Illegal Streaming of Pay TV – Is It a Pirate Treasure Island?

In our previous blog post—on the scope of illegal streaming—we analyzed one of the forums that hosts illegal streaming server offers and concluded that it reaches at least 285,000 viewers.

That’s an impressive figure. But what does it mean in financial terms? Or to be more specific, how much are pirates making on these closed illicit streaming networks and what can we anticipate in the future?

In this post, I will try to answer these questions, based on our experience and constant monitoring of the piracy scene.

While prices vary across regions and service types, our research shows that a subscription to an illegal IPTV server costs an average of €12/month. Multiply this by 285,000 subscribers, and you have an average of €3.4 million circulated every month from this single forum!

Read that again. €3.4 million a month, from a single forum. Untaxed, unreported.

And this is clearly a growing phenomenon. Looking again at our sample forum, in April 2017, there were a total of 285 servers offered. In January 2017, there were 257. A year earlier (January 2016), there were just 101 servers. That’s an increase of 154 percent in a single year!

Our field knowledge, intelligence, and frequent conversations with customers all indicate that illegal streaming will continue to increase at high rates every year, at least for the foreseeable future.

There are many other forums like this one and plenty of other ways to advertise illegal streaming services. The total financial value of illegal streaming piracy may be subject to debate, but the numbers are clearly enormous.

To help understand the growth of streaming piracy, we explore the following question: how much profit is each pirate making from each illicit streaming server?

If, as per our previous blog post, we factor in an average of one thousand subscribers per server, and apply the same average monthly subscription of €12/month, we are talking about  a “gross revenue” of approximately €12,000 per month per server.

As for the costs – here are some of the major ones:

Bandwidth:

A cloud server with a 100 Mbps bandwidth can handle 40 subscribers at a cost as low as €3/month. We covered some of those calculations in our blog post on the shifting from card sharing to content sharing.
In order to have enough bandwidth to serve 1,000 clients, the illegal provider needs to invest minimum €75 in bandwidth. Let’s assume he will purchase some extra bandwidth and a few more cloud servers as backup.  So that’s up to €130 a month for bandwidth costs.

Server software:

Most streaming servers also use software, such as “IPTV panel”. This software includes all the necessary tools to run IPTV broadcasting operations: subscriber management, channel management, packages, prices, statistics, and more. The monthly cost of IPTV panel is around €70/ month.

Channels and Content:

There are several methods of getting the channels to the streaming server. The easiest and most common method,  “re-streaming”, involves the streaming server owners replicating and selling their content to other pirate servers. Since the streams are already in the cloud, it is very easy to transfer them from server A to server B. Server B can have exactly the same channel offer as server A, but with its own customer base. The server owner can buy 1000 channels replicated to his server for €1200 /month. This is a fixed cost regardless of the number of clients. As the number of paying subscribers increases over time, this initial cost is easily recovered.

Other costs:

A typical illegal streaming service may have additional costs that can improve their service. For example, websites, advertising on forums, human resources and support. While it is difficult to accurately calculate this cost, an average pirate usually won’t invest beyond 5% of total revenue for those purposes. In our case, that translates to €600/month.
Now let’s calculate the net profit of such a pirate server.

Based on our analysis above, the average monthly cost for an illicit streaming server with 1000 subscribers + 1000 channels, can be as low as €2,000 per month, while the estimated income is €12,000.

That’s a profit of over €10,000 per month for an average server, or around 80% profitability!

It’s no wonder then that additional illegal streaming providers are popping up every month! The more subscribers, the higher the profit.

Beyond the allure of high profit for pirates, we see multiple additional reasons for the significant increase in illegal streaming:

Growing acceptance among consumers. Young generations are the biggest consumers of illegal streaming services. They see nothing wrong in streaming content “freely,” and they will continue doing so. Others will also join this trend. According to this recent survey, 54% of millennials have watched illegal streams of live sports and a third admit to regularly watching them, compared to only 4% of over-35s.

Older methods of pay-TV piracy are declining. Card sharing/Control Word sharing is on the wane. Broadcasters and conditional access providers are introducing effective new technologies that can permanently stop illegal sharing of Pay TV subscriptions from set top boxes. Pirates then turn to the current weakest link and easiest option: illegal streaming.

Pirates offer complete services. Pirate streaming servers often offer more features than legit services, such as watching “catch up” recordings of live channels up to 14 days back, VOD content with whole seasons of TV series and the latest movies, support for almost any device and operating system, integration with Kodi, no geo-location restrictions, and 24/7 support. Pirate streaming providers have become a real and material threat to legitimate operators and broadcasters.

Increasing broadband availability. High speed internet use continues to grow all over the world, making stable illicit streaming more accessible and more convenient.

Looks like pirates have found their treasure island! Will their treasure chests continue to pile up?
Feel free to use the comment box below to share your thoughts with us.

For more on our piracy intelligence research findings, please see these related blog posts:

Illegal Streaming of Pay TV – Is it Now a Flood?