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Cutting the Prices Discourages Piracy

By westfirst in Media
Thu Dec 21, 2000 at 07:53:55 AM EST
Tags: Culture (all tags)
Culture

The New York Times has an article explaining how the Chinese movie theaters are cutting prices to encourage the poor masses to take a night off. It's also, at least in the eyes of the reporter, a scheme to undercut the pirate movie business.

The story says, "But the experience in Chengdu -- so far at least -- suggests that if the price is right, consumers may prefer a night out. `We've had many people leave messages on our bulletin board saying things like, `If the price had been five yuan all along, we wouldn't have bought so many discs,' " Mr. Ge said. "


The pirate discs retail for as little as $1.20. According to the article, many people earn less than $100 a month. The movies cost $3.60, or about 3.6% of the monthly income. If an American makes $4000/month, then the equivalent cost would be $144. The new price in China to see a first run movie is about 60 cents.

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Cutting the Prices Discourages Piracy | 22 comments (14 topical, 8 editorial, 0 hidden)
Hong Kong is rubbing off on them (4.33 / 9) (#5)
by fluffy grue on Wed Dec 20, 2000 at 11:45:32 PM EST

In Hong Kong, it's difficult to find legal copies of software, yet it's nearly impossible to find bootlegged movies or audio CDs. This is because the music and movie studios there have released their respective media at very low prices - most movies cost US$3 on VCD (which is also much cheaper to produce, ship, and store than VHS, while being about the same quality and being much more rugged) which gives pirates no clear operating model. The only bootlegged movies and music seem to be things from the US and things which are illegal in Hong Kong (the list being very short, namely uncensored pornography, where the censorship really doesn't get in the way either - basically, porn only needs to pixelate regions of the screen which depict insertion).

Hopefully other aspects of Hong Kong will rub off on China before they get assimilated back in. Hong Kong is probably the only working example of a libertarian society right now; from what I understand, only the police and fire departments are government-funded, and taxes are nearly nonexistent. Even the printing, valuation and issuing of currency is privatized, and yet they don't seem to be suffering for it - there are plenty of quality museums, all funded on low admission fees (I seem to recall it being about HK$5 - about US$.80 - for students to enter the HK art museum, for example), and everything's privatized, and yet still cheap. It almost makes me want to be a libertarian. :) (Unfortunately, American ethics are different than those of the Chinese, and American corporations are bent on maximizing profits, whereas in Hong Kong all the privatized services seem to go for minimizing costs and actually - get this - providing a service, what a concept...)
--
"Is not a quine" is not a quine.
I have a master's degree in science!

[ Hug Your Trikuare ]

Hongkong (2.28 / 7) (#7)
by darthaya on Thu Dec 21, 2000 at 12:24:39 AM EST

Is just one tiny city. The way it operates wont work on, let's say, 99% of the countries in this world.

[ Parent ]
HongKong is not tiny (3.40 / 5) (#9)
by duxup on Thu Dec 21, 2000 at 02:53:36 AM EST

"Is just one tiny city."

6.8 million people is not tiny.

[ Parent ]
Not surprising, really... (none / 0) (#18)
by ksandstr on Thu Dec 28, 2000 at 10:03:21 PM EST

... considering that many political/economical systems (and don't you dare say that "the economical system doesn't have anything to do with the political system" - we both know that's not true) scale poorly if at all. Take, for example, centralist communism in the USSR and how badly it fell into the hands of power-drunk assholes, wrecking a whole lot of nature in the process (although the USSR was at the height of its power at a time when more eco-friendly production methods weren't as readily available as today). No, USA-style capitalism doesn't get things right either.

I like to think that both libertarian capitalism, socialism (and probably even communism!) would work if the unit of government was kept small enough (like the size of a town of 10-15k people, maybe less), so I'm not advocating any particular political or economical system.



