Assessing the Evidence: “Piracy and Movie Revenues: Evidence from Megaupload”

by Julia Jenks 11/30/2012 14:11 (UTC-08:00) Pacific Time (US & Canada)

An abstract released recently by researchers in Europe has gotten some blogger attention for suggesting that box office revenue for some films may be down since Megaupload shut down in January.  Today, Julia Jenks, head of research here at the MPAA, is breaking down some of the serious methodological gaps in the abstract and notes that its flimsy findings raise far more questions than they answer. 

Assessing the Evidence: “Piracy and Movie Revenues: Evidence from Megaupload”

Researchers at the Munich School of Management and the Copenhagen Business Schoolrecently posted a two page summary abstract on the Social Science Research Network entitled “Piracy and Movie Revenues: Evidence from Megaupload” that has caught the attention of some bloggers.  While independent review of the academic literature has shown that the vast majority of it, particularly the literature published in the top peer reviewed journals, finds evidence that piracy harms media sales (for more on that literature, see: “Assessing the Academic Literature Regarding the Impact of Media Piracy on Sales”), some bloggers have focused on a seemingly contrary conclusion from this new abstract, regarding box office revenue in time periods before and after the Megaupload website shutdown in January 2012. 

The reality is that it is impossible to evaluate the validity of the approach or the reliability of the conclusions based solely on the abstract, which does not fully present the methodology or results of the study. In fact, in its present form, this summary abstract raises more questions than it answers, including:

Are the conclusions being presented and interpreted correctly? From the two page abstract it is unclear, for example, which results are or are not statistically significant, what are the definitions for the variables in the statistical tables, and whether and how the results differ for the films that showed on more than 500 screens, which the authors suggest experienced a positive box office effect post the shutdown.  Specifically, the regression tables seem to indicate that the Megaupload shutdown caused an increase in box office revenue for movies that were shown on more than 500 screens (which is a large number of films), but the tables are unclear and could also be interpreted as also showing an increase in sales for all films after the Megaupload shutdown.3  

Which system was used for “matching” like movies? The abstract’s conclusions rest on the assumption that it is possible to create a “matched” control group of movies from the time period prior to January 2012 (pre shutdown), which accurately predict the potential box office performance of similar movies in the post January 2012 time period (post shut down) had the Megaupload shutdown not happened.  This is an extremely difficult proposition, even with the most sophisticated econometric techniques, particularly for specialty films4 – or there would be no box office surprises.  In this case, it’s impossible to assess the validity of the control group without information about the matching technique and methodology, and the actual matching factors.  The only potential factor visible, genre, is very weak.  In fact, it is well known in both the industry and peer-reviewed academic literature that box office revenue is affected by a myriad of both observable and unobservable characteristics (e.g. audience taste).

How does the research account for box office trends independent of the Megaupload shutdown? The “matching movies” approach taken seems to assume that the only thing that changed in terms of box office for films in the time period, covering the last five years, was the Megaupload shutdown. The authors do state that they did some testing of alternative shutdown dates, but they provide no information on how this was performed or whether this adequately accounted for other changes in box office revenue over the last five years that are unrelated to the Megaupload shutdown.  Box office trends not accounted for in the estimation and independent of Megaupload being shut down would lead to a different set of conclusions.

As currently presented, the conclusions in this abstract are not clear or compelling.  We hope that when the final paper is released, these and other related questions are addressed, and a detailed methodological description provided, so that it will be possible to interpret the conclusions presented, and evaluate their reliability.  

____________________________________________________

1Christian Peukert, a Ph.D. student at Ludwig-Maximilians-University Munich, Institute for Strategy, Technology and Organization, and Jörg Claussen, a post-doctoral researcher at Copenhagen Business School - Department of Innovation and Organizational Economics.

2The abstract erroneously cites the academic paper Assessing the Academic Literature Regarding the Impact of Media Piracy on Sales,” as stating that “privacy [sic] negatively impacts sales.” 

3Films that are shown on more than 500 screens are a large and important universe.  According to Box Office Mojo, the data source used, all 100 of the top 100 films, and more than 150 films in total, released in the U.S. in 2011 were shown on more than 500 screens.* Given that the total sample of movies in the study (1,344) works out to about 270 films per year, this suggests that in certain years films that were shown in more than 500 screens may actually be a majority of the sample, more than 50% of the total.  *Box Office Mojo actually presents “theaters” not “screens,” but since the Munich paper uses Box Office Mojo and presents the information as “screens” we’re using the same nomenclature. 

