U.S. Losing $20.5 Billion to Movie Pirates

[BJ_M]

In an analysis of figures by the Motion Picture Association of America showing that motion picture piracy costs the major movie studios $6.1 billion in revenue, the Texas-based Institute for Policy Innovation has concluded that piracy costs the entire U.S. economy $20.5 billion per year. The figure takes into account losses to theater operators, video retailers, ad agencies, advertising-supported media outlets accountants and lawyers, set makers, janitors and suppliers and includes $5.5 billion in annual earnings losses for U.S. workers and $837 million in annual tax revenue. Commenting on the findings, MPAA Chairman and CEO Dan Glickman said, "Motion picture piracy hurts not only the movie business, but triggers a harmful domino effect that results in lost jobs and wages for American workers inside and outside the industry."

[painkiller]

Is there a chance that we can get/have access to the "data" that was used to generate this article??

I don't want to jump the gun and say this isn't true - but I have a real hard time taking something like this article at face value.

Particularly when I work with data modeling as part of my job.

I'd like a chance to take a shot at these numbers - even if it's only for myself.

[ROBERT BLACK]

That report makes baby jesus cry. :P

Fabricating numbers has become a hobby for some people in the entertainment industry. I'd like to take a look at that data myself.

[lordsmurf]

Numbers like this are fudged. They do not account for secondary reasoning, such as people would not buy them. Had the downloads or street cheapies not existed, people simply would not have seen the movie at all.

Then it fails to address the bigger issue (one they've ALREADY acknowledged), where people buy the DVDs for home viewing. They simply do not go to theatres for any reason, except a few annual special occasions.

If they provided products for the demanded market (DVDs @ release date, instead of theatres only), maybe they'd make a few more bucks.

Personally, I think downloads/fakes are bad quality, so I just wait for DVD releases. Then I either rent or buy, depends on the flick. I refuse to be taken to the cleaners at a theatre. Plus I enjoy the convenience of watching at home, whenever I feel like it. These days, I'm in the majority, not the minority.

[Conquest10]

I'm sure its all based on estimates. They estimate a movie will break records and make $5 billion and spend millions on marketing. The movie only makes $300 milllion. That's at least $4.7 billion (not counting marketing) in lost revenue due to movie pirates on that movie alone.

[redwudz]

Not a direct comment on their figures, but I'm wondering if they are adding in the huge loses to the studios when they produce a 'major bomb' that has paid actors, and others, outrageous wages and costs and will only be seen on video or after midnight on Turner.

These problems are likely their major losses.

[Pixel Land]

I lost some $200 million awhile back by not picking the correct 6 numbers for the Power Ball Jackpot. I'm sure that that loss will trickle down to where the places I buy gas and smokes will have to close their doors.

[TBoneit]

I'm sure its all based on estimates. They estimate a movie will break records and make $5 billion and spend millions on marketing. The movie only makes $300 milllion. That's at least $4.7 billion (not counting marketing) in lost revenue due to movie pirates on that movie alone.

Sort o flike a state agency complaining about a budget cut because they didn't get as big a increase as they requested and expected to get. Gov speak lowered increase = a cut

[lumis]

I lost some $200 million awhile back by not picking the correct 6 numbers for the Power Ball Jackpot. I'm sure that that loss will trickle down to where the places I buy gas and smokes will have to close their doors.

Perfect analogy.

[Supreme2k]

Is there a chance that we can get/have access to the "data" that was used to generate this article??

Yes, but I'm afraid that someone will have to take some muscle relaxers in order for you to retrieve that data from its place of origin.

[lordsmurf]

I lost some $200 million awhile back by not picking the correct 6 numbers for the Power Ball Jackpot. I'm sure that that loss will trickle down to where the places I buy gas and smokes will have to close their doors.

Perfect analogy.

Indeed! 8)

I'll have to remember this one!

