The existential threat posed by piracy not just to live sports streamers but also the leagues and events themselves has been repeated loudly many times by Qatari based beIN Sports, which has suffered far more than any other OTT provider. The sports and leagues have been listening and joining in some of the actions against the most egregious offender by far, beoutQ, hosted in Saudi Arabia. But the sports industry has still not woken up fully to the threat, according to Yousef Al-Obaidly, CEO of beIN Sports, who warns that piracy will be the agent that bursts the sports rights bubble as coverage continues its migration from traditional linear channels to streaming around the world.
He took the opportunity of a speech at the recent Leaders’ Sport Business Summit to proclaim that in future his company’s offers for broadcast rights would reflect that all sports services will be effectively non-exclusive. This would be because the piracy threat means that exclusive coverage could not be guaranteed and so the high associated rights costs could no longer be justified. Consequently, the total income for premium sports and leagues from broadcast rights would at best subside and in some cases crash.
Such dire warnings of content piracy and potential impact on rights revenues have been stock in trade at conferences ever since pay TV operators started to take over premium sports coverage from FTA broadcasters. But a new flashpoint has been reached as the stampede to streaming gathers force at a time when some sports derive as much as 80% of their revenues from broadcast rights. Certainly the current business model underpinning top sports, such as association football, basketball and American Football, would collapse if Al-Obaidly’s dark vision became reality.
Fortunately, we believe his fears will not fully materialize, in part because the sports themselves and their anti-piracy technology providers will step up to the plate and just about keep the problem in check. For beIN itself it is true that the worst-case scenario identified by Al-Obaidly’s has almost come to pass, because of piracy conducted by beoutQ. The operator has lost $1 billion as a direct result of the industrial-scale content theft by beoutQ and has been forced to lay off 300 staff, about 20% of its workforce. But it is still in business and its hope is that by galvanizing the sporting world into action against piracy in general and beoutQ in particular, it can stave off the worst consequences.
Precisely by provoking some panic, beIN Sports is hoping that the fears will turn out to be misplaced, which certainly has historical precedent. Approaching the year 2000, the IT industry was beset with doomsday predictions of catastrophic system failures after January 1 as a result of failing to allocate four digits to the year for many calendar calculations. In the end virtually nothing bad happened but that was partly because a great effort had been made to identify and fix date bugs in software beforehand or develop workarounds. In the current piracy case, the crunch has emerged because streaming creates different threats through illicit content redistribution, which can be accomplished under the smokescreen of authorized services.
Al-Obaidly is right to point out that beoutQ’s piracy is a threat to the whole sporting world and that it calls for coordinated action. No technology, operator or sporting body can combat streaming piracy on its own and when governments such as Saudi Arabia’s collude with such activities, the problem is that much harder to counter. But this particular piracy is rather unique to the region, arising from Saudi Arabia’s dispute with Qatar where beIN Sports is hosted. Now that Saudi Arabia is facing multinational action and also the threat to be barred from participation in the FIFA World Cup, it may clamp down on beoutQ, although the situation is being overshadowed by the deepening geopolitical crisis in the region.
While Al-Obaidly’s warnings are understandable and may even be productive, that does not make them right. Our research arm Rethink TV has considered the impact of piracy on sports rights in its recent forecast Globalization lifts TV sports rights past $85 billion future. Sports Rights Forecast to 2025 and come to the conclusion that its impact will not become substantially greater than it is at present. Against that background, the value of rights for the big global sports has some way still to increase as the major leagues tap rising popularity in developing regions especially.
It is certainly true though that the current extent of streaming piracy is significantly greater than published figures suggest, because such information is commercially sensitive and therefore not provided accurately by the rights holders and distributors that have access to the information. In some cases, pirated streams in reality account for as much as 50% of viewing for a given sport, but that figure is almost the same as it was three to four years ago when forensic watermarking was introduced as a basis for identifying and tracking down infringing sources. Aside from the beoutQ case, there is no indication streaming piracy is rising.
It is also true that the established remedy of issuing takedown notices after identifying an infringing website works less well than it used to, largely because pirates have become more adept at providing a moving target, switching between sources so that at any one time there will always be a body of illicit streams. This is alright if the volume is constrained within acceptable bounds but lately it has proliferated.
This deficiency has led to fast growing demand for forensic watermarking, which is increasingly being mandated by sports rights holders as well as studios. This is the only proven technology that can be used to identify specific sources of illegally redistributed content, with the potential to revoke access of the originating subscribers within minutes. But this has ushered in a new security arms race where content thieves by necessity target the watermarking systems themselves and vendors equally have to incorporate new enhancements to prevent their defensive weapons being disabled.
At least on this front the security industry is able to stay one step ahead because it is the pirates that have to keep developing new counters. With the help of machine learning algorithms and other techniques, the sports streamers can themselves present a moving diverse target. Our bet therefore is that although piracy is a huge problem, just as it has been since the dawn of pay TV, it is containable in the streaming age. The beIN Sports piracy was more a consequence of a particular political conflict than a seismic shift in the balance of power between attackers and defenders.