New Piracy Loss Estimate

An anonymous reader writes "WSJ reports on a new MPAA estimate losses due to piracy. "The study, by LEK Consulting LLC, was completed last year, and people familiar with it say it reached a startling conclusion: U.S. movie studios are losing about $6.1 billion annually in global wholesale revenue to piracy, about 75% more than previous estimated losses of $3.5 billion in hard goods. On top of that, losses are coming not only from lost ticket sales, but from DVD sales that have been Hollywood's cash cow in recent years."

Comments

This, from the organization

[QuietLagoon]

that said VCRs would kill the movie industry.

Re:This, from the organization

[Dare nMc]

>so clearly since they were wrong once they can never ever possibly be right about anything?
I didn't take it as a example of wrong, it was a example of exageration.

So ya, because they have always exagerated in the past, it is likely they are continuing along that theme today.

Clearly they are not "losing about $6.1 billion" they may be missing out a potential extra profit of $6.1 billion. Same as me saying I Lost $100,000 on the Palm IPO. Had I been a big enough trader, I could, and would (I did try) having shorted Palm during their IPO, covered by the 2000 shares I (eventully) recieved from my 3com stock distribution when it was selling over a $100 a share (was at ~$5 a share when I actually got the distribution). Then canceled out those shares when I recieved my distribution from 3com. I didn't do anything to deserve the $100,000. but had it not been for the exchange rules, I would have that money.
(ignoring that a million other people/variables would have likely ruined that possibilty first.)

Duh *bangs head against wall*

[Epistax]

Pay $20+ for an ad infused FBI warning with regioning, or virtually nothing for no ads or FBI warnings or regioning.

Remove the warning, remove the ads, charge $10 max. I can live without movies if you force me to.

Imagine the losses...

[vex24]

...if they were actually making movies worth watching!

I thought they might be legitimate...

[fireboy1919]

...until I read this:
An additional $529 million in losses came from consumers making copies of legitimate films they bought on DVD or VHS.

Losses? You have to buy another one when you want to make a copy? Pay-per-disc?

They're counting every time any kind of copy is made as a loss of sale. They're not even trying to be realistic here.

Re:I thought they might be legitimate...

[MightyMartian]

Let's try to remember here that the movie industry's definition of a loss bears little or no resemblance to the commonly accepted accounting definition. The creative accounting involved can turn blockbusters into net loss situations, particularly when some guy due royalties starts asking "hey, this movie made 100 million bucks, so why didn't I get a check?"

This is the pathetic thing about the MPAA (and RIAA as well). These guys represent some of the worst financial pirates out there. They rip off artists, investors and, most importantly, consumers, and then run around crying when some amoral sonofabitch does in miniature what they've been doing in large for decades.

it's... fuzzy math.

[yagu]

I don't know why I bother:

• fta:

  The MPAA froze plans to release the survey..., 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

  I interpret this (IMO) that the MPAA had gotten so absurd in their claims of piracy and their methodology for studying and proving it they crossed a bright line that even insiders could see and were embarrassed to allow public scrutiny. The numbers they claim are staggering, but beyond believability.
• fta:

  In one market, it was calculated that for every bootleg DVD that turned up in raids, seven more existed.

  This is a non sequitur. First, it's a questionable assumption a disconvered pirated dvd is a lost sale. Second, it's their SWAG that seven more exist, and to my first point, it's not clear that represents loss of revenue.
• fta:

  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.

  Another non sequitur. What impact can fuzzy-math numbers truly have?

This is funny, it almost sounds from the article that they changed their methodology to increase their claimed "losses", and had to rein them back in when they discovered their losses exceeded global Gross (International) Product.

I'm surprised to see such an MPAA friendly article from WSJ. Or maybe I'm not.

Fact is, they don't know.

[mysidia]

They are guessing, and they are being overoptimistic about market prospects with no piracy.

The problem is, there is no evidence that the drop in sales from their expectations was due to piracy.

