SEC Investigating Hollywood Studios For Alleged Bribes To China

from the open-markets dept

When the MPAA came out with its annual report about the movie market worldwide, it showed that China was a huge growth market. However, now it appears that perhaps some of that growth was the result of Hollywood studios bribing Chinese officials. For years, China has limited how many Western movies can be released in the country. While Hollywood loves to decry all of the "piracy" in China, much of it is due to the fact that the movies can't be released there under the law. That's a situation where the problem is not piracy, nor the MPAA itself (even as it whines about Chinese piracy), but local laws. However, there has been a loosening of those restrictions lately -- and the SEC is exploring whether or not that came about due to bribes from the studios:
The Securities and Exchange Commission has sent letters of inquiry to at least five movie studios in the past two months, including News Corp's 20th Century Fox, Disney, and DreamWorks Animation, a person familiar with the matter said.

The letters ask for information about potential inappropriate payments and how the companies dealt with certain government officials in China, said the person, who was not authorized to speak publicly about the letters.
That said, there is an interesting tidbit in the Reuters article about all of this, that really serves to highlight how ridiculous the MPAA's fight against "piracy" is. It shows that despite the fact that piracy is rampant for Hollywood movies -- once the MPAA was able to get legit movies into the country, people flocked to the theaters. In other words, despite the cheaper pirated options -- or even free options -- people have no problem paying for the legit product when it's offered in a quality fashion:
China's booming middle class is increasingly willing to pay tickets prices for a cinema experience, forgoing cheap pirated DVDs and free internet downloads.
Once again, this seems to demonstrate why the problem is not piracy. If consumers are offered what they want in a reasonable manner, they are more than willing to pay -- and the Hollywood studios seem to recognize this implicitly (which is why they may have bribed Chinese officials to release authorized versions in that market, even with "piracy" being so common).

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  1. identicon
    Anonymous Coward, 26 Apr 2012 @ 1:24pm

    Re: Re:

    Ahh! So you might be someone who would understand.

    Until recently, the idea of a movie theater wasn't much to most Chinese people. For probably 3 or 4 decades, that was a place you went to see the latest internal propaganda films, the latest boost the moral of the population opus, turned out and approved by the central government. Most people wouldn't go because there was no reason to. They might only go if the local party officials expect them to show up on a give night for some reason.

    About a decade ago, they started to allow some western movies into the country on a regular basis. It's tightly controlled, very limited, and they faced many difficulties such as outmoded equipment, dilapidated buildings, and such. The idea of a retail movie industry was about as foreign as the movies they might show. That of course would be if they happened to live in a village or town that actually had a movie theater, and not just some guy driving around on a three wheel motorcycle showing movies in a different town each night:

    http://articles.latimes.com/2011/mar/06/business/la-fi-china-cinema-20110306

    "Over the last four years, the number of screens in China has doubled to more than 6,200, a figure that's projected to double again by 2015. Box-office receipts hit a record $1.5 billion last year, according to the State Administration of Radio, Film and Television."

    So when Mike goes on about how the Chinese industry is proof that they can overcome piracy, take it with a grain of salt. The movie theater business started at effectively zero not that long ago. Increase (35% last year, if I remember correctly) are only keeping in line with growth, which is still well behind.

    If Mike had any idea about things in China, he wouldn't make such obviously silly statements.

    (as a side line, if you totaled up all the time of my Chinese visas, I would have about 4 years - and another 1 year unlimited being issued this week again).

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