Netflix, the all you can eat movie and TV show streaming service, is incredibly popular, and may account for up to a third of peak US internet traffic. Because of this popularity, it is regularly held up as an example that proves people will happily pay for content rather than pirate it, if legal, affordable, and convenient alternative exists.
While some evidence for this does exist in the music industry, it is much more difficult to prove when it comes to movies, especially as the number of pirates who have responded to the increasingly hostile and bitter copyright environment by masking their behavior using VPN (or by switching to Usenet etc.) is unknown (The Pirate Bay reports visitor numbers have doubled since 2011).
A new study released by research firm KPMG examines the online availability of 808 ‘most popular film titles (as measured by box office success) as well as critically acclaimed titles’, and has found that 98 percent of these movies are available legally online.
The study, which was commissioned by NBC Universal and is endorsed by the MPAA, therefore appears to dispel the notion that piracy is a result of a lack of affordable and convenient options.
EST= Electronic Sell through (sales), SVOD= Subscription Video On Demand (e.g. Netflix)
… What the study heavily downplays is that while 96 percent of top movies are available online through some channel or other, only 16 percent are available through online streaming services such as Netflix, which are by far the most popular legal channels for obtaining content.
We therefore have a number of observations:
- The vast majority of people who pay for legal access to content are unable to (legally) watch the best / most recent content. This therefor invalidates the main conclusion of the study – that people pirate regardless of price and availability
- The reason Netflix does not stream this content is because Hollywood and the entertainment industry refuses to grant it (and other similar companies) licenses to do so
- This is an even bigger problem in the rest of the world (outside the US), where even more restrictive licensing means that content is either available much later than it in the US, or sometimes is never made legally available at all. In addition to this, subscription costs are often much higher, even in countries where the average incomes are much lower
- Through illegal P2P distribution channels (e.g. torrents or Popcorn Time), free, high quality content is available almost instantly wherever people are in the world. While the movie and TV industries will never be able to completely compete with this, the music industry has shown that people will pay for legally content through a reasonably priced and convenient subscription service when content is actually available.
It is not Netflix’s fault, but until Hollywood allows Netflix and other streaming services to offer the latest and best content, piracy remains a superior option for those unconcerned about damaging the profits of a business that in 2013 made over $12 billion in US box office sales alone …