Fin.
[ Parent ]
Not really... (none / 0) (#20)
by cenotaph on Fri Dec 29, 2000 at 11:28:18 AM EST

I like to think that both libertarian capitalism, socialism (and probably even communism!) would work if the unit of government was kept small enough (like the size of a town of 10-15k people, maybe less), so I'm not advocating any particular political or economical system.

I remember reading somewhere that one of the first settlements in the US tried to use a socialist system. (IIRC it was the "pilgrams" of the NE.) The colony almost failed because not enough people were producing. They eventually stoped the experiment and moved to a system where everyone had to provide for themselves. We all know what happened then. (I hope.)

I realize that not having a source hurts this argument, but hopefully some one will be able to produce a source. I may even be able to dig it our of the black pit that is my memory. :)

--
"He knows not how to know who knows not also how to unknow."
-- Sir. Richard Burton
[ Parent ]

Spread the influence (none / 0) (#14)
by Robert Hutchinson on Fri Dec 22, 2000 at 04:18:06 PM EST

In Hong Kong, it's difficult to find legal copies of software, yet it's nearly impossible to find bootlegged movies or audio CDs. This is because the music and movie studios there have released their respective media at very low prices - most movies cost US$3 on VCD (which is also much cheaper to produce, ship, and store than VHS, while being about the same quality and being much more rugged) which gives pirates no clear operating model.

[...]

Hopefully other aspects of Hong Kong will rub off on China before they get assimilated back in.


To heck with China ... I want this to rub off on the U.S.! :)

Robert Hutchinson
Or your primary commercial country of choice
No bomb-throwing required.

[ Parent ]
It may help in the shortrun.. (3.33 / 3) (#10)
by locutox on Thu Dec 21, 2000 at 04:26:38 AM EST

..but sure won't help that much in the long run!

No matter how cheap movies are people are still going to want copies to watch at home. The movie runs at the cinema for 2-4 weeks, then what? I couldn't imagine the movies over there being so crap as you don't want to watch them again. I can think of countless movies I've gone to see over and over and just WANT to see it at home.

So I believe that it won't solve the problem but just dent it. I also think it would quite a risky venture to cut movie ticket prices from $3.60 to $0.60.

Different situations (none / 0) (#15)
by Robert Hutchinson on Fri Dec 22, 2000 at 04:34:31 PM EST

No matter how cheap movies are people are still going to want copies to watch at home. The movie runs at the cinema for 2-4 weeks, then what? I couldn't imagine the movies over there being so crap as you don't want to watch them again. I can think of countless movies I've gone to see over and over and just WANT to see it at home.
I, on the other hand, rarely watch most movies more than once or twice. Both of our types exist.

I also think it would quite a risky venture to cut movie ticket prices from $3.60 to $0.60.
Economic apples and oranges. The "before" price in China was an outrageous percentage of average income. The "before" price in your example is not an outrageous percentage of American or Australian income. If cutting prices in half increases profits, that hardly means you can keep cutting prices in half indefinitely.

Robert Hutchinson
No bomb-throwing required.

[ Parent ]
Sure it would. (none / 0) (#19)
by ksandstr on Thu Dec 28, 2000 at 10:09:19 PM EST

Just cut the prices of digital recordings (of the same movies) as well and don't engage in regional price gauging. If the price of a movie in the store is lower than where people value their free time (that would be used in finding a pirate copy and possibly dealing with defects in the unofficial version), most people won't bother downloading the movie over the 'net, for example.

I mean, the big players in the movie industry have these machines that they can just press a freaking button on and have it make N copies, just like that (I mean DVD presses and the like). It's not like they'd need to compete on the effortlessness market or anything.



Fin.
[ Parent ]
Average American Income (4.33 / 3) (#13)
by Refrag on Thu Dec 21, 2000 at 06:08:30 AM EST

According to the U.S. Census Bureau's Money Income in the United States (page 16), the per capita income was $21,181 in 1999. This would mean that the average American earns about $1600 a month before taxes. This would make the equivalent price $58.

