Content piracy challenge: perceived versus actual loss of revenue, and tackling it.

This blog published a post ten days ago discussing how anti-piracy measures that modern legal system provides may not be sufficient to prevent piracy. A 3 days old news digest published on LinkedIn again raises the issue of piracy faced by Australian film production industry. The news digest cited The Sydney Morning Herald article which also reported research by Deloitte indicating decreasing profits or increasing losses in Australian production companies.

The news digest raises 2 points that need further reflection and contemplation;

1) Actual versus perceived loss of revenue:

Each illegal download or illegal streaming of a film by an individual or an entity is regarded as loss of revenue by the content producers. If the illegal download or streaming was not available to that individual or the entity then the individual or entity might not necessarily seek legal avenues to watch the film that would compensate the content producers. Hence the loss of revenue is not an actual loss of revenue but perceived loss of revenue and shutting down illegal download and illegal streaming may not improve the bottomline of content producers.

2) Tweaking the business model (pricing and costing):

Just like any other business if content producers can estimate the revenues for a project then it would be easy to execute the project. However it can be difficult to estimate the revenue for films that is derived from the cinemas. This challenge is tackled by high budget film producers in India by tweaking the business model. Before the film is released, the film’s satellite rights and music rights are sold at or more than the cost of the film hence making the film profitable before it is even released in cinemas.

To conclude, estimating accurate content costing and adopting modern content pricing and revenue models may offer potential avenues to improve content producers bottomline.

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