Shift in Consumer Demand: Should Studios Emulate Pirates?

Hollywood studios are reexamining traditional distribution models in an era of piracy enabled by digital technologies. Today’s media savvy consumers have evolving expectations regarding how they discover and share music, video content and games, thanks in part to new cloud-based technologies, streaming media services and sophisticated social tools. Some media companies are even considering the idea that models popular with pirates are worth imitating.

“Generally speaking, we view piracy as a proxy of consumer demand,” wrote David Kaplan, head of anti-piracy efforts at Warner Bros. Entertainment, on the Anti-Piracy & Content Protection Summit website. “Accordingly, enforcement-related efforts are balanced with looking at ways to adjust or develop business models to take advantage of that demand by offering fans what they are looking for when they are looking for it.”

Kaplan favors a loosening of copyright restrictions to allow the use of content when it is not a genuine threat to business.

“We give a wide berth to ‘fan use’ and permit fans to use and interact with our content in ways that might technically still constitute copyright infringement, but do not directly substitute for the full length feature, episode or game,” notes Kaplan.

“Many videogame companies have taken this approach to the insanely popular in-game replay videos that fans make and post to YouTube through channels such as Machinima,” reports Businessweek. “At the same time, Nintendo’s recent decision to start claiming a portion of the ad revenue from these videos is a reminder that openness seems more threatening when money is on the table.”

“Media companies may also be coming around to the idea that the models for moving pirated content are worth imitating,” suggests the article. “A 2010 study by researchers at the University of Texas, Dallas found that legal digital music marketplaces blunt demand for illegal ones; while the impact of music piracy continues to be disputed, legal online music services have since then gained steam.”

The Wall Street Journal recently reported that Disney and Sony have begun distribution experiments in South Korea in which the companies have made movies available via video on demand while they are still playing in theaters. Since theater chains object to eliminating the window between theatrical and home entertainment releases, the approach may not come to the U.S.

“The streaming movies aren’t necessarily cheap, either,” explains Businessweek. “But there’s definitely a school of thought within media companies that customers would be willing to pay for the relative convenience and safety. And anything that might steer people away from BitTorrent is worth a shot.”