Maybe HBO Does Get it: Game of Thrones Again the Most Torrented Show

It’s long2888272896_82581cfbc2[1] been said that piracy represents an untapped marker or unmet need, and this has led many pundits to wonder why some creators aren’t tapping said markets. I have made that argument myself and I’ve been hearing it for the past several years, but today I would like to make an alternative suggestions.

What are the chances that a creator might be aware of the piracy but simply decide that it represents a market not worth investing in?

Take Game of Thrones, for example. Wired reported earlier this week that the finale of season 3 was the most pirated tv episode of 2013:

Three seasons in and Game of Thrones still continues to set records — both legitimate and otherwise. After hitting ratings milestones earlier this year, it now has yet another accomplishment to boast about: the most pirated show of 2013.

This latest honor comes via TorrentFreak, which found that the Season 3 finale of the show had 5.9 million downloads via BitTorrent, beating other shows like Breaking Bad and The Walking Dead by large margins. However, the fact that millions of people are pirating Game of Thrones really isn’t the story here — or, if it is, it’s not a new one. What bears examining is the extent to which that piracy is a direct product of HBO’s policies — and the network’s staunch refusal to budge in the face of mounting evidence that their policy of avoiding third-party distribution to reinforce the value of their product is accomplishing just the opposite.

At this point everyone knows that the piracy is happening, including Game of Thrones director David Petrarca who had previously admitted that piracy generated much-needed “cultural buzz” around his show. Even the CEO of Time Warner (HBO’s parent company) knows about the piracy; he sees it as a positive:

Our experience is that it leads to more paying subs. I think you’re right that Game of Thrones is the most pirated show in the world. That’s better than an Emmy.

Okay, if the highest levels of the company know about piracy and don’t appear to be responding directly to it, do they really deserve to be criticized about it?

I don’t think so. Instead I would like to posit an inverse to Hanlin’s Razor. Rather than assuming the cause to be  stupidity, my new rule of thumb states that never attribute an action to stupidity that which might be explained by asymmetrical information. (In other words people aren’t as stupid as we might assume; they’re just working from different data.)

If we apply the razor here then can conclude that HBO’s response was to choose to not offer a new digital product which could compete with the pirated downloads. Rather than label this the stupid or wrong decision, let’s instead consider why HBO might have made that decision.

Here’s one suggestion: What if HBO has data that showed that some percentage of their existing subscribers are also downloading pirated copies which can be watched offline? (This makes perfect sense to me.) If HBO already knows that they’re getting money from some pirates then they might decide its not worth offering a new digital product to the rest.

And if that’s not convincing, consider this. Wired is throwing around the 5.9 million downloads like it represents a significant failure on the part of HBO, when in fact they are making the same mistake as the RIAA and others have made in the past. Wired is assuming that the 5.9 million downloads translates to 5.9 million frustrated customers, when in fact that is not true.

It’s long been established that far more people will pirate a song than will ever buy a song, and I think the same principle applies here. Rather than looking at 5.9 million subscribers, we’re looking at a potential 590,000 subscribers – and it’s probably far smaller than that. What if HBO has research data from a survey group which shows that only a very low percentage of pirates would convert to subscribers if given the chance?

What if HBO knows that their conversion rate was only 1%? It’s not out of the realm of possibility; there are many software companies with paying customers making up only 2% to 3% of their user base – MegaUpload was one such example. HBO might have concluded that the couple hundred thousand new digital subscribers weren’t worth the effort – not when it could potentially cannibalize their existing business deals (cable subscribers might want to switch over).

Update: And just to be clear, when i refer to HBO’s existing deals I am referring to the hefty fees they collect from cable companies, including the one that owns HBO.

I don’t know why HBO is not directly addressing piracy, but it has gone on long enough that it’s no longer safe to assume they are making a mistake.

Thoughts?

P.S. If someone knows of a name for razor I coined in this post, let me know. Otherwise I will name it after myself.

image by officergleason

16 thoughts on “Maybe HBO Does Get it: Game of Thrones Again the Most Torrented Show

  1. It’s important to remember that HBO is owned by Time-Warner, which also owns dozens of other cable channels. They are also one of the biggest cable service providers in the country. The reason they do not offer HBO as a separate package is because they don’t want their customers to cancel a $100 a month cable package and buy a $10 a month HBO package.

