day hosting 12 billion unique files for over 100 million users. Without a subscription, visitors could watch 72 minutes of video and 17
  18. 18. The Piracy Continuum™ - White Paper then have to wait for a half hour before watching again. However, the content was uploaded by individuals and was not always legitimate, and according to the indictment Megaupload made no significant effort to indentify users who were using the Mega Sites or service to infringe copyrights, to prevent uploading of infringing copies of copyrighted materials or to identify infringing copies of copyrighted works. Streaming video sites with infringing content like Megaupload, and there are many, cause a great amount of confusion for consumers. Visitors do not have to download anything, so to some this may not feel like piracy because they do not have anything after the session is over. As well, advertising on these sites can make it appear to be legitimate. In some cases, the advertiser may not even be aware that they are supporting a pirate site, and thus supporting the activity. For example, SideReel streams content and has advertisements from Comcast, Hulu, ABC, iTunes, Rogers, the University of Liverpool for Masters and Doctoral Degrees as well as others. This gives the impression that the site is legitimate as reputable companies are “sponsoring” it. 18
  19. 19. The Piracy Continuum™ - White Paper Screen capture of a streaming website with advertisements making it appear legitimate The Confused Consumer group is starting to become aware of alternative content sources that are available but are still willing to pay for the content they view. However, as they are now able to find content from alternative sources they may look at reducing their subscription package. To counter this trend operators and studios have to mark content so that it can be identified and issue takedown notices to remove the content that is made illegally available. They also have to attack illegal streaming by working with advertisers to remove their ads from streaming sites, thus breaking the pirate’s 19
  20. 20. The Piracy Continuum™ - White Paper business model. As well, content has to be made available to the Confused Consumer in the way they want, and they must be effectively educated on how to access it. This provides the opportunity to expand beyond broadcast transmission to offer broadband services providing additional value to the consumer. 6. Consumers “I’m happy with the paid access I have today” GOAL: Continue to give consumers what they want so that they stay loyal, consumers and be prepared to meet their changing demands in the future. Buy content through legitimate channels The final group is the Consumer. These are what would be considered “traditional” pay TV subscribers who have access to content solely through legitimate means, and are satisfied with what is offered. Pay TV services have grown dramatically since they were launched in 1948. Within the first four years there were 70 operators serving 14,000 subscribers. Today, there are around 1000 operators with over 700 million subscribers world-wide, not to mention dozens of over-the-top (OTT) providers with more being launched all the time. 20
  21. 21. The Piracy Continuum™ - White Paper There could be a number of reasons why this group is content today. The consumer could simply be satisfied with the offering, meaning that they are getting the content they want on their device of choice, most likely the TV. They may have higher tier subscription packages giving them access to more content, such as live sports or movies. They may also be augmenting their pay TV subscription with a reasonably priced and easy-to-use OTT offering, such as Netflix or Hulu, to get the content they want. Apple already controls 65 per cent of digital movie sales, according to research by IHS Screen Digest. Digital delivery of content, saw sales rise 51 per cent to $3.42 billion in 2011, up from $2.26 billion in 2010. Netflix has over 26 million subscribers, and Hulu Plus has grown to more than 2 million paying subscribers in only a few years. Consumers may also not be aware of these services, have the devices required to use them, or possess the knowledge required to do so. For example, they may not be aware of an iPad app that is available, not own an iPad, or not understand how to set up a wireless network within the home to access content on these types of devices. As they say, ignorance is bliss, but if these consumers become more aware of services, and how to access them, they will become more demanding and will be looking to their pay TV operator to meet their need. If the operator doesn’t meet the need, they risk watching the consumer shift to a more undesirable position on The Piracy Continuum. Alternatively, this group may not consume much video content and may be satisfied with little, or no content. This could be a result of them reducing their subscription to a lower tier package, called cord shaving, or cancelling their service altogether, called cord cutting. According to Convergence Online there will be 2.65 million cord cutters in the USA by the end of 2012 with 21
  22. 22. The Piracy Continuum™ - White Paper nearly half of them coming from the past few years as alternative services become available. Recent data from Parks Associates has identified the top TV features that appeal to households in different regions. Interestingly, catch-up TV content, either on the TV or on a PC, is the most demanded feature throughout the world. This shows that consumers want access to the content that is most interesting to them available at their convenience. Anytime / Anywhere Access Appeal of Advanced TV Services "Please rank the top three TV features appealing to you and your household" France Spain U.K. Italy Germany US Catch-up TV 3D TV / Movies Catch-up TV Catch-up TV Catch-up TV Catch-up TV on TV on TV on TV on TV on TV on TV Catch-up TV Catch-up TV Catch-up TV 3D TV / Movies Catch-up TV Catch-up TV on a PC on TV on a PC on TV on a PC on a PC View digital Catch-up TV Video handoff Catch-up TV 3D TV / Movies Music library photos on TV on a PC to CE devices on a PC on TV on TV 3D TV / Movies 3D TV / Movies View digital 3D TV / Movies View digital Video handoff on TV on a PC photos on TV on a PC photos on a TV to CE devices Wireless mobile- Wireless mobile- Wireless mobile- 3D TV / Movies View digital to-TV photo View digital to-TV photo to-TV photo transfer transfer on TV photos on TV transfer photos on TV Wireless mobile- Wireless mobile- Music library View digital Music library Video games to-TV photo to-TV photo on TV photos on TV transfer transfer on TV on a TV Video handoff Video handoff Music library Video handoff 3D TV / Movies 3D TV / to CE devices to CE devices on TV to CE devices on a PC Movies on TV Content Program DVR 3D TV / Movies Music library Music library Video handoff discovery with with mobile on a PC on TV mobile phone on TV to CE devices phone 3 Source: Parks Associates Survey © Parks Associates 2012 Appeal of Advanced TV Services from various countries provided by Parks Associates This group is considered the “bread and butter” for pay TV operators as they are willing to pay for content and are pleased with what they receive making them loyal subscribers. However, as new options become available they may 22
  23. 23. The Piracy Continuum™ - White Paper supplement their subscription with alternative sources which may lead them to reduce, or even eliminate, their existing subscription. To keep Consumers happy, operators must offer them the content and services they want, and educate them on their availability and how to get the most value from them. The challenge with this group is to offer services before they start to become dissatisfied and seek out alternatives, which could move them to become Confused or Frustrated Consumers. Understanding the patterns of both the Frustrated and Confused and analyzing it in context with the Consumer gives the greatest business intelligence insights insofar as programming and other offers. Conclusions The industry has traditionally looked at consumers and hackers as singular groups. This limits the ability to properly address the specific issues that they create, whether that is understanding what their needs are and how to address them or to realize the manner and motivation for them access illegitimate content and slow their progress. By breaking down these groups further, specific issues and trends can be identified and solutions can be created. 23