As a member of ACE and MPA, Netflix is โโat the forefront of the global battle against online piracy. The company doesn't usually address the issue directly, but in a recent SEC filing, Netflix writes that it's difficult to compete against free entertainment piracy offerings. Not only that, but it is also growing rapidly.
Since the launch of its online streaming service fifteen years ago, Netflix has positioned itself as a piracy competitor.
The idea was to take market share away from piracy sites, offering a legal and more convenient streaming platform.
Initially, this seemed to work. Netflix amassed hundreds of millions of subscribers, some of whom left their piracy habits behind. However, as the 'streaming wars' turned legal and convenient streaming platforms into isolated and expensive content silos, momentum began to shift.
In recent years, piracy started to grow again, even in well-served markets like the United States. In theory, this can help Netflix in its battle with other legal platforms, but that is a consolation prize if the war against piracy is lost.
There are no concrete signs that Netflix is โโfalling apart, but piracy is a concern. This It's not breaking news.; Piracy has been repeatedly highlighted as tough competition in the company's business. 10-K Filings in the SEC.
Piracy is a tough competitor
Earlier this week, Netflix filed its latest 10-K filing. The mandatory document provides information that helps investors gather key information about listed companies. In the "competition" section of the annual summary, piracy is mentioned again several times.
Netflix explains that the online video landscape is a competitive business. New services and distribution models could impact the business of the leading video streaming platform. This includes both legal competitors and piracy.
โThe various economic models underlying these channels include subscription, transactional, advertising-supported and piracy-based models. โAll of these have the potential to capture significant segments of the entertainment video market,โ Netflix writes.
This is partly standard information, as all companies face competition. However, Netflix believes that online piracy is particularly attractive because it is free to consumers. That makes it very difficult to compete against them.
"Piracy also threatens to harm our business, as its fundamental proposition to consumers is very compelling and difficult to compete with: virtually all content is free," Netflix writes.
Growing and hard to stop
When Netflix launched, its on-demand streaming experience was more convenient than most pirate sites. At the time, torrent sites were dominant, but they still required users to have some technical knowledge and patience to wait for content to download.
Nowadays, most pirate sites use on-demand streaming, which takes away an important advantage from Netflix. And because piracy is so attractive to consumers, it is growing rapidly around the world, threatening legal services.
"In light of the compelling consumer proposition, piracy services are subject to rapid global growth, and our efforts to prevent that growth may be insufficient," Netflix notes.
"If we are unable to compete successfully or profitably with current and new competitors, our business will be adversely affected and we may not be able to increase or maintain market share, revenue or profitability."
(Unauthorized) copy?
The concerns expressed by Netflix are real, but the company is not close to its demise. These 10-K filings are supposed to detail the risks, and Netflix isn't the only company to mention piracy as a potential threat.
When we started looking for similar mentions from other companies, we came across similar concerns and, interestingly, some identical ones. Apparently there is quite a bit of copying going on, as several companies' SEC filings include identical passages.
Netflix: โIn light of the compelling consumer proposition, piracy services are subject to rapid global growthโ
Triller Corp.: โIn light of the compelling consumer proposition, piracy services are subject to rapid global growthโ
fubo tv: โIn light of the compelling consumer proposition, piracy services are subject to rapid global growthโ
Redbox Entertainment: โIn light of the compelling consumer proposition, piracy services are subject to rapid global growthโ
IMQ: โIn light of the compelling consumer proposition, piracy services are subject to rapid global growthโ
CuriosityCurrent: โIn light of the compelling consumer proposition, piracy services are subject to rapid global growthโ
We don't know where these references originate. Netflix has been mentioning it for a while now, that's for sure, and apparently, use of this language is widespread and subject to rapid global growth.
It's clear, however, that piracy is a concern for Netflix. While Reed Hastings I wasn't worried about piracy A decade ago, the company is now spending millions of dollars to address the problem.
The streaming giant joined the AMP a few years ago and it is also a member of the ACE anti-piracy coalition. Additionally, Netflix also has a internal anti-piracy department that monitors piracy threats.
