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Why movie companies are killing their own profits (on purpose)

Movie companies. Dreamworks, 20th Century Fox, Universal, Sony, these behemoth movie companies own the entertainment landscape among others, so why are they killing their profits on purpose? To quote a wonderful lifehacker article on the subject “There’s method behind all of that madness, but none of it has any of your best interests in mind. It’s largely about money and how that money is made”.

And how exactly is that money made? Licenses, royalties, and the antiquated idea of region coding of course! So region coding works like this; a movie is released in Europe (region code 2) and the person who buys the physical copy (be it DVD, Blu-Ray, et cetera) wants to play it in the US (region code 1) because he/she has recently moved.  They pop the movie into their recently bought media player but it won’t work!!! This my dear friends is region coding. Why do media companies do this? As the Lifehacker article states very well “it’s a tool that allows them to control releases, stagger availability, localize their movies and TV shows, battle piracy, and (perhaps above all) drive up prices in as many markets as possible for as long as possible”. The last one being the most important reason (to movie companies anyway).

Geo-blocking also operates on the same premise (geo-blocking is region coding except that content is blocked online by looking at where your ip address {a personal identifier unique to your internet connection} is coming from). We will use Netflix as an example. Netflix has to negotiate different fee payments for each region even if it’s the same company. For example, although Netflix may have a deal in the US with Universal Studios (or other movie companies) to show a particular film, they still have to negotiate with those movie companies’ executives in the European and Asian markets in order to show the film there (and pay more money to the movie companies). Hence, Netflix is required to put up a geo-blocking “fence” that only allows Americans to access the US content, and Europeans to access EU content.

Now for the good part; these technologies are minimally to null effective in doing what the movie companies want. At one time these movie companies’ tactics were effective but no longer with the ease of circumvention available. DVD/Blu-ray players can easily be modified to change/set region codes and proxies or VPNs can easily circumvent any geo-blocking taking place. Proxies and VPNs change where it looks like the ip address is coming from. I highly recommend TorrentFreak’s article on VPNs that don’t keep logs of your activities (because some do). Also, while you’re there, check out TorrentFreak’s “Top 10 Most Popular Torrent Sites of 2015” because it’s important to be educated.

So we’ve learned that these tactics by the movie companies are in reality, an attempt to further inflate huge profit margins all the while providing even less value to the consumer. Great job movie companies.  Now that circumvention of these movie companies’ tactics has become so easy, the only people it is hurting are the customers who actually want to legally pay for the content and the movie companies themselves. Wow… good job. In fact, these attempts to stop piracy and inflate profits further actually turn customers away. The customers who want to pay have to jump through so many hoops, eventually it goes something like “F**K YOU FOR F***ING ME FOR SO LONG” and the movie companies lose thousands upon thousands of dollars that individual would’ve spent over their lifetime. Not only because they are pirating that particular content they couldn’t get legally, but now they will likely pirate further content they would have paid for previously out of sheer prior frustration.

In conclusion, I believe that the best way for movie companies to both decrease piracy and increase profit margins would actually be to have worldwide releases at the same time, for all content. Pirates will no longer need look for ripped Asian subtitled versions because guess what, the streaming service they subscribe to will probably have it (or it will be available through another legal channel). Piracy down, profits up.

P.S. this content also applies to music companies’ restrictions and licensing as well (such as Beats Music launch in the US and coming to other countries “soon”).

Disclaimer: I in no way, shape, or form endorse piracy, strictly because it’s illegal. This information is for educational purposes only. I assume you have legally paid to watch whatever content. Another great Lifehacker article “The Always Up-to-Date Guide to Streaming Blocked Content Overseas“.

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Why movie companies are killing their own profits (on purpose)

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