This feature about the Motion Picture Association's battle against movie piracy in the Asia Pacific region appeared in The Business magazine sold with the New Zealand Herald but never appeared online, so here it is....
In the bustling industrial city of Shenzhen in south east China it doesn’t take long to track down pirated movies on sale at bargain prices.
Over lunch, Chinese business people scribble down the web addresses of popular Chinese illegal download websites and tell me the best places to find good quality copies of movies that are still playing in theatres.
It’s advice given surprisingly openly.
The DVD sellers do good business standing outside Shenzhen’s factories, catching the workers as they head home, I’m told. In China, buying bootlegs is the norm.
“There’s a massive oversupply of discs. You can’t walk down a street in China without finding a pirated DVD,” admits Mike Ellis the Motion Picture Association’s senior vice president and director for Asia Pacific.
An Englishman and former Hong Kong policeman, Ellis has the unenviable task of fighting movie piracy in Asia, a region where the practice is rife.
The Hollywood studios Ellis represents – Buena Vista, Paramount, Sony Pictures, Twentieth Century Fox, Universal and Warner Bros., lost US$6.1 billion to worldwide piracy in 2005, with Asia contributing US$1.2 billion.
The trade shows no discernable let up. But Ellis says Operation Trident, a recent series of raids spread over two months in countries from Pakistan to New Zealand, netted 4.8 million pirated DVDs, 749 DVD burners and resulted in 870 arrests.
“It was one of our most successful operations yet,” he says.
Half of the raids took place in China, where 2.9 million discs were seized. Police in India, Malaysia, Taiwan and Thailand also rounded up hundreds of suspected pirates.
Ellis says many of those arrested during the raids are now facing criminal charges.
“In Singapore the instances of piracy have been significantly reduced. Hong Kong has done it as well,” says Ellis.
“Malaysia has got itself off our worst offenders list.”
Legal penalties for piracy have slowly but surely been lifted.
“Six to nine months in prison for selling a couple of dozen CDs is quite a message to send,” he says.
Sniffer dogs trained to detect the chemicals used in making CDs and DVDs are now used by Malaysian customs officers.
In Hong Kong, 175 customs officials are now committed to fighting piracy. Dodgy DVDs are harder to find on the streets of Mongkok, Hong Kong’s shopping district, than they once were.
In Pakistan, Ellis has worked closely with the Federal Investigation Agency, to shut down factories that were pirating DVDs for export.
That’s a far cry from just a few years ago when Government cooperation was less forthcoming.
“The door was slammed in your face,” says Ellis.
“Developing countries just didn’t have the resources to deal with it.”
Political pressure from the US has played a part in encouraging governments in Asia to crack down on piracy.
The US is threatening to drag China through the World Trade Organisation’s disputes process if it doesn’t do more to stop it.
Other Asian countries have been advised they must clamp down on the trade if they are to secure free trade deals with the US.
But for every DVD burner put out of action in the Trident raids, several more churn out thousands of discs that make their way through the supply chain to the pirates’ equivalent of the cut-price factory outlet store.
The anti-piracy effort has been most successful at clearing out what Ellis calls the “mom and pop” shop owners who form the front line of piracy – selling DVDs in the bustling markets and side streets of Asia.
Last week, one such Shanghai retailer was fined after being sued by several MPA members for selling bootlegged copies of Lord of the Rings and other movies. The owner had run a previous pirate DVD operation on the same premises and had simply changed the shop name after being busted. On this occasion, the owner was shut down and ordered to pay fines to the movie companies ranging from US$800 to US$1600. Recidivist offending is common both among convicted retailers and website operators, the fines not enough of a deterrent.
If the sales of dodgy DVDS weren’t bad enough, Ellis has another dark border to deal with – the internet.
China rigidly controls its 140 million web users’ access to the internet with the “great firewall of China”. Access to certain foreign websites is blocked and internet cafes are tightly regulated. But those measures have political motives and aren’t designed to protect the intellectual property rights of movie makers.
“The internet piracy is without doubt a growth industry in China,” says Ellis.
“Peer to Peer networking is part of the problem.”
The speed with which movies can reach a mass audience online has led Hollywood movie studios to release some of their blockbusters in China ahead of their US releases.
Spiderman 3 will debut in China a few days before its release in North America, a move designed to counter the disappointing Chinese box office takings for Spiderman 2 – a mere US$5.5 million.
Columbia Pictures hopes to more than double that figure by getting the movie onto theatre screens before pirates can get their DVD burners up and running.
While it’s Hollywood’s more glamorous productions that are the stock trade of the pirates, Ellis says independent production companies and film makers are hit equally hard.
“What’s frustrating is that it’s not just hurting Hollywood, it’s the local industry as well,” he says, pointing to pirated DVD versions of the hit comedy Sione’s Wedding sold in South Auckland last year before the movie had been released in theatres.
A pre-release copy of the movie was stolen from a film production house by an employee, and although Sione’s Wedding went on to make over $4 million at the New Zealand box office, its producer John Barnett has suggested it would have made a lot more had the piracy not taken place.
The MPA’s local face is the New Zealand Federation Against Copyright Theft, which this month ratchets up its anti-piracy campaign with the launch of a new website Stopmoviepiracy.co.nz and an advertising campaign featuring Once Were Warriors star Temuera Morrison.
“He volunteered to do the voice over for a trailer,” said Ellis, who will check out the anti-piracy effort personally on a visit here next month.
According to NZFACT, piracy wiped out a quarter of the film industry’s potential market in 2005, some $70 million in lost earnings, of which over a third would have gone to MPAA member companies.
Even the poor state of broadband here hasn’t held back a flourishing trade in illegal movies via the internet, which accounted for $33 million in lost earnings for 2005. In comparison, illicit copies of VHS tapes and DVDs contributed just $13.6 million, while bootleg DVD sales cost the industry $24 million.
You’d think that last category, where knock-off DVDs are sold under the table in markets and pubs, would be a fairly underground activity in New Zealand. Ellis disagrees.
“A lot of people are still selling [pirated] DVDs. I think there is a culture there,” he says.
It’s changing that culture, that expectation that movies should be cheap or free, that’s the key to curbing piracy. New technology is doing little to stop the pirates. If the ambivalent attitude towards piracy among Chinese consumers is anything to go by, the MPA faces a losing battle.
Ellis hasn’t yet seen pirated versions of high definition Blu-ray and HD-DVD discs appear in Asia yet, but the copy encryption has already been cracked and he “wouldn’t be surprised” to see them turn up.
What progress he has made in his eight years fighting piracy at the MPA, suggests the chances of him making a serious dent in the illicit trade are slim. Around 90 per cent of DVDs sold in China are pirated, a figure that remains steady year to year.
Does he ever feel like he’s wasting his time?
“I’ve a job where I’m optimistic there are areas I can make progress in,” he says.“It is a long haul, but we’re making progress.”