Motion Picture and Video Tape Distribution

SIC 7822

Companies in this industry

Industry report:

This classification covers establishments primarily engaged in the distribution (rental or sale) of theatrical and nontheatrical motion picture films or in the distribution of videotapes and disks, except to the general public. Establishments engaged in both distribution and production are classified in SIC 7812: Motion Picture and Videotape Production. Establishments primarily engaged in renting videotapes and disks to the general public are classified in SIC 7841: Videotape Rental. Those businesses engaged in the sale of videotapes and disks to individuals for personal or household use are classified in SIC 5735: Record and Prerecorded Tape Stores.

Industry Snapshot

The U.S. motion picture distribution industry was separated into two distinct categories: majors and independents. Major studios Universal, Sony/Columbia, Warner Bros., 20th Century Fox, and Paramount controlled the lion's share of movie distribution revenues and showed films in large multiplexes and community theaters alike in the early 2010s, whereas independent distributors relied more heavily on small art houses and rarely achieved the box-office blockbusters enjoyed by the majors. In the early twenty-first century, majors invested heavily in purchasing many of the leading independent distributors, such as Miramax, New Line Cinema, and DreamWorks, in a massive trend toward vertical integration. The remaining independents benefited from the unexpectedly robust box-office success of critically acclaimed high-profile independent films. According to the U.S. Census Bureau, 509 establishments employed 8,426 people who together earned an annual payroll of around $700 million. Combined, motion picture and video distribution and production garnered $62.5 billion in revenues in 2010.

According to the Motion Picture Association of America (MPAA), in 2011 domestic box office returns were down 4 percent from 2010 to $10.2 billion. Admissions had increased an average of 2 percent each year during the first decade of the 2000s, but they declined about 4 percent to 1.3 billion in 2011. The average cinema ticket price stayed relatively flat at $7.93, having increased steadily during the previous decade from an average price of $5.81 in 2001.

During the first decade of the 2000s, more than 93 percent of domestic box office revenues was attributed to the 10 leading distributors. A total of 610 films were released in 2011, up from a decade low of 455 in 2003. Of the films released in 2011, 45 were released in 3D. Non-MPAA-affiliated independents released a majority (about 75 percent) of all films, but those films generally had a very limited audience. Generally, in the early twenty-first century, nearly 90 percent of all ticket sales were accumulated by a handful of leading major distributors.

World markets for films and television programs have long been critically important to U.S. producers and distributors. Since 1970, foreign markets have generally accounted for about one-half of major U.S. producers' total sales in these industries. By the early 2010s, international sales accounted for approximately 69 percent of box office sales, which reached $32.6 billion worldwide. The success of U.S. films and television productions in global markets is indicated both by industry trade balances and by comparisons with other film and television exporting nations. The United States has historically exported more than three times the total television programming exports of the next three leading exporting nations combined. For years, U.S. studios were limited significantly by a variety of barriers to trade in foreign markets. In the mid- and late 1990s, they welcomed the relaxation of such restrictions as a result of free trade agreements enforced by the World Trade Organization. By the early twenty-first century, the increasing adoption of the English language gave U.S. filmmakers an edge over foreign competitors. Growth in the pay television and home video markets were other factors benefiting the industry abroad.

In the middle of the first decade of the 2000s, the major studios were challenged with the financial and technical issues of digital theatrical distribution. In 2005 the studios agreed on major technical specifications, giving potential manufacturers information needed to design new digital projection equipment. There were many benefits to the new technology in addition to improved sound and picture quality. Foregoing celluloid prints and long-distance shipping would ultimately save billions of dollars and allow fast delivery to a greater number of locations. During the second half of the first decade of the 2000s, the industry continued to transition to digital screens in movie theaters. By 2011 more than half of screens worldwide were digital--an increase of more than 25 times over 2003. By 2011 in the United States, 27,469, or 44 percent, of U.S. screens had made the switch to digital, and more were going digital every day.

