Inside Popcorn Time, the Piracy Party Hollywood Can't Stop

That's easy to say when the products you sell aren't as easy to pirate as movies and music.

Let's say a content provider created the perfect media service, exactly to your specifications - super easy, DRM free, etc. etc. Done and done; the service issue is gone.

Tomorrow, you want a new movie. On one hand, you have Provider X's new service, and on the other, you have piracy, which gives you pretty much the same content it always has but now is relatively less convenient in comparison to the service. Which are you going to choose? Oh yeah, by the way, piracy is still free, but Provider X is charging $19.99 for a movie, because that content service cost them millions. More importantly, they don't want to devalue their content. They don't want to live in a world where the street value of a first-run film is 99 cents.

Piracy is a value issue. The only reason it looks like a service issue is because there's a reasonable solution to that part of the problem and it's easy to point at content providers and blame them for not fixing it. But the reason they don't is because if they did, it would simply surface the other side of the problem, which they're not going to do anything about.

Box office earnings are a barometer for home market sales...in fact I'd go so far as to say that the theatrical release is, for most films, the advertising campaign. Most films lose money at the box office but that's OK, because the purpose is to establish the perception of the film in the public's mind as A Movie, so that it can make an actual profit in the secondary market.

Merchandising and other ancillary income is nice but doesn't amount to much for non-blockbuster films. Your R-rated drama isn't going to make tons of money from novelizations, t-shirt and poster sales, even if it's a hit...maybe 2-3% of your budget. Some films have lots of marketing/product placement potential (or are put together specifically to meet that requirement) but most don't. seeing a major reliance on that in a film's business plan would be a huge red flag.

Hand-over-fist profits? Only at the very top of the market. If you're producer of one of the top 50 or so films, yes people are shoving money at you. In the top 100, you probably broke even and people will be shoving money at you when it hits the home video market. In the top 101-200 films, You'll most likely make your money back and enjoy a modest profit.

Outside of the top 200 films? Then your box office takings were certainly under $1 million (except for about 10 films), and more to the point most people haven't heard of your film. Have a look at yearly box office #s on a site like boxofficemojo, and look at some of the other 6-800 films that get a US theatrical release each year. Many good films have box office numbers that are measured in thousands, and remember that box office numbers are gross - as a rule of thumb, only 1/3 of the box office goes back to the distributor, the rest stays in the theater.

What you seem to be overlooking here is that while some films do indeed make money hand over fist, for the many more than don't, piracy is just as big a problem - not because so many people are pirating an obscure or somewhat unpopular film who would otherwise have paid for it (although this is a problem for quite a few films, eg Terry Gilliam's last film had dreadful box office because they didn't have much money to advertise, but was very popular on file-sharing sites), but because piracy makes it increasingly difficult to come up with any kind of meaningful estimate about a film's long-term earning potential. that in turn makes it much harder to raise financing for a film. It's definitely tougher than it was 10 years ago when I got into the business.

http://www.boxofficemojo.com/yearly/chart/?page=1&view=relea...

Good grief you guys. How many films do you think make that kind of money? Billion dollar film franchises happen about as often as billion dollar startups - often enough to be something you might get lucky with, but the odds of that happening for you are staggeringly low. And even then, those films have as much or more spent on advertising as on the production, which is part of why it's such a high-risk business and major studio offerings are so conservative in terms of storytelling, casting etc..

A prepay model is what we have now. The largest 6 studios have the resources to open a film globally if they really want to (eg this will probably happen with the new Star Wars movie, and most likely the new Avengers one coming out in a few days), but generally international distributors sign contracts to buy a film in advance at a certain price and those are used as collateral in obtaining financing, but this model is falling apart under pressures from piracy, Netflix, and other factors.

If you mean prepay as in Kickstarter, that model doesn't work for features. Well, I should qualify a little - it can work for feature documentaries, because there is an existing community for many interests and people are very interested in seeing their pet interest/issue treated in movie form, without being too picky on quality. And of course it works well if you have a book or a comic or an unfashionable old TV show or something that has a small number of very dedicated fans, eg the Veronica Mars project last year, or fans of a particular actor. I call these 'fanservice' films - they're basically franchise properties, but franchises too small for Hollywood to care about. You can also get some mileage out of community fanservice, eg if your story appeals to people of an under-represented demographic like people from a particular country, LGBT people, or similar.

But if you just want to make an ordinary narrative film pitched at a broad audience - a drama, thriller, whatever - it doesn't work well at all. Dig through the major (and some minor) crowdfunding sites, and you see hardly any feature projects meet their funding targets. This should (I hope) change a bit later this year or early next, when the SEC finally opens up the possibility of crowdfunding equity under title III of the JOBS act, because while the risk is high at least there's an incentive to invest, whereas under existing crowdfunding models you have to come up with a mix of merchandising swag (which is not free to provide) and weird high-ticket rewards like getting a hot air balloon trip with the lead actor or something to land a couple of big donations.

Except that Netflix has a really bad selection of movies and it's getting worse and worse as they seem to be focusing all their money and energy on producing their own content. I'm hoping someone can come along and do Netflix right now that Netflix has decided to go all HBO on us.