Illustration: Maxime Mouysset for Bloomberg Businessweek
Ever since taking on Netflix Inc. at its own game, old Hollywood has struggled to turn a profit in streaming, with the likes of Disney+, Peacock and Paramount+ losing billions of dollars each year, sparking concerns on Wall Street that the services will never be as profitable as cable once was. But the age of streaming has been a boon for some unintended winners: pirates that use software to rip a film or television show in seconds from legitimate online video platforms and host the titles on their own, illegitimate services, which rake in about $2 billion annually from ads and subscriptions.
With no video production costs, illicit streaming sites such as myflixer.to and projectfreetv.space have achieved profit margins approaching 90%, according to the Motion Picture Association, a trade group representing Hollywood studios that’s working to crack down on the thousands of illegal platforms that have cropped up in recent years.
Initially the rise of legitimate online businesses such as Netflix actually helped curb digital piracy, which had largely been based on file uploads. But now piracy involving illegal streaming services as well as file-sharing costs the US economy about $30 billion in lost revenue a year and some 250,000 jobs, estimates the US Chamber of Commerce’s Global Innovation Policy Center. The global impact is about $71 billion annually.
Source: Kearney analysis of MUSO data. 2023 is an estimate.
In the US, which counts almost 130 subscription piracy sites, the MPA estimates that the top three combined have about 2 million users paying $5 to $10 per month for films, TV shows and live sports. Analysts say the user number could soar as the cost of subscriptions from legitimate companies such as Walt Disney Co. approach $20 per month as they seek to bolster the finances of their streaming platforms. “Some of these pirate websites have gotten more daily visits than some of the top 10 legitimate sites,” says Karyn Temple, the MPA’s general counsel. “That really shows how prolific they are.”
Last year, Philadelphian Bill Omar Carrasquillo—who broadcast his lavish lifestyle to about 800,000 followers on YouTube and who the FBI said ran one of the most “brazen and successful” TV piracy schemes ever prosecuted by federal officials—was ordered to forfeit $30 million in assets including a dozen properties, a Lamborghini and $6 million in cash. At its peak, his illicit streaming business, GearsTV, had 100,000 subscribers and brought in about $1.5 million in monthly sales. In March 2023, Carrasquillo was sentenced to five and a half years in prison.
Some pirate sites are invitation-only platforms that can gain traction on the dark web. But most are legitimate-looking streaming websites, searchable on Google and advertised on Facebook and TikTok. They’re funded by ads as well as subscriptions and offer a buffet of film, TV and live sports that’s wider in variety than legitimate outfits because they usually steal content from multiple services. (In some cases, viewers mistake the platforms for legitimate streaming services because of how slick they look.) Subscription payments are sometimes made in cryptocurrency, but they’re more often processed via credit cards and PayPal—which can help the MPA find the businesses and shut them down.
The MPA says that in recent months, Russian crime rings have paid patrons to sneak into AMC Entertainment Holdings Inc. theaters in Los Angeles with camcorders and record films including Book Club: The Next Chapter, Barbarian, Smile and Lyle, Lyle, Crocodile. The footage is then uploaded to the internet and watermarked with links to illegal online casinos owned and operated by the same criminal organizations, to encourage viewers to place bets on those gambling platforms.
“The people who are stealing our movies and our television shows and operating piracy sites are not mom and pop operations,” says Charlie Rivkin, chief executive officer of the MPA, who adds that some of the operators also engage in drug trafficking, child pornography, prostitution and money laundering. “This is organized crime.”
Rivkin, a former US ambassador to France and onetime CEO of the Jim Henson Co. (home of the Muppets), joined the MPA in 2017 after the organization failed five years earlier to build consensus between Hollywood and Silicon Valley to win passage of legislation in Congress aimed at stopping online piracy. Web companies such as Google and Yahoo! said the move would give the government too much power to shut down sites accused of infringement. In 2017 the association formed the Alliance for Creativity and Entertainment, an enforcement task force of about 100 detectives circling the globe—and sometimes skirting death threats—to help local authorities arrest streaming pirates. It’s led by Jan van Voorn, a veteran of Interpol and the Marine Corps, where he helped combat drug trafficking.
ACE says it’s helped shrink the number of illegal streaming services in North America to 126, from more than 1,400 in 2018, aided in part by the MPA’s support for a 2020 federal law that made large-scale streaming of copyrighted material a felony rather than a misdemeanor. But internationally, piracy increased 39% for films and 9% for TV shows in 2022, led by demand for movies such as Paramount’s Top Gun: Maverick and series including HBO’s House of the Dragon, according to data tracker Muso’s latest report. The reach of illegal streaming services is booming, with a record 215 billion visits to the illicit sites in 2022, Muso says. And measures by legitimate streaming operators to shore up earnings—for instance, cracking down on password-sharing—will further increase visits to illicit platforms, according to Muso.
Source: Kearney analysis of MUSO data
The main red flag that a site is operating illegally is pricing, which starts at about $5 per month—less than a third of a basic Netflix subscription—for access to a seemingly limitless trove of films and shows from multiple streaming platforms. Another clue is that a site is anonymously registered, obscuring ties to its owner. To fight the pirates, the MPA’s investigators track down a platform’s operators and put them on notice with cease-and-desist orders.
If they don’t comply, the MPA begins what Van Voorn calls “the disruption phase,” which seeks to disable their payment and hosting platforms, social media accounts and domain names. If the perpetrators still won’t comply, the MPA escalates the case to civil or criminal status and works with Europol, Interpol and national police forces dedicated to intellectual-property theft and cybercrime. It’s taken as little as two weeks to dismantle a site’s operations in Egypt and as long as four months in Spain, Van Voorn says.
Consulting firm Parks Associates predicts that legitimate US streaming services’ cumulative loss from piracy since 2022 will reach $113 billion in the next two years. “While there is some optimism that emerging countermeasures and best practices may see piracy begin to plateau by 2027, there is no consensus among stakeholders as to when it may begin to decline,” says Steve Hawley, a Parks Associates analyst.
For now, Van Voorn says he’ll continue to fight bootleg streamers—even if it sometimes feels like whack-a-mole. In November, ACE shuttered Zoro.to, Goku.to and ShowboxMovies, which together had close to 400 million visits per month. The same month it closed down the two largest illegal video platforms in the former Soviet republic of Georgia and formed a partnership with sports streaming giant DAZN to shut down illicit live sports site watchwrestling.ai, which operated out of India. Van Voorn’s team also had a breakthrough in Vietnam—historically a piracy hot spot—when it helped close down 2embed, a site that provided films and TV shows to hundreds of criminal platforms around the world.
The move is part of ACE’s mission to target disseminators at the top of the bootleg food chain that farm out pirated shows and movies to illegal sites. “Taking down these content sources and therefore impacting 25 or more services at once is a very effective strategy,” Van Voorn says. “We’re working hard to be the one-stop shop for the growing piracy issues around the world.”