The next wave of video piracy

[Len]

TickBox and other purveyors of ill-gotten content have grabbed the attention of TV programmers and distributors.

The next wave of piracy has reached the shores of the pay TV industry, and it’s shaping up to be possibly the biggest, most threatening one yet.

Call it Video Piracy 3.0. It’s a leap beyond digital file-sharing using technologies such as BitTorrent, or the earlier use of illegal — and more localized — distributors of set-top smartcards and other forms of illegitimate physical media that were sold out of the backs of trucks or in darkened alleys.

The pay TV industry is now faced with a new, more sophisticated flotilla of pirates who can deliver movies, TV shows and linear digital TV feeds that have been snatched somewhere in the complicated distribution chain and relayed directly to consumers who are willing to take big risks just to save a buck.

This new ecosystem includes video streaming devices, but its power comes from a vast network of illegal sites and unauthorized software “add-ons,” and a repository of illegal subscription services. This multifaceted threat is also paired with easy-to-use interfaces that look and feel a lot like something one might find on a legitimate pay TV offering.

Still, a source of the threat can be traced to the growing distribution of so-called “fully-loaded” Kodi boxes. On its own, the Kodi application — previously known as the Xbox Media Center (due to a heritage that focused on Microsoft gaming consoles) — is not illegal or a piracy threat. Rather, Kodi is getting a bad rap when the open-source media player software, which can run on commodity streaming hardware, is paired with the aforementioned unofficial add-ons, creating criminal conduits that can connect the user to sources of illegal content.

Some of that content is coming in the form of illegal subscription services that replicate much of what one could get from a traditional pay TV offering for a tiny fraction of the price, or for free.

Fuel for Cord-Cutting

A greater shift of consumers to unlicensed video and TV streaming and services could also hasten a growing cord-cutting trend. In addition to adding fuel to the cord-cutting fire, this illegal activity also keeps revenue out of the pockets of the companies that are legitimately creating, licensing or distributing TV shows, movies and linear channels.

“The emergent threat is a migration to subscription-type models where it truly cannibalizes cable revenue,” Dan Deeth, manager of media and industry relations with Sandvine, a bandwidth-management specialist that has been keeping close tabs on the TV piracy trend, said.

Pirates have also become more brazen in how they obtain and redistribute their video signals. While some are simply taking an over-the-air TV signal and relaying via the internet, others are obtaining and redistributing content from legitimate set-top boxes.

This scenario, Deeth said, has spawned a dark market of sorts where pirates will trade and swap illegal digital channels with other pirates to help build and expand their illegal content networks. Ironically, some pirate providers have even watermarked their own channels.

That ecosystem has also created a massive number of moving targets that can stymie those that are trying to tamp down the threat.

“This is a whole new source of content,” Jan van Voorn, executive vice president and chief of global content protection at the Motion Picture Association of America (MPAA), said. “Just going after the box sellers is not going to impact this whole range of players in this field.”

Today’s piracy landscape — and the ecosystem underpinning it — is also increasingly more sophisticated and even more professional-looking in terms of how the theft of TV and other types of video services is executed.

There are flashy, brazen advertisements that tout how these fully-loaded devices can be used by consumers to easily obtain premium content, including movies that are still in theaters, for free. Several of these pirates have even built a customer care infrastructure that provides step-by-step instructions on how these illegal products work and help with troubleshooting when consumers get tripped up by a technology issue.

Though it’s not easy to get an exact fix on the financial impact of this new, growing threat, a recent analysis of data collected by Sandvine sheds some light on the extent of it. And the results are attention-grabbing.

Gauging the Threat

In a report last year that spotlighted the fully-loaded Kodi ecosystem and was based on a dataset of more than 250,000 anonymized homes representing North America, Sandvine estimated that 8.8% of homes have an active Kodi installation. Though the Kodi apps don’t generate a lot of data, Sandvine said detection within a household isn’t difficult because the “heartbeat” of Kodi traffic is easy to hear.

