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Cannes: Hacking Threat Leaves Big Independent Films Vulnerable

Fear stalks the Croisette as movie execs mull the ransom demand that Disney faced recently over a hacked copy of “Pirates of the Caribbean: Dead Men Tell No Tales,” and ask: who’s next for the gangplank?

One leading distributor didn’t want to even discuss the issue that first reared its head with the Netflix “Orange Is the New Black” hack, stating he’d been advised by his technology experts “not to get into a conversation about how we prevent them hacking into our systems because all it does is put your head above the parapet and [the hackers] try and shoot you down.”

Industry leaders are assessing the changing nature of the threat. “The pirates are now looking at a whole other revenue stream, which is extortion,” Jean Prewitt, CEO of the Independent Film and Television Alliance, said. “Now there are people who think they can get money directly from you — it’s shifted the equation in terms of piracy.”

Independent movies run the same risks as those from the studios, she says. “The independents can’t write the same checks Disney can but their films can be just as high-profile and have the same potential audience. You have to assume everyone who has something with high visibility could be a victim.”

It is a war and the challenge is to stay one step ahead. “We’re locked in an arms race with commercial pirates who want to build businesses using content they didn’t create and don’t own, but are happy to steal,” said Stan McCoy, president and managing director in Europe, Middle East, and Africa at the Motion Picture Assn. of America.

“As technology develops, creators are using it, but the criminals are too, to set up pirate business models. The problem is with us over the long term, but that’s no need to lose heart.”

The ransomware infections that hit hospitals and other organizations worldwide recently is also a threat for film companies. “We have backups of backups of our files and in a worst-case scenario we could rebuild a film from scratch if someone ransomed our stuff, but for intellectual property, the ransom wouldn’t be ‘pay us or you’ll never get your files back,’ it would be, ‘pay us or we’ll put this out in the world,’” said Michael A. Jackman, exec VP and post production and worldwide delivery at FilmNation.

“I don’t know whether those ransomware programs have yet started to think about targeting this arena but they might so I am definitely concerned about that kind of thing,” he added. “The WannaCry virus makes me quite nervous, and another reason to protect our films and encrypt everything we move around.”

Both majors and indies encrypt their files when moving movies around but the pirates keep upping the ante. “For every method of encrypting there’s someone who is coming up with a way of hacking through and breaking that encryption, so it is a battle that we will all keep fighting, but I think I am less of a target than a studio simply because they have an infrastructure that needs to have access to a lot of material,” Jackman said.

There are differences between the access to content provided to staff at the Hollywood studios and the independents that make the latter less of a target for hackers, he believes. “We don’t have this enormous broad network where we are keeping all of our assets. You have a company like Disney – there are a lot of people that need to touch and see that product all over the world. They have secure networks, but if it gets hacked there is content on those networks where people have to use that content, whether it’s marketing, publicity, post-production, etc.”

Jackman thinks one of the keys is to tightly restrict access to the content. “[For example] we have an isolated Avid system in a cutting room that is protected. I suppose someone could hack into it but they wouldn’t necessarily know where to look,” he said. “And it’s not part of a big network; it’s on a very local network with local storage.”

The Hollywood mini-majors are also tasty targets for the pirates. “Lionsgate is as affected by film piracy as any other major studio, and it is an increasing problem,” said Matt Smith, co-head of theatrical distribution at Lionsgate U.K.. The higher the profile of the movie the greater its value to the pirates, but movies appealing to younger, more internet-savvy audiences are the most prized, Smith said. Lionsgate U.K.’s anti-piracy agency took down more than 50,000 internet links to pirate copies of “La La Land,” while for each of the “Hunger Games” movies it took down more than 200,000, while the former took as much box office in the U.K. as each of the latter.

Smith believes that if distributors had the option to shorten the window between theatrical and home entertainment release this would reduce the demand for pirate copies “because we have this dark period – a piracy window – when a very popular film is not available and if it is not available legitimately then people are going to steal it.”

The galloping popularity of set-top boxes that can bring pirated copy direct to the main TV set is threatening to broaden the audience of pirated content to all age groups, Smith said. “It has taken the piracy of the teenagers’ bedrooms into the family living room – it has normalized piracy.”

This normalization of piracy is driving demand for illegal content that the pirates are feeding. “There’s less stigma about piracy now,” said Chris Anderson, head of TV and film at anti-piracy tech firm Muso. “People are happy to say they have a Kody box and are watching on Popcorn Time. The audience is less afraid to use these delivery methods.”

Industry groups say that proportionally the independents spend as much as the studios on security, or if they don’t, it is not a lack of will but a lack of means. Others maintain that they haven’t made the same efforts as the majors.

“They have never spent the same amounts of time or money on the issue,” said Ashok Amritraj, chairman and CEO of Hyde Park Entertainment. “One of the few advantages [the independents] have is that neither they nor the hackers know which movies on their slates are going to be worth hacking.”

It is, however, more complex than throwing money at the problem, said Alexander Vandeputte, CEO of distributor Lumiere, which is based in Belgium and where there are high levels of piracy. “Every type of movie needs protecting in a different way,” he said. “You protect a Disney movie in a different way to a new independent film. That doesn’t mean there is less protection.”

Precautions involve monitoring promos, encrypting digital packages and securing Vimeo and other screening sites, but a lack of clarity over who is responsible among the independents is hampering efforts to safeguard titles, a source said. “Everyone knows anti-piracy measures need to be put in place but no one wants to take responsibility,” said the independent expert. “The distributors and sales agents both say it is down to the other one.”

Holding a film for ransom is an unwelcome new phenomenon, but pre-release leaks are not. Despite efforts to place protections on online screening systems and screeners it remains a problem.

“Finance is tied to pre-sales, which are based on the promise of exclusivity,” Prewitt said. “When that promise blows up the buyers are still obliged to pay, but may not know how to, and the producer has used that promise as collateral and still has to pay the bank.”

Damaging the whole infrastructure that underpins independent film is the risk. “If there is no legitimate market and the buyers can’t get paid they might not be around to bid on your film next time,” Prewitt said. “Look at Spain, a lot of the distribution infrastructure has disappeared.”

Muso will unveil new research into piracy at an industry gathering organized by Europa Distribution, a body representing indie distributors in Europe, in July.

“In some countries piracy is seen as cool and in others the VOD market has yet to grow,” said Christine Eloy, general manager of Europa Distribution. “Most films are available in theaters, on DVD or on VOD and some people are too lazy to find them. Or they don’t want to pay; they think they have spent money on an iPad, why pay for a film to watch on it?”

The advocacy groups point to Germany, with its super strict anti-piracy rules, as proof that stealing content happens on a smaller scale when there are tough penalties in place. Google, meanwhile, takes some flak for apparently not extending its Google Content ID program to smaller players.

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