Group-IB, a Singapore-based cybersecurity company that specializes in preventing cyberattacks, reports that, for the first time in 5 years, the online piracy market in Russia has not only stopped growing, but showed a decline. Today, its volume amounts to $63.5 million, which is 27% less than in 2018. Group-IB experts believe that the key reasons for the collapse in the income of Russian online pirates include: a blow to the advertising model of monetization of pirate websites, the shutdown of the three major CDNs that provided pirated video content to about 90% of pirate streaming websites in Russia and the CIS, improvements to legislation, and the signing of an anti-piracy memorandum. That being said, the interest of Russians in watching illegally distributed films and TV shows has increased.
Pirates losing money
Over the past five years, the piracy market in Russia has been growing drastically. Each year in their reports, Group-IB experts highlighted the main factors that helped the gray market for video content develop rapidly. These factors included powerful advertising support from illegal online casinos and bookmakers, pirate-powered CDNs, and traffic growth.
The above components were dealt a heavy blow in 2019, which led to an unprecedented decrease in the volume of online piracy market in Russia. As a result, for the first time in five years, the market has stopped growing and has shown the opposite trend, shrinking to the level of 2016. Reasons for this include legislative changes in recent years, the widespread practice of pre-trial blocking of pirate resources and, of course, tactical successes in the fight against piracy. Among others, the active work of the Russian Federal Tax Service against bookmakers and gambling led to the pushing out of advertisers of pirated websites. For example, Azino777, a highly affiliated provider of advertising services for pirate CDNs, has already lost its leading position.
Director of Brand Protection and Anti-Piracy at Group-IB
Group-IB Anti-Piracy team for the first time estimated the volume of the Russian video piracy market in monetary terms in 2015. At the time, it amounted to $32 million. In 2016, it almost doubled to $62 million, in 2017 it amounted to $85 million (+21% increase), and in 2018 it reached $87 million (+2.3% growth). In 2019, however, for the first time in five years, there was a sharp collapse: the annual earnings of online pirates decreased by 27% and approached the $63.5 million mark.
Group-IB explains that the consistent adoption of anti-piracy laws has created a strong legislative framework to deter online piracy through a «permanent» blocking of pirate websites and their «mirrors». Changes to search engines also played against pirates. Improved search algorithms and the imposition of search engine penalties on resources with all types of built-in advertising (banners, pop-ups, underlays, ads built into the player, etc.) have reduced opportunities for pirates to place any such advertising, which has resulted in a drop in their revenue. However, the «tectonic shift» in the fight against piracy was ensured by the signing, in November 2018, of an anti-piracy memorandum with the participation of Yandex, Mail.Ru, Rambler, Channel One, VGTRK, STS Media, and Gazprom Media. According to the new directive, search engines are now required to remove links to pages with pirated content from search engine results. In almost a year, copyright holders included about 600,000 links to pirated copies of films and TV shows in the official register of pirated resources.
Tortuga Crisis: The takedown of the biggest CDNs
The monetization of pirates’ activity depends heavily on the volume of advertising traffic. Group-IB Anti-Piracy team has calculated the monthly average advertising revenue from a big pirate streaming websites, which is estimated at $10,000. In the past few years, bookmakers and online casinos became the major advertisers that fuel the distribution of pirated content. Their ads are built into the CDN players that provide pirated content to streaming websites. The takedown in October 2019 of Moonwalk CDN, one of the biggest pirate-powered providers of video content to Russian-speaking viewers, has caused a knock-on effect and lead to the closure of Kodik and HDGO CDNs. The content provided by Kodik and HDGO was also stored on the servers in the Netherlands and therefore could appear on the radars of anti-piracy groups, which took down Moonwalk. The takedown of the «BIG-3» has affected about 90% of Russian pirate streaming websites.
At the same time, Group-IB’s Anti-Piracy team note that despite the transformation of online piracy market in 2019,the interest of Russians in watching illegally distributed films and TV shows has increased a little bit in comparison with the last year. The number of search requests in popular search engines to watch movies and TV shows for free on pirate websites is amounted at 10.4 billion (+0,06%).
The drastic change in 2019 consists in the following fact: unlike previous years, not every intention of a user to watch pirated content resulted in profit for online-pirates. First of all, this is the result of the anti-piracy memorandum: in the previous years, even if pirated content was removed from a web page, a user still could open the web page, finding it in the search engine, and see the advertisement placed on it, bringing money to online-pirates. In 2019, on the contrary, a user was not always able to open a resource with pirated video content, even intentionally. The legal framework aimed at fighting online piracy market in Russia has been revised a number of times and started to produce results: the market players learned how to effectively exercise their rights and settle the issues related to content copyright without approaching the court. However, online piracy is an international problem. And, as recent developments have shown, coordinated efforts to fight online piracy at the international level are needed, since only they bring concrete results.
Director of Brand Protection and Anti-Piracy at Group-IB