[dvdguy4]

This tells me that they really need to go out and find some new creative directors "nothing against Speilberg or the other and older film makers" to create new ideas for movies. I mean come on now they just wrapped up shooting "UnderDog" where I live. Are they gonna blame it on piracy if the film flops which it most likely will. My 4 year old calls the cartoon the stupid show.

$20.5 billion per year
10 billion goes to the actors ,agents,and the agencys
10.5 billion to those fletcher heads who run the studios

[psycaz]

Why should I beleive their data. Most blockbusters lose money if you go by the accounting they use. That way they don't have to pay the percentages they contract for.
Thats on top of all the other reasons listed here.

[edsmith77]

Just another case of "figures do not lie but ....."

[painkiller]

http://www.boxofficemojo.com/weekend/chart/

At least according to this site we can tell when particular motion pictures bomb or not.

But this would appear to be our only data source, I guess.

[normcar]

MPAA Chairman and CEO Dan Glickman said, "Motion picture piracy hurts not only the movie business, but triggers a harmful domino effect that results in lost jobs and wages for American workers inside and outside the industry."

That is just a stupid statement. If people do not buy their product, they will not buy anything. They must have very high opinion of thier importance to society to assume that if people will not buy their wonderfull product, they will not buy anything.

According to their numbers, I have been underpaid 1.2345 million dollars per year because people spend too much money going to the movies and buying their DVDs instead of buying my computer consulting skills. Where do I go to get my money back. Do you think congress will pass bills to help me and others like me?

[edDV]

I've been with Netflix for a year and after renting maybe 150 DVD's I can't think of any other than music performances that I have bought to keep. Netflix sells old copies for as little as $5.99 and I haven't seen one I'd want to keep.

I do have a collection of DVDs (Matrix series, Star Wars, Hitchcock's, etc.) but the rest are music performances that I like to play from time to time.

I think their calculations are bunk and they would need to lower DVD prices to something like $1.99 to get those volumes. So their $20 billion quickly drops to $3-4 billion if the rest is correct.

[oldandinthe way]

These numbers follow a long tradition of computer piracy estimates.

In the early days of PCs almost every machine which appeared at my dealership for service had a pirate copy of Lotus 1-2-3 on its hard disk. Most of the machines we saw had no worksheet files, although someone put the software on the disk it wasn't used and the PC owner had no clue how to use it.

Lotus issued revenue lost to piracy estimates which sounded equally outrageous. And equally including cases in which no revenue was actually lost because no one would have made a purchase.

Similarly there are enormous numbers of pirated movies and CDs outthere that are never viewed or listened to. No revenue is lost because there never would have been a purchase.

[saladonyourlincoln]

The MPAA are absolutely a bunch of MORONS!!! They have the ability to point their finger at absolutely anything they can imagine and announce that THAT is the reason we are losing money. They will never admit that the quality of crap coming out of Hollow-wood has been steadily going down the shitter for years now. There used to be many movies that I wanted and would wait for the DVD to be released so I could purchase it. Lately, I have not seen much that I would even consider downloading much less purchasing. I think the true culprit here is the quality of the crap they are "pushing out the door"...of course, it sure sounds better if the loss can be blamed on "downloading pirates"...

[Cornucopia]

This is from Sourcewatch.org:

Institute for Policy Innovation
From SourceWatch
The Institute for Policy Innovation (IPI) is a think tank based in Lewisville, Texas and founded in 1987 by Congressman Dick Armey to "research, develop and promote innovative and non-partisan solutions to today's public policy problems." [1] (http://www.ipi.org/ipi/IPIAbout.nsf/0/f085ee37720007f0862567e800696003)

The conservative Capital Research Center ranked IPI as amongst the most conservative groups in the US, scoring it as an eight on a scale of one to eight. [2] (http://www.capitalresearch.org/pubs/pdf/x3759843322.pdf) (Pdf)

