Hollywood lost $6.1 bn to piracy in 2005: study

MUMBAI: Major Hollywood studios lost a whopping $6.1 billion in global wholesale revenue to piracy last year, a study put out Wednesday by the Motion Picture Association of America (MPAA) shows.

The haemorrage is coming not only from lost ticket sales, but from DVD sales that have been Hollywood's money-spinner in recent years, the study reveals.

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.

In the US, illegal copying and distribution is more of a problem while internationally, illegal downloading and bootlegging is more prevalent.
The countries where movie piracy is occurring most prominently are China, Russia, UK, France, Spain, Brazil, Italy, Poland and Mexico.

The average film copyright thief is male, between the ages of 16-24 and lives in an urban area. College students in the US, Korea and Hungary contribute the most to each country’s individual loss. The 16-24 age range represents a disproportionately high percentage of pirates, especially downloaders, across the 22 directly researched countries. It is even higher in the US, where the same age range represents 71 per cent of downloaders.

“The findings in this study reinforce the need for a multi-pronged approach to fighting piracy,” said said MPAA Chairman and CEO Dan Glickman. “As an industry, we have to continue to
educate people about copyright laws and the consequences of breaking those laws. At the same time, we have to provide legitimate, hassle-free ways for consumers to obtain movies at a reasonable cost. In the meantime we will continue to work with governments and law enforcement around the world to ensure copyright law is prevalent and enforced.”

The MPAA recently provided international data from the study to the Office of the US Trade Representative for use in preparing its annual report on worldwide intellectual property rights.

MPAA had commissioned LEK Consulting LLC two years ago for this study. The study was conducted over a period of 18 months across 28 countries to 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 report states that previously the MPAA used figures based on a series of random calculations that estimated how much was lost in each country. 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 US currently leads with about $1.311 billion lost to piracy.

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. This survey specifically asked consumers how many of their pirated movies they would have purchased in stores or seen in theaters if they didn't have an unauthorized copy, giving studios a different picture of their true losses.

The new approach reduces the estimated losses in some of the world's most notorious pirate markets, even as it adds Internet-related losses for the first time. 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.

China's losses slipped to an estimated $244 million in 2005, from $280 million in 2004 under the old counting technique. Russia's estimate declined by about $10 million.

The study also shows that home video, not theatrical distribution, is the market that piracy hits hardest, accounting for two-thirds of the studio's lost revenue. That is a big blow to the studios, which had been counting on the lucrative DVD market to increase their bottom lines, but in recent months have found DVD sales are slowing considerably.

Piracy is not all a kids' activity though. In Japan, one of Hollywood's biggest foreign markets, 50 per cent of the overall industry's losses are the result of piracy by people ages 25 to 39. While piracy has not affected the stock prices of the big conglomerates that own studios, that could change if investors feared DVDs would no longer generate sales at the pace they expected.
While new data are potentially helpful in negotiating with foreign governments because they also estimate losses to local film industries, the information is also bad news for the MPAA's antipiracy efforts. Those have ranged from public-awareness campaigns to beefing up laws to raids of illegal DVD plants.

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