Organization and Structure

The organization and structure of the motion picture industry had traditionally been concentrated in the major Hollywood studios that took control over the three major divisions of production, distribution, and exhibition. The organization of the industry into companies that became fully integrated producers, distributors, and exhibitors represents a structure that existed in the 1920s and 1930s but was disbanded under antitrust regulation before being rekindled during the Reagan administration. This structure hurt independents, as those film distributors without established alliances or reputations are known in the industry, because many of the nation's prime theater venues have relationships with the major distributors that book the larger theaters months in advance.

Typically, a motion picture studio distributes or licenses the rights to its films to an independent distributor, who in turn sells these rights to theaters or exhibitors across the country and abroad. The distributor licenses films to exhibitors by either bidding or negotiation. To obtain the maximum revenue from motion pictures, they are released in a series of runs to theaters across the country. "First run" indicates a picture's initial widespread release to "high gross" theaters across the country. Subsequently, the films are released to lower gross theaters across the country until the earning capacity of the film is finally depleted in the exhibitor market. The film is then marketed abroad by foreign distributors, released in video format, and offered on cable television before being syndicated to a television broadcast network.

When an independent distributor pays for the rights to market a specific film from a Hollywood studio, that company then forms a contract with the exhibitor market to show the end product. These contracts take many forms but normally include several key features. The distributors create "zones," or geographic boundaries, for their pictures. Within each zone a distributor typically would only release a particular motion picture to one theater for exhibition. This practice ensures that the distributor will obtain the largest audience for a film, and it prevents other theaters in close proximity from competing for the same customers who might wish to see that particular movie. There usually is a clearance clause in the contract that relates to the amount of time that must elapse between the end of the first run of a motion picture and the beginning of its subsequent runs. Longer clearances provide more first-run revenues for a picture. In addition, many of the distributors of "A" rated films also practice block booking. Block booking is the practice of offering for license one feature, or a group of features, on the condition that the exhibitor also licenses another feature, or group of features, released by the distributor during a given period. Block booking ensures outlets for a motion picture regardless of its quality or box-office potential. The practices of block booking and blind bidding by distributors, which requires an exhibitor to bid for a film before reviewing it, are regulated in approximately half of the states in the United States. These statutes, although primarily concerned with curbing the practice of blind bidding, also regulate the entire bidding process.

Background and Development

Since the formation of the motion picture industry by individuals including Thomas Edison, Louise and August Lumiere, C. Francis Jenkins, and Thomas Armat in the 1880s, movie producers and distributors have attempted to control the industry by engaging in multiple tactics. Originally, monopolies were attempted through the ownership and protection of patents on the equipment and technology needed to produce and exhibit motion pictures. As technology advanced, the power provided by these patents decreased. In an attempt to maintain control, industry leaders, led by Edison, merged their companies and formed a cartel, the Motion Picture Patents Company (MPPC).

At first the MPPC wielded its power by pooling all of the licenses and patents that its individual members held. It defended its position by bringing numerous lawsuits against those who infringed on their rights. At the same time, motion picture exchanges developed to distribute the movies that the MPPC was producing. These entities purchased or leased films from producers and rented them to theater owners. These exchanges became quite profitable, and the MPPC purchased most of them in a vertical integration marketing strategy. As the MPPC purchased exchanges, it instituted practices designed to increase its bargaining power and ability to control the exhibitors who needed the product. Using its patents to force compliance from the exhibitors, the MPPC imposed restrictions on these exhibitors, including stipulations that implemented a system of distribution based on theatrical runs, geographic zones, and clearances (the amount of time contracted for between the first run of a motion picture and subsequent runs). The MPPC's successful control over distribution was short-lived. A motion picture antitrust action brought by one of the few exchanges that MPPC did not operate resulted in the dissolution of the trust arrangement. The first attempt by movie producers at organized distribution had failed.

