BLOCKBUSTER COO RIPS DVD REGION CODE AS AIDING PIRACY

In his welcome speech, PEVE Pres. Jean-Paul Commin likened DVD to the “new Eldorado” but warned that profitability was “fragile” and that “piracy is the greatest threat to our industry as it is to the music industry -- and we must mobilize all our resources,” to counter that threat. Travis, the keynoter, warmed to the issue. “Piracy remains a real threat and it’s growing more important, but it’s not so much of a threat to rental as retail. That is why the Motion Picture Association has designated piracy as public enemy number one,” he said. “Try to talk to a 15-year-old about downloading being wrong, and you will get a blank stare. I was playing golf with some executives recently and one of them talked about a Disney movie he had bought in London’s Petticoat Lane street market. I said, ‘Don’t you realize, that is theft?’. He just didn’t understand what I was talking about.” The only deterrent to unauthorized copies “is a higher quality alternative,” Travis said.

Travis then launched into a direct attack on the studios on DVD’s regional coding. “Regional coding is a mistake. Telling consumers what they can’t buy will backfire. It’s better to build a better mousetrap. Consumers want value, whether it is legal or illegal,” he said. “You should eliminate regional coding. Pirates are exploiting it,” he said, giving instances of hit movies such as Finding Nemo and Sea Biscuit that opened theatrically in the U.S. before elsewhere, then similarly become available for home video in the U.S. on Region 1 DVDs, ahead of other world markets. “It’s easy to buy multiregion DVD players in Latin America, Europe and Asia. So pirates are driving a cart and horses through the release structure,” Travis charged. “The consumer is totally confused and frustrated. The studios should rethink their policy on regional coding. It would have a major impact on piracy.”

In a panel session on piracy, downloading and home copying, Travis asked Dara MacGreevy, MPA vp-regional antipiracy based in Brussels, the direct question: “What is the MPA’s view on regional coding?” MacGreevy ducked a direct answer, saying it was “a matter for member companies -- my job is to hunt down the pirates, but there is no single magic bullet.” Dreamworks Home Entertainment Pres. Matt Brown countered a suggestion that worldwide release of movies was the best way to combat piracy. He reminded the attendees that Memorial Day weekend, the traditional prime release time for movies in the U.S., coincided with World Cup soccer that dominated audience of viewers in Europe and elsewhere.

During the panel, audience members raised the issue of whether the studios turned a blind eye to DVD parallel imports from Region 1 to Region 2 because they were earning revenue from all legitimate sales anyway. No one responded, but Travis told retailers about the profit potential for DVD trade-ins, whereby customers can get a new DVD for $12.99 if they bring in any older DVD title in working condition. “There is some fabulous product coming in and we are able to sell it easily,” he said.

Piracy on DVD and the Internet from first-run movies in theaters also was a preoccupation at PEVE. Mark Cutten, CEO of MediaWorldComm International, called attention to a study released in Sept. by AT&T Research that showed “77% of piracy is originating at the studios. The studios should clean up their own act. Titles are being pirated before they are even released. Now we know where the source is.” MacGreevy countered that “the MPA does not accept the 77% figure, we seriously question the assumption.” Cutten responded: “But they [MPAA] stopped sending out screeners for the Oscars,” alluding to an MPAA plan to ban DVD screeners that was overruled by a federal court in N.Y.C. last Fri. By the MPAA’s own estimates, about half of the 83 screeners of Oscar contenders issued last year found their way quickly to the Internet.