Academic study says piracy via Kodi didn’t impact pay TV or VOD subscriptions

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Supported by grants by the National Science Foundation, the NET Institute and CableLabs, researchers at the University of Delaware and University of North Carolina hypothesized that the emergence of Kodi introduce(d) a trade-off for multiple-service operators (MSOs); that the availability of unlicensed alternatives reduced demand for legal services.

Using deep packet inspection to verify their premises, they found that while broadband data rates went up by almost 65% after adopting Kodi media center software to access licensed and unlicensed content , they also found that this had minimal impact on legal subscriptions from pay TV operators.

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“We find that adoption does not harm paid over-the-top video providers. TV subscriptions decrease and internet-tier upgrades increase, resulting in a 1% reduction in pay- ments to multiple-system operators (MSOs). MSO profits decrease if TV margins exceed 30%. These behavioral changes harm content providers reliant on MSOs for distribution via reduced licensing and advertising revenues,” they said.

Ad revenue impacted more than TV revenue

However, content producers that rely on MSOs for distribution did “suffer harm from lost advertising and licensing revenues due to the reduction to the MSO’s TV services.  As for harm to the MSO, the observed decrease in revenue correspond(ed) to a decrease in profits only if the margin associated with lost TV revenue (was) large enough to offset the margin associated with increated internet revenue.”

Read the report: The Impact of Video Piracy on Content Producers and Distributors, by Zachary Nolan, Jonathan W Williams, Haoran Zhang. Sept 29, 2022.

Why it matters

A premise of this report is that piracy through Kodi has minimal impact on pay TV and VOD subscriptions.  This doesn’t mean that the threat of piracy is low through media centers or through illicit streaming applications running on those platforms; it contends that consumers don’t quit legitimate services in favor of legal or illegal consumption via Kodi.

Not long ago, Kodi and other media center platforms were cited by pay TV operators as the most flagrant channels for pirate distribution.  But that’s on the consumer side of piracy.  Targeting the theft of programming and services before or during distribution has much greater leverage against the media and entertainment ecosystem.

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