Dvd Sales and Internet Piracy

Movie studios have long believed that home video recording damages the market for movies broadcast on free television. This issue has gained renewed importance with the advent of highdefinition television, causing movie studios to argue that consumer recording of digital video will result in increased piracy and reduced DVD demand. In contrast, we find that the dominant impact of movie broadcasts is to stimulate DVD sales by an average of 120% in the week after broadcast. Moreover, this increase in sales appears to derive from the broadcst itself, as opposed to pre-broadcast advertising. However, we also find that movie broadcasts stimulate piracy by between 20-60% in the week after broadcast. Our research highlights both the opportunities and threats facing studios in a digital age.