"Current areas of focus include tax cuts and tax reform, intellectual property, Internet taxes and regulation, pharmaceutical issues, Social Security privatization, and educational choice. We pursue these areas through our IPI Center for Tax Analysis, our IPI Center for Economic Growth, our IPI Center for Technology Freedom, and our IPI Center for Education Freedom," it states on its website. [3] (http://www.ipi.org/ipi/IPIAbout.nsf/0/f085ee37720007f0862567e800696003)

It's got *Conservative Republican* and "Corporate Lackey" written all over it. Now I know this is "supposed" to be a "non-partisan" news release, but it's little more than just one more corporate-backed propaganda salvo.
Yes, I'm sure you can guess where my politics lie. Big deal, I'm not trying to turn this into a political debate (I know it isn't allowed), but I think news releases like this shouldn't be simply pasted into V'help without a little "investigative journalism" regarding the source. BJ_M, I'm a little surprised at you...

Scott

[edDV]

This is from Sourcewatch.org:

Institute for Policy Innovation
From SourceWatch
The Institute for Policy Innovation (IPI) is a think tank based in Lewisville, Texas and founded in 1987 by Congressman Dick Armey to "research, develop and promote innovative and non-partisan solutions to today's public policy problems." [1] (http://www.ipi.org/ipi/IPIAbout.nsf/0/f085ee37720007f0862567e800696003)

The conservative Capital Research Center ranked IPI as amongst the most conservative groups in the US, scoring it as an eight on a scale of one to eight. [2] (http://www.capitalresearch.org/pubs/pdf/x3759843322.pdf) (Pdf)

"Current areas of focus include tax cuts and tax reform, intellectual property, Internet taxes and regulation, pharmaceutical issues, Social Security privatization, and educational choice. We pursue these areas through our IPI Center for Tax Analysis, our IPI Center for Economic Growth, our IPI Center for Technology Freedom, and our IPI Center for Education Freedom," it states on its website. [3] (http://www.ipi.org/ipi/IPIAbout.nsf/0/f085ee37720007f0862567e800696003)

It's got *Conservative Republican* and "Corporate Lackey" written all over it. Now I know this is "supposed" to be a "non-partisan" news release, but it's little more than just one more corporate-backed propaganda salvo.
Yes, I'm sure you can guess where my politics lie. Big deal, I'm not trying to turn this into a political debate (I know it isn't allowed), but I think news releases like this shouldn't be simply pasted into V'help without a little "investigative journalism" regarding the source. BJ_M, I'm a little surprised at you...

Scott

Don't just blame the conservatives, the ultra liberal California Democrats are totally in the pocket of Hollywood and are backing every MPAA request. Since the entire state party is effectively owned by Hollywood and union interests, candidates would be cut out of the party for taking a contrary position. Pelosi is in a position to discipline Dems from other states that stray.

It is bi-partisan stupidity.

BTW, I tend to agree with the business software industry that they are being ripped off and that people would buy their programs if penalties were higher and prices reduced for "small business" versions.

[adam]

I've dealth with surveys like this often, though obviously nothing on this massive scale. The formulas they use are actually quite complicated and they really don't make blanket assumptions such like, "every copy pirated equals a lost sale." They have formulas based on market studies and past and present surveys to determine averages (every so many pirated equals so many lost sales, every so many pirated equals so many lost to set maker, etc...) Nothing is ever a 1 to 1 correlation. Also, all surveys of this kind are required to use the same economic model which is administered by the U.S. Bureau of Economic Analysis.

BUT with that said, these surveys are usually biased as hell. The results are substantially influenced by the amount of money the client is willing to spend, and you better believe that a survey like this costs well into the millions to conduct. By the way, this study was partially paid for by the MPAA.

