Cynics Unlimited

(Via Jack’s NewsWatch) Canada.com is reporting that movie distributor Twentieth Century Fox –apparently on behalf of the entire American film industry- is threatening to delay releases in Canada due to rampant piracy:

As much as 50 per cent of the world’s pirated movies come from Canada, prompting the film industry to threaten to delay the release of new titles in this country.
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Changes to laws in the United States have seen movie piracy in that country plummet … one man caught with a camcorder in a theatre was jailed eight years and fined $250,000.
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Because of movie piracy, a U.S. congressional committee has added Canada to a “country watch list” that includes such well-known piracy havens as China, Russia, India and Malaysia.

As a member of the The Motion Picture Association of America (MPAA), Fox is attempting to scare Canadian authorities into ignoring such trivialities as terrorism and serial murder in order to recover Hollywood film profits.

Could 20th Century Fox and other film studio truly be contemplating delaying movie releases throughout Canada to pre-empt the release of pirate movies overseas by a few days? Unless the lot of them has gone completely mad, the answer is almost certainly “no”. Retarding a prosperous market to stem the proliferation of inferior products to and from an unstable market is economically dubious. Furthermore, the suggested course of prevention and punishment would only irritate legal movie goers while presenting little or no deterrent to pirates familiar with modern data transfer technologies.

Camcorder Movies are Poor Quality

It is important to understand the nature of these Canadian bootlegs before assessing the validity of Fox’s threats. First, consider the source - As the article states, movie pirates are literally recording movies using camcorder in the theatre. In the hacking world, these bootleg movies are known as “Cams” and are known for having extremely bad quality: Camera angles are usually not perfect since the camera has to be obscured by the bootlegger in order to avoid arrest. This means plenty of shaky pictures, cutoff images (most camcorders record video in 4:3 aspect ratio – the same as television – whereas theatres show movies in 16:9 widescreen), and silhouettes of moviegoers getting up to go to the washroom. The sound is typically recorded using the camcorder’s internal microphone, making the sound unclear and easily drowned out by cell phones or audience chatter.

To be fair and balanced, there are bootleggers who make deals with theatre owners to record movies in an empty theatre; however, even under perfect shooting conditions (the camera is placed on a tripod with a direct connection to an external audio source), the picture quality of a bootleg –in this case called a Telesync bootleg- would still be poor because video cameras simply can’t photograph television or movie screens with any degree of accuracy (for a live demonstration, try videotaping your own television!). Thus, any camcorder videos produce a quality slightly worse than home-taped VHS cassettes – definitely unacceptable in most first-world nations and increasingly unacceptable for even third world nations.

Now consider the destination format of the bootlegs. Originally these videos were sold on VideoCD discs, a low-resolution CD-based format popular in Asia but generally ignored in North America. Until a few years ago, VCD’s were dominant in the Far East and sold for between $0.75US and $2.50US. However DVD’s have since taken over and tend to retail for around $7.00US.

While Cams and Telesyncs were good enough for VideoCD discs, their low quality is quite visible on bootleg DVD’s and are avoided by people even slightly concerned about quality or who would otherwise be willing to pay for the “movie experience”. In other words, camcorder bootlegs threaten the movie industry the way home cassette taping threatens CD sales – not greatly.

Asia is an Unstable Market; Canada is Not

Quality is only part of the story, however. Fox news knows as well as anyone that Asia is very much a market dominated by individual merchants who survive on offering basement bargains (which inevitably includes piracy of films, music, video games and computer software). There is little chance that the entertainment market will be dominated by Blockbuster-style chains that can be easily influenced by MPAA threats or demands. Moreover, there is little incentive for Asian authorities to comply with American demands – any job or economic losses caused by piracy of American films will not affect local Asian economies but the sales of those discs could stimulate economic growth. Furthermore, India and Hong Kong both have prosperous film industries (the former being the largest film industry in the world) far more likely to successfully lobby for legal favor against pirate activities.

Asian piracy is also inadvertently perpetuated by protectionist government policy. China in particular limits the number of foreign films released on Chinese screens in order to favour the local film industry. Chinese consumers respond by seeking illegal copies of the movies online or through the underground market, contributing to the staggering 93% of Chinese film sales purchased illegally.

By comparison, Canada is very prosperous market upon which the MPAA has great influence. Last weekend alone, the top 10 box-office films in Canada grossed $5,440,837, with Fox’s own “Night at the Museum” taking first place [source: Tribute.ca Top 10 Movies in Canada, January 19-21, 2007]. As the article states, there are also guards at many Canadian cinemas actively looking for camcorder pirates, since Hollywood IS the local film industry (at least indirectly).

Piracy Logistics Have Advanced

The US watch list referred to in the article states that Canada has become a “dumping ground” for imported pirated goods from Russia and the Far East. This claim is rather dubious for the simple fact that these logistics are outdated for present-day movies. Aside from DVD and VCD, bootleg films can also be compressed into DivX files, which are MPEG-4 based computer files famous for allowing high quality video streaming over a low bandwidth. A 2 hour movie ripped directly from DVD can be compressed into a 700MB file that looks virtually identical to the original file. Transmitting such a file over a high speed internet connection from Russia to Canada can be done in a matter of hours. In fact, online pirates and casual internet users do so frequently using advanced file sharing technologies like BitTorrent. A transmitted DivX file can be converted back to a DVD for duplication and distribution in the local market. Transmitting pre-manufactured pirated movies from abroad is both expensive (in a market where black market movies will not sell well if priced for more than about $6) and unnecessarily risky. One has to assume the MPAA is aware of these technological advances.

Verdict: “Not … Very … Likely”

So to review Fox’s threat in terms of the information provided above and the original article –

1. Fox would have us believe that the sale of sub-VHS quality movies in a market where over 90% of purchased films are pirated has a significant impact on their bottom line
2. Fox and other movie studios are willing to stifle a prosperous, primary movie market over which it does have legal influence in hopes of indirectly forcing compliance on a struggling, secondary market where it has limited legal or political influence.
3. Canadian police and customs officials should waste millions of dollars searching for bootlegged media entering/exiting via Canadian ports when a piracy operation of average aptitude realizes the cost saving and risk reduction of transmitting one copy and replicating locally.
4. Fox is upset because Canadian authorities won’t jail camcorder pirates for as long as our nation jails murderers

One can only hope that Fox is merely saber-rattling to scare Canadian authorities into recouping some supposedly lost revenue (which is a dishonest argument, but that will be another post), because if this is an actual anti-piracy strategy then the mighty film studio is in bigger financial trouble than they think.