Study: Movie piracy helps and hurts the film industry

Movie piracy study shows it both helps and hurts the industry

A new study from the University of Houston and Western University has some findings that upend conventional thinking about movie piracy. Researchers examined the effect illegal downloads had on hundreds of different movies shared through the popular torrenting website the Pirate Bay. As it turned out, the effects on the box office of illegally distributed films largely depend upon when they are available.

Piracy is Bad for Movies Pre Release

On the one hand, the content piracy study confirmed the argument made by the Motion Picture Association of America; piracy hurts movies at the box office. However, the financially damaging effects of piracy primarily affect movies that aren’t in theaters yet.

“Does Piracy Create Online Word-of-Mouth? An Empirical Analysis in Movie Industry” found that when movies are available to torrent ahead of their official release date, their box office returns tend to be 11 percent lower than they would be otherwise. That said, when movies are made available for download after their premiere, the results are very different.

Piracy is Good for Movies Post Release

The Houston-Western study found that movies leaked online when they are in theaters can see a revenue increase of around three percent at the box office. Researchers attributed this piracy bump to word of mouth promotion (WOM). As the number of people that saw the pirated movies increased, so too did the online buzz surrounding them.

Intriguingly, the effect of WOM proved to be more beneficial to some genres than others. Action movies, comedies, romances, and thrillers performed better post illegal availability release than dramas. Though the overall effect of piracy on the movie industry is a net negative, researchers noted that because of the WOM bump, Hollywood’s antipiracy efforts might have better outcomes if they were focused on shutting down prerelease leaks.

Can a Change in Release Strategy Result in Higher Profits?

Given the findings of the piracy study, it seems that Hollywood might be best served by changing the way in which certain films are released. For instance, if leaks of the latest blockbusters are inevitable, the major studios may recover some of that 11 percent in lost revenue by making movies like “Avengers: Endgame,” or “Longshot” available for download the same day they are released in theaters.

The simultaneous release of movies in theaters and through video distribution channels has occurred in the past to mixed results. In 2006, low-fi drama “Bubble” and British docudrama “The Road to Guantánamo” both ditched the traditional 90 theatrical release window paradigm. But neither film set the box office on fire. However, they were both somewhat inaccessible films that likely would not have been big financial successes no matter how they were released.

Conversely, more conventional cinematic fare with higher public profiles has performed better. The simultaneous release of the animated adaptation the graphic novel “Batman: The Killing Joke” brought in $3.8 million despite only being in theaters for two days. And in late 2018, Academy Award nominee “Roma” grossed $3.5 million in theaters despite its widest availability period coming after it was added to Netflix’s streaming library.

In 2016, Facebook’s Sean Parker tried to get a day and date streaming service called Screening Room off the ground that would allow consumers to rent theatrical new releases for around $50. Due to resistance from the studios and major theatrical distributors, Screening Room ultimately failed. However, it’s been reported that Fox and Warner Bros. are working with the theater chains theater owners to make its movies available on demand 17 days after their premiere.

The reality is simultaneous theatrical and VOD releases for major Hollywood films will likely never be popular with distributors. But the possibility of recouping money that would’ve otherwise been lost to piracy might prompt the big studios to change their decades-old release strategy without their partner’s approval.

After all, like every other multibillion-dollar industry, the film business is not known for leaving money on the table.