Hollywood Contradicts Itself on Effects of File Sharing

By Richard Menta 4/6/07

I need a little help. Which of these two articles should I believe? The first article, which was posted on April 2, 2007 on Investor's Business Daily is titled Hollywood Reeling From Illegal Movie, TV Downloads. The commentary from Investor's Business Daily writer Brian Deagon recants the MPAA's spin that "in 2005 alone it lost $2.3 billion to Internet copyright breaches in the U.S and $7 billion worldwide, including box-office receipts and video sales".

The second article was published in USA Today on April 1, 2007. The title of that article is 2007 Box Office is Smoking.

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The USA Today article tells how the film industry is set to break all box office records this year. "Through Sunday, ticket sales are at $2.1 billion, a healthy 6% ahead of the same time last year and 5% ahead of 2005, according to estimates from Nielsen EDI", says Scott Bowles who penned this story. And with summer crammed with such showcase movies as Spider-Man 3, Shrek the Third and Pirates of the Caribbean: At World's End, studio executives already are crowing that 2007 could be a record breaker". According to the article "The record was set in 2004 with $9.54 billion in the USA, although 2002 holds the record for most tickets sold at 1.6 billion".

In 2006 the domestic take was $9.49 billion, 5.5% higher than 2005 according to the MPAA. 2005 came in at about an even 9 billion. For those who can do simple math the 2005 figures are hardly $2.3 billion off of the $9.54 billion set in 2004. Those figures don't include videos sales, but it is my understanding that video sales have risen every single year since the DVD started to take off. According to another USA Today article from last year 2005 set a record. "After three years of double-digit growth, DVD sales and rentals are expected to slow from 2005's $22.8 billion total".

The USA Today printed an interesting figure that itself has an effect of how much money is drawn yearly from the box office and that is how many films are made. "Hollywood also is cranking out more material. So far this year, 49 movies have arrived in wide release, compared with 48 by this time last year and 35 in 2005."

Could the fact that Hollywood shipped less movies be the cause of the overall 2005 drop? Could it be that this year's movies are simply more compelling? Is file sharing really crushing Hollywood? If so, why are we now looking at setting new a box office record when more people have broadband access than ever before?

To be honest, I don't know. Maybe file sharing really is damaging the movie industry. Maybe it isn't. Maybe, I simply don't know which numbers to trust.

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