Because not all Kodi users are stealing unlicensed content or using the technology for illegitimate purposes, Sandvine took things a step further to examine streaming behavior alongside content sources that were associated with official and unofficial add-ons.

Sandvine said it determined that 68.6% of homes with Kodi devices also have unofficial add-ons configured to access unlicensed content. Extrapolating that math further, the data showed concluded that roughly 6% of all homes in North America have a Kodi device configured to access unlicensed content.

Though not everyone uses Kodi for nefarious means, there’s no denying its growing popularity.

Irdeto, a company that specializes in digital security, estimates that there are about 40 million active Kodi users.

“It can be used anywhere in the world that has reasonable broadband penetration and speed,” Mark Mulready, vice president of cybersecurity services at Irdeto, said. “It’s a significant and growing threat.”

Sandvine’s data, alongside some examples of piracy that was hitting regions such as the United Kingdom, was “eye-opening” to the cable industry, James Assey, executive vice president of the NCTA: The Internet & Television Association, said.

Theft and piracy is not a new focus to organizations like the NCTA, but the report made it clear that it was time for the cable industry to get smart about the situation in a coordinated way, he said.

The Cable & Telecommunications Association for Marketing, meanwhile, teamed with Magid last year on a Connected Consumer study that included some focus on the threat of fully-loaded Kodi boxes. Among its findings: the threat isn’t limited to millennials. Fully-loaded Kodi users also include a wider range of consumer groups and a general blend of cord-cutters, cord-nevers and even some traditional pay TV subscribers who aren’t particularly remorseful about accessing illegal content for their personal enjoyment because they are already putting some money into the pay TV “system.”

Targeting the Threat

The threat level this represents has also brought together a broad coalition of stakeholders, including programmers, studios, distributors and packagers of premium content, taking aim at the new wave of piracy as a unified front.

“There’s a much wider array of players that are interested in disrupting the pirates,” Assey said.

A prime example in this arena is The Alliance for Creativity and Entertainment (ACE), a global coalition that identifies and coordinates strategies against the makers of these fully-loaded Kodi boxes and helping to identify sites and applications that are feeding them streams of illegal content. NCTA itself is not a member, but ACE’s backers largely include content rightsholders such as Amazon Studios, AMC Networks, BBC Worldwide, CBS Corp., Hulu, HBO, Bell Media, Lionsgate, NBCUniversal, Netflix, Viacom, MGM, Sky, Sony Pictures, 20th Century Fox, The Walt Disney Co., Warner Bros. and Univision Communications.

The growth of piracy devices, add-ons and apps “is a serious emerging threat to the legal market place for content, including films, television shows, sports and news programs, as well as a potential danger to consumers by spreading malware,” an ACE official explained via email.

ACE members are already making some progress, in the form of legal action, in their fight against new or emerging threats to the businesses of distributors, programmers and studios.

Among its recent court-focused activities, ACE and a group of its members, including Universal Studios, Disney, 20th Century Fox, Paramount Pictures, Netflix, Amazon and Warner Bros., have been taking aim at two different-yet-similar services — TickBox and Dragonbox.

There has already been some success against these threats. In a preliminary injunction handed down Feb. 13, a U.S. District Court in Los Angeles ordered TickBox to halt providing access to unauthorized content via its devices and software.

The order called on TickBox to ensure that its launcher software did not link to any sources of known pirated content, and to update its launcher software to delete or disable any previously installed apps that link to pirated content.

The original complaints go into some great detail about how both TickBox and Dragon Box allegedly link users to vast amounts of copyrighted content for free. Both use what are described as user-friendly interfaces that work in tandem with software tools that “scour the internet” for sources of infringing content and deliver links to those infringing sources to their respective customers via Kodi media players with the illegal add-ons and plug-ins.

The content — accessible through online repositories, called “cyberlockers,” that host the pirated content or streaming sites that make unlicensed streams of video content available through an embedded media player — can include movies that are still in theaters, as well as linear TV feeds.

