Piracy: the big debate

With the number of illegitimate broadcast services on the rise in the Middle East and several online portals offering unlimited entertainment dirt cheap, the consumer has the opportunity to make the most cost-effective choices today although the legitimacy of these services is open to question. Legitimate broadcasters have now decided to challenge any service that does not have a licence to operate in the region while also launching ad campaigns to educate consumers. Vijaya Cherian speaks to various players in the industry as part of our quest for some answers to the piracy debate

Last month, Dubai-based pay TV operator OSN and a few Indian channels launched an ad campaign in the local dailies stating that Dish TV, Tata Sky, Airtel Digital TV and Sun Direct services were illegal in the UAE and all those who subscribed to such services were in essence, “stealing”.

Dish TV poses a significant threat to the pay-TV business in the Middle East as many South Asian consumers receive their content at an annual subscription of USD 85.

David Butorac, CEO of OSN, slams Dish TV’s service in the region alleging that its spillover into the region is “deliberate”.

“Traditionally, Dish TV operated in India on an NSS6 transponder and there was a slight overspill into the Gulf states and so, traditionally Dish TV could have been received if you were in a Gulf state because it was right on the fringes of the footprint.

“They have now added an AsiaSat 5 transponder, which is their South Asia beam and while it covers India, it also goes as far West as the other side of Libya. The transponder beam very clearly focuses on all of the core MENA markets going right across to Egypt, Libya, Saudi Arabia, the Levant and in fact, north to Turkey. We operate on specific MENA beam transponders. What Dish TV has done looks to us to be a deliberate strategy of growing in the region, where they are illegal and where they do not have the broadcast rights.”

Rajiv Khattar, President of Dish TV, when contacted by BroadcastPro ME, denied any direct involvement in this issue.

“We are aware that there is a problem in the Middle East so we act on any information we receive. We deactivate any cards that we learn are outside of our business and do not permit reactivation again. If the pay-TV platforms don’t try to curb this, we will all suffer.

“Regarding the allegation that we have deliberately chosen AsiaSat, we had a capacity requirement when we launched our HD channels and concluded a deal with AsiaSat because their transponders were available and more importantly, were in the slot where we could still use the same antenna to receive transmission from two satellites – NSS6 and AsiaSat. We only use AsiaSat for our HD channels, which make up less than 10% of our subscriber base. Now, if as they allege, we have deliberately chosen AsiaSat, we should ideally have moved all of our channels to AsiaSat to encourage such subscriptions,” he explains, adding that he has neither been approached in a personal or professional capacity by any regional broadcaster to discuss this issue.

Butorac, however, reiterates that “there are no uncertainties that this business is being perpetrated through third-party distributors that are licensed by Dish”.

“This is Dish TV activity in a market that has no rights. They will publicly say that they are great supporters of their fight on piracy but it’s difficult to take them seriously when their commercial activity is a complete antithesis to their comment.”

OSN’s frustration is not without reason as it recently acquired the Pehla network in the region, which targets the South Asian population in the MENA region. A significant part of the South Asian population in the region, however, subscribes to Dish TV, which does not offer a legitimate service here. While the signals cannot be accessed by all, it can be received if the subscriber’s home faces the South East.

“This is not just about South Asian content. Dish TV in India also carries legitimate content from Western series and movies. I have no qualms about their legitimate business in India but when they are taking those signals to this region, where we have the rights, they are not just targeting South Asian markets but all markets. That’s unfair on those of us who have invested in this region. We cannot afford to invest in this region if we do not get a return on our investment,” explains Butorac.

Khattar, however, says there’s nothing Dish TV can do about this.

“Like any other satellite footprint, the AsiaSat footprint also spills over into the region. It is common knowledge that the footprint of almost all DTH operators operating out of the Asian sub-terrain will have a spillover into different geographical areas including the Middle East. We see this in other DTH markets as well. For instance, we see a lot of boxes moving from the US to Canada. This is a common phenomenon with satellite transmission. If a consumer sees an economic benefit, he is likely to seize that opportunity. Platforms need to work together and co-operate to see that this is minimised and we’re willing to extend our support.”

Unfortunately, this is only one of many battles that legitimate players in the region have been fighting to maintain a successful business in this market.

In the case of Dish TV, there are several small third-party players in the region, who are willing to set up a service for customers. In most cases, customers bring a set-top-box with them from India and subscribe to a service from their Indian accounts.

Perhaps one of the steps that the government can undertake is confiscate the box at customs.

Unfortunately, as Butorac points out, “governments and regulators have often seen this as a victimless crime”.

“What we are now able to demonstrate is that businesses are getting hurt and we are unable to create a viable creative industry,” explains Butorac.

But this is not unique to the South Asian community. Increasingly, we are cognisant of individuals setting up boxes for an annual sum of USD 900 to enable more high-end customers to access premium content from any part of the world. This poses an even bigger threat to players like OSN, which invests heavily in offering the latest premium Western content in the region. Then, there is the threat from online content providers.