I think that the Chinese are getting screwed percentage-wise. But, there's really nothing that can be done about it. It costs too much to distribute the movies, so I don't see the price being able to drop much lower in China. Maybe DLP projectors will allow theaters to cut their costs and lower ticket prices once again.

There's no way in hell that I'd pay $58 to see a movie in the theaters. I'd buy myself a LCD projector for home before I'd do that!

Refrag

Kuro5hin: ...and culture, from the trenches

Ahem. (4.00 / 1) (#16)
by Potsy on Mon Dec 25, 2000 at 03:27:59 PM EST

Maybe DLP projectors will allow theaters to cut their costs and lower ticket prices once again.

DLP projectors actually cost about an order of magnitude more than film projectors. They also have lower resolution (1280x1024? Are they kidding?!) than even 35mm film, let alone 70mm film.

Going to electronic projection, with the data beamed in by satellite, might save the studios and distributors money, but not the theater chains. (The studios and distributors are the ones who pay for film prints right now, not the theater chains.) I say "might" because as we all know, transmitting data is not free. Film prints are also not as expensive as you might think. They cost about $2000 a pop, which if shown 6 times a day for 3 weeks, works out to about $15 dollars a show. That's hard to beat.

By the way, when it comes to electronic movie projectors, DLP is not the only game in town. In fact, they are the worst game in town. Both JVC's D-ILA technology and Silicon Light's GLV technology have better resolution and a better price/performance ratio. DLP just has the most mindshare at the moment, due to TI's aggressive marketing.

[ Parent ]

Ack-umm. (none / 0) (#17)
by Refrag on Thu Dec 28, 2000 at 12:31:49 PM EST

From what I know about the movie industry, the theaters bid on a limited number of prints for a specific movie. So, in essence they are paying for the print. Digitally projected movies (regardless of the technology) will allow the supply to increase almost infinitely and will drastically reduce the price of producing each film element as well as distribution of the reels.

I wouldn't recommend digital porjection replace film in all but a few areas -- China being one of them. I agree that the resolution isn't satifactory.

Refrag

Kuro5hin: ...and culture, from the trenches
[ Parent ]

Ah. (4.00 / 1) (#21)
by Potsy on Mon Jan 01, 2001 at 04:27:50 AM EST

I don't know exactly how theater financing works either, but from what I understand, theaters pay a rental fee, plus a percentage of ticket sales. The rental fee is, I believe, less than the cost of actually running off the print in the first place. (The ticket percentage is based on a Machiavellian formula that is basically designed to give all the profit to the studios, and leave little or none for the theaters.)

That said, I highly doubt that studios would ever "pass the savings on" to theaters after going to electronic distribution. They'll probably just keep it for themselves. I'll bet studio accountants are sitting around at the moment just drooling at the idea of digital cinema. "It's just data! It's practically free! And we can still charge the same rental fee that we do for film! We'll be rich! Muh ha ha ha ha!"

I wouldn't recommend digital porjection replace film in all but a few areas

Well, I agree, but I have to ask -- for what reason do you say that? Personally, I prefer film because I believe that (if properly done) film projection has higher quality than any electronic system demonstrated to date. Do you share that preference, or is there some other reason why you wouldn't recommend digital?

By the way, sorry if I sounded grumpy with that "ahem" subject line in my previous post. I just get a little touchy about the subject of digital cinema.

[ Parent ]

digital "film" (none / 0) (#22)
by Refrag on Tue Jan 02, 2001 at 10:31:26 PM EST

I agree that digital cinema is not up to the task of reproducing images for the big screen (it's best to use it to try to lower ticket prices now). However, I think DVD and LCD projectors can do wonders in the home.

Refrag

Kuro5hin: ...and culture, from the trenches
[ Parent ]

Cutting the Prices Discourages Piracy | 22 comments (14 topical, 8 editorial, 0 hidden)
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