Netflix (NFLX) is following the pirates as it chooses content to add to its streaming-video service.
When rolling out its service in the Netherlands, the company looked at what content to offer based in part on what shows were popular on piracy websites. “Prison Break is exceptionally popular on piracy sites,” Kelly Merryman, Netflix’s vice president of content acquisition, told Torrent Freak, a website that tracks news about the BitTorrent file-sharing protocol.
Netflix takes the view that it can draw people away from a life of video piracy by offering the same content, only with a better user experience and less risk of legal fallout. Reed Hastings, the company’s chief executive, has said that whenever Netflix is launched in a market, the level of activity on piracy sites drops. Netflix has also described piracy sites as a sort of lead generator, in which people whet their appetites for content before satisfying themselves through legitimate online services.
The idea that piracy serves as a proxy for consumer demand is gaining increasing currency among companies threatened by people downloading illegal versions of their content without paying. Earlier this summer, for instance, Time Warner (TWX) made more or less the same argument as Netflix while pushing for looser enforcement on certain kinds of copyright violations that didn’t threaten its core businesses, such as fan-made mashups of different songs.
There’s one serious complicating factor to the idea of simply seeing what people are pirating and then offering it to them through legitimate means: The most-stolen stuff is exactly the kind of popular content that companies guard most closely. Here is a list of the top 10 pirated movies of last week, according to Torrent Freak:
• World War Z
• This Is The End
• The Hangover Part III
• Now You See Me
• We’re the Millers
• The Croods
• Pain and Gain
• The World’s End
• Kick-Ass 2
Not a single one of those titles is currently available to Netflix users in the U.S. The company’s ability to acquire the rights to stream content has become an increasing concern as Hollywood realizes the value of what it is giving up and Netflix itself grows more powerful within the entertainment industry. So while activity on piracy sites can tell Netflix what shows it should try to acquire, it is also an indicator of what is the most popular content coming out of the studios—and they continue to be wary of letting any upstart Silicon Valley company use it to build its own rival empire.