L.E.K Consulting

Movie piracy costs Hollywood's big studios about 6.1 billion dollars last year, far more than the 3.5 billion dollars the industry had previously conceded, a stunning report revealed Wednesday.

A study ordered by the US film industry's lobbying group, the influential Motion Picture Association of America, revealed that pirates were costing Tinseltown's major studios about 75 percent more than they had thought.

Around 2.4 billion of the 6.1 billion dollar losses resulted from bootlegging, 1.4 billion was due to illegal copying and 2.3 billion dollars was lost to Internet piracy, said the study, parts of which were released by the MPAA.

The losses included decreased cinema ticket sales and falling DVD sales that have been one of the struggling industry's major money-spinners in recent years.

Previous piracy studies conducted by the US movie industry had focused solely on what the MPAA terms "hard-goods" piracy and not on Internet piracy.

"This study will help us better analyze and focus our efforts to fight movie theft," said MPAA chief executive Dan Glickman.

"We are calling on governments internationally to continue to work with us in limiting the impact of piracy on local economies and the film industry. Movies are a valuable product and intellectual property must be respected."

The study, conducted by L.E.K. Consulting LLC, was completed last year in the hope of giving the seven major Hollywood studios that make up the MPAA a clearer idea of where their losses were occurring, but was kept under wraps by the MPAA, according to the Wall Street Journal.

The survey was conducted over 18 months in 28 countries at the cost of three million dollars and revealed the previously unknown scale of the cost of piracy in various markets around the world.

Piracy is costing the industry about 1.3 billion dollars a year in the United States alone, while more than two billion dollars was lost in Europe.

Other revelations of the report included the scale of illegal copying of movies in Mexico dwarfing the problems in China and Russia which have long been targets of anti-piracy swoops.

Mexico is now the world's largest market for piracy, accounting for around 483 million dollars in lost revenue to MPAA member studios in 2005, the study showed.

Estimated losses in China were 280 million dollars and Russia was the source of 275 million dollars in losses, it said.

The countries where movie piracy is occurring most prominently are China, Russia, Britain, France, Spain, Brazil, Italy, Poland and Mexico.

The movie industry faces a potential loss of 93 percent of its market in China, 62 percent in Thailand, 51 percent in Taiwan and 29 percent in India due to piracy.

Intellectual property theft in Russia, Hungary and Poland could cost studios 81, 73 and 66 percent of the market in each country respectively, the report showed.

Outside of the United States, illegal downloading and bootlegging are prevalent, while domestically the main scourge is illegal copying and distribution, the MPAA said.

The average film copyright thief is male, between the ages of 16 and 24 and lives in an urban area, while college students in the United States, South Korea and Hungary contribute the most to each country's individual loss, the MPAA said.

"The findings in this study reinforce the need for a multi-pronged approach to fighting piracy," said Glickman.

"As an industry, we have to continue to educate people about copyright laws and the consequences of breaking those laws. At the same time, we have to provide legitimate, hassle-free ways for consumers to obtain movies at a reasonable cost," he added.

The results of the study come as bad news for the MPAA's high-profile anti-piracy crusade that its new chief Glickman has thrown his weight behind since taking over the job in September 2004.

The MPAA embraces Paramount Pictures, Sony Pictures Entertainment, Warner Bros, Metro-Goldwyn-Mayer Studios, Universal Studios Inc, Walt Disney Co. and 20th Century Fox.