WSJ on the MPAA Piracy Study

I cited this below, but never expected that I might actually get to see the WSJ article — some kind of promotion: Studios See Big Rise In Estimates of Losses To Movie Piracy [pdf]

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 result: Piracy, an issue that normally brings Hollywood studios together, was driving them apart. Although the studios eventually agreed to release parts of the information, it was only after months of infighting. […]

[…] The previous estimates didn’t include the impact of free Internet downloading, which is incorporated in the LEK report. Another surprise involves the fast expansion of online piracy by consumers compared to the losses stemming from professional bootleggers who sell DVDs. Last year, according to a person familiar with the matter, copies of movies downloaded or received from people who had downloaded them cost the studios $447 million in the U.S., whereas copies stemming from professional bootleggers cost the studios $335 million. An additional $529 million in losses came from consumers making copies of legitimate films they bought on DVD or VHS.

Critics have faulted some piracy estimates for equating each pirated DVD with a lost sale, when many consumers would have skipped the movie altogether if they hadn’t gotten a cheap or free unauthorized version. This time, the 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 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.

The survey also bucks the assumption that piracy is a kids’ activity. In Japan, one of Hollywood’s biggest foreign markets, 50% of the overall industry’s losses are the result of piracy by people ages 25 to 39.

[…] 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. Dan Glickman, the organization’s president for almost two years, has made fighting piracy a priority. He joined the organization a few months after it hired John Malcolm, a former Justice Department official, to head its world-wide antipiracy operations.