Netflix could win big Monday night at the Emmy Awards as an online-only winner of TV's top honors. But for all the ways the Silicon Valley firm has transformed entertainment, Netflix has been just as helpless as its old-school TV rivals when it comes to stopping the online theft of its shows.
As recently as last week, "Orange Is the New Black," Netflix's hit series about a women's prison, was the second-most-pirated TV show in the world on a daily basis after HBO's "Game of Thrones," according to CEG TEK, a data service that tracks online piracy.
The show, nominated in the best comedy series category at the Emmys, was downloaded — mostly illegally — about 60 million times in the first six months of this year, more than the number of Netflix's total users, according to a separate report last week by Internet data research firm Tru Optik.
Just about every Emmy-nominated show ranks high among stolen videos online, including CBS's "The Big Bang Theory," HBO's "True Detective" and AMC's "Breaking Bad." Online viewers are rampantly sharing files of the stolen videos, bypassing payments to cable firms and broadcast networks that rely on viewers to watch ads.
But the fact that Netflix shows are also being voraciously downloaded illegally renews industry worries that there are no clear solutions to piracy. Entertainment industry executives had hoped Internet-based services such as Netflix, Hulu Plus and Amazon Prime would persuade those watching pirated videos online to begin paying or subscribing legally — much the way music lovers embraced iTunes, even if they had grown up illegally downloading files on Napster. But even Netflix, which at $8 to $9 per month for a streaming-only plan costs a fraction of a typical cable bill, may not be able to curb online theft.
Pirating — often called "torrenting" in reference to the top file-sharing site BitTorrent — has become significantly easier in recent years, and analysts say that younger Internet users are getting used to the idea of watching movies and television shows for free.
If you want to watch HBO's "Veep" and Netflix's "House of Cards" legally, you have to subscribe to cable television, a broadband service and Netflix. All it takes to access a torrent library — possibly the most complete place to find just about every movie and TV show in one place — is an Internet connection.
Analysts say hundreds of millions of dollars are being stolen with these unauthorized downloads of video, music and book files through pirate sites such as the Pirate Bay.
And Netflix's tactic of releasing entire seasons of hit shows at once may have only encouraged people to put more illegal content on the Internet more quickly.
"Releasing whole seasons at the same time makes it easier to pirate that kind of content," said Jon Nicolini, chief technology officer at CEG Tek.
Netflix sees piracy as one of its biggest challenges.
"It's so hard to fight against it," chief executive Reed Hastings said in an interview in July. "It's not too bad in the U.S., but in markets around the world it could continue to grow. So piracy is the number one threat to helping build the business in a couple of years."
Thefts of Netflix's titles are most rampant in Australia and other countries where Netflix isn't available. Hastings has pointed to a decline in piracy in Canada since Netflix began offering its service four years ago.
The company adds that shows such as Fox's "Firefly" were being illegally shared on BitTorrent and other peer-to-peer services until they began to appear on Netflix a few years ago, creating new revenue streams for Fox and "Firefly's" creators.
"I think people do want a great experience and they want access. People are mostly honest," Netflix chief content officer Ted Sarandos said in an interview with Stuff.tv in May 2013. "The best way to combat piracy isn't legislatively or criminally, but by giving good options."
That doesn't explain, though, the high rates of piracy in the United States. "Orange Is the New Black" was third in pirated titles last week, with nearly 5,000 illegal downloads a day, based on data from CEK TEK.
Even with the sharp rise in Netflix's subscriber numbers in recent years, piracy rates are up. One-quarter of Internet users around the world have illegally downloaded content, Nicolini said. And between November 2011 and January 2013, the number of page views on piracy sites rose about 10 percent — a key indication of pirating activity, according to Nicolini.
The users downloading the files tend to be young. Seventy percent of U.S. online users between the ages of 18 and 29 said they have copied a CD or DVD or downloaded music or a movie free, according to "Copy Culture," a 2013 report by Columbia University's American Assembly public policy think tank. About 30 percent said they get most of their entertainment through free downloads.
Comcast last week took steps to get younger people interested in buying cable television subscriptions by offering a free cable television service for students at a handful of colleges, including MIT and Emerson College. The idea, analysts say, is to get young users accustomed to the exclusive programs that appear only on cable channels such as HBO and ESPN.
It's still too early to discount the possibility that services such as Netflix and Hulu Plus will ultimately dampen piracy, said Ernesto Vandersar, co-founder of Torrent Freak, a website and blog focused on copyright and piracy.
He notes that most people who download files illegally also tend to be the biggest consumers of media overall. Those who download music illegally spend 30 percent more on legal copies of songs and albums, according to the American Assembly report.
In other words, these are people with a bottomless appetite for media.
"Netflix has a decent product and plenty of titles, but not everything," Vandersar said. "And that's what will make people feel like they need to pirate."