Digital Piracy, the Hidden Competitor to Pay Per Views

Abstract

Microeconomic theory states that if two homogeneous goods are offered to a buyer at two different prices, the buyer will choose the cheapest option. However, behavioral economics tells us that the rational idea to save money is in fact not always the case. This paper will explore digital piracy and the factors that consumers face when choosing whether or not they wish to pirate, specifically in the sports broadcasting industry. "Pay Per View" (PPV) programs such as MMA, Boxing, Football and other sporting events have many alternatives to consume and stream them for free illegally. Because of the many extreme ranging prices of these PPVs, as an economist, one would think that if there was a free alternative to these products the consumer would take it and the business of PPVs itself would be forced to lower prices or fully contain the externality; however, this is not always the case. Although pirated PPV streaming and the actual PPV program are not exactly "identical products", the opportunity costs streaming illegally can be viewed as equal to the monetary costs of the legal PPV. In line with that thought, this paper questions the motivations of individuals and shows evidence in which behavior towards piracy has taken place in certain sports programming; concentrating on the Ultimate Fighting Championship (UFC). The fact is that PPVs are still wildly profitable even though many people can and do stream them illegally. This can be due to the many negative carry-ons that come with illegally streaming such as, morality, consequences of viruses, illegal repercussions, and ability and effort to find a proper outlet where these free streams are available and working.