This week has provided a much-needed win for Hollywood in the
war against piracy. It has also provided the video game industry
with another black eye against any and all measures that have
been taken to curb the problem.
First, the good news: researchers at Wellesley College and
Carnegie Mellon University found that two unnamed film studios
experienced an online revenue increase of
six to ten percent
after Megaupload and Megavideo were shut down.
Now the bad news: Electronic Arts (NASDAQ:
getting assaulted in the press
by angry consumers, bloggers, reporters and professional athletes
who can't log in and play the new SimCity.
Piracy is at the center of both issues. Hollywood studios
thought of Megaupload as a threat to their business because it
allowed users to download and upload pirated films. Fearing a
similar problem, Electronic Arts implemented an unpopular form of
DRM (digital rights management) that prevents software from
running without a persistent Internet connection.
Movie studios have yet to publicly respond to the Wellesley
College/Carnegie Mellon University study, but it is safe to
assume that they are happy with the results. Electronic Arts is
also remaining silent, though it did publish a
defensive blog update
to explain the issues that players have incurred.
The problem with both of these scenarios is that neither
industry has a definitive answer in the war against piracy. By
shutting down Megaupload, Hollywood may have encouraged some
people to actually pay for the entertainment they consume. That
does not mean that every file-sharing site should be banished,
nor does it mean that every file-sharing consumer is bad. It
simply means that this one particular site might have been bad
for movie studios.
Even if that's true, there is at least one hole that can be
poked in the study's results, which did not consider the quality
and popularity of the films released when the research was
The study focused on the 18 weeks after Megaupload was shut
down in January 2012. During that time, Twilight: Breaking Dawn
Part 1 was released on DVD and digital distribution. Alvin and
the Chipmunks: Chipwrecked and Mission: Impossible - Ghost
Protocol were also released during the period. Isn't it possible
that they had a positive impact on revenue?
That is precisely the problem with the research -- it didn't
make room for outside factors that may have also impacted
On the flipside, Electronic Arts is sending the message that
all anti-piracy measures are bad for the game industry. In
reality, this particular strategy is the problem. Consumers
cannot be expected to stay online at all times. Other game
learned this the hard way
. Now Electronic Arts will have to do the same.
This does not mean that game publishers cannot actively fight
piracy. They can -- and should -- continue to do so. Movie
studios should do the same.
However, neither industry should be led to believe that it is
an all-or-nothing proposition. The battle against piracy is
arguably the most challenging that the game and entertainment
industries will ever face. It cannot be won by shutting down one
website -- nor will it be lost because another game company
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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