Newest Export From China: Pirated Pay TV (9/2)
The technology, called peer-to-peer, or P2P, streaming TV, enables viewers anywhere in the world to watch cable, satellite or broadcast TV on the Web free of charge. Pirate services offer the programs to anyone equipped with a high-speed Internet connection who downloads some simple software.
The most active of these services are based in China, where a rising number of people are using them to watch channels such as HBO, ESPN and MTV. Now, the practice is spreading to Europe, where users have begun tapping into the Chinese services to watch European soccer matches unavailable on their local TV channels. Much of the programming is in Chinese, but HBO, ESPN and some other Western cable channels offered on the mainland are in English with Chinese subtitles.
P2P streaming TV is the latest generation of peer-to-peer technology, which evolved as a way to swap music and video files over the Internet, as software maker Grokster Ltd. helped users to do. This new twist turns an ordinary computer receiving the TV channel into a rebroadcaster of video streams, feeding the next computer, which feeds the next. The signal, which is taken live off TV systems mostly in China, is delayed by about a minute before it shows up on computer screens in Microsoft Corp.'s Windows Media or RealNetworks Inc.'s Real Player program.
Underscoring the challenges for the law to keep up with technology and its global reach, P2P television is emerging barely two months after the U.S. Supreme Court's decision in the landmark Grokster file-sharing case, which was seen as a victory for traditional media companies. The court ruled that file-sharing companies may be liable for copyright infringement if their products encourage consumers to illegally swap songs and movies.
These new services already seem to have a following. A National Basketball Association game featuring star Yao Ming drew about 50,000 simultaneous peer-to-peer viewers on Coolstreaming, one of the P2P services, says Yang Yongqi, a vice president of engineering for Coolstreaming's owner, Roxbeam Media Network Corp. of Beijing. The free software, which Coolstreaming considers a test network for technology it aims to sell commercially, has been downloaded 1.5 million times, he says.
China's pay-TV market is small, but the global industry faces the risk that P2P streaming TV could catch on in the U.S., where cable revenue totaled $57.6 billion last year, while sales of satellite TV services generated $18.5 billion. The more high-speed Internet users, the bigger the threat to the industry.
Sports and media companies and associations are just waking up to the problem. To keep its games off limits, the NBA's Asian office says it has informed its 14 licensed Chinese TV broadcasters of the streaming systems and expects the broadcasters to find ways to stop violations. Officials of Roxbeam didn't respond to questions about the source of its Coolstreaming content, including HBO and ESPN, which the Chinese government bans from wide distribution.
A spokesman for Time Warner Inc.'s Time Warner Cable says that if live online cable piracy takes off in the U.S., "we would prosecute pirates under the full extent of the law." Cable-TV giant Comcast Corp. says it constantly monitors its networks for unauthorized use, and takes immediate action when it discovers breaches. Because the Asian pirates aren't getting their material from U.S. cable distributors, U.S. companies aren't taking action against them, they say.
Cable channel HBO Asia, whose greater-China feed is featured on many of the services, says it, too, is aware of the systems and "very vigilant about shutting them down" but it declined to give details. HBO Asia is a joint venture of Viacom Inc.'s Paramount Films, Sony Corp.'s Sony Pictures Entertainment, Time Warner Entertainment and General Electric Co.'s Universal Studios. Representatives of Walt Disney Co.'s ESPN as well as ESPN Star, its Asian joint venture with News Corp., say they protect their rights vigorously but declined to comment on this particular situation.
So far, the Motion Picture Association of America, one of Hollywood's most aggressive piracy watchdogs, hasn't taken any action against Chinese peer-to-peer streaming networks. "We're in the process of investigating the technology and the structure," says Mike Ellis, the group's Asian-Pacific regional director.
Coolstreaming's site proudly displays the HBO and ESPN logos, and it recently promoted a feature starring Ben Affleck and Uma Thurman (though the promo didn't name the film). Yet the site carries a disclaimer stating "Coolstreaming.org honors the copyright of all video/audio programs." PPLive, another Chinese service, publishes a program guide on its Web site for viewers' convenience.
In May, England's F.A. Premier League began investigating reports that thousands of British soccer fans were using P2P systems to watch pirated broadcasts of live matches during a Saturday blackout period, which is designed to protect attendance at games. A German P2P system called Cybersky-TV, one of the first to use the technology, stopped distributing its streaming software after being slapped with a court injunction. Cybersky's Web site says it will release a U.S. version this month.
The genie is out of the bottle, says Eric Garland, chief executive officer of P2P consultants Big Champagne LLC, who believes programmers around the world are working on recreating the Chinese technology. American pirates could use the technology to stream feeds of U.S. channels, which could mean U.S. programming beamed free around the world.
Like Coolstreaming, PPLive didn't provide details about the origins of its video feed. A third Chinese service, SopCast, a student project at China's Fudan University, doesn't have a license for its content, says Zhou Qiang, a professor involved in running the service.
"We still have very small scale of operation, so no one is coming after us yet," Prof. Zhou says, adding that the whole system has supported 100,000 simultaneous users. "We're seeking the opportunity to legitimately rebroadcast [foreign channels] and would like to set up a system for that."
Some people do see potential legitimate business applications for the peer-to-peer streaming technology. For content providers without a widespread traditional platform such as cable TV, it offers a way to make users take on the expensive challenge of distribution. Some of the groups behind the technology say they already are working on ways to add digital-rights management to the systems, which could protect the owners of copyrights.
"Legal, licensed and protected streamed video via the Internet is potentially a future entertainment distribution model," says the MPAA's Mr. Ellis, "providing there can be developed secured methods to deliver it and protect the digital file from copyright theft."
Just ask MTV, one of the pirated channels. "We embrace new technologies," says a New York-based spokeswoman. "But we would want to figure out a way to get copyright holders paid for their content."