Drop in sales can be due to the market; DVDs and ticket sales may no longer be attractive -- drop in sales figures may reflect people seeking alternative, cheaper entertainment options.

Yes, piracy exists, yes it has an impact, but no, that impact cannot be reliably measured with any precision -- there are too many factors influencing the sales numbers you get; primarily, the market - to presume sales always go up unless piracy drives them down is just plain arrogant and a head-up-in-the-clouds assumption.

The amount of piracy occuring is by its very nature a relatively unknown factor, especially when they refer to casual copying, or other things which DRM and other measures are purported to prevent ---- the best that can be made is an educated guess.

These from the people who consider lending an original copy of a CD to a friend to be piracy ---- they cannot reasonably measure the total of such things with anything close to an accurate reading, it's just not practical to get statistically relevant information from a population that is being told what many of them do is bad.

Of COURSE reporters and researchers paid by a company with a certain agenda are likely to drastically exagerate the extent and certainty about the loss being due to piracy or not due to piracy.

Good news? Ever?

[PasteEater]

Is there *ever* going to be a point when the xxAA reports good news again? For instance, "Ticket sales are down, but we've increased profits by not releasing so many terrible movies this year." Or, "We increased sales of DVDs this year by reducing the price by $3 across the board."

Not likely.

As long as they keep complaining, they have a way to justify restricting access to digital (and analog) content.

Not that it really matters, because they have the money to pay lobbyists to influnece Congress anyway. But the public may be able to stomach some sort of compromise with regards to fair use restrictions if the xxAAs keep bitching and complaining.
 

Oh, irony!

[porneL]

I don't like being forced to watch copyright warnings, stupid "don't steal" commercials and having trouble with archiving movies, so I prefer watching 'stolen' copies, which don't have any added crap.

They are way off!

[Un pobre guey]

Let's assume every man, woman, and child on earth consumes the equivalent of 10 pirated DVDs per year. Let's further assume that there are currently about 10 billion people on earth, and that each DVD's list price is US$20. Then, the lost sales are really:

10 x 10,000,000,000 x US$20 = US$2,000,000,000,000 = 2 Trillion US Dollars

This clearly dwarfs the cost of invading Iraq and giving Baby Boomers their Social Security benefits put together, therefore it is much more important. It is in fact, as shown by the objective calculations above, by far the most important issue on earth today. More than global warming, AIDS, tuberculosis, environmental pollution, shortages of potable water, collapse of fisheries, ozone layer depletion, overpopulation, lack of medical care, famine, poverty, slavery, wars in the Third World, tyrannical dictatorships, nuclear weapons proliferation, exploitation of the many by the few, rampant governmental corruption, compromised information and news media, organized crime, in short more important than anything.

Someone should tell the RIAA.

Re:Gee, They put the lotto on TV...

[Reverend528]

Donations through PayPal?

That may be the only way to pay them after they withdraw from the american market. After all, they're apparently losing 1.3 billion dollars a year by selling movies here.

Re:Brilliant assumptions

[Kingrames]

More like Pirates are waking those geese up to the fact that they can't sell $100 worth of gold in the form of an egg for ten times what people are willing to pay.

Piracy is not an indicator that suddenly 50% of the country is willing to break the law.

It's a very strong indicator that prices are WAY too high.
There is no other explanation for it. People simply aren't willing to pay what the industry is charging, and the representatives of the industry are trying to preserve what little bit of a monopoly they have left.

The ONLY WAY that these idiots can save their money and their shareholders' money is to drastically slash prices to the point where people stop downloading videos through torrents.

Remember that even the person doing the downloading has to make an opportunity cost comparison.
"is this video worth the Gigabyte of storage it'll take up?"

At some point, when the prices go down, sales will go up, and people will slow down and stop their piracy simply because it isn't convenient.

Any effort to preserve the high prices may result in recovering your losses in out-of-court settlements, if that, but even then, you're losing millions, if not billions, in the long term.