Recently, the torrent news website TorrentFreak revealed that the second episode of season four of HBO's "Game of Thrones" was the most downloaded TV episode ever. According to the site, as many as 1.5 million people downloaded the episode within the first day of its release and 193,000 of those had shared a copy of the episode within a few hours of its release. Given that Time Warner (NYSE:TWX), owner of HBO, isn't making any money off of these downloads, will the show's popularity among pirates be its downfall?
Pride in the distinction
Last year, Time Warner CEO Jeff Bewkes made the comment that having "Game of Thrones" as the most pirated show in the world was "better than an Emmy." He isn't the only one associated with the show that seemed to take pride in its popularity on torrent sites, either; various members of the cast and crew, including director David Petrarca, have expressed opinions that rampant piracy actually had a positive effect on the show.
While speaking at Perth's Writers Festival last February, Petrarca commented that "cultural buzz" was a key part of keeping shows like "Game of Thrones" on the air. He argued that pirates help to feed this cultural buzz, and that the people who download the show and talk about it with friends are actually increasing interest in the show.
While this is obviously true given how many people were discussing the "purple wedding" after the show's record-breaking episode, how does this cultural buzz translate to financial success for the show?
Do pirates spend money too?
If record numbers of people downloading "Game of Thrones" had a significant impact on HBO, it would likely come in the form of reduced subscriptions or slow DVD and Bluray sales. Neither of these seem to be happening, however.
When speaking with Entertainment Weekly on the subject last March, HBO programming president Michael Lombardo stated that piracy was "something that comes along with having a wildly successful show on a subscription network." He explained that while the company does try to stop piracy when it finds it, it hasn't "sent out the 'Game of Thrones' police" to try and stop casual downloading. A larger concern seemed to be those who sell bootleg copies of the show, actively denying HBO sales and potentially giving viewers a different experience than they would receive from an official release.
Lombardo explained that piracy "certainly didn't negatively impact the DVD sales," explaining that the show was in high demand despite rampant downloading. He even confirmed that it was the top money earner for the network, saying "If you look at aggregate of international and DVD sales — which are the two revenue streams we look at since we're not selling it domestically on another platform — yes, absolutely, in terms of shows we have on now."
Piracy as a metric
HBO isn't the only one keeping track of downloads. Netflix (NASDAQ:NFLX) has admitted to tracking the most popular downloads to determine which shows and films are in the highest demand as a way to plan future acquisitions. The company attempted to get the streaming rights to "Game of Thrones" at one point, though HBO declined the offer since the streaming service would provide direct competition for subscribers.
The reasoning behind this is fairly sound, since looking at what people are downloading is a good way to tell which content is popular. Netflix uses this to provide a legal streaming option for would-be pirates, allowing them to watch shows instantly instead of waiting for the episodes to download. HBO offers a similar option in HBO Go, though new episodes of "Game of Thrones" have been known to overload demand on the server and cause the service to crash.
Even though piracy can be a major problem in the entertainment realm, HBO seems to view it more as a metric of the success of "Game of Thrones" and other shows. Both the network and those involved with the show have expressed more than once that high piracy stats are something to be proud of because it means that people are enjoying the show. Moreover, it doesn't seem to be hurting subscriptions or sales so there's no reason for HBO to make a knee-jerk reaction to try and stop it.
If piracy did become a problem for the show, the network's best bet would be to shore up its HBO Go service and possibly spin it off as a separate product (which has been making the rumors of late anyway). This would give potential viewers easy (and legal) access to the show in streaming form, eliminating the wait for downloads and enticing new subscribers with other offerings as well.
If the service does spin off into its own product, it'll be interesting to see whether HBO actually affects the piracy numbers instead of the other way around.
John Casteele has no position in any stocks mentioned. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.