New Study: Megaupload Shutdown May Have Hurt Box Office For Smaller Movies

from the makes-sense dept

TorrentFreak points us to an interesting new study from Christian Peukert of the Munich School of Management, and Jorg Claussen from the Copenhagen Business School, that looks at the shutdown of Megaupload to see if they can determine what impact it had on the box office for various movies. The findings are probably not what Hollywood wanted to see: basically, the evidence shows that taking down Megaupload didn’t suddenly send people running back to the theaters. In fact, for many, many movies there appeared to be a tiny decrease in box office take, though the results are not statistically significant. The one exception to this was for “blockbuster” films that appeared on more than 500 screens. There there was a similarly tiny increase in box office. Considering that the MPAA and studio heads keep insisting that they’re really concerned about indie filmmakers when they try to stamp out piracy, this suggests they may be doing it wrong.

Of course, you shouldn’t read too much into non-statistically significant findings, but at the very least the data does pretty clearly show that there wasn’t a sudden rush by people to go back to the theaters once Megaupload went away. Furthermore, it’s possible that at least some movies — perhaps a lot of movies — were slightly harmed by less word of mouth. As the researchers note:

Our counterintuitive finding may suggest support for the theoretical perspective of (social) network effects where file-sharing acts as a mechanism to spread information about a good from consumers with zero or low willingness to pay to users with high willingness to pay. The information-spreading effect of illegal downloads seems to be especially important for movies with smaller audiences.

At the very least, it seems like a good area of research that deserves more study going forward.

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Comments on “New Study: Megaupload Shutdown May Have Hurt Box Office For Smaller Movies”

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62 Comments
out_of_the_blue says:

"results are not statistically significant"

Most people would stop there. But it’s enough for Mountains-out-of-molehills Mike.

Take the link to hear Melancholy Mike cover a Springsteen tune reminiscing his one big quip and nothing since:
http://en.wikipedia.org/wiki/Streisand_effect
Glory days well they’ll pass you by
Glory days in the wink of a young girl’s eye
Glory days, glory days
“Glory Days” (Bruce Springsteen)

Gwiz (profile) says:

Re: "results are not statistically significant"

Ya know Blue, at one time I used to find your comments a whimiscal distraction. I now find them to be annoying.

What exactly is your beef with Mike & Techdirt anyways? All I can glean from your comments anymore is that you are an angry, bitter person who seems to obsessively resent Mike’s success.

Did you attempt to start a blog somewhere that no one ever read and now you feel so insignificant that the only way you can redeem yourself in your eyes is to constantly attack Mike and Techdirt? The underlining tone of petty jealousy that runs through your comments is really getting old.

jupiterkansas (profile) says:

Re: Re: Re:

Sorry, but when I think of a movie I want to see, it’s usually not something playing in the theatres. It’s usually something on DVD, and my choice is buy it or pirate.

People will go to the movies whether they can pirate it or not, so piracy will probably never affect box office. It’s the other revenue streams that it’s destroying.

PaulT (profile) says:

Re: Re: Re: Re:

“It’s usually something on DVD, and my choice is buy it or pirate.”

I have to wonder what changes in the window between the film’s theatrical release and the DVD release that somehow makes you want to watch it…

Anyway, regardless of your own anecdotal experience, I believe the AC’s point still applies. Part of the problem with the movie industry is that it still tries to depend on windowing – not only format windowing but regional and other windows. Remember, that film you want to watch on DVD might be something that somebody already saw at the theatre and decided to pirate instead of paying full whack again or waiting for the DVD release. That DVD release may be blocked from some rental outlets by another window (e.g. Redbox) or withheld from streaming. And so on…

“People will go to the movies whether they can pirate it or not, so piracy will probably never affect box office.”

