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According to the Wall Street Journal (subscription required), Twentieth
Century Fox is shifting its strategy in fighting movie piracy in China.
Rather than pushing legal action (the traditional model), the studio
has plans to release and sell
inexpensive, legal DVDs of its films. The idea is to offer a superior
product inexpensively to attract Chinese movie fans away from the
Most movie companies invest relatively little in establishing distribution channels in booming markets like China while allocating most their funds toward preventing piracy in such countries. But that’s just proven to be a waste of time and money. Fox is catching on and is leading a new push in Hollywood to actually compete with counterfeits rather than just shut them down (which has proven to be more difficult than high paid lawyers had hoped).
So today, News Corp.’s Fox will announce the opening
of a new office to oversee DVD sales in China. An alliance with a Chinese distributor is also in the works:
“It comes down to our ability as marketers to convince
the Chinese consumer it’s worth spending the money” on legitimate DVDs,
explains Keith Feldman, Fox’s manager for international home-entertainment.
The Motion Picture Association of
America, of course, loves to release estimates on the cost of piracy in China, claiming it deserves $244 million due to
lost ticket and DVD sales last year.
But Fox is moving to release less expensive and affordable DVDs as part of the new strategy. The retail prices for the company’s new DVDs are expected to be around
20-25 yuan or about $3 a DVD. That’ still about double the cost of street-purchased DVDs but much more reasonable than previous prices. And the quality will be quite a better too.
Another major studio, Warner Bros., recently started its own push for low-priced legitimate DVDs in China. But Fox’s Feldman isn’t concerned with studio competition: “Obviously our key competitor is counterfeit.” The idea being that the combined marketing and distribution power of two major Hollywood studios will only help in competing with piracy.
The other issue facing studios is that DVD sales are slowing in the United States, forcing the companies to take advantage of developing markets such as China, Russia, and Brazil. And in the case of China, the DVD market is especially important to
Hollywood since the Chinese government only allows 20
foreign films a year to be distributed to movie theaters.
Zoke Culture Group is Fox’s new local partner in China. Guo Zilong, Zoke’s chairman and president, talks about how “Many consumers want to buy legitimate products, but
they can’t find them.” So the company has established a nationwide network of agents to sell to retailers. The claim is that many Chinese are eager
to purchase foreign films but just find it easier to find a
street vendor than to find a place where a legal version might be sold. Thus, improved distribution is at the top of the list for Fox in China.