OTT video service credential sharing will cost the industry $500 million (€447m) in direct revenues worldwide in 2015, according to research from market research and consulting company Parks Associates examining video piracy, credential sharing, and its impact on OTT revenue.
The report – The Cost of Piracy – shows 6 per cent of US broadband households use an OTT video service that is paid by a person living outside of the household. It also analyses usage and impact of live-streaming applications such as Meerkat and Periscope, which are used to ‘share’ broadcast events such as Game of Thrones episodes and the Mayweather-Pacquiao fight.
“Live-streaming usage has garnered media attention recently, but credential sharing is also a popular form of piracy in the connected world, one that has received varying responses from service providers and content owners,” said Glenn Hower, Research Analyst, Parks Associates. “Credential sharing has a measurable impact on video services, particularly in the OTT video service area, where young subscribers are active. The impact on OTT video revenues is especially troublesome as OTT providers are investing large sums of money to boost their original content offerings.”
The Cost of Piracy finds 20 per cent of OTT users aged 18-24 use an OTT video service paid by someone outside the home, the highest of any age group. Only 10 per cent of OTT subscribers 25-34 admit to this behaviour. Previous research, reported in the whitepaper Uprising: College Students & Changing Video Preferences, found that few respondents expressed guilt or embarrassment over using someone else’s video service credentials.
“While credential sharing predominantly impacts OTT service revenues, the process will affect pay-TV operators in a similar fashion as they develop and deploy their own OTT and TV Everywhere offerings,” Hower said. “The motivation for credential sharing is primarily economic, and a move to consolidate video service subscriptions among family and friends stands to impact digital video services of all types in the near future.”