I disagree here 100%. There are many factors that would drive people toward and away from a cinema, and piracy very much factors into that. For example, a sequel might be bolstered by pirate viewing of a previous film, while a person might be driven to support a smaller film at a theatrical showing after seeing a downloaded version. Or vice versa, of course – if the film’s no good then a pirate viewing may make them choose something else or stay at home.

jupiterkansas (profile) says:

Re: Re: Re:2 Re:

I disagree here 100%. There are many factors that would drive people toward and away from a cinema, and piracy very much factors into that. For example, a sequel might be bolstered by pirate viewing of a previous film, while a person might be driven to support a smaller film at a theatrical showing after seeing a downloaded version. Or vice versa, of course – if the film’s no good then a pirate viewing may make them choose something else or stay at home.

I think that can have a negligible effect on box office, but I don’t think there are a lot of people downloading films and then going to see just the good ones at the theatre. If they’re excited about a movie, they’ll just go see it.

I contend the market that piracy affects isn’t box office, but DVD, streaming, online downloads, cable subscriptions, etc.

nasch (profile) says:

Re: Re: Re:3 Re:

Or vice versa, of course – if the film’s no good then a pirate viewing may make them choose something else or stay at home.

I think he’s probably right, and that’s a good thing. If piracy can force the movie studios to make better movies to get people to watch them more, GREAT! That’s a win for everyone: more money for studios from more paying customers, and more good movies for everyone to watch.

nasch (profile) says:

Re: Re: Re:5 Re:

For the purposes of this discussion, “good” means “what people want to see” not “what you like”. If piracy means there are more movies that people want to see, that’s a good thing overall. If those aren’t what you are I would like to see, that’s just unfortunate for us that our tastes don’t coincide with the majority’s, but it’s not really relevant to the debate IMO.

Machin Shin (profile) says:

Re: Re:

You know, there is this very funny thing I have been noticing. I have a lot of movies and TV shows already on my hard drives. For example Warehouse 13 I noticed I have buried away in my drive. I noticed it there and STILL I watch it on netflix. I do not even have to download it I already have it and yet still use netflix instead.

Why? Well netflix keeps track of where I am and I love how it starts back right where I stopped watching and it rolls to the next episode automatically.

So… If you want to stop piracy, the best option I see is to offer a SERVICE not slap me around with DRM because I can tell you now that DRM will just piss me off and make me less likely to buy something again.

art guerrilla (profile) says:

Re: Re: Re:

Yes, FTW ! ! !

it is highly amusing and telling to watch all the copyright maximalists skitter away like cockroaches whenever anyone mentions ‘hollywood accounting’…

really: ALL one has to do to refute their ‘moral high-ground’ (sic) is simply point to ‘hollywood accounting’ tricks that ‘prove’ that -apparently- NO movie or recording act in the his story of the world -NO MATTER HOW MANY BILLIONS OF TICKETS ARE SOLD- has nebber, ebber turned a ‘profit’…

*that* little dose of skullduggery should simply eliminate the copyright maximalists and their ilk from being taken seriously about ANYTHING; except how to implement mafia tactics in mainstream bidness (if that isn’t an oxymoron all ready)…
and they wonder *why* people hate those fuckers…
art guerrilla
aka ann archy
eof

bob (profile) says:

Makes sense? It's bogus.

Yet Hollywood is reporting the best Thanksgiving evah:

http://www.grantland.com/blog/hollywood-prospectus/post/_/id/62326/weekend-box-office-hollywood-just-had-its-best-thanksgiving-ever

You guys can go on dreaming that someone is going to download a free version and then march right down to the theater to pay for a legit version. I’m sure there are a few folks who might do this, but I’ve been around long enough to know how humans behave when there’s a temptation to get something for free.

Closing down Megaupload was just one way to make it harder for people to cheat the system and that also makes it easier for them to do the right thing.

I doubt it’s possible to draw much of a conclusion, but I’ve watched systems fail when cheating becomes too easy.

Zakida Paul says:

Re: Makes sense? It's bogus.

