Piracy

FILM & ENTERTAINMENT

According to the last study conducted by an independent research firm, the worldwide motion picture industry, including foreign and domestic producers, distributors, exhibitors, retailers and Media Service Operators (MSOs), lost an estimated $18.2 billion in 2005 as a result of motion picture piracy.2In 2005, the major U.S. motion picture studios alone suffered an estimated $6.1 billion loss due to all sources of piracy. Concerns about piracy have shortened the theatrical release window to protect the sale of DVDs and has necessitated worldwide “day and date” releases to prevent the cannibalization of international theatrical revenue.

According to the Motion Picture Association of America (MPAA), bootlegging, illegal copying and distributing, and Internet piracy are responsible for the biggest damages.

The MPAA also estimates that greater than 90% of this illegal Internet content is derived from camcorded movies copied from theaters early in the theatrical release window. Virtually every major U.S. motion picture is camcorded in the first few days of its theatrical release, if not sooner. These first illegal copies are traded in underground Internet release groups where for-fee downloads are sold to optical disc replication factories around the world. In the case of most major U.S. motion pictures, saturation of the pirate network with high-quality recordings is complete within days of the theatrical release.

As a result, the MPAA and all U.S. major motion picture studios spend a significant amount of money, both domestically and internationally, on the protection of movies during their early theatrical release. This protection usually takes the form of uniformed security guards who maintain a visible security presence in pre-release screenings and first run theaters. More aggressive and expensive security strategies have also been implemented, including searching moviegoers as they enter the theater and equipping security guards with night vision goggles — all with mixed results.The associated costs of such aggressive security strategies can be prohibitive and can negatively impact the moviegoers’ experience. Additionally, as more highly-refined concealment techniques are used, these security measures may not be the most effective in deterring or interdicting professional camcorders.

Even if this strategy of protecting pre-release screenings were 100% effective, the film is immediately exposed as soon as it’s released to thousands of cinemas worldwide during opening weekend. While the studios have historically focused on pursuing professional pirates, there’s a growing threat posed by “social piracy” – recording, storing and distribution of video taken by moviegoers in theaters – as over 250 million video-capable cell phones are in the hands of consumers today … and that number is growing at an astounding rate of 150 million annually.

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2 MPAA studios reported a worldwide loss of $18.2 billion as a result of piracy in 2005.  The U.S. motion picture industry had an estimated loss of$6.1 billion, which is consistent with a piracy study conducted by Smith Barney in 2003 that predicted the motion picture industry would lose $5.4 billion to piracy in 2005. Of the $6.1 billion in lost revenue to the studios, $1.3 billion came from piracy in the United States and $4.8 billion internationally, with nearly half of that loss occurring in Europe. About $2.4 billion was lost to bootlegging, $1.4 to illegal copying and $2.3 billion to Internet piracy. “The Cost of Movie Piracy,” An analysis prepared by LEK for the Motion Picture Association, 2005.