MPAA study of piracy reveals damage far worse than expected

May 4, 2006

The Motion Picture Association of America has conducted a detailed study of movie piracy over a period of 18 months across 28 countries to try and estimate how much piracy is costing them. Unlike its previous studies, this study takes in consumer research by telephone, Internet surveys, focus groups, more consistent surveying methods and even Internet downloading to obtain more accurate estimates. The study turned out much worse than they expected and even made some of the studio executives think twice of making this information public over the past couple of months. While the results would help give better reasoning to enforcing tougher laws, some studios were worried that it would making the MPAA a laughingstock for its anti-piracy efforts up until now.

Based on
these figures, the U.S. movies studios lose around $6.1 billion each year in
global wholesale revenue as a result of piracy; a 75% hike over previous
estimates. This drastic increase is more likely the result of better
measuring this time, since the piracy level for some countries was often based
on random calculations in previous studies. The U.S. currently leads with
about $1.311 billion lost to piracy. Despite all the hype about piracy in
China, Russia and several other of the world's most notorious pirate markets,
Mexico actually turns out the 2nd worst with $483 million lost to piracy; over a
3-fold increase of $140 million in its 2004 study, which used old methods of
surveying. A CDFreaks news story.

Of the $1.311 billion in US piracy, this figure breaks down to $447 million due to illegal downloading of movies, $335 million as a result of professional bootleggers and $529 million from home piracy where consumers make copies of legitimate DVD and VHS media they purchased. As some consumers may not buy an official DVD even if they cannot purchase or download a pirated copy, this survey apparently takes these figures into account by specifically asking consumers how many movies would they have bought or watched in the cinema if they couldn't obtain pirated copies of these. Thanks to jef195 for letting us know about the following news:

The study, by LEK Consulting LLC, was completed last year, and people familiar with it say it reached a startling conclusion: U.S. movie studios are losing about $6.1 billion annually in global wholesale revenue to piracy, about 75% more than previous estimated losses of $3.5 billion in hard goods. On top of that, losses are coming not only from lost ticket sales, but from DVD sales that have been Hollywood's cash cow in recent years.

The MPAA froze plans to release the survey. Late yesterday, in response to questions from The Wall Street Journal, the MPAA released some information from the survey, including members' U.S. and global piracy losses. "A study this magnitude takes some work to roll out," says an MPAA spokeswoman. She says the numbers weren't far out of line with what the industry expected. For months, MPAA members debated whether and how to release the information. Some studios argued that making the figures public would help the industry win tougher laws and enforcement. Other studios said the figures were so bad that releasing them would hurt their stock prices and make a laughingstock of their enforcement efforts.

The full detailed article can be read here.

As the MPAA finally decided to release its figures, this seems like a good chance for them to really try to introduce tougher legislation and use these figures as a good reason for why this legislation needs to be written into law and enforced. Once (if) the next generation DVD formats become widespread, it will be interesting to see what happens with piracy then.

Unfortunately, even if the stronger copy protection methods lasts for a long time, this will not stop determined pirates from finding some way of taping the actual TV picture such as with a high definition video camera to make a duplicate, particularly since pirates do so at the cinema! When pirate copies are distributed online or as bootleg copies, to them a copy is a copy, even if it's not perfect. Also, as copies generally are not copy protected either, there is little in stopping consumers from making further copies of these.

jef195 added: Guess who will be blamed? And notice who is number one Country (I guess China wasn't as bad as we thought)

Source: The Wall Street Journal