The Motion Picture Association of America’s Jan. 23 disclosure that the movie trade group overestimated profits lost to student piracy proved two facts: First, the mistake proved statistics are not always accurate representations of facts, even when the sources disseminating them research and report them in good faith. Second, the event served as another reminder how much money the film industry is really making despite the challenges posed by a changing customer base.
The film industry quickly reminded the public it still loses an estimated quarter billion dollars to piracy by college students alone — no trivial amount, considering individual losses can make the difference between a hit independent film and a first time filmmaker in debt. Even this figure is open to question, however, because these types of estimates usually assume pirates would have bought all the films they stole had they not had the opportunity to copy them. No one can fix the true cost of piracy without resorting to some guesswork.
Despite the threat of piracy, however, movie studios continue earning record-breaking profits while the recording industry struggles. While music distributors have tried adapting their business models to the iPod generation with varying results, the MPAA has endured by relying on DVD sales and online rental companies like Netflix. The association even reported steady box office receipts hovering around $9.5 billion per year, in a format once given up as a dying medium.
Clearly, this section of the entertainment industry has changed to meet the demands of a customer base it cannot control. Its business model has worked well at paying dividends to company stock holders who rely on dependable profit margins. Yet the ongoing Writers Guild of America strike – fueled in part over disagreements about how to pay screenwriters for work broadcast over new media like streaming webcasts – sheds a less flattering light on the industry. If film studios can adapt to the Internet Age to protect their pockets, these executives have no excuse for blaming temporary downturns on dorm room bandits and greedy writers.
