Study Shows Piracy a Huge Problem

By Ed Oswald, BetaNews

May 3, 2006, 1:39 PM

A study commissioned by the movie industry has left those involved both baffled and embarrassed, as the issue of piracy seems to be much bigger than anyone thought. Some industry executives have even advocated not releasing the information to the public.

Carried out by LEK Consulting for the MPAA, the study found that U.S. studios lose $6.1 billion annually, much more than earlier estimates of $3.5 billion in losses. Not only is the issue affecting ticket sales, the study found, but also DVD sales, which the studios have increasingly turned to for revenue.

Facing disagreement among its members, the MPAA has apparently halted a plan to publicly release the results. According to a report in the Wall Street Journal, while some studios said the study would help the case for tougher piracy laws, others feared the report would show that enforcement isn't working and hurt their bottom line.

The dramatically higher numbers are also a result of new methodology. The MPAA was previously only basing estimates on the result of raids, leading many to believe that countries like Russia and China were the largest piracy markets.

However, under the new methodology, that is no longer the case. In the U.S. alone, piracy losses are a staggering $1.3 billion, followed by Mexico with $483 million.

Such wild swings have even led some to question the validity of the survey's results. However, it should be noted that the previous studies did not factor in the effect of Internet downloading.

It is not clear how or when the MPAA will finally release the data to the public. The organization's head Dan Glickman has made piracy a central tenet of his two-year presidency, and the data could harm his and the MPAA's efforts.