“Closing down Megaupload was just one way to make it harder for people to cheat the system and that also makes it easier for them to do the right thing. “

Except that it did not make it harder as there are a plethora of other services out there where people can download from.

Also, who gives a shite about Hollywood when they haven’t made a decent film in years? It is the smaller and independent film makers who suffered over this.

JEDIDIAH says:

Re: Makes sense? It's bogus.

> You guys can go on dreaming that someone is going to download a free version and then march right down to the theater to pay for a legit version.

If a copy of your movie on The Pirate Bay is not a good advertisement for the real thing in a real theater, then you just p*ssed away a big pile of money.

What you’re really saying is that the cinema doesn’t matter any more. If a home video copy is really a suitable replacement, then that’s basically what you’re saying. So it’s time to man the lifeboats because the whole thing is going down.

Piracy is just a distraction.

Anonymous Coward says:

Re: Makes sense? It's bogus.

So when is American Politics going to fail???

There has been so much cheating, lying, and stealing that it isn’t even funny, yet things continue on as they always have…

I’m not advocating blowing up all politicians, only the cheating, lying, stealing ones…. but that may be too much work… kill em all and let god sort em out (to paraphrase the military mindset)…

Gwiz (profile) says:

Re: Makes sense? It's bogus.

You guys can go on dreaming that someone is going to download a free version and then march right down to the theater to pay for a legit version.

I most certainly would – if the theater offered value above and beyond watching a movie at home. Unfortunately, it doesn’t anymore. Idiots talking on their cellphones, sticky floors, no pause button for bathroom and snack breaks, unruly children, etc, etc. Haven’t had a pleasant movie theater experience in well over 20 years now.

I’m fine waiting for it come out on Netflix – that is if I even remember I wanted to see it after waiting the 3 months for it to get there.

John Fenderson (profile) says:

Re: Makes sense? It's bogus.

Closing down Megaupload was just one way to make it harder for people to cheat the system and that also makes it easier for them to do the right thing.

Well, no, it doesn’t, but ignoring that…

I’ve seen three movies in the theaters over the last month, (the new 007 movie being the most recent), and they were so bad that I left the theater from each one of them feeling cheated.

From my point of view, Hollywood is the big cheat here. Will I see another Hollywood movie? Sure, when I can do so conveniently in my house, without being tracked, and for the right price ($1 or less) so when it turns out to be another clinker I’m not out as much time, hassle, and expense.

I’m unlikely to go see a new release in a theater very often. I’ll be very likely to go to a theater that is showing a movie that I already know is good. Which means one that I’ve already seen.

Chronno S. Trigger (profile) says:

Re: Makes sense? It's bogus.

Let me ask you this, Bob. How does shutting down Megaupload make it easier for someone to do “the right thing” (I use quotes because right is relative). What did they do that makes their option look better? Did they make a better movie? No. Did they force theaters to use better hardware? No. Did they force theaters to clean the damn rooms? No. Did they force theaters to shut people up? No. What did they do to make their option easier? Nothing.

This is their problem. They don’t do shit to make their option easier or better. They just spend all their time and money to attempt to make the opposition look worse (and failed at it).

This is also your problem. If you spent a little time trying to make yourself look better instead of spending all your effort in harassing Techdirt, we wouldn’t write you off as bat shit insane.

Anonymous Coward says:

Re: Makes sense? It's bogus.

If you actually believe you know how people behave you have just made the generalisation of all generalisations. Streetsmarts and utilitarian arguments are crap in science.

In this case out_of_sanity has caught the thick end of the stick. The “not statistically significant” is what makes for a good point against writing a story on this ground. Some news about Hollywood doesn’t say much about the smaller movies, which is what the article is about!

Anonymous Coward says:

Re: Makes sense? It's bogus.

Alright, I hadn’t gone off ripping apart your brand of stupidity for awhile. Seems like you need it regularly and often in order to keep your stupidity in check though. So let’s play “put bob in his place”.

