Earlier this year, American streaming giant Netflix announced that it had lost 200,000 subscribers for the first time in more than 10 years, raising fears that the lucrative business model that has disrupted the entertainment industry could be facing a plateau.
In a letter to shareholders, Netflix blamed the slowdown in growth on the low uptake of smart televisions, increased competition from traditional TV and new streaming service providers and password sharing among users that erodes overall revenue.
“In addition to our 222 million paying households, we estimate that Netflix is being shared with over 100 million additional households, including over 30 million in the UCAN region (the US and Canada),” the company said.
Last month, the firm began cracking down on password sharing in some markets, charging subscribers a small premium to maintain ‘sub-accounts’ to have additional households on their subscriptions.
Kenya is one of Netflix’s major markets in Africa and the company is currently spending tens of millions of shillings to develop new original content targeted at growing the number of subscribers in the country and the region.
However, like other digital entertainment stakeholders, the company’s ability to monetise its content among new users across the country has for years been undermined by piracy. In 2020, Netflix was part of a consortium of more than 3,200 companies including Walt Disney Studios, Universal City Studios and Warner Brothers that wrote to the Kenyan parliament asking for an overhaul of the country’s copyright legislation.
Through the lobby group International Intellectual Property Alliance (IIPA), the companies that also include giant publishers such as Bloomsbury, Penguin Random House and HarperCollins Publishers Worldwide asked the government to introduce tougher penalties for both individuals and corporates aiding copyright violations. “Kenya’s copyright legal and enforcement frameworks remain deficient, and piracy, particularly online, remains a significant barrier for the creative industries in Kenya,” said IIPA in a letter to the US congress. The lobby asked that the overhaul of copyright laws be made a condition for Kenya in the ongoing trade negotiations for a free trade agreement with the US.
“These negotiations should be a catalyst for the Government of Kenya to take the necessary steps to modernise Kenya’s copyright legal and enforcement regimes, and improve its marketplace for legitimate digital trade in copyright-protected materials,” the lobby said.
These demands were reiterated last year when Homa Bay MP Gladys Wanga proposed repeal of Sections 35B and 35C of the Kenya Copyright (Amendment) Bill that provided for takedown notices and internet service providers (ISP) liability respectively.
“The Bill proposes to repeal the provisions on takedown notices and requirements, the role of internet service providers and application for an injunction,” said Ms Wanga in a memorandum to the Bill.
“It is intended to remove the ambiguity in the role of ISPs; further, it is to align the Act as there are already legal remedies provided for.” The amendments were eventually dropped after opposition from industry stakeholders, including the Kenya Copyright Board (Kecobo).
Last week, the High Court made a landmark ruling that will set a precedent over which party carries the most liability in disputes over piracy of digital entertainment. Justice Wilfrda Okwany ruled that Safaricom and Jamii Telecom Ltd were obligated to comply with a takedown notice served by pay-TV service provider MultiChoice.
MultiChoice had in 2019 served the two firms with a takedown notice targeting 141 websites known to stream football matches pirated from its SuperSport channels. “Section 35B of the Copyright Act obligates an internet service provider to take down any infringing content within 48 hours of being served with a takedown notice,” said MultiChoice in its suit.
The ISPs, on the other hand, argued that blocking or restricting access to specific IP addresses amounts to a breach of the users’ freedom of information and an overachiever into censorship, a function the telcos argued they are not equipped to serve.
Safaricom and Jamii argued that their role remains neutral as the conveyor of information and should not be tasked with the responsibility of monitoring what passes through their networks.
“The re-broadcasting, re-transmitting or replicating the exclusive content of the applicant without their authorisation is a breach of their rights, is unlawful and causes irreparable economic loss to the applicant, not to mention other losses and evils that piracy perpetrates,” Multichoice said.
The ruling could open the floodgates of similar legal demands by both individual content creators and entertainment firms that find their work published or streamed on digital platforms without their authorisation.
In a memorandum to parliament last year, MultiChoice claimed that Kenya has one of the largest numbers of consumers of pirated content in the continent and among the top five globally for illegally streaming English Premier League games.
“In 2019, it was reported that almost one million Kenyans watched the boxing match between Britain’s Anthony Joshua and Mexican Andy Ruiz Jr through unauthorised channels,” the firm said in its memorandum. “Kenya was the second on the list of audiences by country.”
Last week’s ruling is expected to reverberate throughout the creative industry where writers, screenwriters, artists, actors, musicians, producers, broadcasters and other service providers have routinely pointed to the debilitating effect piracy has on their earnings.
MultiChoice itself has been losing subscribers on its DSTv and GoTv platforms and views the ruling as central to defending its traditional revenue base, as well as protecting its new Showmax digital streaming service.
“In Kenya, piracy has cost the creative industry losses of Sh106 billion per year, which includes Sh24 billion loss in taxes and revenue to the government and Sh41 billion losses to thousands of local content creators, such as actors, animators, comedians, dancers, filmmakers, musicians, podcasters, publishers etc due to content streaming piracy,” the firm said in the memorandum to parliament.