Most commercial DVD piracy is allowed to flourish because of opportunities created by the Studios' system of Windows of Exclusivity. Changes in business model could eliminate most forms of commercial piracy. The clearest example of this is in the window of time between the theatrical release and the DVD release. The longer the interval, the more pirated product will come to market.
Hollywood is continuing to shorten the window. Last year, major studio movies arrived on DVD an average of four months and 16 days after their theatrical release. That was 11 days sooner than in 2003 and more than two months faster than a decade ago, when the average was six months, 12 days.
According to the NATO (National Association of Theater Owners), films now make more than half of their total box-office gross within the first two weeks of release. In fact, for the Top 100 grossing films last year, the first three days of release accounted for more than a third of the total. Five years ago, the average opening weekend represented less than a quarter of a movie's total. With theatrical runs getting shorter, it makes sense to release the DVD sooner.
Theater owners are not happy about this trend, but there is little they can do about it. I think the theaters will eventually go into the DVD business, giving theater goers a DVD of the film in addition to a ticket.
As TV sets get bigger and DVDs get cheaper and the windows get shorter, the theaters are seeing declines in attendance. But I don't think that theaters go extinct because of one simple fact:
If it were not for theaters, all movies would be straight-to-video. And that would suck.
In April of this year (which at the time of this writing is 2005, well into the future) the Paris Court of Appeals granted UFC-Que Choisir (a French consumer protection organization) a prohibition on DVD copy protection devices because they are incompatible with private copying rights. Two companies, Les Films Alain Sarde and Studio Canal, had originally won this case in 2004-08 but have been dealt a major setback with this ruling. UFC-Que Choisir supported a consumer who, because of Copy Protection, was unable to copy his Mulholland Drive DVD to VHS to watch at his mother's.
Years ago in France, as in many other countries, the Studios managed to obtain a tariff on blank media. This compensates them for any losses that might occur as a result of the use of the blank media, even if the blank media is not used for copying their material. Sweet.
But now the court is saying they can't have it both ways. They cannot charge the consumer in advance for potential copies, and then prevent the making of the copies. In France consumers have bought and paid for the right to make copies for personal use, and technology that frustrates that right is clearly illegal.
The Studios will appeal to the Cour de Cassation. They feel that the anticircumvention language that they inserted into the European Copyright Directive contradicts the court's opinion. Anticircumvention makes it a crime to defeat a copy restriction device. The Studios feel that the court is itself violating the directive, and that no country has the right to determine what copy protection devices can be tolerated within its own borders.
This issue could be settled easily if the Studios would do away with the blank media tariffs. They must simply balance the real, unearned revenues that they get from the sale of blank media versus the imaginery losses that could be prevented by DRM.
It could also be settled by adopting DRM technology which only stops illegal copying but which allows all legal copying. This turns out to be impossibly hard. All existing DRM systems prevent legal copying, while sometimes allowing illegal copying. Such DRM systems are the state of the art.