Exhibs, digital cinema service providers and 3D TV manufacturers aren’t the only ones profiting from the technological revolution that is transforming the entertainment industry.
Speaking at the Cinema Expo in Amsterdam on Monday, Paramount Pictures chief operating officer Frederick Huntsberry said pirates have adopted the business models of legit enterprises like iTunes to fool buyers into purchasing memberships to illegal sites where they can download films just days after their bigscreen release.
While the industry still faces serious challenges from streaming and cyberlockers — sites that offer online digital storage — which can be used to store illicit fare and accessed via an URL address, the biggest threat comes from illegal storefronts.
Huntsberry said one such site, ZML, is based in Russia and has been linked to the Russian mafia.
“Organized crime has found a nice way to get into this business,” he said. “Why sell drugs on the street when you can sell a perfectly nice model here and entice consumers to subscribe to your website. And as we all know, legislation is still lagging with respect to this problem.”
Pointing to estimates that some 500 million households worldwide will be watching Internet-connected TVs by 2015, Huntsberry said the problem was certain to get worse.
“That’s a very, very scary proposition. In other words, no more need to purchase anything legitimately.”
Huntsberry warned that consumers who gave these sites their credit card info also faced the danger of identity theft, possibly the next step in this game.
Meanwhile, illegitimate revenues are soaring. “In this new world, there’s some serious money being printed,” Huntsberry said, citing Megaupload, which uses a subscription and ad model and boasts 63 million unique visitors a month. The site is estimated to earn up to $215 million annually.
While it’s a bleak picture, some educational campaigns are showing positive results, according to Liz Bales, director general of the U.K.’s Industry Trust for IP Awareness, which promotes copyright protection.
Bales said the org has made headway in convincing young people that the entertainment industry is very much dependent on them.
“There is no silver bullet when it comes to piracy and the volume of page visits and downloads and streams are incredibly frightening,” Bales said, adding that there are an estimated 6 million regular users of pirated content in the U.K. alone.
“Consumer education is trying to bring people closer to the industry. It’s trying to break down barriers, giving them very personal reasons as to why they want to connect to the industry and support it through the purchase of content.”
Bales said that such “behavior change” campaigns in the U.K., whether against smoking or drunk-driving, have been successful.