Film piracy is the latest billion-dollar blockbuster

“Finding Nemo, Pirates of the Caribbean, Calendar Girls — as soon as something was released, and sometimes before they were released, the copies were out there,” says the Buena Vista executive.

The top pirated titles, which also included films such as Master and Commander, Kill Bill, Brother Bear and Love Actually, were part of an unprecedented 400 per cent increase in seizures of pirated films in the UK last year, a picture mirrored across the developed world.

The growing problem could be costing film makers as much as 20 to 30 per cent of their takings from the home entertainment segment of film revenues. Estimates of the damage range from $3.5 billion (£1.9 billion) a year to more than $5 billion.

Everyone involved agrees that the problem is the most serious the film industry faces and that it is getting very much worse. John Stanley, managing director of home entertainment at 20th Century Fox, fears that every part of the chain of making and releasing a movie is now vulnerable.

“For us the scariest thing is just how broad it is getting. It can be a big movie but also a very small movie. Every movie is vulnerable,” says Stanley.

While DVD sales are undermined by illegal copies sold in their thousands at private markets and car boot sales, cinema receipts are also being hit. John Wilkinson, chief executive of the Cinema Exhibitors Association in the UK, says that the pirate copies are arriving earlier and earlier, often before a film has gone on general release.

“It’s on the market before we see the films and cinema staff are telling their management what films to book for the autumn because they have seen them for free in bars in Greece,” says Wilkinson.

The film industry is worried that unless it takes urgent action it could face piracy on a scale already experienced by the music industry. The problem is becoming so bad because of the coming together of online and offline piracy and the wide range of people involved.

Those involved can range from teenagers trying to beat the system and see a film first, to organised crime bosses who find the margins more attractive, and less risky, than drug dealing. A film posted on the internet by young people can be shared endlessly. The same file can be downloaded by pirates and turned into $10 million worth of illegal DVDs.

One source of pre-release copies of movies, particularly in the US, is people taking a camcorder into the cinema. Those invited to pre-release screenings, including journalists, are now liable to be searched going into cinemas, and night goggles or binoculars are being trained on pre-release audiences to catch any illicit recording during the screening.

In the year to May 2003, 50 major films were stolen by camcording in screenings before the theatrical release.

To try to counteract piracy nearly 50,000 investigations were launched worldwide last year and there were 32,000 raids. Some of the most spectacular came last month in Germany, when 15 people were arrested and a disc-burning lab with 24 high-speed burners discovered.

Alongside the professional pirates it is also seen as “very cool” by young people in Germany to download a film, burn it on DVD and trade copies at school.

According to Dara McGreevey — a regional anti-piracy director for the Motion Picture Association of America (MPA) — the producer of the German film Goodbye Lenin lost €3 million (£2 million) as a result of piracy and had to cancel four new film projects for young film makers in Germany. An estimated 770,00 Germans had an illicit copy of the film, either downloaded from the internet or bought on disc.

Josh Berger, of Warner Brothers Entertainment UK, believes a whole generation of young consumers — the key target audience for the film industry — is growing up in a world where “the value of intellectual property is a very confusing concept”.

People in the film industry often find that their own children have bought a pirate copy of a film like Finding Nemo at school. What do they tell them?

If there is general agreement on the worsening scale of the problem, the industry is equally agreed on the fact that there is no single solution. Tougher legislation is part of the answer and it is now an offence in the US to use camcorders in cinemas. In the UK the maximum sentence for manufacture and distribution of pirated material has increased from two years to ten.

Organisations such as FACT, working closely with customs officers, have had considerable success on imports of pirated films from Asia.

“The legislation is getting better but we are desperate to get more control of private markets and boot fairs. The controllers and organisers just walk away. When we shut Hackney market (in East London) down last year there were 70 stalls selling counterfeit film product alone,” says John Conlan, acting director general of FACT.

The industry is trying to tighten up its own security and working on technical systems to prevent films being copied.

Holograms are being added to DVDs to demonstrate that they have been legitimately purchased. Extensive education is also under way to try to persuade the public that it is just as wrong to steal someone else’s property when it comes in the form of a film as it is to steal physical goods.

In the end perhaps the industry’s strongest card is that DVDs or videos made from a copy recorded from a hand-held camera in the cinema are often not very good.

“The number one reason people give for getting into DVD was the picture and sound quality, so why are they happy to watch something where someone gets up halfway through and walks across the screen and there is no surround sound?” says McGreevey of the MPA.

The only difference between music and film piracy is the size of the internet files involved. The film industry has only a few years to prevent piracy becoming an epidemic that could threaten its very existence. “Education has to be delivered into all areas if we are going to change habits,” says Parkinson of Buena Vista, who hopes she will not be quite so successful in the piracy charts this year.

By Raymond Snoddy for Times of London