4e.g. Films showing on 500 or fewer screens.

Categories: Content Protection, Copyright

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MPAA Screens ABFF Winner THE UNDERSHEPHERD

by John Gibson 11/28/2012 16:03 (UTC-08:00) Pacific Time (US & Canada)

Yesterday evening the MPAA partnered with the American Black Film Festival to host award-winning director and national radio host Russ Parr for a reception and Q&A screening of his film, The Undershepherd.  Parr wrote, produced and directed the film which won the 2012 American Black Film Festival Grand Jury Prize for Best Narrative Feature and Best Director.  Parr is the host of the nationally syndicated Russ Parr Morning Show heard weekdays by more than 3.2 million listeners in 25 major markets.   In 2006 he wrote, produced and directed his first film The Last Stand followed by Something Like a Business, Love for Sale, 35 and Ticking and The Undershepherd

In a Q&A session after the screening, Parr discussed the challenges of being a filmmaker.  He said, “you all have to support dramatic themed movies like The Undershepherd to counter the widely regarded belief that African Americans will only support a black director and producer if they produce movies that are urban comedies.”  He also spoke about the need for greater distribution opportunities for filmmakers like himself.   

The MPAA is pleased to have hosted the American Black Film Festival Founder and CEO Jeff Friday at the event and look forward to working with him in the future. Over the last 16 years, the ABFF has been the premiere festival for the advancement of African Americans and other minorities in film and television. 

Russ Parr (left) with MPAA Chairman and CEO Senator Chris Dodd (right) photo credit: Ralph Alswang

An Evening With Adrian Grenier and Peter Glatzer

by TJ Ducklo 11/13/2012 17:39 (UTC-08:00) Pacific Time (US & Canada)

Actor Adrian Grenier and film producer Peter Glatzer joined Senator Dodd at the MPAA this evening to discuss their joint venture SHFT. Co-founded by the two artists, SHFT is a multimedia platform aimed at conveying a more sustainable approach to the way we live through film, design, art, and culture.

Tonight’s event is the latest installment of the MPAA’s “Evening With” series, which invites leaders from the entertainment industry to Washington to share their interests, their experiences, and their craft. Grenier and Glatzer sat with Senator Dodd to discuss the various elements of their project and why they do what they do:

Grenier: “We wanted to do something we believe in, but not just in our spare time. We wanted it to build momentum, to make it our job and to give back in meaningful ways. (We did this) in the only way we know how which is by storytelling and filmmaking. And it’s been our pleasure- we are fulfilled by it”.

Glatzer added: “We wanted these (short films) to be sharable pieces of content rather than something your mother thinks you should watch.”

Grenier is best known for his role on HBO’s ENTOURAGE and has appeared in many films including THE ADVENTURES OF SABASTIAN COLE, DRIVE ME CRAZY, and THE DEVIL WEARS PRADA. Glatzer is an independent film producer whose works include the Sundance hit THE GRAVE, the former Executive Director of the Hampton Film Festival and the creator of the IFP Gotham Awards. He and Grenier co-founded SHFT in 2009 after they collaborated on ALTER ECO, a TV series for Discovery.

photos by Joy Asico

Categories: Evening With

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FILM COMMUNITIES IN US & CHINA COMMITTED TO BUILDING SUCCESSFUL PARTNERSHIPS

by MPAA 10/31/2012 11:03 (UTC-08:00) Pacific Time (US & Canada)

2nd China International Co-production Film Screenings  

Kicking off with a special gala evening at Twentieth Century Fox’s Zanuck Theater in Century City, leaders from the American and Chinese film industries celebrated their continued efforts to co-produce films for the American and Chinese markets.  Over the next week a series of Chinese co-production screenings will take place around the city of Los Angeles. 
 
Christopher Dodd, Chairman and CEO, Motion Picture Association of America (MPAA), and Jim Gianopulos, Chairman and CEO of 20th Century Fox Film co-hosted the first screening, with special guests, Tong Gang, Director-General of the Film Bureau of China’s State Administration of Radio, Film and Television(SARFT), and James Cameron, director of Avatar and Titanic.

 


“Over the past few years, the film industries in the U.S. and China have committed to laying down stepping stones to building a successful partnership between our two great film communities,” said Christopher Dodd. “Appraising the relationship today, it’s fair to say that those stepping stones have become a firm and well-trodden path... as we look ahead to developing a truly globally-integrated film market within China, increased collaboration in the form of co-productions promises a bright future."
 
