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For immediate release 23 Mar 2007


FILMART 2007 Seminar Series
Beating Back the Pirates


Intellectual property pirates have moved on from the days when they would sneak a camera into a cinema and surreptitiously film the movie with a lens poking out of their coat pocket. While such methods still exist to feed the counterfeit video disc factories, the advent of BitTorrent and other peer-to-peer file sharing software means millions worldwide can upload and share material from the comfort of their home.


The digital revolution has brought risks as well as opportunities to filmmakers and television content providers. While the global revenue from paid-for music ring tones and video-on-demand is rising, the industry faces a challenge in distributing such material securely.


“How the latest innovation is impacting the film business today” was the subject of a March 23 FILMART 2007 forum featuring an international panel of veteran industry players. Their comments suggested that, with the right approach, content providers can beat the pirates if they meet the needs of the consumer.


The Consumer Mantra


“The mantra of the modern consumer is very clear,” said Mike Ellis, Senior Vice President and Regional Director of Asia-Pacific Motion Picture Association (MPA). “It is: ‘What I want, when I want and on whatever device I happen to be carrying at the time.’”


The average Hollywood film costs US$100 million to make and market, he said, meaning it needs to exploit all revenue streams to have a chance of making a profit – and to stop the pirates. “Only one in 10 movies will make a profit through theatrical release,” he said. “Worldwide, only four in 10 films will make any profit. This is an incredibly difficult business to get into and stay in.”


Peer-to-peer file sharing was “a real problem,” Mr Ellis said, praising Hong Kong authorities for bringing the first successful piracy prosecution for using BitTorrent software. He also lauded efforts in Japan, Singapore and Taiwan for taking people to court for intellectual property theft via the Internet.


“The bottom line is we don’t really want to go after our consumers,” Mr Ellis said. “Making consumers understand intellectual property is what we want to do.”


“The consumer wants the cheapest cost with the highest quality,” said Tony Shu, Executive Secretary of the Movie Producers and Distributors Association of Hong Kong. He said piracy, which now delivers high quality, had hit the industry hard, and law enforcement needed to be stepped up.


“We hope we can identify the pirates and take action,” Mr Shu said. ‘We would like the government to have a complete piece of legislation [on this], and hope that they can educate the public.”


Willing to Pay


Panellists believed most consumers would rather pay if they could get the content they wanted. “I think the consumer is willing to pay for it,” Mr Ellis said, citing the success of iTunes in winning customers, some of whom had previously been ripping off music via illegal file sharing.


Following the iTunes model, US-based company Jaman last month launched a film website, jaman.com, that is somewhat of a movie version of Apple’s song sharing site. At the site, viewers can download films for rent or purchase at a price of US$2 to US$10.


“Ultimately, I don’t think people want to be pirates,” said Carlos Montalvo, a former Apple Computer executive and now Senior Vice President of Operations at Jaman.


Some 40 million films were bought on the web last year, and Mr Montalvo said the market potential was huge. “This is a very new industry. Two years ago people were not downloading film,” he said. “We are building a world community for the discovery, enjoyment and sharing of world cinema. We believe people will use the Internet not only to purchase and watch movies but also to socialise around them as they do around music.”


Mid-budget, independent and world cinema productions stood to gain from a direct distribution network like Jaman, he said, noting that less than one percent of overseas films receive theatrical release in the US. The only way Americans saw Chinese-language films from Hong Kong was through DVD, but most of those were pirated and so did not generate revenue, he said


“Many of the technologies that were originally misused are now being used in a legitimate way to transfer content around the world securely,” Mr Montalvo said. “If you offer a high-quality product at a fair price, people would prefer to purchase it than pirate it.”


Content Conundrum


When it was suggested by a questioner that consumers might feel ambivalent about movie piracy in light of the huge pay cheques Hollywood superstars get, Mr Ellis said more than 1.3 million people were employed in the US television and movie industry, earning an average of US$73,000 per year each. “These are the people we have to protect, not just Tom Cruise or Tom Hanks,” he said.


Paul Jackson, Chief Engineer of NDS Asia-Pacific, works worldwide to protect paid television content. His company has secured US$32 billion in pay TV revenue worldwide and has produced 69 million smart cards, which act as locks on delivery devices such as set-top boxes.


Mr Jackson said there were many complex issues hampering the secure distribution of movies, music and other digital content. “A lot that’s holding these things back is the rights issues, such as what a consumer can do with content once he has downloaded it,” said Mr Jackson. One such issue was that, while a consumer should be able to transfer content between devices in the home, could he transfer it to portable devices and take it elsewhere, or share it with family members?


Whatever happens, the industry will adapt, said Mr Ellis, when asked if he thought new technology was the death knell for traditional studios. “When colour television came out in the 1960s, people said movies were dead.”




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