“Yet Hollywood is reporting the best Thanksgiving evah:

http://www.grantland.com/blog/hollywood-prospectus/post/_/id/62326/weekend-box-office-holly wood-just-had-its-best-thanksgiving-ever”

Hmm. A major Holiday is the best ever? The hell you say?! /s

Let’s see. So that’s the card you want to bring to the table?

Okay, so should I start citing all the reports showing Hollywood having RECORD BREAKING profits each and every consecutive year since 2000 or so, which includes all the years that piracy was running rampant and Megaupload was not shut down? Is that the game you want to play? Because if so I have no problem citing said reports. Which basically say, “Piracy schmiracy! No harm was caused and Hollywood still f*cking made a mint! EACH AND EVERY CONSECUTIVE YEAR!”

Basically, stfu Donny! You are out of your element!

“You guys can go on dreaming that someone is going to download a free version and then march right down to the theater to pay for a legit version.”

It’s not a dream. It’s actually a reality. I can, but don’t, download something I am iffy about paying good money to see and if it is decent I’ll pay to go watch it in theater. I’ve been burned too many times by insanely deceptive trailers to risk going to the theater anymore. So much so that I just do without. Know how much money Hollywood has lost because of deceptive trailers? A fuckload. My family and I used to go every Saturday from the minute the theater opened and stay til they closed watching movies. Paying. For the experience and the quality time together. Know how often we do that now? Maybe once. Every 2 years. And we only see one movie. That is a direct and verifiable loss. I have the ticket stubs (which for some reason I’ve been collecting since I was 5 or so, I’m 27 now) to prove it. And the sad thing is I’m not alone in this. Remake upon remake and reboot upon reboot have left a bitter taste in consumer’s mouths. Frankly, you couldn’t pay us to download some of the stuff that Hollywood is putting out.

“I’m sure there are a few folks who might do this, but I’ve been around long enough to know how humans behave when there’s a temptation to get something for free. “

Wait. You’ve been around long enough to know that if people can get something for free they’ll take it? The hell you say?! I am fucking shocked that it took me my first two years of life to figure out that FREE means “Hey, right on!” Shocked!

God. It’s so hard to see why you aren’t out there writing speeches and teaching our youth. Your wisdom with age truly makes you a remarkable person and one we could all learn from. /s

Seriously, people will always take free when they can. We all do it at the grocery store when they offer free samples. Even if it’s something we don’t like. This isn’t much proof or a point for your side. It’s a fact of life. And no, a “free” copy of a movie doesn’t mean people won’t pay to see the movie in theater. If anything it gives them more reason to pay. Have you ever seen a cam copy? They’re not the best. Horrible sound. Picture that’s more often than not barely watchable (and that’s being extremely generous with the words “barely” and “watchable”).

“Closing down Megaupload was just one way to make it harder for people to cheat the system and that also makes it easier for them to do the right thing.”

How was Megaupload being online a way to “cheat the system”. Using loopholes in tax code to write off various things as “expenses” is cheating the system. Finding loopholes in law to get away with murder is cheating the system. Using a file storage locker is NOT cheating the system. Rapidshare, which offers the exact same services, is perfectly legal. And not cheating the system. God, you’re so fucking stupid I’m almost tempted to use the vast potential and intelligence I do have, which have no compunction to use, to invent a time machine just to go back in time and slap your mother before she let your father fill her with the semen that eventually produced you and just say, “NO! BAD bob’s MOM! BAD!” And then whack her on the nose with a newspaper just to hammer home the point. I’d be spared a lot of grief, and would earn the gratitude of everyone on this site, if I were to do so.

Also, how does shutting down Megaupload make it easier to do the right thing? You’re aware that Netflix, a legal option, is ONLY available in certain countries, right? Ditto Spotify. Pandora. Hulu. iTunes. Amazon. Etc. If anything, it is fucking hard to “do the right thing”. To the point that piracy, more often than not, is the easier and thus chosen option. If paying for content is so difficult most people say “fuck it” and do without, you’re issues aren’t the sites where users can find free offerings. Your issues start and end with you and your horrible business, as well as inability to make things easy on your customers. Basically, you’re business is doing bad because you’re an idiot and should feel bad.

