The Kuala Lumpur Digital Anti-Piracy Summit held recently was an eye opener for all stakeholders in the media industry. Various government agencies and foreign media practitioners discussed best practices in combating content piracy. We walk away from the event optimistic, we are of the impression that the government is taking serious efforts to tackle this issue, with the first amongst many is being the ban of Android TV boxes. If this materialises, Astro should be the key beneficiary. Maintain UNDERWEIGHT rating on the media sector until we see tangible outcomes.

We attended the Kuala Lumpur Digital Content Anti-Piracy Summit held in Putrajaya. The session was eye-opening for all stakeholders in the media industry, with a clear focus on best practices to combat content piracy in Malaysia. Efforts have started by various government agencies to stop content piracy and further efforts are needed to streamline the enforcement activities.

Significant loss to the government coffers. Globally, the impact to the media industry is estimated at USD50bn annually due to content piracy. In Malaysia, the media industry is hit with an estimated c.RM1bn in loss revenues and potentially up to RM150m in taxes being withheld from the government. Furthermore, many jobs have been lost due to this issue and companies had to earmark significant compensation to the impacted staff which hit their bottom line especially for the pay-TV and FTA stations, e.g Astro and Media Prima.

Android box-the culprit. Many countries have banned the sale of Android box, be it online or off the shelf. The ban proved to be a success as shown by the stable pay-TV subscriptions and provided similar level of competitions with the OTTs. In Malaysia, MCMC, together with KPDNKK, has started removing 33 Android box models from the market.

Responsible advertising. The reason behind the success of piracy content is due to the advertisement network being able to generate revenues on their illegal network. In Malaysia, MCMC identified that 90% of popular illegal streaming contained ad networks. Surprisingly, this ad network is coming from well-known mainstream brands. Streaming on illegal sites poses high-risk advertisements (HRA), and thus impacting brand image with the likelihood of supporting organized crime and terrorism funding.

Site blocking. There are 2 types of site blocking that proved to be a success in Malaysia and other countries, namely judicial and administrative. Malaysia practices administrative site blocking where (1) rights owners submit a request to regulator with supporting evidence; (2) regulator reviews request and evidence; and (3) regulator directs ISPs to implement blocking. Nevertheless, the best practice for site blocking is to follow the UK standards - dynamic site blocking. Dynamic blocking is best to use to encounter domain hopping which can ultimately eliminate the illegal websites effectively. To date, 246 illegal streaming websites have been blocked by MCMC.

Education-the best way. Perhaps the effective way to combat piracy content is from the consumer end. Consumers need to be educated on the risk of piracy content. Such action was a success in The Philippines where Globe Telecom ran anti-piracy ads called #PLAYITRIGHT. In addition, consumers need to be taught of risk on the illegal streaming site which is associated with malware attacks. Malware attacks are common when the consumer visits an illegal site, of which malwares are able to steal personal data from the user devices.

Collaboration and enforcement. One of the reasons Malaysia lacks of enforcement activity is due to its outdated 1987 Copyright Act. The act does not cater to the rapid change of technology in today’s world, this includes the sale of Android box and digital content piracy. In addition, there is an urgent need for an only single agency to handle the piracy content to be placed under MCMC’s purview. Currently, there are overlaps of purview between MCMC, KPDNKK, the police and Customs to handle the matter. Moving forward, stakeholders have suggested that the matter should be handled under one enforcement unit for swift monitoring and actions.

Maintain UNDERWEIGHT. We left the event optimistic as we witnessed that the government is taking serious efforts to tackle this issue and we can expect positive results on the decision to ban Android box in the near term. Astro is a key beneficiary should this materialise. Nevertheless, despite the optimism, we see a long road to recovery for the overall media sector amidst weakening adex on traditional platforms. We maintain our UNDERWEIGHT rating on the sector.

Source: Hong Leong Investment Bank Research - 21 Feb 2019