Piracy reduces foreign box office receipts 7%, study says

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A new academic study provides ammunition for those who say online piracy is hurting Hollywood’s bottom line.

A paper by economists Brett Danaher of Wellesley College and Joel Waldfogel of the University of Minnesota estimates that piracy caused a 7% decline in international box office returns during a one-year period bridging 2005 and 2006 studied by the academics.


The study did not estimate the effects of piracy on domestic box office or DVD sales.

The authors looked at a period before and after the 2003 launch of the popular BitTorrent technology, which is widely used by film pirates. Since movies have typically premiered first in the U.S. and are usually available via BitTorrent soon after they hit theaters, the study compared movies’ foreign box office receipts to their domestic takes before and after the advent of Internet piracy.

It found that the overall decline in overseas box office receipts was 7%, which during the period studied amounted to a drop of $240 million. The researchers found a more significant decrease in foreign box office compared with domestic for science fiction and action films, genres that tend to be more popular among the online piracy community.

While there’s much debate over the effectiveness of laws intended to crack down on piracy, such as the failed Stop Online Piracy Act and Protect Intellectual Property Act, Danaher and Waldfogel note that one easy solution would be to decrease the amount of time between U.S. and foreign releases of movies.

That’s something Hollywood is already doing. Most big-budget movies now debut simultaneously in most countries and a growing number are actually premiering first overseas, including the upcoming ‘Battleship’ from Universal Pictures and ‘Prometheus’ and ‘Ice Age: Continental Drift’ from 20th Century Fox.

The release of the study was first reported by Deadline.


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-- Ben Fritz