“I doubt it’s possible to draw much of a conclusion, but I’ve watched systems fail when cheating becomes too easy.”

Yeah, well, since we’re creating “facts” out of what we’ve “watched” in our lifetimes then it is entirely factual, based upon what I’ve watched, for a system to not only NOT fail when cheating becomes too easy, but actually THRIVE AND BECOME BETTER for said cheating. Cheating eventually must be met with some form of something or other to counter the cheating, usually resulting in a better system for everyone. Thus, by my own witnessed events, you’re fucking wrong.

Man, I hated OotB since you stfu. I now hate you again, more so than OotB. Lion Day. I can’t fucking wait. If you aren’t the first to go… Lion Day will have proven a failure. Because obviously the dumbest are surviving. At which point in the words of The Professor, “I don’t want to live on this planet anymore.”

ComicGuy89 (profile) says:

Re: Re: Makes sense? It's bogus.

I agree with you about how hard the entertainment industry has made it to pay them. Living in Australia, it is really difficult to do the so-called right thing when it comes to watching TV and movies.

In Australia, movie tickets cost the equivalent of $20USD and more and satellite TV is monopolized by one company, FOXTEL, that shows episodes that are outdated. One show I’m following is currently airing its third season in the US but there is still no legal way to watch the second season in Australia.

Finally, there is no decent On-Demand service like Netflix or Hulu. The Netflix equivalent has a terrible selection of content, poor customer service, lousy quality and is overpriced. All other On-Demand services seem geared to exploiting the money off customers, by forcing exorbitant fees or subscriptions to satellite TV.

This is just Australia, a country that the entertainment industry at least has an eye on. Goodness knows how the situation is like in the rest of the world that is often ignored by the industry. It’s little wonder that the highest piracy rates come from developing countries. When I was studying in the US, I had little need for piracy because I could watch a majority of things in affordable, convenient and legal ways such as Netflix or on the official websites. Now, I can hardly imagine possibly watching anything current without the help of copyright infringers.

Anonymous Coward says:

Re: Re: Re: Makes sense? It's bogus.

Look at the Australian who posted above you, darryl. That is the perfect example of a sane, reasonable Australian. Unlike you, who actually advocate, support and masturbate to the ridiculous restriction of culture entering your country. Your country is ashamed to have a shitstain specimen like you carrying a passport. (Or maybe it doesn’t allow you to have a passport, which is why you spend half your posts whining about America since you can’t go there.)

Buster says:

No Surprise

This really isn’t a surprise. It follows the same proven theory as new musicians and bands. No one is going to hear about you if you don’t advertise, if you don’t have the money you can’t really advertise on every channel known to man, the radio, newspapers, internet, and so on.
Now if 1 person hears your song, they MIGHT tell their friend, and than that friend tells another friend. Well with this proces it’ll take you months to get your name outside of your small town, and years to be known in the next state, and on and on.
With the internet, music spreads like wildfire. Pages of artists and bands can be stated in achieving near overnight celebrity status thanks to the internet.

A movie is only in theaters a couple months. The internet opens your movie to countless people… Need I say more?

Anonymous Coward says:

Ya know Blue, at one time I used to find your comments a whimiscal distraction. I now find them to be annoying.

Thank you Gwiz, for saying that. OOTB long ago went from amusing to annoying. I consider it a blessing to come into the comment section with his posts missing from view. I open them, much the same as he doesn’t read the articles before spouting off, just to add my report click and then close them.

Once in a great while he actually has something relevant but most of the time it’s a waste of virtual space.

