We have all seen the famous photo of the Buddhist monk, clad in his saffron robes and riding his motorcycle, with his cell phone clamped to his ear. Who is he calling? The abbot? A fast food restaurant down the road? We don’t know but we do know that Asia has leapfrogged over more established wired markets in the use, in particular, of mobile technology, but also other technologies. Most of Asia skipped the land-line phase for telephony, and is now forging new paths in content delivery…and content theft, enabled by rapidly evolving technology.
The Indian Example
Let’s use India, this vast, diverse and rapidly developing subcontinent as our example because it has one of the richest content markets in Asia, indeed in the world, measured by its creativity as well as the potential returns that can be obtained from a market of over one billion people. Bollywood, (Hindi cinema) and its spin offs, Tollywood (Telugu films) and other regional film markets have long been creative dynamos. Television took a while to catch up, with the state-owned broadcaster Doordarshan long dominating the market (it was the sole provider for many years and still has the monopoly on free-to-air broadcasting). It was the advent of pay TV in the 1990s that opened things up for consumers and provided a new platform and new opportunities for the content industry—except that many Indian viewers didn’t actually pay for access to the pay TV content they consumed. Even if consumers did pay someone for access, rights owners generally did not receive any flow back of licensing fees from the last-mile distributor. This was the era of the local cable-wallah.
(For the uninitiated, the word “wallah” is from Hindustani and means someone who specializes in a particular activity or profession. Thus a punkah-wallah was the person whose job it was to make sure that the manually operated ceiling fan–the punkah—was kept in constant motion, or an auto-wallah, is the driver of an auto rickshaw. But I digress….)
The Cable Wallah
The cable-wallah was an engaging chap, a local entrepreneur who ensured that consumers in his neighbourhood had access to cable TV, although in most cases he didn’t bother to license or legally acquire the content he was distributing. He cut the rights owner out of the loop. A jerry-rigged head-end to download or tap into content was usually the device of choice, with wiring strung down alleys and into households, borrowing whatever pole was handy. Of course the cable-wallah collected some subscription fees from his customers, fees that were attractively discounted from the going rate of the large, legitimate cable companies who paid for their content. The cable-wallah (or “last mile operator”) could afford to be generous—after all, his content costs were zero. No-one knew exactly how many subscribers there were in India since the cable-wallahs did not report their subscribers to the regulator, and indeed some of the intermediate content distributors were in cahoots with the cable-wallahs, persistently underreporting to the large Multi System Operators (MSOs) the number of the subscribers they distributed to, thus minimizing licensing fees. It is estimated that over the past three decades only about 20% of cable subscribers were officially “declared”. India has persisted in this mode for years, with “under-declaration” being a serious ongoing issue for content owners.
Digitisation of the Indian Market
This state of affairs began to be seriously addressed only about five years ago when the Indian government finally decided to upgrade the technology used in the industry, go digital, and impose a requirement that all distributors install “addressable” digital systems. This technology requires the installation of sophisticated Set Top Boxes (STBs) to enable distribution and results in each and every cable subscriber being uniquely identified and counted. While not completed by the original deadline of 2014, the program continues to roll out and is in its final stages. Once the program is completed, technology will have more or less dealt with one of the most persistent aspects of cable piracy in India. But if technology can solve problems, it can also create them.
New Technology Challenges: Streaming Services
Today piracy and signal theft in India has taken on a wholly different dimension, enabled by new technologies. Where once there was only analog cable access, now there is mobile and increasingly high speed broadband access to enable a range of Over-the-Top (OTT) streaming services. According to the telecom and broadcasting regulator in India, from 2013 to 2014, the total number of Internet subscribers in India increased by 34%, and the number of broadband subscribers in India quadrupled. No longer is piracy the domain of the local cable-wallah or DVD pirate; it is going hi-tech through online distribution of pirated content enabled by devices that are pre-programmed to access pirated programming, many of them developed in and sourced from China. And this is finally causing the industry—Bollywood and its derivatives, and the related TV industry, to finally come together to take the issue seriously.
Industry and Government Response
It is estimated that music and film piracy alone totalled $4 billion (USD) last year. As a result, the industry is finally putting some real pressure on the Indian government, from the broadcast and telecom regulator to state police authorities, forcing them to take more effective action to curtail the problem. Unfortunately, despite its rich cultural cinematic and music heritage, the culture of piracy runs deep in India and technology has only made theft of content more pervasive through updated methods.
Two recent examples serve to illustrate the depth of the problem, and the extent to which the industry is still penetrated by piracy. At the beginning of June, STAR TV, one of India’s biggest broadcasters, filed complaints against licensed cable operators in three states, accusing them of illegally retransmitting STAR’s pay TV channels. The control rooms of the cable operators, who served between 10,000 and 15,000 households each, were physically raided by police, and on-site arrests made. In another disturbing example, in mid-June the new Abhishek Chaubey blockbuster film Udta Punjab was leaked two days prior to release. What was particularly disconcerting was that the source of the leak was the copy of the film submitted to the Film Certification Board for censorship review! This is a galling example, but government authorities in India are in fact finally starting to take action. Some states are now setting up Intellectual Property Crime Units, responsibility for copyright has been removed from the Human Resources Ministry, where it was an orphan, and placed with the Trade Ministry, and the digitisation program continues.
The Technology Dilemma
India is a bellwether for the content industry in Asia. It has a well-established film and music industry, growing technical sophistication, high value television content in the form of sports (cricket) and movies, and a growing middle class. It is estimated that the industry is worth something like $17 billion USD annually. India is proud of its content industry, and perhaps will take steps to try to staunch the flood of piracy that has taken the region by storm, driven by the growing availability of high speed internet and 4G mobile services in many Asian cities. If India is a problem, in other Asian countries where there is less at stake in terms of preserving a domestic cultural industry, the situation is worse.
As a contact in the pay TV industry in Asia told me, “the pirate offer is constantly being upgraded. Piracy syndicates now offer a product that is extremely easy for every family to use, to watch pirated content on the big-screen TV in their living rooms. No more is piracy just seen on some laptop squirreled away in some teenager’s room – now the teenager goes out and buys a plug-n-play Android “black box” that brings 150 channels of HD pirated content into the family living room. The content is captured from many different locations (in and around China, in India, in Thailand) aggregated on web servers, and transmitted in excellent quality to many millions of boxes, 24/7. As strong broadband gets rolled out in more and more Asian locations, the piracy syndicates roll out black box sales right behind.”
That is the technology dilemma in Asia. From being a laggard in technology, Asia has leapfrogged some of the established markets in the West and in the process is demonstrating the new opportunities—but also the new challenges—that technology brings to the content industries. If indigenous film and TV markets are to thrive and prosper, there will need to be a serious commitment by Asian governments, including India, to build a technical and legal ecosystem that will allow content producers and distributors to survive. And this will require the political will to put in place the necessary measures to curb and control (one can never say eliminate) widespread internet piracy.
© Hugh Stephens 2016. All Rights Reserved.