Although this decision brought an end to the MPPC, it was not successful in curtailing the control that motion picture producers and distributors had gained. In 1916 Paramount Pictures Corporation, a fully integrated production and distribution company, rose from the ashes of the MPPC. Paramount, as a producer, had contracts with many popular film stars. It was able to use the appeal of the stars together with its distribution capabilities to create a new mechanism for control through block booking. Although Paramount was a dominant force in the industry, other companies gained similar control by engaging in similar practices. Block booking, along with the established run-zone-clearance system, effectively put the exhibitors at the mercy of the producer/distributor companies.

In response to these practices, the exhibitors gained bargaining power by forming chains and circuits. In 1917 the First National Exhibitors Circuit was formed. This group of exhibitors gained power and market domination through anti-competitive practices of their own. As a result of the power that these exhibitors had gained in their circuits, control of these cinemas meant control of the entire industry, and they became targets for purchase by the big producers. The studios' purchasing was influenced by the realization that if they could control every level in the motion picture industry from production to distribution to exhibition, they would not only be able to control prices and ensure access to screens for the exhibition of their own pictures, but they also would be able to prevent competition from independent producers and gain control over the entire industry. The studios began to purchase exhibitors to make this complete control a reality. As a result of these monopolistic activities, with studio-owned circuits gaining control over entire exhibition markets, the government believed it was necessary to intervene.

By 1930 the government had filed numerous lawsuits against the circuits and distributors in an attempt to curtail these practices. The industry clearly was dominated by a group of eight major studios. The top five vertically integrated firms, all of which had a major presence in distribution, exhibition, and production, were Warner Brothers Inc., MGM Inc., Paramount, 20th Century Fox Film Corp., and RKO. The other three included Universal Studios and Columbia Pictures (involved solely in production and distribution) and United Artists (distribution only). The majority of these suits charged the defendants with illegally restraining trade by adopting various anti-competitive practices, including the use of arbitrary clearances, discriminatory zoning methods, and block booking. Although the government succeeded in forcing the studios to restrict their conduct, it ultimately lost the battle, as the anti-competitive atmosphere had taken over the industry. By the end of the 1930s, the majority of the most powerful circuits had been purchased by the major studios.

In 1938, as a result of these anticompetitive practices, the U.S. government filed a case against the major studios that came to be known as the "Paramount case." The suit alleged that the motion picture producer defendants had attempted to monopolize and had monopolized the production and distribution of motion pictures. Although the case never went to trial, the major defendants signed a three-year consent decree that enjoined them from block booking more than five pictures, blind bidding, and requiring unreasonable clearances from exhibitors. The agreement also stifled forced rentals and limited the defendants in their quest to purchase exhibitors. The decree was unsuccessful in bringing about change in the industry because the government did not require the separation of production and distribution from exhibition.

In the late 1940s and early 1950s, the government reopened the Paramount case. The result of this action was that all major motion picture studios were required to license motion pictures on a picture-by-picture basis, solely on the merits of the movie and without discrimination in favor of affiliated theaters, circuit theaters, or others. In addition, the government forced the five major companies to divest themselves of specific theaters and theater circuits. This action dismantled the fully integrated motion picture industry. The grip that studios had once held over the industry finally had been loosened. By eliminating the domination of vertically integrated studios, the hold over motion picture distribution was sufficiently weakened to give independent producers and distributors access to screens and a chance to prosper in the industry. The number of independent producers grew from 70 in 1946 to nearly 170 in 1950. In early 1953, the U.S. Justice Department concluded that the industry had become "de-monopolized," and that competitive bidding and negotiations had become the dominant method of film licensing and distribution. In this environment, independent theaters were given the chance to compete equally for the right to exhibit first-run movies.

