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New Study Reveals Piracy Has Almost No Effect on Box Office Revenue

Posted by: , 14:49 AEST, Fri July 18, 2014

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File sharing only causes "statistically insignificant" losses, but early piracy releases may actually boost box office revenue
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Image/Photo Credit: m4tik @ Flickr

A new study has revealed that file-sharing has almost no discernible effect on box office revenue.

The study, conducted by economist Koleman Strumpf of the University of Kansas School of Business, looked at data covering the most popular movies over a period of seven years and compared and looked at the release of pirated versions of these movies, and the effect these releases had on box office revenue. The study is one of the most comprehensive, with data taken over such a long period and with thousands of daily observations being recorded and used as well.

Despite the extensive data, and the industry assumption that piracy cases billions in losses ever year, Strumpf's study actually found that piracy had little effect on revenue.

"There is no evidence in my empirical results of file-sharing having a significant impact on theatrical revenue," Strumpf told file-sharing news websiteTorrentFreak.

From his research, Strumpf found a possible $200 million reduction in box office revenue during the 7 year period covered by the data, which sounds significant at first, but actually accounts for only three tenths of a percent of total revenue. The 0.3% reduction in box office revenue means that Strumpf cannot rule out that file-sharing has no impact on revenue, but the effects are so small that they become statistically insignificant. 

TorrentFreak notes that in the same period, Hollywood spent more than $500 million combating piracy.

What may not be so insignificant finding is that piracy may actually boost revenue.

"One consistent result is that file-sharing arrivals shortly before the theatrical opening have a modest positive effect on box office revenue. One explanation is that such releases create greater awareness of the film. This is also the period of heaviest advertising," the study found.


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