Studios experimenting with release models that mean piracy

A photo illustration of pirated music being illegally downloaded with the legitimate music service iTunes in the background in London, England.

Matthew Lloyd | Getty Images

2021 will be a very different year for the movie theater industry. Studios, hoping to find ways to make lucrative profits for big budgets, have turned to new methods of releasing movies.

For Warner Bros. led the pandemic to its parent company AT&T deciding to release all of its films in theaters and on HBO Max on the same day. Universal, which is owned by Comcast, has decided to enter into agreements with individual theaters to shorten the time their films have to stay in cinemas before switching to premium video on demand.

Then there are those like Disney who have mostly postponed most of their movies until 2021 and put a handful on its own streaming service.

But the box office analysts will not be the only ones to perform well next year. Pirate experts eagerly anticipate how these new release methods will affect illegal streaming.

“As a researcher in computer science, it’s a dream,” said Brett Danaher, a professor of entertainment analysis and computer science at Chapman University. “It’s such a wonderful experiment.”

In 2021, piracy experts told CNBC that they have theories about how pirates will react to these different models, but are not entirely sure what will happen.

What we know about piracy

For one, piracy is a difficult thing to detect. Experts can detect some downloads from major piracy sites, but once the file is downloaded, it can be distributed privately to thousands of other viewers.

This is also why experts provide a variety of what piracy can cost the U.S. economy, rather than a fixed number. Last year, the Global Innovation Policy Center estimated that global online piracy cost the U.S. economy between $ 29.9 billion and $ 71 billion in lost revenue each year.

But much can be learned from people who are pirates. If we look at the data, experts like Andy Chatterley, the CEO and co-founder of MUSO, a global authority on digital piracy, can provide insights to media companies around the world.

First, Chatterley noted that the larger the buzz around a blockbuster, the more piracy it will see. Movies with big marketing campaigns, the initial demand from ardent fans and a lot of exposure to the media will yield more illegal downloads online.

MUSO’s data also indicates that piracy is increasing as versions of higher quality films are available on piracy sites. For example, ‘Bad Boys for Life’ arrived in theaters in January and saw a ‘fairly mild’ piracy, Chatterley said. However, when it became available on video on demand in mid-March, there was a huge increase in online piracy.

Conversely, Disney’s “Mulan”, which was sent to the stream immediately, saw a huge increase on its release day and then a decrease in overtime.

“The piracy was all over again,” Chatterley said. “But the piracy was not necessarily bigger or smaller.”

How to prevent illegal downloads

For companies like AT&T that will release high quality movies on day one, there are a few ways to deter piracy. Two weeks before “Wonder Woman 1984” started in theaters in North America, and on HBO Max, for example, the film was released internationally.

This enabled audiences to first see the film in theaters before placing a high-quality copy on pirate websites. This is especially important because HBO Max is currently only a domestic product.

“Of course you have people who are always going to pirate,” said Michael Smith, professor of information technology and marketing at Carnegie Mellon University. ‘The people you care about are the people who legally bought your content but found it [piracy] is more convenient. ‘

People in masks walk past a billboard from the movie ‘Wonder Woman 1984’. Photo taken on December 26, 2020.

Simon Shin | SOPA Images | LightRocket via Getty Images

Smith said the majority of people who do piracy do so because they have no other legal way to consume a product. If these viewers had offered an easier legal way, they would have paid to see the movie.

While online piracy can have a negative financial impact on media companies, the data experts can also help it determine these businesses that their audiences want to watch. Data from groups like MUSO can tell companies which movies or TV shows they should buy or license domestically or internationally.

The European Union’s intellectual property office, for example, ruled that ‘The Mummy’ had been excessively pirated in Spain and that the TV show ‘South Park’ was a popular illegal download in Finland.

This information tells Universal that it may want to make ‘The Mummy’ more widely available in Spain and Viacom that it wants to enter into an agreement with a Finnish streaming service.

What could happen in 2021

As Danaher said, 2021 is going to be a big experiment for the piracy industry. This is the first time that several different release strategies are taking place at the same time and for a long time.

While some titles are more popular than others, there should be information in the data that shows how people consume their entertainment.

As in previous years, it will be difficult for experts to determine a clear financial impact, especially since the pandemic is likely to affect how people prefer to watch certain films. Those who cannot go to movie theaters may prefer to stream legally if available, but rather opt for illegal methods for big movies.

As premium video-on-demand becomes a call option sooner than usual, it may not be immediately clear whether it is on-demand or piracy purchases that are causing theater revenue to cannibalize.

“Unfortunately, I can not tell you who will win the horse race,” Danaher said.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.

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