Tong Gang, who also led a Chinese delegation attending the screenings, said, “Our work with the MPA and its member studios has helped cultivate an ever-growing professional talent base active in film co-production, and I commend the artists who have brought us such a great variety of movies. We hope exchange programs and events such as this will allow American audiences to see more high quality co-production films. We also hope movies such as these will inspire more studios to participate in Sino-American film co-productions and in turn, continue to help elevate quality and standards.”
 
James Cameron, in his remarks said, “I think we all understand that the Chinese film market is growing so rapidly, not only as an internal market for its own filmmakers, but as a market for Hollywood films and international films to play there. It’s an incredibly exciting time. I’ve been to China a number of times over the last couple of years and I’m literally stunned by the rapid pace of change there, and the opportunity for those of us here and the filmmakers there to work together and really forge something new.”
 
The 2nd China International Co-Production Film Screenings is a week-long program developed by the Motion Picture Association (MPA) and SARFT, with the support of AMC cinemas, the Asia Society, China Film Co-Production Corporation, China Film Group Corporation, China Lion Film Distribution, Chinese American Film Festival, IMAX and MTIME.
 
The screenings began with the opening night film Hot Summer Days, a co-production between China, Hong Kong and Fox International Productions (US), directed by Tony Chan and Wing Shya.  Other films featured include 33 Postcards, The Founding of a Republic, Love in the Buff, Ocean Heaven, and Painted Skin: The Resurrection.
 
On 29 October, IMAX held a special screening of the Hong Kong-China costume action pic Flying Swords of Dragon Gate, directed by Tsui Hark and starring Jet Li and Zhou Xun, at their headquarters in Santa Monica, Los Angeles.

Categories: Press Event

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MPAA Welcomes Mike Medavoy

by TJ Ducklo 10/09/2012 18:24 (UTC-08:00) Pacific Time (US & Canada)

The MPAA welcomed film industry great Mike Medavoy to our DC office this evening in the latest installment of our “Evening With” event series. These events feature leaders in the entertainment community sharing their experiences and wisdom, which in Medavoy’s case, spans 50 years in the industry. MPAA Chairman and CEO Senator Chris Dodd and American Film Institute Founder and entertainment industry leader George Stevens, Jr. moderated what was a fascinating and incredibly timely discussion.

Medavoy's talent for recognizing talent is a main contributor to his success, as he explains "There's no science to it. It's instinctive. That's just what I did." He went on to share stories about working with iconic figures in film, among them Marlon Brando, Martin Sheen, Kevin Costner, and Terrence Malick. His profound reflections on the industry's role in a globalized society struck a chord with the audience, stating "Movies are markers. You remember where you were, what effect they had on you (when you saw them). And that's true everywhere, around the world."

From working in the Universal Studios mailroom to having his hand in over 300 feature films, seven of which won the Oscar for Best Picture, Medavoy has quite a story to tell. Working as both an agent at Creative Management Agency and studio executive at several studios, Medavoy developed an eye for talent that has translated to success after success on the silver screen. Early in his career, he helped produce One Flew Over the Cuckoo’s Nest, Rocky, Annie Hall, The Terminator, Dances with Wolves, Silence of the Lambs, and Sleepless in Seattle. In 1995, Medavoy co-founded Phoenix Pictures and currently serves as its Chairman and CEO. During Medavoy’s tenure, Phoenix has released numerous award winning films, including The People vs Larry Flynt, The Thin Red Line, All The Kings Men, Shutter Island, and Black Swan.
 
We look forward to continuing to host these captivating discussions, celebrating those who make the film and television industry such an important part of our nation’s culture.

More Legitimate Avenues Available Today to Watch Movies and TV Shows Online than Ever Before

by Howard Gantman 08/21/2012 13:58 (UTC-08:00) Pacific Time (US & Canada)

A new piece by David Pogue in Scientific American today echoes a very common argument about online digital theft: that if more movies and TV shows were available legitimately online, the problem of online content theft would take care of itself.  The problem with this argument is that it’s not borne out by the facts.  There are more legitimate avenues available today to watch movies and TV shows online than ever before: Hulu, HBO Go, Vudu, Crackle, UltraViolet, Epix, MUBI, Netflix, Amazon – and that just scratches the surface.  Yet analysis of data from comScore, Inc, shows that pages views on sites facilitating online theft has grown exponentially in the past few years.

