Study: Box Office largely unaffected by online piracy

An academic study looking at the correlation between the appearance of BitTorrent in 2003 and loss of box office revenue by Hollywood films as a result of piracy indicates that US box office revenue has largely been unaffected but that international returns have been lower than they might otherwise have been in the absence of pre-release piracy.

Noting that with the growth in movie piracy since the appearance of BitTorrent in 2003, films have become available through illegal piracy immediately after release in the US, while they are not available for legal viewing abroad until their foreign premieres in each country, the researchers – Brett Danaher of Wellesley College and Joel Waldfogel of the University of Minnesota – ask whether longer lag, which facilitate more local pre-release piracy -depress theatrical box office receipts, particularly after the widespread adoption of BitTorrent.

The study – Reel Piracy: The Effect of Online Film Piracy on International Box Office Sales – found that that longer release windows are associated with decreased box office returns, even after controlling for film and country fixed effects. “This relationship is much stronger in contexts where piracy is more prevalent: after BitTorrent’s adoption and in heavily-pirated genres,” they note.

The study also indicated that, as a lower bound, international box office returns in the sample were at least seven per cent lower than they would have been in the absence of pre-release piracy. “By contrast, we do not see evidence of elevated sales displacement in US box office revenue following the adoption of BitTorrent, and we suggest that delayed legal availability of the content abroad may drive the losses to piracy,” observe the researchers.

Posted by on Feb 13 2012. Filed under Articles, Consumer Behaviour, Content, Piracy, Research.

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