The industry operated under this format until 1980, when President Reagan allowed studios to once again become vertically integrated by giving them the right to own movie theaters. This new application of the antitrust doctrine was used by the studios to reshape the motion picture industry. Under Reagan administration policies, the Paramount consent decrees were not enforced, and the movie studios reassembled the vertical integration path abandoned in 1948. By 1985 the studios were overcome with acquisition fever and were purchasing theaters at a record pace. Although some studios waited with cautious observance to analyze the Justice Department's response to these acquisitions, no objections were raised. Between 1985 and 1988, movie companies spent more than $1 billion to purchase independent movie theaters. The entire motion picture industry reverted to the structure that had existed before 1948.

With the increasing popularity and mainstream critical acclaim of independent hits in the late 1990s, the motion picture distribution industry experienced an ever-tightening link between independent producers and Hollywood distributors, who saw in the former's products a lucrative and refreshing break from the increasingly formulaic, sequel- and budget-driven Hollywood market. In that spirit, major distributors entered into revenue-sharing agreements with independents, with the majors taking a share of the receipts in exchange for wider exposure. This practice encapsulated the decade-long efforts of major studios to reach into the independent market.

Meanwhile, rising advertising costs made it more difficult for independents to turn a profit and generally resulted in production of fewer films in an attempt to scale back budgets, with advertising and exposure efforts devoted to the more hopeful products. Although few independent distributors expected to reap Hollywood-scale rewards at the box office, some broke into the major studio stratosphere in the late 1990s. Independent films enjoyed spectacular revenues at theaters from wide scale features like The English Patient and Shakespeare in Love, both of which won several Oscars, including best picture, as well as Good Will Hunting and The Full Monty. Meanwhile, the unlikely runaway success of the independent Artisan's The Blair Witch Project, with $140 million in box-office revenue, generated a record in profitability, as the documentary-style film was produced for less than $60,000.

The major independent studios included October, Fine Line, Fox Searchlight, and Artisan. The number of independent films released doubled between 1995 and 1998. The bread and butter of independent films were the small art houses, which diminished in number as the norm became enormous multiplexes that were dominated by the major distributors. This combined with the rising numbers of independent film productions to create a fiercely competitive distribution market among independents. As a result, the market became internally stratified as distributors concentrated their production and promotional budgets on those films likely to achieve the greatest success. Sixty-eight independent films grossed $1 million in 1998, compared with $48 million in 1997, but far fewer earned more than $20 million.

For the independent exhibitors, distributors, and producers, one of the most unsettling aspects of the resurgence of major studio involvement in distribution and exhibition was that the studios hoped to guarantee their access to screens. Although the Paramount decree required divestment and mandated that motion pictures be distributed theater by theater solely on merit and without discrimination, the reintegration of the industry removed these safeguards altogether. As affiliated and nonaffiliated circuits continued to grow in size, independent circuits virtually were eliminated from the competition to obtain first-run motion pictures. Although there was no evidence of collusion or discrimination by distributors or affiliated circuits, the market power of the large affiliates was allowed to resurface.

In an attempt to rectify the imbalance of bargaining power that distributors maintained over exhibitors in the licensing of motion pictures, many states passed statutes to regulate motion picture licensing. The majority of these statutes regulated the licensing of motion pictures and the bidding practice used to gain control of a motion picture. Motion picture licensing usually occurs under either competitive bidding, competitive or noncompetitive negotiation, or track system. With competitive bidding, distributors send exhibitors solicitation letters informing the exhibitors of the release of new films. This correspondence contains a minimum amount of information about the film, possibly including the stars, a brief plot synopsis, and suggested terms for the licensing of the film. If the distributor is unhappy with the bids that it receives, it will either solicit new bids or negotiate directly with the exhibitors. The track system is used when there is an established relationship between an exhibitor and a distributor.

Exhibitors themselves have also attempted to obtain some bargaining strength against the major studio distributors with the use of "split agreements." Split agreements are the practice whereby exhibitors in a given market split the rights to negotiate for the rental of upcoming films. These agreements ensure that each split member has an initial right to bid or an opportunity to negotiate for certain films without competition from other split members. Because other split members agree not to submit bids for films that have not been designated to them, participants in split agreements initially face competition only from exhibitors who are not members of the split. Distributors have tried to fight these agreements in court in order to maintain their bargaining strength.

