Film piracy has a very little impact on box office results in the U.S. but likely cuts into studio profits overseas depending on the time lag between a film’s American debut and rollout overseas. Those are the surprising conclusions of an extensive study titled “Reel Piracy: The Effect of Online Film Piracy on International Box Office Sales,” spearheaded by Brett Danaher of Wellesley College and Joel Waldfogel at the University of Minnesota and the National Bureau of Economic Research.
While researchers in the study acknowledge an increase in piracy — especially for genres such as science fiction and action films — U.S. audiences still prefer the theatrical experience. The study found that Americans are heading to theaters in about the same numbers they would have otherwise in the absence of piracy, suggesting that perhaps people opt to see a film in a theater despite an initial pass online, or word of mouth from a pirated copy of a film may push others to the multiplex.
The study also concludes that since the advent of piracy software BitTorrent in 2003, the longer the lag time between a film’s release abroad compared to its U.S. opening, the greater the depression in box office receipts. Generally, the study found international returns were 7% lower in the sample set than they would have been had piracy not existed. Hollywood films normally bow in the U.S. before heading abroad, with opening dates varying by country; countries like Denmark, Finland, Italy, Poland, and Turkey generally have longer lag times than the UK, Switzerland and Australia.
Researchers found that in 2003-2004 a movie released overseas eight weeks after its U.S. premiere had lower returns by about 22% in a given country. That figure shot up to nearly 40% in 2005-2006 as each additional week of lag time decreased returns for science fiction and action titles by an extra 1.3% compared with other genres.