"The Big Picture"-Part 3: The Bootleg Business
Wednesday, November 09, 2005SUSIE GHARIB: Time was, the only way you could watch a movie was at a movie theater. Now, just pop in a DVD and your family room becomes a movie theater. That`s good news for consumers, but bad news for movie studios, because more and more of those discs are being pirated. Tonight, as we wrap up our series "The Big Picture", Diane Eastabrook looks at the growing challenge that picture pirates pose for the movie industry.
DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: These look like authentic movie DVDs sold at retail chains across the U.S. But looks can be deceiving. They are actually copies of pirated films. The Motion Picture Association of America estimates fakes like these cost movie studios up to $3 billion a year.
RICHARD COOK, CHAIRMAN, THE WALK DISNEY STUDIOS: This is organized crime. This business is better than the drug business.
EASTABROOK: Pirated DVDs are often on the streets within days after a movie`s release. Most of the material comes from pirates who sneak into movie theaters and record films with camcorders. The pirates make multiple copies which are then sold by street vendors and unscrupulous mom and pop retailers in the U.S. and around the world. In the U.S., law enforcement agencies have had some success collaring pirates recording films in movie theaters or making DVD copies at production facilities. But piracy expert William Murray says catching pirates abroad has been more challenging.
WILLIAM MURRAY, PRESIDENT, WILLIAM MURRAY & ASSOCIATES: In China, private parties are not allowed to conduct investigations, so the industry has to work really at arms length to try to find information, turn it over to authorities and it`s a cumbersome process.
EASTABROOK: An even more vexing problem for the movie industry is the downloading of pirated films over the Internet. Experts say web pirates are harder to catch than those making hard copies. They also think the losses from downloaded movies could exceed those of illegally copied films. In an effort to fight back, studios have begun releasing a limited number of titles for downloading over a few legal Internet sites. But, analysts say more wide- spread distribution over the Internet shortly after a film`s theatrical release could stop some pirates from plying their trade.
ANTHONY VALENCIA, SENIOR V.P., TRUST COMPANY OF THE WEST: The studios have seen what happened with the music industry and don`t want to make that mistake. They understand that you need to give consumers what they want at a reasonable price and that that is the best business decision.
EASTABROOK: Michael Lynton, chairman and CEO of Sony Pictures Entertainment agrees.
MICHAEL LYNTON, CHAIRMAN & CEO, SONY PICTURES ENTERTAINMENT: I do believe that you`ve got to offer the consumer that ability because if you don`t, the piracy will get worse than it already is and I also believe that it is potentially a big business for us completely separate from the DVD business we`re in at the moment.
EASTABROOK: Still, Lynton thinks Hollywood needs to be more vigilant in catching and prosecuting pirates. Experts say as studios begin sending movies to theaters through digital files, state of the art encryption must be used. But industry watchers don`t think better enforcement or technology will eliminate piracy completely.
MURRAY: Why do people deface property? They don`t get paid. They just like the thrill of going out there and tagging a piece of property. And there are always going to be folks out there who are going to want to steal content.
EASTABROOK: Piracy, digital cinema, and declining attendance all present new challenges for Hollywood. But experts think the movie industry will deal with them and emerge stronger. Some even think this could be another golden age for Hollywood.
STEPHEN MARCUS, CHAIRMAN & CEO, MARCUS THEATER CORP.: Look at the "Lord of the Rings" series; look at the Harry Potter series of movies. These are great, great pictures, great motion pictures that people will remember for the rest of their lives just the way I remember "Gone with the Wind."
EASTABROOK: Industry watchers say if studios make the kinds of movies audiences embrace, then they can assure themselves a happy Hollywood ending. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Los Angeles.