The nature of motion picture distribution was dramatically altered by the rise of home video in the 1980s and 1990s. Distributors increasingly relied on small-screen revenues to recoup their costs. With box-office receipts shared between distributors and theater operators, the home video market came to be an important part of the distribution system. In 1998 movie distributors earned about $8.5 billion in video rentals from U.S. and Canadian theaters and a similar amount overseas, while video sales and licensing films for television broadcast brought in more than $12 billion. Nevertheless, home video had become the leading source of profit for distributors. It offered many movies a new lease on life because films that would otherwise go straight into the company vaults were released routinely on video without a theatrical run. However, box-office performance remained critical to a film's future success in the home video and television markets.

Another growing market for film runs in the late 1990s was in satellite broadcasts. By 1999 made-for-satellite films comprised a $543 million distribution market. There were approximately 10 million pay-per-view subscribers in the United States, a figure that was expected to increase with the further proliferation of DirecTV service. Furthermore, satellite broadcasters were leaning increasingly toward on-demand video service, in which customers could download any film licensed to the broadcaster directly to their homes. Several major Hollywood directors, including Francis Ford Coppola and John Landis, boosted the satellite movie market by producing made-for-satellite films, in which producers contracted directly with satellite broadcasters for exclusive rights to show the films.

Although a number of very successful independent films were released during the early years of the first decade of the 2000s, this sector of the film market did not attract the attention it had in previous years. As larger industry players swallowed up independent distributors, some observers argued that profits had become a primary concern and the quality of the films had suffered. Conditions like these led to outcries from independent producers, some of whom claimed that a distribution crisis existed for those with small budgets. These problematic conditions extended to the home video market, in which distribution companies owned by the largest industry players pushed smaller distributors aside. In 2006 there were approximately 1,170 establishments in the distribution industry, with well over half employing fewer than five people.

The rapid adoption of digital video disc (DVD) technology opened a new market for independent distributors. Variety reported that potential revenue from DVD sales helped increase the outlook for independent film companies in search of financial backing. According to the MPAA, the number of titles available on DVD increased from 8,500 in 2000 to 45,000 in 2006. During this period, average DVD prices declined substantially, inspiring movie enthusiasts to purchase movies with enhanced content and extra features for their entertainment libraries, as opposed to renting them.

By second half of the first decade of the 2000s the transition to digital technology was well underway in the film industry. Citing figures from Screen Digest, the MPAA reported that the number of digital cinema screens worldwide increased from 31 in 2000 to 328 in 2004, with about 100 of that number showing feature films in the United States. The major studios quietly worked on the technical specifications and financing needed to convert some 36,000 theaters throughout the country. At about $80,000 per screen, the total cost was estimated to be almost $3 billion. In 2005 Disney and Warner Brothers accounted for two-thirds of all digital cinema titles, with Disney benefiting from the ease of projecting animated films digitally.

Small companies were more able to experiment with the new technologies, departing from traditional distribution methods. 2929 Entertainment, a company owned by Mark Cuban and Todd Wagner, was part of a completely digital production and distribution chain. The company gave consumers simultaneous DVD and theatrical releases, eliminating the period when a film is only available in theaters and banking that digital technology would create savings in all of these areas.

Digital technology also was impacting the way movies were delivered to home viewers. In late 2002, Warner Brothers forged an agreement with CinemaNow that allowed consumers to download movies to their personal computer for a period of 30 days for $3 to $4. By the spring of 2003, 20th Century Fox had also entered into an online distribution agreement with CinemaNow. Wal-Mart Stores got into the game in 2007, partnering with the six major studios to offer downloads the day of the DVD release. In 2007, online shopping giant and digital recorder pioneer TiVo worked together so that customers could purchase movies online at Amazon and download them instantly to their TiVo units, making the traditional conversion network from computer to television unnecessary.

