Web An Opportunity For Movie Business, Says Report

Online movie downloading is not as prevalent due to the shher size of the files and the need for a high-speed internet connection. However, studios remain concerned and earlier this year the Movie Picture Association of America (MPAA) launched a nationwide media campaign to highlight the legal and moral implications of online piracy.

However, a recent report by the Yankee Group cast doubt on the supposedly detrimental effect of file sharing (see Downloading Poses Little Threat To Movie Business). It found that around nine in ten young people attended movies as often or more frequently than they did before taking up downloading and called on the movie industry to introduce legitimate online film services.

Informa Media also believes that the issue has been overstated, claiming that only 144,000 films are exchanged every day. Assuming that 50% of these represent a lost sale and using an average legitimate download price of $3.50 per film, annual losses to the film industry come to $92 million. To put this in perspective, legal online film revenues came to almost $805 million in 2002.

The report does accept that if the numbers accessing P2P networks and exchanging film files in the years to 2010 increased in tandem with the growth of internet access across the world the potential losses for the industry could mount. By 2010, it is forecast that the number of films downloaded daily will be in the region of 720,000 with associated losses to the movie industry totalling $460 million.

However, this is more than offset by the revenues from legitimate sources which are predicted to reach $3.49 billion in all forms by 2010. North America is set to remain the primary market, accounting for 42% of the global total.

Hard format sales via internet retailers currently account for a vast majority of online film revenues but their share of the market is set to fall from 99.7% to 75.0% between now and 2010. Legitimate download sites are expected to grow rapidly with global revenues set to reach almost $500 million by 2010. Streaming will see more more modest growth as it generally requires the user to be online while viewing the film. Subscription services will largely appeal to fans of independent movies.