In other cases, legitimate players find that small channels steal their signals and redistribute them to subscribers at a fraction of the cost. In fact, some of them steal content and even sell advertising space to clients.

ART has lost up to 20% of its US business to criminals in the Middle East, who subscribe to their channels and many others and then, redistribute it on the internet to their subscribers for a fee.

In other cases, small channels pilfer content from rights owners such as MBC, ART or OSN and broadcast them on their channels and also sell commercial space on them.

“If you haven’t bought the rights to the content, you haven’t really spent any money. Therefore, you can afford to offer cheaper subscriptions and also offer advertising at a fraction of the cost,” says Mustafa Tell, General Manager, Broadcasting Operations, ART.

OSN’s Butorac seconds that.

“No legitimate advertiser should support an illegal channel. The advertising industry needs to recognise whether they are supporting a legitimate or illegitimate business.

“For example, a major Hollywood film such as Captain Phillips is likely to have cost us $250,000 for just that movie for the defined period for which we can use it and we are entitled to get a return. Likewise, we spend hundreds of millions of dollars every year on our content and we do that to provide a service. Now, if a broadcaster spends zero on content, they can afford to sell it cheaper. If someone offered to sell you a brand new Audi A8 for $5000, you’d think it was a great deal. But if he has stolen it and sells it to you, he can afford to sell it to you cheaper because it has cost him nothing in the first place. Stolen content is the same as a stolen bike or cars and consumers need to know it is a crime. This is why we are running an ad campaign – to create consumer awareness,” he explains.

In many cases, rights owners find themselves embroiled in a long legal battle that they do not have the time to go after.

“It is a long process,” says ART’s Tell.

“When you see that someone has stolen your content, you have to first have seen it, then record it and prove to the satellite operators that they do not have the rights for it. Usually satellite operators are reluctant to take a channel off the air without substantial proof. In some cases, we are able to convince satellite operators to at least contact rogue channels and ask for proof. Invariably, we find that the contracts are forged.”

In some cases, we find that a channel has actually been the victim of some other players.”

A channel in Jordan Media City, for instance, was recently shut down for broadcasting Hollywood films that have not yet been released in the US market. This is where it gets really murky and we realise how widespread the piracy net is. When the owner of the Jordanian channel was contacted, he had a genuine contract from a company in Turkey that had sold him the rights to the films. What he did not know was that he had purchased those films from a pirate.

But there are also instances where channels now buy pirated versions of Hollywood films and broadcast them. One source, on condition of anonymity, told us that you could buy films for as little as $2 from downtown Amman.

“It’s a big business that comes with sophisticated additional services. If your DVD doesn’t work, they tell you to bring it back for a fresh copy. If you want subtitling services, they’ll offer it to you in just 24 hours – whether you want it in Chinese, Japanese or Arabic.”

There are so many varied instances of piracy.

This is why OSN decided that a two-pronged approach is the way forward. On the one hand, it is running an active ad campaign along with its content partners as well as the International Cricket Council (ICC) to create awareness among consumers in the Asian segment in the Middle East that subscribing to a service that is distributed illegally in the country is tantamount to theft.

On the other hand, it has also collaborated with leading broadcasters, satellite operators and the Motion Picture Association of America to form an anti-piracy coalition to contain piracy.

“This is a coalition of the willing and is a very positive industry initiative,” explains Butorac, although he adds that the primary measures are being undertaken by MBC and OSN.

These broadcasters have invested in resources to monitor channels and seek legal assistance while also putting in place a workflow to ensure that action can be taken against offenders. Such a workflow addresses the issues plaguing the legitimate industry and makes the coalition more efficient.

“MBC and OSN have been working collaboratively for a long time. We have particularly resourced these facts on piracy and we are not asking the other participants to do anything except support it. We have a joint monitoring operation, where we record the intellectual property and make satellite operators and the broadcasters aware of these transgressions. Because of the heightened awareness, all of the satellite operators are now taking material action and in recent times, they have been able to remove broadcasts of channels that we are able to demonstrate clearly as being in breach of our intellectual property rights,” says Butorac.

“The satellite operators do wish us to demonstrate that the broadcasters’ assurances are correct. This is organised crime so they are able to show forged documents that purport to show them as owning the intellectual property but as broadcasters, MBC and OSN know who owns the rights to the content. For instance, OSN has an exclusive relationship with all seven Hollywood studios and the three major movie distributors of independent content, so we are very sure that viewing of Western movies in its early windows is a breach of our intellectual property.

“Similarly, MBC has contracts with major studios for the free-to-air run of their content. What we are able to do is demonstrate to the satellite companies that we own that intellectual property. The Hollywood studios – both directly – and through the Motion Picture Association, who are part of the consortium are able to identify and confirm any breach. We can articulate and prove to the satellite companies that we own the intellectual property and the satellite companies are able to recognise the strength of that evidence before taking action even when people claim to show them that they own the rights, which are primarily forged.”

The fight against piracy is a constant battle but the region’s legitimate players have decided to proactively protect their turf unlike in previous years with the anti-piracy coalition.