At my firm we usually spend between $10,000 and $15,000 on a market survey. Spending more means they will survey more people over a broader geographical area, if applicable, and that they will generally do a more intensive analysis. But it invariably means that the results turn out more in your favor. There's no bribing going on, we're not asking for preferential treatment or that the results be rigged.... it just happens. And the other side is getting their survey as well. Its the nature of the beast and the only saving grace is that the jury gets to decide what they want to believe. In the case of this survey, its the politicians making the decisions.

One thing that needs to be pointed out about this survey though is that it measures the effect of GLOBAL film piracy on the american economy. I think about $4 billion dollars of the ~$6 billion in estimated lost revenue comes from China alone. I do think that makes large numbers more reasonable because it is well known that in China the pirated film market is substantially more lucrative than the legitimate film market. Its estimated that 90% of films acquired (bought, downloaded, whatever) in China are pirated. There really are "lost sales" happening all the time there, but its a massive cultural problem and not something that is going to be solved by passing more US copyright laws.

I don't find the $20.5 billion unreasonable at all. I'd think it could easily be much more, or much less. When you've got soooo many factors to consider and are dealing with such ridiculously large numbers, I think surveys like this are utterly useless. Its a paid guessing game.

[adam]

Here is the survey report. It doesn't get into all the behind the scenes data, in my opinion. But it shows some of the models they used.

http://www.ipi.org/ipi/IPIPublications.nsf/PublicationLookupFullTextPDF/293C69E7D5055FA4862571F800168459/$File/CostOfPiracy.pdf?OpenElement

[deadrats]

Personally, I think downloads/fakes are bad quality, so I just wait for DVD releases. Then I either rent or buy, depends on the flick. I refuse to be taken to the cleaners at a theatre. Plus I enjoy the convenience of watching at home, whenever I feel like it. These days, I'm in the majority, not the minority.

i have to agree. the theater experience is not what it used to be. who wants to put up with people that shout and scream at the characters on the screen, the little kids that won't shut the "f" up, certain ethnic groups that act like chimps and throw food all over the f'en place?

as for downloads/fakes, who wants them? why would i download a movie that been encoded to xvid at a retarded resolution like 512x384 when i can just spend the 5 bucks or so and order the movie from "movies on demand" (or a competing service) and watch it in beautiful 1080p?

[SingSing]

The biggest sellers in movie theater are animated family movies. Quite a few of them have 3D imax version to get people back into the theater. The 3D home DVD did not work too well, see "Spy kids -3D".

Note : We are returning to Big screen and Drive-in, what a concpets!

[dLee]

From securities/entertainment attorney John W. Cones' book The Feature Film Distribution Deal, opening paragraph, Chapter 1:

"It is the primary contention of this book (and its companion volume How the Movie Wars Were Won) that the pervasive market power of the major studio / distributors in the United States (the MPAA companies, generally) has been gained and is maintained by engaging in numerous questionable, unethical, unfair, unconscionable, anticompetitive, predatory and / or illegal business practices."

[FulciLives]

I lost some $200 million awhile back by not picking the correct 6 numbers for the Power Ball Jackpot. I'm sure that that loss will trickle down to where the places I buy gas and smokes will have to close their doors.

Perfect analogy.

Indeed! 8)

I'll have to remember this one!

Absolutely one of the best things I've read on these forums lately. You, Pixel Land, are to be congratulated!

- John "FulciLives" Coleman

[normcar]

They show the movies on postage stamp size screens with gold brick priced butterless healthy food, and wonder why no one goes to the movies to hear all the morons with little kids runnning around, people talking, phones going off, and no theater people to say a thing because they might offend a patron.

So the money is being spent on large screen TVs and home theater sound systems, DVDs of older movies and TV shows, and no one shows up at the theater. DVD sales are lower, because people have the movies they want or rent them. Good stuff does sell as witnessed by the high sales of older popular TV show DVDs. People are willing to buy good stuff, but it is rare in the new releases.