Industry concerns about piracy were affected by the digital revolution in the second half of the first decade of the 2000s. MPAA President Dan Glickman named illegal copying as the biggest concern for the major studios. According to a study conducted by the MPAA, piracy cost the major studios over $6 billion annually and cost the overall industry, including producers, distributors, dealers, and video store owners, over $18 billion a year. About two-thirds of pirated goods were DVDs and the other third were transmitted via the Internet, but digitally stolen goods were expected to continue to rise as video uploading became increasingly popular.

Illegal clips of movies had become so prevalent on the Internet by the end of the first decade of the 2000s that to combat it, the industry was seeking ways to vastly increase the number of legitimately available movies and clips online. However, the efforts were being stymied by the actors' guilds, which were insisting that the actors be compensated on a per-view or per-download basis--a request that the distributors thought would unreasonably complicate the process.

Some distributors were, however, finding ways to bring digital content to viewers. For example, in 2009 Disney signed with ABC, NBC, and Fox to distribute its ABC television shows and its movies via, the number-two video streaming Web site behind Yahoo!. Ad supported, Hulu streamed television shows and movies--both clips and full length--directly to the consumer's computer. Such direct digital transmission was expected to increasingly replace such services as Netflix's DVD and Blu-Ray rental service. Other direct service distribution options included television on demand, which provided consumers the ability to rent movies directly to their television, and iTunes, which provided consumers with the option to rent or purchase digital copies of movies to download to their computer or mobile device. The growing popularity of these different distribution methods led to a drop in DVD sales at the end of the first decade of the 2000s and early 2010s.

Current Conditions

A plethora of changes and technological advances in the movie and television industry overall kept distribution companies on their toes in the early 2010s. According to New Media Age Online, "Technological developments, such as an increase in the number of web-enabled TVs, are expected to make film-streaming services more appealing, experts believe, while movie studios are expected to agree to distribute more of their content online, although disputes over copyright will continue."

Copyright and piracy was the number one issue in the industry at the beginning of the 2010s. Organizations like the MPAA, the RIAA (Record Industry Association of America), and the ESA (Entertainment Software Association) supported passage of such legislation as the Stop Online Piracy Act (SOPA) and the Protect Intellectual Property Act (PIPA). According to the January 18, 2012, edition of the Chicago Sun-Times others, such as Wikipedia and Google, protested the proposed laws, calling them, for example, "terrible, misguided legislation that serves the interests of one commercial industry" and saying that they inhibited the freedom of Internet users. As of 2012 there was no sign of a resolution to the heated debate regarding the fine line between misuse and freedom of use of content on the Internet.

Industry Leaders

In terms of box office market share, a handful of large producer/distributors have consistently led the film entertainment industry. Universal, Sony/Columbia, Warner Bros., 20th Century Fox, and Paramount were the top five studios in 2011, followed by Lionsgate and Buena Vista. Competition was fierce, and rarely did a single company hold the top position for long. With the increased importance of international box office developing throughout the decade, Universal and Paramount created a joint venture United International Pictures (UIP) in the early 2000s to become one of the world's largest theatrical distribution companies. However, at the end of 2006, Universal and Paramount decided to part ways, and UIP was dismantled and Universal and Paramount began to manage their own international distribution.

In 2011 Universal was the top studio in terms of revenue, grossing $405 million and holding a 16.8 percent market share. Sony/Columbia was second, with 15 percent of the market and $362.6 million, followed by 20th Century Fox with 12.2 percent and $296.1 million and Warner Bros. with 12.1 percent and $293.4 million. Paramount rounded out the top five, holding 9.2 percent of market share and grossing $227.7 million. Together these five companies accounted for 65 percent of all industry revenues in 2011.

