Pirates spread festive gloom

British box office is up 7% in 2004. DVD sales rose 46% by volume in the first nine months, far outstripping any other European territory. The U.K.’s pay TV market is the second largest in the world.

To the untutored eye, the patient looks in decent health. Which begs the question: If the disease of piracy has taken such a severe grip upon Britain, with the U.K. Film Council’s Anti-Piracy Task Force recently predicting “film theft” will hit £1 billion ($1.9 billion) within three years, where exactly is the pain being felt?

Ask film execs for tangible evidence of pics whose British theatrical or DVD release was hurt this year by the black market, and they hesitate.

Although piracy is poisoning the industry’s bloodstream, the precise symptoms are frustratingly elusive. That, in turn, makes it all the harder to come up with effective remedies.

Nonetheless, industry scuttlebutt suggests this Christmas season is delivering the clearest signal yet that piracy is starting to bite in the DVD market. Although catalog sales are still booming, blockbusters such as “Shrek 2,” “Harry Potter and the Prisoner of Azkaban” and “Spider-Man 2” reportedly are falling short of their targets by an alarming 25% or more.

“People are scratching their heads about this,” confides a studio topper. “Is this the early signs of piracy really starting to show up in the sales figures? Or is it because we’ve been so aggressive with our catalog pricing that we’re deflecting customers away from our new releases?”

Only the extended edition of “The Lord of the Rings: The Return of the King” is holding firm — testament to the value of that added footage and the extensive extras.

At the theatrical box office, the damage is still much harder to quantify. Is “The Incredibles” soft because of piracy, or because it doesn’t contain any talking animals? In 2003, Pixar’s “Finding Nemo” was the highest-grossing movie of the year, despite a five-month gap between its U.S. and U.K. release. Would it really have earned another $10 million in Blighty with a day-and-date opening?

“As an industry, we might be projecting signs of rude health, but we’re being overrun,” insists Fox theatrical topper Simon Hewlett. “We’re getting a much better sense now of where we get hurt. Not everything suffers, but certain titles — family movies, anything with a window over America, anything that has a specific Internet fan base, like comicbook adaptations.”

He suggests Fox’s “Alien vs. Predator” and “Man on Fire,” along with Columbia TriStar’s “Hellboy,” underperformed in cinemas this year because piracy proliferated in the window between their U.S. and U.K. release.

Col TriStar insiders estimate that “Hellboy,” which was released on DVD in the U.S. before its U.K. theatrical bow, lost around 40% of its potential British B.O.

“Was ‘Hellboy’ ever going to work?” asks UCI booker Stuart Boreman skeptically. “All of the industry believes piracy is hurting us, but I can’t measure the impact on particular films. Pirate DVDs of ‘Shrek 2’ were on sale before it was in cinemas here, but it was still the biggest film of the year.”

There’s some evidence that independent cinemas, which typically get new releases two to four weeks after the frontline multiplexes, are bearing the brunt of the damage, as distribs go for a fast-burn release strategy to stay one step ahead of the pirates.

On the other hand, the report from the Film Council taskforce cites one piece of research suggesting consumption of pirate material sometimes can boost the public’s appetite for legitimate cinema-going and DVD buying. This claim is so politically incorrect that some members of the taskforce wanted it removed.

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