In the piece, Pogue claims that none of the top 10 most pirated movies of 2011 are available to rent online.  In fact, many of the films on that list are available to watch instantly online.  Take Fast Five, for example, which made the list for 2011.  It is currently available to watch through HBO GO.  A quick search also shows that Thor and Rango, also both on the list, are available for instant streaming on Netflix and Amazon.  Now, no process is perfect – and that’s why the studios are listening to what their audiences want, and working to make their movies and TV shows available through newer, more innovative channels every day. Audiences deserve to be secure in knowing that the outlets where they watch movies and TV shows online are legitimate and safe. People want to get it right, and the entertainment industry is relentlessly innovating to help them do just that.

Pogue’s thesis is that people choose to download content illegally when it’s not available to them in a legal format.  He cites the availability of music on iTunes and TV shows on Hulu as evidence.  But, as we know, digital theft of music and TV hasn’t stopped – in fact, it’s increased.  That increase underscores the challenge we face: online content theft is a complicated problem – everyone can agree on that.  There isn’t one simple solution. That’s why it’s incumbent on everyone who has a stake in this discussion to come to the table to develop meaningful solutions that will protect the hard work of creators and makers while helping ensure that audiences have a seamless experience watching the shows and movies they love.

New Congressional Report: IP Theft Is Hurting American Industries and Innovation

by Howard Gantman 08/08/2012 13:41 (UTC-08:00) Pacific Time (US & Canada)

A new report from the Congressional Joint Economic Committee this week sheds some light on the increase in intellectual property theft in recent years and underscores the damage it’s doing to businesses all across the US economy.

Noting the many negative consequences of intellectual property theft on American industries, the report summarizes that, “Foreign infringement of intellectual property harms businesses by raising their costs, lowering revenue, and eroding profits.”

As an organization whose mission is to advance the business and the art of filmmaking – an intellectual property-intensive industry by nature – we’re obviously troubled by this ongoing problem.  And it’s only gotten worse over the last decade.

Investigations of domestic intellectual property theft emanating from foreign countries have increased in eight of the last ten years, according to the report.  And the increase in theft is more pronounced when you look at the hard numbers – in 2002, there were only 17 cases but in 2011, 69 investigations were brought. 

With almost 20 percent of American jobs in 2010 coming from industries that are IP-intensive, it’s not hard to imagine the widespread negative impact of intellectual property theft.  What is more, these industries accounted for more than a third of the nation’s gross domestic product (GDP) in 2010, one of the most significant measures of a country’s economic health and growth.

And the effect on companies’ bottom lines is huge.  The report cited one estimate that “the average company lost $101.9 million in revenues and incurred costs of $1.4 million” to identify and enforce intellectual property rights, “leading to an average decline in profits of $46.3 million.”

Perhaps most importantly, the report states that protecting intellectual property “is critical to ensuring that firms pursue innovation.”  It’s hard to think of a more urgent reason to work to stem this endemic problem.

Whether it’s the software design for a new smartphone, a lifesaving drug, or the next great American film, this report underscores how critical it is that we identify solutions that will protect the intellectual property of our country’s creators and innovators.

MPAA Launches "Evening With" Event Series with Director Michael Apted

by TJ Ducklo 07/12/2012 18:32 (UTC-08:00) Pacific Time (US & Canada)

The MPAA welcomed critically acclaimed director Michael Apted to our Washington office Thursday night for the inaugural “Evening With”- a new event series that will bring leaders from the entertainment community to DC to discuss their work, their passions, and their experiences in the creative industries.

Apted’s work includes both television and film, most notably feature films Coal Miner’s Daughter, Amazing Grace, The Chronicles of Narnia: The Voyage of the Dawn Treader, The World Is Not Enough, and Gorillas in the Mist. He is also renowned for his work on HBO’s Rome series, and his multi-award winning UP documentary series, which Roger Ebert characterized as, “… an inspired, almost noble use of the film medium.”

Apted sat with MPAA Chairman and CEO Senator Chris Dodd and provided fascinating insight on the creative process, a perspective that could only come from a passionate storyteller. He covered a wide range of topics, a reflection of the wide variety of his many works. Apted emphasized the importance of using local actors when filming on location to achieve the right authenticity; he described the “fantastic” pressure associated with directing a James Bond film; and he revealed the unique challenges in capturing real truth from his subjects while filming over several decades for his UP documentary series.

We look forward to hosting more creators, makers, innovators, and other celebrated members of our industry as we move forward with this exciting event series. Stay tuned!


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