BitTorrent doesn't hurt US box-office, delayed international releases drive downloading

Economics researchers at Wellesley College and U Minnesota have published a study showing that feature films' US box office returns are not correlated to BitTorrent sharing. They also show that shorter delays between the US exhibition and overseas releases result in less file-sharing -- that is, people outside the US download movies because they can't buy tickets to them.

The second point is an important one. There's only one Internet, networked culture doesn't respect national boundaries. A particularly effective marketing campaign for a new release in America will stimulate demand in other countries, and if there's no legitimate way to fulfill demand, then some portion of viewers will choose illegitimate routes. For example, the new Muppets movie has only just been released in the UK, some months after the US theatrical release (which was attended by enormous publicity). Presumably, someone at a studio concluded that there were too many UK movies in the pipeline at Christmas and not enough in February, and chose to delay the film's release to now. However, a certain portion of the audience for Muppet movies have been reading reviews, watching viral YouTube clips, and sitting through extended online discussions of the movie without being able to see it and participate. I'm pretty sure that a lot of these people downloaded the movie so that they could be a part of this moment.

Maybe they'll still buy tickets to the cinema, too. I'd guess that a lot of middle-class families with small children will do this. There aren't many kids' movies in cinematic release at the moment, and Muppets is certainly the best bet for a Sunday matinee during the record-breaking cold-snap, when no one wants to take the kids to a park on the weekend or during half-term break. But child-free adults who love the Muppets may well have slaked their thirst, and there are a lot of adults in the Muppet cohort, and adults who like kids' movies often complain about paying a lot of money to attend screenings that are disrupted by crying, talking, squirming children. If you've already seen the movie on your computer, that may be enough. Finally, there are families in the "squeezed middle" who are struggling to pay the bills may want to see the movie in the cinema, but simply lack the funds to do so, and the amount of time that's gone past since the initial release has meant that there are more online copies and that they're easier to download (for example, more BitTorrent seeds) than at the initial release. For them, the delayed release makes downloading easier and more attractive.

"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.

Here's the study: Reel Piracy: The Effect of Online Film Piracy on International Box Office Sales, by Brett Danaher (Wellesley College - Department of Economics) and Joel Waldfogel (University of Minnesota - Twin Cities - Carlson School of Management ; National Bureau of Economic Research (NBER); University of Minnesota - Twin Cities - Department of Economics).

“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.

Study suggests U.S. box office not affected by BitTorrent (Thanks, Xeni!)

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