No Big Surprise: Piracy Trumps Legal Video Downloads

A few takeaways from an Ars Technica story on NPD report that claims that peer-to-peer (P2P) video downloads are out pacing purchases from legitimate video download services by a rate of five to one.

• 8 percent of Internet-using households downloaded video content from P2P services, whereas 2 percent paid to download video content from legitimate providers.
• The study also indicates that nearly 60 percent of video files downloaded from P2P sites were adult-film content, while 20 percent was TV show content and 5 percent was mainstream movie content.

Some of the highlights from the solid analysis by Ars Technica:

• The big one has to be the ease of using a P2P network. Download a video from a P2P network, play it on your computer or burn a DVD. Simple. Why? No DRM on P2P networks.
• It’s hard to compete with free. Why would you pay for a DRM laden video with poor bit quality for $11.99 from an online service when you can get an HD quality, DRM free video from a P2P network?
• Selection is the pits with online video stores. But go to the P2P services and you can get pretty much anything you want. And, once again, it’s free.
• Set top box to the rescue? Video downloads may get their light of day in the mainstream when “on demand” goes to the next level. From Ars Technica:

Right now, the current leader in the video download market is Apple, which boasts nine out of every ten digital movies sold in the NPD study. I’m inclined to believe that the market for commercial video downloads will be pushed into the mainstream by set-top devices that provide integrated downloading services that go beyond current “on demand” services by carrying more selection and offering “download-to-own” videos. Such products insulate users from some of the frustrations of DRM while solving the problem of getting the content to a television screen. Apple’s upcoming iTV product is a good example of set-top box (STB) hardware with an integrated video download service. Microsoft’s increasingly popular Xbox Live Video service is also a great example. I’d like to see NPD perform a similar study in a year or two comparing adoption of set-top-based video downloads with computer-based video downloads so we can see how products like the Xbox 360 and the iTV impact the market.