In absolute terms, television felt the greatest impact of the theft, experiencing a loss of $2.7 billion, against total potential earnings of $6.9 billion, as illegal cable operators under-declared subscriber numbers, resulting in a $2.5 billion loss. Film piracy totalled up to $959 million, marking a 31% loss to the industry.
As a proportion of total potential revenues, music experienced the greatest loss with piracy estimated to have stripped away 64% of total revenues, leaving $183 million in the pot for corporations, down from a potential $508 million. The gaming segment came in at a close second with estimated losses at $40 million, leaving just $24 million for gaming companies.
Furthermore, the report estimates that 820,000 jobs are lost each year to the media and entertainment industry: 571,896 of which come from the film segment and 133,434 from music—as piracy squeezes both retailers and producers and results in a reduction of total output.
But the findings are not entirely bleak, albeit “shocking” in totality, says Farokh Balsara, head of the media and entertainment practice at E&Y and key author of the report.
Innovations in technology, in particular the advent of digital cinema, have enabled films to be released simultaneously across the country in the crucial first week and substantially cut production and distributions costs, even as they thwart piracy, Balsara noted.
Another innovation is direct-to-home, or satellite television broadcasts intended for satellite-to-home reception, which is a transparent and accurate way to establish view figures, and the entry of companies such as Moser Baer India Ltd, a leading Indian optical disc manufacturer, into the market. Moser Baer acquires the rights to films, then produces quality prints for sale at less than $1—still up to 1.5 times the price of the pirated version.
Balsara added the Indian government has not yet come to grips with the phenomenon of Indian companies going global. He says that despite total outbound investment from India tipped to exceed in-bound investment this year at $15 billion, the government still attempts to treat piracy as a domestic issue.
“The whole thinking by the government is that piracy is in-bound,” he says. The phenomenon of companies going global is very difficult as it happened so quickly and the government has other burning priorities, too. The Indian government and film industry do not have the clout to stop piracy.”
Megha Bhouraskar, an entertainment lawyer at Poppe and Bhouraskar, a New York-based law firm, says the actual losses to piracy are likely to be even greater due to a lack of data.
Additionally, contrary to the report’s contention that technology is chasing technology and helping to contain piracy, Bhouraskar says that innovations in technology actually help counterfeiters to go beyond geographical limits by using the Web. “It helps them to communicate much quicker at a level where we can’t understand where they are based,” says Bhouraskar, a leading anti-piracy lawyer. “Previously, there were geographical limits to mobility and now much is done over the Web and it is harder to understand who is orchestrating the pirated product.”