The Growing Threat of Internet Piracy in the Movie Industry: The Effect of Rapid Pirated Leaks on Motion Picture Revenues.
Henning, Nicholas.
2009
- In 2005, the MPAA claimed that worldwide losses to movie piracy amounted to about $18.2 billion, with $6.1 billion of that missing revenue accounted for by MPAA affiliates alone. The difficulty in measuring piracy is that it is obviously illegal, making data collection and participant surveys skewed in results. In addition, the movie industry is a complex system, and any given movie has a large ... read morevariability of success factors which amount to unpredictability in the expected revenue of motion pictures. This paper seeks to investigate how the speed of internet piracy affects industry revenues by creating a model for film revenue regressed against the number of days from theatrical release to first piracy leak, first screener leak, and first DVD leak, amongst several control variables. When including control variables, the impact of piracy is found to be negligible, particularly in comparison to the production budget variable. Without these controls, significance is found for days until first piracy leak and screener leak, implying the more days until first piracy leak the lower revenues will be and that more days until first screener leak leads to higher revenues, t(124)=-2.91, p<.01, and t(124)=3.05, p<.01. Finally, scatter plots of the data find that most films which end up making high worldwide revenues are pirated within the first week after theatrical release.read less
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