How High Is The Risk Of Home Copying To Hollywood?
Study Estimates Revenue Loss to Home Video approaching $1 Billion Per Year in the US
SANTA CLARA, CA (August 20, 2003) – Movie studios, independent producers, music video record companies plus creators, distributors and retailers of video content collectively could be losing estimated retail revenue approaching $1 billion a year in the United States, due to lack of comprehensive application of copy protection, according to a new study sponsored by Macrovision Corporation. This level of displaced revenue would amount to nearly 5% of the $20.6 billion home video industry.
Macrovision estimates that approximately 75% of movies, music videos and other video material released on DVD and videocassettes utilize its copy protection technology. In addition to thwarting DVD-to-VHS copying, the technology also prevents DVD-to-DVD-R, DVR and home media center/PC hard drive recording, as a means to inhibit Internet file sharing via these devices. Some video content providers choose not to copy protect certain designated video titles, and these titles are most at risk for unauthorized copying activity.
In each of three Macrovision-sponsored surveys this year, more than 25% of respondents admitted to attempting to make copies of pre-recorded video content in the previous 12 months. Survey results indicate that respondents who admitted to copying activity, primarily by exploiting non-copy protected titles, would otherwise have rented (50%) or purchased (30%) specific titles, amounting to approximately $1 billion in unrealized retail revenues.
“With new, less-expensive products equipped for DVD-to-DVD video copying arriving in home entertainment stores soon, the popularity of combination DVD/VCR units, and other advances in high-quality video and computing technology, leading video content companies are continuing investments in copy protection to counter the rising threat of casual piracy among consumers,” said Carol Flaherty, senior vice president for Macrovision’s Entertainment Technologies Group. “Surveys show that over 50% of respondents have copied music CDs, and over 40% would copy DVDs if they could.”
“The video rights owners are determined to prevent the financial damage that digital piracy has inflicted on the music industry,” she said. “Additional digital rights management technologies, available now or in advancing stages of development, support that objective. The technologies provide options for consumers to make limited numbers of copies when permitted by content rights owners; they support the concept of using an authentic DVD to access other desirable content and features over the Internet, and they further help control illicit peer-to-peer file sharing.”
Most Motion Picture Association of America (MPAA) studios and leading independent rights owners have consistently utilized Macrovision’s copy protection technologies since videocassette recorders were introduced in the mid-1980s. Digital versatile discs (DVDs) now account for more than 60% of home video sales and rentals. Video retailers, represented by the Video Software Dealers Association, believe copy protection is key to sustaining consumer demand.
Macrovision’s survey data was collected in individual interviews by the independent research firms of Taylor Nelson Sofres Intersearch and Understanding & Solutions Limited, for a total of 3,066 completed interviews in the U.S(1). Applying the admitted copying results with the ratio of rental/purchase trends (of failed copying attempts), and introducing retail rental and sell-through pricing data(2), Macrovision calculated U.S. retail revenue losses in the previous 12 months in the estimated range of $607 million to $960 million.
Revenue losses relating to home copying in Western Europe mirror those in the U.S., at an annualized rate between $779 million to $1.25 billion. Western Europe’s VCR household base is approximately 20% larger than the U.S. With 20-25% lower DVD penetration than the U.S., the European survey results were very similar to the American ones, but suggest moderately higher home copying trends among European consumers(3).
Macrovision will demonstrate its latest copy protection features at the DVD Entertainment Conference at the Universal City Hilton Hotel in Los Angeles, Aug. 20-21. A special session for journalists is scheduled today, Wednesday, Aug. 20, from 3.00 p.m. to 4:30 p.m. Carol Flaherty will host the session. She will also be available for individual interviews at other times during the conference. To schedule an interview, please contact Christine Cannon, of IPR, Inc., by phone at 631-776-0247, or (mobile) 917-733-9796, or e-mail at email@example.com
Macrovision (NASDAQ:MVSN) develops and markets digital rights management (“DRM”), copy protection, and electronic license management (“ELM”) technologies for the video, music and software industries. Revenues in 2002 were $102.3 million. More than 2.1 billion digital versatile discs (DVDs), 3.9 billion videocassettes, 105 million digital set-top boxes, and over 100 million DVD players/game consoles and 110 million PC/DVD drives have utilized Macrovision’s video copy protection technologies. Macrovision holds a total of 162 issued or pending United States patent and 864 issued or pending international patents, and continues to increase its patent portfolio with new and innovative technologies in related fields. The company has its corporate headquarters in Santa Clara, California, with international offices in London, Frankfurt, Tel Aviv, Tokyo, Hong Kong, Taipei and Seoul.
Note to Editors: Additional information on Macrovision Corporation can be obtained from our Web site at www.macrovision.com.
1. Surveys were conducted in March, May and July 2003 in the U.S.
2. National average retail rental and sell-thru pricing for DVD/VHS from Kagan World Media and DVD Release Reports.
3. The European surveys were conducted by Taylor Nelson Sofres Intersearch in UK, Germany and France during April 2003, including an average of 1007 completed interviews in each respective countries.
This press release may contain “forward-looking” statements as that term is defined in the Private Securities Litigation Reform Act of 1995. A number of factors could cause Macrovision’s actual results to differ from anticipated results expressed in such forward-looking statements. Such factors are addressed in Macrovision’s filings with the Securities and Exchange Commission (available at www.sec.gov). Macrovision assumes no obligation to update any forward-looking statements.
© 2003 Macrovision is a registered trademark of Macrovision Corporation. All rights reserved. All other products and names mentioned herein are the properties of their respective owners.
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