    1. Also, there’s the fact that TWC is a cable internet provider too–all those people downloading torrents need a fast connection. I’m sure a large percentage of them (as TWC is HUGE) are actually paying TWC for the content, even if it’s indirectly.

      *shrug*

      Seems to me, that the parent company of HBO isn’t actually losing a lot of money on the deal.

  2. Here in Brazil HBO packages are offered with or without Cinemax in a series of 3 to 10 channels + 3 of them in HD.

    Since Season 2 they started broadcasting Game of Thrones and True Blood with only 1 or 2 hours difference from the US. The show has original audio and subtitles. They started doing this because the piracy rates here in Brazil are huge, and the 1-week waiting time from season one proved them that.

    HBO is the only channel that is able to do this. The Walking Dead, for example, has a 2 days delay.

    I’m a HBO subscriber, I watch the show but I also download it. :D

  3. Part of the motivation is to keep the CableCos happy.
    Diverse broadcasters from ESPN to Fox have living room streaming apps, ad-supported, that they refuse to activate unless the user is subscribed to a white-listed cable company as a broadband provider.
    Others, like CW and PBS are content to let you watch whenever and wherever you might be.
    In fact, the CW app offers the same five recent episodes as Hulu on the same day-after basis. The only difference is that on Hulu, Hulu gets the ad revenue and pays CW, whereas the ad revenue from app viewers goes straight to CW.
    HBO could easily follow the lead of MLB.TV and offer direct subscriptions for HBO GO instead of requiring users be cable subscribers. That they don’t is to avoid offending the cablecos.
    This fear of the cablecos is why neither MS nor Sony, Intel or Apple, has been able to secure network rights for their TV-over-ip services.

    1. As was mentioned HBO is owned by a CableCo (Time Warner). An HBO direct subscription may cost more than $10/month. MLB.tv cost $24.99/month.

      Not sure what else HBO can do. You can’t beat free.

      1. Sure you can: with convenience. With a fair value proposition.
        The music studios proved it by drastically reducing music piracy by allowing affordable and convenient digital downloads. Every content business will get some piracy, but when it gets to those levels they are failing customers, current or potential in one way or another.
        To focus on price is to miss the point of a service like MLB.TV (or hulu plus, for that matter). Yes, $24 a month is a lot, but you get a lot; you get every game, every day–hlme and visitor broadcast, no ads–live or recorded, for less than a dollar a day. You get MLB on your terms. Millions of people find it a fair deal.
        As for TimeWarner owning both HBO and TW cable, so what? TWC gets the same treatment as their competitors on this. And Time Warner is looking to ditch TWC, anyway.
        http://mobile.bloomberg.com/news/2013-12-05/time-warner-cable-s-incoming-ceo-ready-to-sell-if-price-is-right.html

        Again, even if the unauthorized downloads are going to people already paying, HBO is failing their customers. Beancounter-think is focusing only on the money instead of customer satisfaction. Satisfy the customers first and the money will come.

        CW gets it, not HBO.

      2. “You can’t beat free.”

        The problem with that idea is that we can prove its not true by example. All the many websites selling ebooks, movies, music, etc, and the sales of physical media are proof that one can compete with free. If they couldn’t compete with free then the content stores wouldn’t continue to exist.

        And speaking of competing with free, the Financial Times shows another way to compete with free (in this case, free sources of news). They sell stuff that can’t be found elsewhere.

        1. That’s why MLB.tv works. If you live in NY and want to watch the Royals then your only option is probably MLB.tv. Are baseball games even available on torrents, if so, live streaming is preferred.

          I agree HBO can compete with free because it’s in an excellent position with GoT. As the article brought out 90% of US households have some form of pay tv and access to HBO at $10/month. Who and where are the direct to consumers who would use live streaming service? The 10% who have no tv?
          DVD sales of GoT were extraordinary; 355,000 sold the first day at around $50. It’s cheaper to pay 3 months of HBO.

          Another show that is less popular and on the cancellation threat would be different story.

  4. HBO’s data may also show that a sufficient portion of the downloaders convert to the DVDs/BRs when they become available, which represents significant revenue stream.

    I’m not sure if the producers get paid per video rental (at video stores), but if they don’t, then the people downloading (and not converting) would probably rent anyways.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>