The complaints also hold that the sources of that content tend to be a moving target, but the software takes the hassle out of locating high-quality illegal versions. “As an easy to install and operate, plug-and-play device, TickBox TV offers its customers nearly instantaneous access to huge quantities of infringing content. All a customer needs is an Internet connection, a screen (computer monitor or television) and a TickBox TV device,” the complaint said.

To make the service easy to use, TickBox also provides videos with instructions on how to use the device to search for and access copyrighted material.

Per the Dragon Box/Dragon Media complaints, both filed with the U.S. District Court for the Central District of California, Western Division, the applications provide customers with a customized configuration of the Kodi media player and a curated selection of what it deems to be the most popular add-ons for accessing infringing content. In tandem with those add-ons (the complaint holds that there are more than 80 of them), content is also sorted into categories such as Sports, 4Kids, IPTV and TV Shows.

Citing information posted last December by Paul Christoforo, a defendant from Carlsbad, Calif., named in the Dragon Box case that sought more Dragon Box resellers, the service claimed to have more than 250,000 customers in all 50 U.S. states and in four countries. At the time, Dragon Box claimed to have 374 sellers.

ACE also stressed that lawsuits aren’t the only strategy being employed, as it also supports voluntary, private- sector initiatives aimed at reducing illicit conduct by coordinating with content creators, ad networks, payment processors, and domain registrars and registries, as well as search engines.

And there’s been some successes in other parts of the world. Last year, for example, Canada’s Federal Court of Appeal in Montreal upheld a ban that prevents the sale of fully loaded devices. That action came after several service providers, including Rogers Communications, Bell Canada and Vidéotron, took legal aim at sellers of preconfigured devices that enabled access to valuable, unlicensed content, TorrentFreak reported.

Also last year, the European Court of Justice also found that the streaming of copyrighted material via fully-loaded Kodi boxes and other similar types of media players is illegal in European Union member states.

And just last month, the hammer of law came down on a London man named Nayanesh Patel, who was allegedly selling loaded Kodi boxes that provided access to illegal broadcasts of English Premier League soccer matches on outlets such as eBay and Facebook. Patel reportedly was forced to pay a fine of £18,000 (approximately $25,000) and made to stop selling and distributing the devices.

Though lawsuits and other legal actions have helped in some instances, the use of forensic watermarking might also dissuade would-be pirates.

In a survey of 4,252 adults in the U.S., United Kingdom, and Hong Kong, YouGov, a data and analytics group, and video tech provider Edgeware found that about half of those surveyed who say they would watch pirated content would think again if they knew a program they were watching could be tracked back to its source using forensic watermarking.

An extremely troubling aspect of this new menace is that consumers don’t need much technical savvy to access and view illegal content. Installs are simple plug-and-plays that are backed up by slick user interfaces that point the user toward where to access illegal on-demand content and live TV feeds.

Ease of Use a Disturbing Driver

This new wave of digital pirates isn’t immune to disruption, but the simplicity of these illegal offerings are driving scale into this dark market, making it tough to contain.

“It’s very straightforward to use for anyone,” the MPAA’s van Voorn said. “They [the pirates] provide consumers with step-by-step instructions on how to program these boxes.”

Said NCTA’s Assey, “The technology makes the presentation of these pirate sites look pretty slick and, maybe to the untrained eye, seem halfway legitimate.”

Ease of availability was also the most cited reason to view pirated content, according to the YouGov/Edgeware study, which also found that 29% of respondents said they watched pirated content at least once a month.

And these illegal video and TV services are just the tip of the spear when it comes to problems they can create for consumers. They also expose consumers to other potential dangers from outside the realm of ill-gotten content. Individuals who use pirated video services might not be aware, for example, that part of the economic model for some of them is the distribution of malware on devices that can form a gateway to a whole host of other illegal activities and fraud.

As locking down the threat becomes increasingly important for those who are trying to enforce their content copyrights, Irdeto has been investing in crawling platforms that provide a real-time analysis of Kodi plug-ins, Mulready said.

“I would put Kodi as one of the main threats to the industry at the moment,” he said. “Overall Kodi usage, in terms of visits and active users, still seems to be growing and very popular.”