A recent article in The Sydney Morning Herald reported that a dramatic increase in illegal downloads of TV shows, movies, etc. was the result of the recession – people risking prosecution to save a bit of money. But hang on a second – Foxtel is enjoying significant increases in subscriptions and is profitable for the first time, while the cinema is undergoing a renaissance. I dont doubt that illegal downloads are increasing, but I do doubt that saving money is driving the increase.  

So what is driving the increase in illegal downloads? I believe it comes down to two key factors. First, there is ever-increasing competition in broadband provision, which is driving down the cost of fast broadband to the consumer. The vast majority of internet users are on broadband now and each year the average package they are subscribed to gets faster, with a higher limit.

The second factor is the availability of content online. Peer-to-peer sharing such as BitTorrent has been around for a decade or more (this month is the 10-year anniversary of Napsters launch) and there has always been a subculture of people sharing content online. But this subculture is going mainstream. In a self-funded study we have recently finished, we found that 48% of online Australians say they have ever downloaded TV shows or movies to the PC, both legally and illegally. And 38% do so at least once a month.

But why do consumers turn to the Internet for TV and movie content? The simple answers (from the same study) are as follows:

• Flexibility (59% say they can watch whenever they want)
• Choice (49% state the shows they access arent available on Australian TV), and
• Gratis (29% say because it is free).

What it really comes down to though, is that consumers are becoming device agnostic when it comes to entertainment. Many consumers are equally happy watching video content via their PC or their TV, and with media centres such as Apple TV becoming more common and enabling consumers to watch their downloaded content on the 42 plasma TV, the line between the TV and the PC is becoming even more blurred. Consumers want to watch the content they want, when they want it. They dont care whether it’s via a broadcast or a download.

The obvious implication is for advertisers and the lost opportunity to reach consumers. Australians may be watching the latest series of Greys Anatomy, but how are they getting hold of it and are they being exposed to your advert on the 7 Network?

Interestingly, when we asked consumers if they would prefer a) free content with advertising, b) paid content, no advertising or c) free content, no advertising (accessed illegally), the overwhelming response is a). In other words, the demand for an advertising-led model is there – but the supply is distinctly lacking. Is Australia ready for its own hulu.com? 

The research mentioned within this blog will be launched at the Digital Now Australia conference in late June, and extracts will be available on the website (www.digitalnowaustralia.com) from July onwards.