America and the World

The global market for films and television programs has long been critically important to U.S. producers and distributors. In the last third of the twentieth century, foreign markets generally accounted for about one-half of major U.S. producers' total sales in these industries, which grew to more than two-thirds of ticket sales by the early 2010s. Of the $32.6 billion in 2011 ticket sales, international sales accounted for $22.43 billion. Japan was the number-one international market, followed by China, France, the United Kingdom, and India. The success of U.S. films and television productions in the global market was indicated both by industry trade balances and comparisons with other film and television exporting nations. The United States historically has enjoyed tremendous advantages in these areas.

Motion picture and home video distribution to other countries was hindered, however, by several factors. Trade problems encountered in the media industries fall into two general classes: government-imposed nontariff barriers and various forms of film and video piracy. These problems greatly reduced U.S. industries' revenues in many markets. Nontariff barriers included various quantitative restrictions, limitations on the repatriation of earnings, and discriminatory taxes, usually aimed at protecting domestic markets from foreign competition. Perhaps even more important in terms of its effect on export earnings was video piracy. Producers' and distributors' losses due to piracy have increased enormously because of the growth of new copying and distribution technologies. Copyright enforcement problems of varying degrees are encountered in all markets worldwide. Moreover, the nature and severity of copyright infringement differs among individual markets and channels of distribution. Copyright infringement problems fall into several different categories of unauthorized public exhibition, including print theft, DVD piracy, and theft of broadcast signals.

The first of these activities, unauthorized public exhibition, has been reported to occur primarily in more developed countries. Unauthorized presentations of copyright-protected films often occur in hotels, cafes, homes, and theaters around the globe. A second related category of copyright infringement is the actual theft of film prints themselves. Copies of prints can be stolen at various stages of distribution, and the negatives subsequently can be used to produce unauthorized prints. The third and perhaps most widespread form of copyright infringement was DVD piracy, which had become a global phenomenon. Analysts estimate that billions of dollars were lost to DVD piracy each year. These copyright infractions, coupled with other forms of piracy like the theft of broadcast signals, resulted in poor relations between U.S. producers and distributors and foreign agencies. According to the MPAA, the countries with the highest rates of piracy were China, Russia, and Thailand, although the countries representing the highest rate of dollars lost were Mexico, the United Kingdom, and France.

As motion picture technology continued to convert to a purely digital format during the first decade of the 2000s and the early 2010s, film distributors hoped to outpace pirates in establishing safeguards against illegal copying with the new technology. In that spirit, a number of telecommunications and film companies joined forces to implement a restrictive encryption standard on digital films and music to prevent piracy. Such measures were not sufficient to end piracy from camcorder copies of theatrical releases, the most technologically advanced of which came from Canadian pirates at the end of the first decade of the 2000s. Although all recording, called "camming," is prohibited in the United States, this practice violates Canadian laws only if intent to distribute can be proven.

Research and Technology

In the early 2010s, advances in technology in the multimedia marketplace were being incorporated into the motion picture industry and were changing the way traditional products are being developed, licensed, and distributed. Film was becoming a digital media and was acquiring many of the similarities found in software products such as video games. Conventional film companies explored the opportunities in interactive transmission and technology. Companies digitized their film libraries and explored new ways to make this product available to distributors and consumers. The transformation of the motion picture industry to a digital format and the increase in new technologies available to cable companies, the broadcast networks, and consumers provided the public with an array of viewing possibilities.

Improved technology also has made the Internet a film-viewing medium, creating an inexpensive outlet for filmmakers without significant financial backing. With decreased production costs and inexpensive computer software, these filmmakers only needed space on a Web server to bring their films to the public.

Distributors and producers became far less wary of new technologies. The arrival of home video recording in the late 1970s, once viewed as a threat, had proven to be a vastly lucrative new source of income. During the early years of the first decade of the 2000s, rapid adoption and widespread use of DVD technology was underway worldwide. In addition to new releases, distributors re-mastered and rereleased older films with extra features on DVD, which consumers purchased for their home entertainment libraries.

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