Piracy hits Hollywood in the wallet

By Dinesh C. Sharma
Posted on ZDNet News: Jan 4, 2005 4:34:00 PM

In a survey of film and TV industry workers, nearly half said illegal theft of entertainment content threatened their bottom lines, In-Stat said Tuesday. About 27 percent of those surveyed said they had already lost revenue because of piracy. The survey was taken by 1,806 people working in the variety, broadcasting, cable and news sectors.

The entertainment industry is trying to grapple with illegal downloading of music from the Internet, as well as file sharing and the use of peer-to-peer software. These efforts got a boost last month, when the U.S. Supreme Court agreed to hear a case on whether companies that produce file-sharing software can be held legally responsible when people use their products to swap copyrighted material.

The Federal Trade Commission has also begun to focus on the issue. The FTC last month hosted a two-day workshop on file swapping that looked at the effect of the practice on entertainment companies, as well as the risks faced by consumers.

In-Stat said more than one-third of film industry insiders see a strong impact on their business today from illegal downloading and copying.

"Piracy was the No. 1 concern among emerging threats," Michael Wolf, principal analyst at In-Stat, said in a statement. "This is no surprise, given the impact it is already having, according to those in the home entertainment market. In turn, those in the TV space (see) personal video recorders as the biggest threat to their business in the future."

In-Stat also noted that executives in the film and TV industries consider Apple Computer and Microsoft to be competitors. Survey respondents feel that Apple currently has the best products, though "Microsoft is coming on strong," In-Stat said in a statement.

More than half of those surveyed also said the video game business will be either "somewhat or very important" to their businesses in the near future.