Research: Piracy ‘Warnings’ Fail to Boost Box Office Revenues

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A new academic study shows that graduated response policies against file-sharers fail to boost box office revenues. The empirical research, which looked at the effects in various countries including the United States, suggests that these anti-piracy measures are not as effective as the movie studios had hoped.

runningOver the past decade, entertainment industry groups have lobbied hard for so-called graduated response systems, where alleged pirates are warned and in some cases fined.

France was one of the pioneers in this area with its three-strikes anti-piracy law, and similar policies have been implemented in countries such as Ireland, South Korea, New Zealand and the United States, among others.

One of the main goals of these policies is to lower overall piracy rates and ultimately increase revenues for rightsholders. The question is, though, whether the measures will reach this desired goal.

Thus far there has been very little research on the topic but a new study, published by Dr. Jordi McKenzie of Sydney’s Macquarie University, suggests that these “strikes” policies don’t boost box office revenues.

For his paper, published in the most recent issue of the journal ‘Information Economics and Policy,’ McKenzie looked at opening week and total box office revenues for 6,083 unique films released between 2005 and 2013.

Using a variety of statistical analyses, he then measured the impact of the graduated response systems and related policies in six countries. In addition, another ten countries were included as a control measure.

The overall conclusion based on thousands of data points is that these anti-piracy policies have no significant impact on box-office income.

“This study has considered whether this has proven true in six countries’ experiences in the context of theatrical film revenues. No consistent evidence is found that supports increased theatrical box office revenues in any of the markets,” the conclusion reads.

The researcher did apply several robustness checks. For example, he looked at possible effects for separate movie genres pirates could be more or less interested in, but none explained the findings.

“While various statistical explanations for this ‘no-result’ finding have been considered, none are consistent with increasing revenues, which suggests the explanation lies elsewhere.”

According to McKenzie, there could be several explanations why box office attendance wasn’t influenced. Pirates might simply be continuing their old habits because the catch rate is relatively low, or it’s possible that they’re taking measures to hide their piracy habits. Through VPNS or by switching to streaming or cyberlocker services which aren’t monitored, for example.

While the study is mostly interesting due to its lack of results, there was another finding that’s worth highlighting. As a “crude test,” McKenzie also researched the effect of the Megaupload shutdown, observing a small decrease in box office revenues.

“Evaluating across all control countries, all treatment countries, and all countries together, no evidence of an increase in box office is observed after this date. In fact, as observed by Peukert et al.(2015), there is actually slight evidence of a decline in box office revenues after this date,” the paper reads.

According to McKenzie, this suggests that pirates are quite sophisticated. If needed, they can easily move from one service to another, much like many of the torrent users who moved to other sites when KickassTorrents was taken down last summer.

Of course, the research also has its limitations. For one, it only looks at the impact on the movie industry, and box office revenues in particular. More research is needed to see if the effects are different elsewhere, but for now the effect of graduated response systems appear to be very limited.


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