A comparison of a public and private university of the effects of low-cost streaming services and income on movie piracy

Highlights

• Streaming service usage differs between the schools.

• The use of illicit sources for movie piracy is not prevalent among sampled college students.

• Ordinal regression found significant differences in the levels of piracy between men and women.

• The data shows that the high usage of legal streaming services as whole has greatly reduced movie piracy.

Abstract

This paper examines factors that affect online movie piracy activity. Specifically, the authors examine the impact of inexpensive legal streaming services, such as Netflix, and household family income as well as gender. A sample of college students at a private university, representing a more affluent population, are compared with students from a public institution. Initial findings indicate differences between the two samples. Lastly, although digital piracy is reduced among the samples, it does still exist suggesting a much more complex issue than previously thought.

Introduction

2016 was a banner year for Hollywood as box office sales reached a record $11.37 billion, up from the previous $11.14 billion record set in 2015 [1]. Despite its success, the movie industry was waging an invisible war against what it considered an existential threat: online piracy. One study estimates that if piracy were eliminated during theatrical runs of movies, industry revenues would see a 15% increase, equating to over $1 billion in additional revenue [2]. Another study conducted by Herz and Kiljański [3] sampled over 28,000 residents from six counties in Europe and found that unpaid movie viewings diminished movie sales at this time by 4.4%, and that most of the lost sales were due to a relatively small group of consumers.

The industry appears to be losing the fight with record demand for content coupled with increasingly sophisticated software across a multitude of devices. For instance, in 2017, a season finale of the HBO series Game of Thrones drew a record 16.1 million legal viewers. However, that number paled in comparison to the over 143 million illegal downloads or streams, resulting in the series pirated over a billion times [4]. Moreover, digital piracy has evolved from file downloads to a very lucrative video streaming business, where unauthorized sites that host and stream pirated movies make hundreds of millions in ad revenue [5].

The growth of digital piracy in the past decade can be considered a continuum of software and digital music piracy coupled with changes in consumer consumption. Prior to the proliferation of movie piracy, music studios fought for its survival as consumers shifted from optical media towards digital distribution. Without a legal digital distribution business model and service, music consumers flocked to peer-to-peer (P2P) services in the late 1990s, prompting music labels, specifically its trade group, the Recording Industry Association of America (RIAA), to pursue controversial aggressive legal action against services, such as Napster, as well as litigation against thousands of individual users, particularly college students (See Ref. [6]).

Paralleling music piracy, movie piracy may be attributed to the delay by Hollywood to adapt to shifts in consumer consumption from physical to digital media coupled with the availability of unauthorized P2P sources. Netflix, for example, which began as a DVD mail distribution service, did not have its subscription digital streaming service until 2007. Today, Netflix and other legal streaming services have established a clear business model and technological infrastructure that caters perfectly to socially connected Millennials, whose binge-watching habits have been labeled “The Netflix effect” [7]. For example, as of March 2018, Netflix now has 117 million members [8]. More importantly, these subscriptions to these authorized streaming services are of high-quality, reliable, and relatively inexpensive. As more people “cut the cord” of traditional cable television and transition to digital streaming as the primary source of media consumption, several questions emerge: How does the existence of relatively low-cost legal streaming services, such as Netflix, Amazon Prime Video, and Hulu, impact unauthorized streaming services?

This study examines the current attitudes and activities of illegal sources of movies in a time when relatively inexpensive options are widely available. Furthermore, we consider family wealth and student income by comparing samples of private university students with public university students. The impact of these subscription services is examined to determine the level of and attitudes towards movie piracy using a survey sample of students from a North Texas public university and a private university. Also, this study contextualizes the purchase of legitimate digital streaming subscriptions and movie piracy activity with family income and other variables. As noted above, the financial loss attributed to digital movie piracy is significant and is growing. Thus, comparing relatively high-tuition private college students with those of more affordable public schools may reveal any general socioeconomic factors at play.