Anonymous Coward says:

I never go to the movies anymore…ever. Between bad experience, poor viewing conditions, the audio at ear blasting levels you can’t control, highway robbery at the concession stand, and walking away after seeing one with the feeling of being ripped off after the money has been spent, it is unlikely I will ever return.

Add to it that I feel like Overcast and don’t want a single penny of my money going to these major studio thieves/asshats and it sums it up with a not-a-customer-anymore.

Anonymous Coward says:

many movies there appeared to be a tiny decrease in box office take, though the results are not statistically significant.

then why the fuck would you say that then ?? and why base an entire argument on that FALSE and MISLEADING “fact”..

“oh, it’s not statistically significant, but ill make a big song and dance about it.. someone might buy my bullshit !!!!”

Anonymous Coward says:

Hollywood.. is NOTHING..

lets have a bit of a look at what “hollywood” does for your GDP !!!!

California, 2011 Top publicly traded companies

1. Chevron
2. Hewlett-Packard
3. McKesson
4. Wells Fargo
6. Apple
6. Intel
7. Safeway
8. Cisco
9. ****** WALT DISNEY *****
10. Northrup Grumman
11. Ingram Micro
12. Google
13. Oricle..

you see a pattern forming here ?? so where are all the ‘big media’ that if reformed will save Americal from certain doom…. DOOOOOOMMMMMM.. I tells ya…

oh and a nice quote for you.. regarding Patents..

With Thomas Edison’s invention of the Kinetoscope in 1894, California would be a leader in sound film development in the following decades. Cheap land, good year-round climate and large natural spaces prompted the growing film industry

so patent ‘wars’ led to a GROWING FILM INDUSTRY…. !!!!!!!!

suck on that..

Anonymous Coward says:

Re: Re: Re: Hollywood.. is NOTHING..

Clearly you didn’t read it. Your point is easily summed up in the sarcastic post that I made. Suggesting that conflict is for the betterment of anyone completely misses the point of mitigation performed in response to said conflict.

You wouldn’t know fact if it slapped you in the face and fucked you in the ass.

Anonymous Coward says:

Re: Hollywood.. is NOTHING..

I’d also like to add another point.

If, in the first place, you are effectively proving that Hollywood matters jack shit to the economy in general, then you’ve proved the case for the pirates that the industries supporting harsher IP enforcement are not the economic driving forces that they claim they are. Which means that their demands are equally bogus.

Congratulations, darryl. To quote the Soldier from Team Fortress 2, “That was an amazing killing spree! …By the OTHER TEAM!” When bob and his spawn whine about how half of the fucking planet’s population are contributory artists I’ll be sure to link back to your gem of wisdom.

Anonymous Coward says:

The film patents wars of the early 20th century actually led to the spread of film companies across the US,

Thats what patents do, they ensure advancement in technology and enables the spread of COMPANIES, and therefore products.

so because of patents we have more film companies, more material, more innovation, and more money !!!!..

win, win.. for exeryone.. (except masnick).. who would rather you believe that patents stifle innovation and development..

the FACT is patents and copyright, PROMOTE innovation, and creation..

(it’s simple really, consumers do not want 500 versions of the same copied shit, they want new products and inventions, not knockoffs of what someone else has allready done..

Anonymous Coward says:

Re: Re:

You’ll probably find there were more film companies, more material, more innovation, and more money after those patents expired (or done by infringing on those patents)

Innovation will occur if patents exist or not. There would be more innovation if inventors weren’t constrained by patents. The companies you admire succeeded because they tend to use patents to stifle and crush any competition.

Josef Anvil (profile) says:

Results are not statistically significant

Duh!!!

There is a reason there is no significant change in the market. Megaupload was shut down, movies were not suddenly pulled from the web.

The Mega Case (can I TM that?) is just good entertainment for us, it hasn’t changed the nature of digital content or the internet.

For all of the IP maximalists out there. We are in the middle of the IP version of prohibition. Keep pushing for more enforcement and see how it plays out. History isn’t on the side of enforcement of laws that are against the nature of humanity.

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