Witness the "stupid people doing stupid things" films aimed at 14 yr old males. What adult is going to take the family to these films? I used to love going to the theater, but they make it harder and harder to get to the theater after closing all the neighborhood theaters, and the movie experience is just crap. I'll wait, and rent the few movies I want to see.

I have over 200 movie DVDs, but I have all the good old movies I like. I purchase very few new movies because they are not worth watching more than once.

[daTerminehtor]

A lot of common sense comments in this thread. Too bad it's all for naught and will never be read by somenone who can make a difference.

Or...

Continue to stand by your own thoughts and ideas, buy what you want, see what you want to see, listen to what you want to listen to.

Maybe, just maybe, someone else will listen.

Then again, its a good thing I live in Canada.

I recentrly surpassed the 1000 DVD mark. I will continue to purchase those shows (older) and movies that interest me and my kids (both older now). Two or three times a year I'll go to a theatre (for similar reasons as posted above).

Make a good movie, and I'll see it.

Make crap and continue to suffer the consequences.

[Cornucopia]

The biggest sellers in movie theater are animated family movies. Quite a few of them have 3D imax version to get people back into the theater. The 3D home DVD did not work too well, see "Spy kids -3D".

Note : We are returning to Big screen and Drive-in, what a concpets!

(Note: I know something about this as I am currently in negotiations regarding licensing of 3d dvd technologies)

There are a couple of problems with 3D DVD's at home:
1. Backwards compatibility
2. Format (non-)universality
3. Quality vs. standard monoscopic shows

All of the current "3D" DVD's suffer from these problems, plus Hollywood isn't ready to license for release their back catalog of 3d movies (I the Jury, Creature from the Black Lagoon, Dial "M" for Murder, House of Wax, Jaws3D, Amityville3D, etc). They're afraid of problems with dual stocking (normal vs. 3d), copy protection, and general demand.
Also, they DON'T want to release right now because they don't want the "home video" option to be available for 3D, JUST YET.

This should change, because they're once again shooting themselves in the foot if they don't cash in on sales for home video (already the majority of profit from movies). They'll woo some people into the theatres (IF the movie is good), but there won't be a mass exodus from home. People will just see what they want in the theatre, maybe spend a little more for the 3d version, then wait for a regular dvd if they like the movie. If they try to take the "momentum" of 3d enthusiam and draw it out over many years, they'll lose it. There needs to be a SNOWBALL/AVALANCE effect.

With that in mind,
I've been proposing using the MULTI-ANGLE feature in a novel way that reads BOTH angles ("L" + "R") at dualspeed/doublebuffering and adds a universal COMPOSITOR module for output in the format that users can choose as appropriate to their home setup (Freeview/Side-by-side, Anaglyph, DualOutput-forPolarized, FrameInterleaved, FieldInterlaced, etc).
Panasonic already has a patent for some of this, and I've already successfully tested a software equivalent.
The beauty of it is that producers need make only 1 disc for distribution. It'll be a dual-angle disc. Standard players will play a standard show, while "3D-Enhanced" players will play a 3D version IN THE FORMAT OF THEIR CHOICE, at the highest resolution capable for that display format. All that would need to be done would be to buy a new "3D-Enhanced" player, and have producers use DualLayer.
This should also be compatible with HD-DVD and BluRay formats, so the benefit will continue. This format takes care of all 3 of those original problems, and hopefully can convince H'wood not to be afraid of consumer demand for 3D.

We'll see...

///Back on-topic:

I never meant that post to be a DEMS=Consumerists/REPS=Corporatists rant. Unfortunately, the reality is that both are much more beholden to the Corporate viewpoint. Hopefully, that will change. Nonetheless, that "think tank" is still WILDLY biased. They actually suggest less regulation on pharmacutical companies in this current climate of dire drug costs!
In the meantime, I'm still going to let my congresspeople know how I feel on these issues, regardless of "expert" suggestion. Hopefully, they will listen to the PEOPLE, and not just those who have paid to have their ear.

Scott