An Empirical Analysis of the Impact of Pre-Release Movie Piracy on Box Office Revenue

Liye Ma (), Alan L. Montgomery (), Param Vir Singh () and Michael D. Smith ()
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Liye Ma: Robert H. Smith School of Business, University of Maryland, College Park, Maryland 20742
Alan L. Montgomery: Tepper School of Business and Heinz College, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213
Param Vir Singh: Tepper School of Business and Heinz College, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213
Michael D. Smith: Tepper School of Business and Heinz College, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213

Information Systems Research, 2014, vol. 25, issue 3, 590-603

Abstract: Digital distribution channels raise many new challenges for managers in the media industry. This is particularly true for movie studios where high-value content can be stolen and released through illegitimate digital channels, even prior to the release of the movie in legal channels. In response to this potential threat, movie studios have spent millions of dollars to protect their content from unauthorized distribution throughout the lifecycle of films. They have focused their efforts on the pre-release period under the assumption that pre-release piracy could be particularly harmful for a movie’s success.However, surprisingly, there has been little rigorous research to analyze whether, and how much, pre-release movie piracy diminishes legitimate sales. In this paper, we analyze this question using data collected from a unique Internet file-sharing site. We find that, on average, pre-release piracy causes a 19.1% decrease in revenue compared to piracy that occurs post-release.Our study contributes to the growing literature on piracy and digital media consumption by presenting evidence of the impact of Internet-based movie piracy on sales and by analyzing pre-release piracy, a setting that is distinct from much of the existing literature.

Keywords: movies; box office revenue; piracy; forecasting (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (19)

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