Why Fox and Disney hate Singapore's little black boxes

The fight against content piracy
The fight against content piracy

Singapore has become the front line in a global fight against rampant piracy of movies, TV shows and sports games.

Major media and entertainment companies are waging a campaign against the spread of small black boxes that can provide free access to thousands of TV and video-on-demand channels worldwide.

 "It's the little box that took over piracy and it's taking over the world," said Neil Gane, general manager of the Coalition Against Piracy, an industry group that includes Disney (DIS), 21st Century Fox (FOX) and Turner, the parent company of CNN.

Gane said Southeast Asia has become "the epicenter" of the manufacturing and distribution of the boxes, which are known as illicit streaming devices, or ISDs.

On their own, the boxes don't do much. But when loaded with the right software, they can enable people to illegally watch content they should be paying for, such as top soccer and NBA games, popular shows like Game of Thrones and the latest Hollywood movies.

The companies are fighting back and pushing authorities to crack down on the boxes.

Losing subscribers

In Singapore, cable operators Singtel and Starhub have teamed up with Fox and English soccer's Premier League to take legal action against two ISD sellers. The case, which is now before the courts, could result in the devices being outlawed in the city-state.

Successful legal action has already been taken against sellers of the boxes in Hong Kong, Thailand, Malaysia and the United Kingdom, according to the Coalition Against Piracy. But it hasn't been enough to stop the sale and use of them in many countries.

Related: China's big streaming shift: Paying instead of pirating

Last year, the US government made the boxes a special focus of its "notorious markets" report, warning that use of them has exploded in the United States. They're different from products like Slingbox and Apple TV, which are set up to work with authorized content providers.

It's difficult to put an exact number on the financial damage the illicit devices may be doing to the global media and entertainment industry. Losses for companies that create, own and distribute content for North America could exceed $4 billion a year, according to a recent report from communications technology firm Sandvine.

Research group Media Partners Asia says that in Singapore, the number of pay TV subscribers has fallen 15% over the past two years, mainly because of piracy. Its CEO, Vivek Couto, predicts the number of subscribers could fall another 15% in the next two years. 

'Everybody's talking about the issue'

Jonathan Spink, the CEO of HBO in Asia, has worked in the region for 20 years and says content piracy has never been as widespread as it is today.

  "Everybody's talking about the issue now, which means everyone's being impacted by it," he said. "People are canceling subscriptions because they can get stuff for free. At the moment, it's not killing the business but it's beginning to have a very real effect on it." 

HBO, like CNN and Turner, is owned by Time Warner (TWX)

Related: The startup that's aiming to outsmart Netflix in Asia

 Spink said it's hard to quantify how much illegal streaming devices are costing the company, but he points to the example of HBO's Game of Thrones, which is the most pirated show in history. Episodes from its seventh season were pirated more than a billion times, according to anti-piracy firm Muso. 

 "Even if you can convert 10% of those people to paying customers, then business would be significantly better," Spink said. 

Easy to buy

One of the biggest problems is the abundant availability of the streaming boxes.

The devices are "the hot thing being sold" in many shopping malls devoted to tech products across Asia, Gane said.

In Singapore's Sim Lim Square, an electronics mall, at least half a dozen outlets were openly offering the media streaming boxes last month. Several of them told CNN that the devices were selling well.

For the equivalent of $150, we bought a box that the store then loaded with software. After that, it's basically plug and play. All that's needed is a screen and an internet connection. 

Related: India's Netflix plans to take Bollywood global

The device we bought provided access to the latest movies, TV shows and sports, including the English Premier League. It was all content we should be paying for, so we shut it down. 

Stamping out the sale of the boxes is proving tough.

 "I think most governments recognize the damage intellectual property crimes do to their economy, but they are not necessarily enforcing it or they are delaying the decisions to clamp down," Gane said.

The industry needs to try to alter the way consumers think about piracy, according to HBO's Spink.

"If you stole £100 through the internet from your bank, you would have the world falling on your shoulders. But if you steal a couple of films from someone, then no one seems to mind," he said. "That mindset has to change." 

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