However, all the pay-TV operators agree that the biggest threat to their business at present is the illegal distribution of content over IP as well as the availability of content from various online sources such as Netflix.

“People who take streams of content and distribute them through IP and indeed, people who access them from this region via IP from outside, whether it’s Netflix or Apple TV – it is in contravention of our rights that we have paid significant sums for. We will continuously engage as an industry through the consortium to enable the government and the telco regulators to recognise piracy, whether it is redistribution, internet piracy or channels illegally broadcasting content to which we have the rights on satellite,” explains Butorac.

Both OSN and Dish TV’s heads also agree that the internet poses an even bigger threat to their business now.

“The internet provides significant challenge to broadcasters because of the nature of the technology,” explains Butorac.

“We face a similar problem,” adds Dish TV’s Khattar.

“What do you do with web sites like Jadoo.com? With Dish TV, you need a physical decoder that can be stopped if the authorities take the right steps. Online service providers are the bigger threat,” he says.

We brought Ben Clasper, Senior VP of Counterpoint Systems Ltd. – a rights management company into this debate to shed light on the whole business of consumers purchasing content from services that do not have rights to operate in the region.

Clasper begins by saying that he is reluctant to label this as piracy.

“The market is consumer led now,” he says.

“15 years ago, the only way one could access content was because the content owner granted the rights to you whether it was the physical release of a CD to a shop or put it on the radio or sold it to BBC to put in on TV. Unless they gave it to you, you couldn’t access it. Now, the consumer can find content without the content owner being a part of that process legitimately and in the eyes of the content owners, not legitimately.”

Clasper says “it’s a different model and a different generation” and calls for a different approach from broadcasters if they are to move forward.

“We had few subscription-based models in the old days – maybe video clubs but on the whole, you purchased the content that you wanted. I think the subscription model has changed that and today, people say, ‘I am happy to pay you 10 bucks a month but on the content side, I want it to be unlimited and occasionally, there might be some premium content for which I will happily pay you extra if the price point is correct’.”

Clasper says that “issues that the entertainment industry is facing today are primarily because their expectation of what that price point is, is now dramatically different from what the consumers’ expectation is today”.

“I pay for everything that I consume and I’m happy to pay. Sometimes, I pay for that single piece of content and sometimes, through subscription. But I’m uncomfortable with my inability to share that content in a legitimate way or access it across geographies. I do not agree that if I buy content from one player and log into my account four hours later in the US, I can’t access it. This no longer works in an age, where people believe in content anytime and anywhere. When people go to different geographies, they take their music collections with them but you can’t do that with subscriptions today,” he says, adding that content providers and broadcasters need to revisit existing business models that are not in sync with existing entertainment consumption habits.

He goes on to add that if a broadcaster does not make content available in a region, they “are asking for trouble”.

“In most cases, I think consumers are happy to pay for content. They usually go illegitimate in the eyes of the owners when they do not have a “legitimate” option. Secondly, what if the legitimate option is perceived as unfair?” he questions.

Speaking on condition of anonymity, one South Asian consumer listed some of the reasons why people prefer Indian DTH options and some of it seems to be in agreement with Clasper’s own explanation.

“Many of the subscribers belong to the lower income bracket and cannot afford the regional pricing; secondly, the DTH operators offer a much larger number of channels and thirdly, the lingusitic offerings are much higher. Not all of us are Hindi- or Malayalam-speaking viewers. In other cases, sometimes our parents live with us and their favourite channels are not available. There’s no availability in the local market. What do to do?” he questions.

Rights expert Clasper adds to this that “the most proactive companies out there are those that understand the difference in how the consumer values the content today and gets more of their content out there but also understands that they cannot demand the money that they could demand previously.”

Clasper goes on to say that the reason he dislikes the word piracy is “because it lumps everything together and it implies that the content owners have all these great products out there and the consumer has the freedom of choice of all these different services to pick and choose”.

“But that’s not the situation.”

He believes that a time is coming when the video industry will undergo the same change that the music industry went through, which will give consumers much needed options.

In the meantime, there is no doubt that this topic is being debated across the world in different forms. At the moment, most pay-TV operators in the US as well as viewers are waiting to see which way the US Supreme Court’s judgement will go as it deliberates whether over-the-top (OTT) streamer Aereo is infringing on broadcasters’ copyrights by streaming local TV feeds over the internet. If the verdict is in favour of Aereo, Centris research shows that four out of ten pay-TV households will cancel their existing TV service and replace it with Aereo.

Is there a solution then? On the one hand, there are legitimate players who invest millions of dollars in content and the region’s production industry and clearly, they have a right to expect a return on their investment. On the other hand, there is a new generation of consumers that want to access the content of their choice anytime, anywhere, on any device at the cheapest price. Then, there is organised crime, where signals are openly pilfered and redistributed to subscribers. We keep this debate open as the industry goes through a revolution and tries to identify how it can monetise its content while also keeping consumers happy.