Illegal downloading falls…Thank Netflix?

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Regulators have been grappling for years with the illegal downloading of films and music, but a new study has shown that peer-to-peer (P2P) filesharing - a common source of illegal downloads - has seen a significant decline, as YouTube and Netflix gain in popularity.

P2P filesharing now accounts for less than 10 percent of total daily internet traffic in North America, down from 31 percent five years ago, according to the Global Internet Phenomena report published by Sandvine. It also found that Netflix and Youtube now account for over 50 percent of downloaded content.

It comes as an increasing number of people are signing up to video-on-demand services, analysts told CNBC, due in part to a rise in tablet ownership. Netflix, for instance, added 1.3 million subscribers in the three months up to the end of September.

(Read more: Soaring Netflix viewership rivals big TV networks)

"Television (programs) are becoming divorced from the TV and viewed on other devices like tablets. Tablets really push video streaming," Paul Davies, senior technology analyst at Mintel, told CNBC.

He said Netflix's competitive pricing - as well as free video content on YouTube – meant consumers had turned away from watching TV shows and films illegally.

"Compared to the past when you had to buy one film for £10 ($16) or rent it, people are now more willing to pay for a subscription, rather than go through the hassle and risk of using illegal downloads," Davies said.

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Video-on-demand services have filled a consumer desire to watch TV online and get programs immediately, according to Sam Gee, a technology analyst at Mintel who has studied piracy trends. He highlighted that often TV series are released in the U.S. before other countries, which frustrates viewers who want to see the episode as soon as it has aired.

(Read more: Netflix shares soar as outlook blows past forecasts)

"Piracy isn't fuelled by people who don't want to pay for things. What you have are consumers who know the internet is here and see no feasible reason why content is released in America and not the U.K. so they go online and download it illegally," he said. "But when streaming services came about they could access the content."

Despite the decline in P2P filesharing, however, film and music piracy still exists in the form of free streaming websites, which sometimes host illegal content.

"The P2P decline only captures a portion of piracy," said Richard Broughton, head of broadband at IHS Screen Digest. "As broadband connections have improved, the availability of streaming sources, not necessarily from legal sources, has improved and become more widespread. It is easier for consumers to watch their programs there and then."

—By CNBC's Arjun Kharpal: Follow him on Twitter @ArjunKharpal

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