Study: Piracy A Minimal Menace to Box Office

By February 21, 2012

International Release Delays Are A More Significant Concern, According to Researchers

Does online film piracy hurt box office returns? A stronger indicator of the international success of a film might be how long studios wait to release it in non-U.S. Markets, according to a study by researchers at Wellesley College and the University of Minnesota.

Researchers looked at weekend box office returns for the top Hollywood 10 movies in 17 countries between 2003 and 2006, the “lag” between the release of the films in the United States and internationally, and their popularity on popular filesharing service BitTorrent. They found that box office revenue drops off steeply the longer a studio waits to release a film internationally after the U.S. release (that international delay is standard practice in the film industry.)

“We find that longer release windows are associated with decreased box office returns, even after controlling for film and country fixed effects,” reads the report. “This relationship is much stronger in contexts where piracy is more prevalent: after BitTorrent’s adoption and in heavily-pirated genres.”

The study, titled “Reel Piracy: The Effect of Online Film Piracy on International Box Office Sales,” also notes that there is not yet an academic consensus on whether illicitly obtained films offset legal consumption–but suggests that most U.S. viewers prefer the cinema.

It’s important to note that most pirated copies of a film available while it’s in theaters are low-quality copies made with a handheld camcorder. Higher-quality versions ripped from the DVD release or leaked screening copies may be more appealing to viewers.

The study comes on the heels of international controversy over anti-piracy initiatives including the Stop Online Piracy Act and the Anti-Counterfeiting Trade Agreement, both heavily supported by the Motion Picture Association of America.

Journalist, science fiction writer and former European Affairs Coordinator for the Electronic Frontiers Foundation Cory Doctorow wrote that the study reinforces the view of draconian anti-piracy measures as a campaign for revenue:

Anti-piracy” efforts are often painted as life-or-death struggles for the studios. But in the case of international windows, this is about profit maximization, not survival. If the studios can outsource the titanic expense of policing copyrights in delayed-release nations to the countries themselves, they can wring a few more points of profit by delaying release to an otherwise optimum moment. But considered as a societal problem, it makes no sense to spend a million euros on copyright enforcement just so Disney can save a few thousand euros on the cost of making new 35mm prints.

The report was authored by Wellesley’s Brett Danaher and the University of Minnesota’s Joel Waldfogel.