Ma, Montgomery, Singh and Smith (2011)
|Ma, Montgomery, Singh and Smith (2011)|
|Title:||The Effect of Pre-Release Movie Piracy on Box-Office Revenue|
|Author(s):||Ma, L., Montgomery, A., Singh, P., Smith, M.|
|Citation:||Ma, L., Montgomery, A., Singh, P. V., & Smith, M. D. (2011). The Effect of Pre-Release Movie Piracy on Box-Office Revenue. SSRN eLibrary.|
|Link(s):||Open Access,Open Access|
|Key Related Studies:|
|About the Data|
|Data Description:||The data on 475 movies was culled from four sources: IMDB.com (for tracking all releases from 2006-2009), BoxOfficeMojo.com, Yahoo movies (both for box office sales and other logistical film information, such as MPAA rating and critic ranking), and vcdquality.com (for monitoring when pirated films became available). After controlling, 194 movies remained in the sample, and 21 had prerelease piracy.|
|Data Type:||Secondary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:|
|Time Period(s) of Collection:||
The availability of digital distribution channels raises many new challenges for managers in the media industries. This is particularly true for movie studios where content can be stolen and released through illegitimate digital distribution channels before, or shortly after, the legitimate release date. In response to this potential threat, movie studios have spent millions of dollars attempting to protect their content from unauthorized release, to prosecute those who might distribute or consume pirated content, and to lobby governments to strengthen anti-piracy laws. However, surprisingly, there has been very little rigorous research to analyze whether, and how much, movie piracy cannibalizes legitimate sales. In this paper, we analyze this question in the context of pre-release movie piracy. Using data collected from a unique Internet file-sharing site, we find that pre-release piracy significantly reduces a movie’s market potential, although movies with pre-release piracy exhibit a slower sales decline over time. We estimate that the net effect of pre-release piracy is approximately a 15% reduction in box office sales. Our study contributes to the growing literature on piracy and digital media consumption in the Information Systems community by presenting evidence of the impact of Internet-based movie piracy, by taking a pre-release perspective to strengthen causal inference, and by differentiating the effect of pre-release movie piracy from the other types of piracy that the extant literature has previously considered.
Main Results of the Study
This study finds that prerelease pirating reduces box office income by 15%, and higher quality audio and video in a pirated film have less of an impact on box office income than lower quality counterparts. This behaviour may act as a substitute for moviegoing or, through word of mouth, may increase sales over time; there is a possibility for prerelease pirating to act as promotion; however, it has the potential to come at the cost of cannabilisation of box office sales if the quality of the movie is low and word-of-mouth is not strong.
Policy Implications as Stated By Author
This empirical information on the impact of prerelease pirating on box office sales impact can be used to justify policy and legal changes, for which creative industries previously had little evidence.
Coverage of Study
|Level of aggregation:||Film|
|Period of material under study:||2006-2009|