Online piracy may not be as bad as Hollywood would like you to believe. A new study titled, “Reel Piracy: The Effect of Online Film Piracy on International Box Office Sales,” conducted by Brett Danaher, from the Department of Economics at Wellesley College, and Joel Waldfogel from the Department of Economics at University of Missouri, suggests little, if any, loss of revenue on U.S. box office sales after the release of BitTorrent. More importantly, while piracy is exhibited to have a direct correlation to a loss of revenue in the international box offices, decreasing the release window would be sufficient enough to curtail losses.
An international movie release following its U.S. debut is wrought with technical difficulties that contribute to a wide release window. The expensive cost of the 35mm film print (a 110 year old technology) for distribution to movie theaters, both domestic and international, typically consumes 3.5 percent of a film’s budget. In an effort to cut costs, it’s common practice for distributors to reuse film from theater to theater, thereby exacerbating the time between releases. But recently, theaters have been slowly transitioning from film to digital projection systems.
The study underlines three other key problems for movie studios:
1. There is a shortage of international theaters.
2. The complexity of organizing promotional appearances for the film’s actors adds to the delay.
3. Action and science fiction genres exhibit the highest supply of online pirated movies.
What shouldn’t come as a surprise from the aforementioned complications is that the restlessness of international fans, waiting weeks or months for a film’s release, is often assuaged by watching pirated material. But what needs to be highlighted from the study is its evidence supporting the notion that, generally, consumers, both domestic and international, will favor theaters over illegal distribution channels.
“Consumers in the US who would choose between the box office and piracy choose the box office (and the remaining US pirates had valuations lower than the ticket price) but that international consumers who would consider both options choose piracy due to a lack of legal availability,” wrote the researchers. “If piracy displaced box office sales in the US, we would have expected the slope of the returns profile to shift more significantly as BitTorrent became more widely adopted.”
In other words, researchers were unable to discern an irregular drop in returns of domestic box office sales, which could fault BitTorrent as the culprit.
Despite the mounting evidence and studies providing evidence to the needlessness of the movie studios’ assault against file-sharing services, their attacks have been intensifying. At the end of the day, these results suggest that, while directing the blame at file-sharing services induces the fear of prosecution among other file-sharing competitors, much of the power to curb piracy remains in the hands of the studios.