Research Shows that Shorter Movie Release Windows Boost Revenue, Not Piracy

[DarksideIH]

Research Shows that Shorter Movie Release Windows Boost Revenue, Not Piracy

Movie studios are increasingly experimenting with shorter release windows or even simultaneous theatrical and digital premieres. But how does this affect overall revenues? According to new research into shortened release windows in Korea, movie studios profit from this strategy. While pirated copies also become available quicker, the overall piracy figures don't change.

After a film premieres at the box office, movie fans typically have to wait a few months before they can see it online, depending on the local release strategy.

This delay tactic, known as a release window, helps movie theaters to maximize their revenues. However, for many pirates, this is also a reason to turn to unauthorized sites and services.

Shrinking Release Windows
In recent years these release windows have slowly decreased and this process was accelerated in the COVID pandemic. Increasingly, traditional delays have come down, and in some cases, release windows have disappeared completely. Warner Bros, for example, now releases movies on HBO Max and in theaters simultaneously.

This shift is nothing short of a historic breakthrough. While more choice is good for consumers, these changes also breed uncertainty. Some movie industry insiders and theater owners, for example, fear that their income will be negatively impacted. At the same time, there are concerns that piracy will spike.

These and other questions are addressed in new research conducted by Carnegie Mellon’s Initiative for Digital Entertainment Analytics (IDEA). The research group, which received millions of dollars in gifts from the Motion Picture Association, just analyzed how early releases affect piracy and box office revenue.

Impact on Box Office and Piracy
The results are published in a non-peer-reviewed paper titled The Impact of Early Digital Movie Releases on Box Office Revenue: Evidence from the Korean Market.

As the title suggests, the research focuses on the Korean movie market which is the fourth-largest in the world, following the US, China, and Japan. In recent years movie studios have experimented with release windows in korea, which are significantly shorter than in other countries, including the US.

Instead of waiting three months, Korean “Super Premium” digital releases typically come out a month after the theatrical release. This means that movies are available while they are still playing in theaters.

The researchers use this unique situation to compare various movie revenue streams, as well as piracy figures, with the United States. To get the full picture, they also add in the effect of early versus regular digital releases in Korea itself.

Box Office Revenue is Unaffected
Following a complex statistical analysis, the researchers can estimate the effect of the early “Super Premium” releases on Korean box office revenue. They find a small negative effect of less than 1%, which isn’t statistically significant.

“We find a statistically and economically insignificant decline in theatrical revenue due to the early SP release, equivalent to an approximate 0.8% drop in total theatrical revenue in Korea during the first eight weeks of the theatrical run,” the researchers conclude.

This is an important finding as it shows that releasing a digital copy of movie months in advance doesn’t hurt theater revenues. This suggests that both consumption channels are complementary, which is great news for movie studios.

More Revenue for Movie Studios
And indeed, the researchers find that “Super Premium” video on demand (SPVOD) releases boost studio revenue by roughly 12% during the first weeks.

“Using digital movie sales data in Korea and industry estimates of studio margins on theatrical and SPVOD revenue, we estimate that SPVOD releases increase the marginal revenue received by studios in the first eight weeks of a movie’s Korean release by approximately 12%.”

While this all sounds positive, it’s undeniable that these early releases also impact piracy. This is confirmed by the data which show that the “pirate” release windows are also decreasing. Not just in Korea, but globally too.

No Boost in Piracy Figures
According to the researchers, however, this isn’t much of a problem. People will download pirated copies earlier, but the data don’t show that the piracy volume in Korea or the US increases for these movie titles. Pirates just get to download a film sooner.

“Finally, while the data from torrent piracy suggest that early SPVOD releases lead to earlier global availability of high-quality piracy sources, we see no evidence that these early sources increase piracy demand for movies released in SPVOD windows in either the Korean or US markets.”

All in all, the findings show that the movie industry is on the right track by shortening release windows. It’s not just good for consumers but also increases studios’ income too.

More Research Needed
That said, it’s far too early to generalize. This study looked at a very specific set of movies for which the “Super Premium” release came out after 28 days. It could very well be that longer, shorter, or no delays will have a different impact.

This shortcoming is recognized by the researchers who also stress that more research into the effects on piracy is needed. Especially in cases where a movie is released in one country before it’s available somewhere else.

But with more and more release experiments taking place, we expect that follow-up studies are already underway.

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