Word-of-mouth generated by post-release digital movie piracy can lead to an increase in box-office ticket sales, new research has found.

The study led by the Terry College of Business at the University of Georgia in the US revealed that pirated movies that are circulated illegally online after their theatrical release generate on average a 3% increase in box-office income.

The report’s authors – Neil Bendle, an associate professor of marketing at Terry College of Business, as well as Shane Wang of the University of Western Ontario and Shije Lu of the University of Houston – claimed that the increase was due to “word-of-mouth advertising”.

However, Bendle was quick to point out that piracy that is pre-release, rather than post-release, can be extremely damaging in terms of ticket sales, leading to an average 11% decline in box-office revenue.

“We don’t want to give the impression that piracy is a good thing, but there is something to the argument that piracy can increase markets,” Bendle said.

The study, which has been published in Management Science, analysed movie ticket sales, piracy rates and crowd-sourced movie reviews between July 2015 and June 2017.

The research team looked at activity on the popular Pirate Bay website as a benchmark for piracy rates and analysed movie revenues before and during 2015, after a late 2014 law enforcement raid blocked the platform for about a year. The study found that during Pirate Bay’s shutdown, word-of-mouth and movie revenues both dipped.

“When the Pirate Bay was taken down by the Swedish police, we see a drop in word-of-mouth because people can’t watch these movies on the Pirate Bay, and then we see a contemporaneous decline in ticket sales,” Bendle said.

“With post-theatrical release piracy, people who are super keen on it or would have gone anyhow have already gone. People who are not going on the opening weekend can be drawn to it by people who have watched the movie and blogged about it.

“Bloggers don’t have to produce their ticket before they write about it. Pirates can still give a useful, valid opinion for consumers.”

The study’s key takeaway for movie studios is that efforts should be targeted on preventing pirated copies of films being leaked onto the internet before their official release, rather than after.

“They’ve got limited resources to try to track down movie pirates,” Bendle added. “We’re saying that the best use of those resources should be put toward controlling digital copies of the movie pre-release and not at who’s pirating it after the theatrical release.”

Image: Pikrepo