How the ‘Oscar Buzz’ Fuels Online Movie Piracy

After Oscar nominations were announced on Jan. 15, worldwide downloads of pirated Academy Award-nominated films skyrocketed 385 percent in the 30 days following.

That’s according to new data from Irdeto, a Netherlands company that tracks digital piracy. The spike led to nearly $41 million in lost revenue for motion picture companies in the month following the nominations, according to Irdeto, which tracked downloads of films nominated for Best Picture, Best Director, Best Actress, and Best Actor.

That’s a big hit on the bottom line, and the solution to the growing threat of piracy is far from settled.

“We need to move at the speed of the Internet rather than the traditional course, which was based on movie reels traveling around the country and then moving abroad,” O’Connor says.  He calls for a “global release date that allows companies to maximize monetization.”

A simple dump across all distribution channels is not a viable option, says Jeff Gomez, chief executive of movie marketing consultant Starlight Runner Entertainment.

“The studios don’t want to challenge the theater chains at that level quite yet,” Gomez says. “While the online release of a first-run like The Interview did quite well, with the film being offered on different platforms for streaming and download, it still pulled in a  fraction of [what] the picture would have done in a standard theatrical distribution.” (The latest sales figures show that The Interview had pulled in about $51 million as of last month. It had a production and marketing budget of about $60 million.)

Michael D. Smith, an information science and marketing professor at Carnegie Mellon University in Pittsburgh, says the goal of the movie industry “is to try to figure out a way to get the high-price consumers to pay a high price while still selling to the low-price consumers at a low price.”

This amounts to the current model—theatrical releases for a high, one-time viewing price; DVD sales for multiple viewings; then HBO, or Netflix, or a similar service for a subscription price to view many movies relatively cheaply.

“The question is, could you come up with something else that would work? The answer is undoubtedly yes,” Smith says. One option could be paying a pay-per-view premium online at the time of release.

“The problem is that every time they’ve tried to do it, theater owners go nuts and say, ‘Hey, if you’re going to do this, we’re not going to show it in theaters”—which have brought in more than $10 billion in revenue each of the past six years, according to Box Office Mojo.

“This is a classic problem,” Smith says. “I’ve got this new market, but if I go after it, I’m going to lose a lot of money in the old market, which is currently a big part of my revenue stream. So when do you jump? It’s the companies with less to lose who are going after the new distribution channel.”

Irdeto places much of the blame for piracy on Hollywood screeners—the Blu-Ray and DVD discs provided by studios to Academy and members of the Directors Guild of America and the Producters Guild of America who vote on key awards. Screeners accounted for 31 percent of the total illegal downloads the company tracked.

Jack Valenti, former longtime president of the Motion Picture Association of America, famously tried to get screeners banned as far back as 2003. That didn’t work then—and it won’t work now, says Gomez.

“Oscar films are released late in the year at a very busy time. There would be no way I could see them all in theaters or at screenings. If I can watch them at home, I’ll see them all. And it makes a difference in my voting.”

Industry insiders have already started to see a transition to online screeners, he says.

“I’m looking forward to the safety of high-definition streaming, where no DVDs or Blu Rays are distributed at all.”