Wither Movie Theaters?

There aren’t that many movie theaters in Shanghai.  Certainly, compared to the size of the population (around 17 million is what I hear), you’d expect far more theaters.  But it’s nearly impossible to find one.

When you run across the occasional theater, you discover that their prices are extraordinary.  Normal tickets are about $12.  This may not sound like much – say, if you live in Manhattan – but college graduates in China often earn under $15,000 a year.  $12 is, in local prices, “ridiculous.”

Then there are the $50 seats (not a typo).  Some theaters in China, like the ritzy theater in the Grand Gateway mall, have “VIP” tickets that cost $50.  You essentially sit in a glass-enclosed box, much like movie stars do when attending stadium games in the US.

Not that I actually know from experience.  $50 is a wee too much for me to spend on one movie (a five minute bathroom break would cost the price of a latte!).  I’m also not sure why you’d want to go to a theater just to sit in an enclosed box all by yourself.  Isn’t the whole point of going to the theater to share an experience with the audience?  If I wanted a completely silent box with no one near me, I’d rather watch at home.

Which brings us to why theaters are so scarce and expensive in China.  They used to be all over the place, and cheap, from what locals tell me.  But in recent years, the advent of DVD piracy has decimated the theater business.  Why pay several dollars to watch a movie in a theater when you can pay $0.80 (not a typo) on the street to buy the DVD?  This is essentially the thought process that Chinese citizens underwent in the past decade.  As cheap pirate DVDs became available, less people went to theaters.  Theaters started closing down.  The remaining theaters had to charge more and more in order to justify staying open.  As movies raised prices, even more people fled to pirate DVDs.  This self-reinforcing cycle has now driven the movie theater business to its new equilibrium in Shanghai:  one theater for every several hundred thousand people, each charging $12-50 for tickets.

If there’s one thing that’s interesting to a computer scientist in China, it has to be the bit about intellectual property rights.  As everyone knows, pirated software and pirated DVDs are everywhere not only in China, but in most of the Far East.

[As an aside, there are cases, albeit limited, where piracy actually seems to fill a legitimate niche.  Here’s an interesting case I ran into recently.  Employees of Microsoft are allowed to download any Microsoft product for business use through an intranet site that’s notoriously slow when accessed overseas.  Coworkers from Thailand tell me that downloading a large product, such as Visual Studio, can take many hours (or in some cases even days).  It turns out that if you’re a Microsoft employee in Thailand and want to install a large Microsoft product, it’s faster to simply buy a pirated version of the product from a local store.  It takes ten minutes of walking and costs about $3.  Once you buy that disc, you can share it with all your coworkers so that their installations also go faster.  Isn’t this an odd case of data-transfer arbitrage?]

Back to China and DVD’s.  You can find pirated DVD’s on many streets in Shanghai.  In fact, most pirate establishments are so formalized that they have their own store, many as large as your local Blockbuster.  The types of pirated content include major Hollywood movies, entire seasons of popular TV shows, as well as a huge collection of Chinese movies and TV.  You can find just about anything.

Pirated movies range in quality both in how they’re distributed and in the original recording source.  For instance, the cheapest movies are the ones that actually come on CDs (VCDs).  The more expensive ones come on multilayered DVD’s (and “more expensive” is a relative term – we’re talking the difference between $0.80 and $1.20).  As for source recording material, television shows are often recorded straight off the network with commercials cut out.  The best movies are recorded directly from the source DVD, but the worst ones are recorded by filming the movie in a theater with a portable video recorder.  Somewhere in the middle are the preview editions of movies which studios send to critics prior to a movie’s release.  These often come with watermarks prominently displayed in the movie (“Property of Warner Bros.”).

This leads to interesting moral dilemmas.  For instance, I subscribe to Netflix in the US.  For several dollars a month, I have the right to stream most US TV shows onto my computer.  However, studio distribution laws don’t allow streaming into China (thereby, funny enough, encouraging piracy).  I can bypass Netflix’s attempts to detect my location using VPN services (such as Witopia), but it’s arguably more efficient just to buy the pirated DVD’s.

Similarly, most major networks (e.g. NBC) now allow you to stream recent shows for free.  But they don’t allow access from outside the US.  This, once again, poses a moral dilemma for US citizenry worldwide.

I’ve always paid for my digital music as well as for movies and TV shows.  However, the restrictive usage rights demanded by major corporations in the US have the side effect of tempting me (some might say encouraging me) to pirate the content.

I’d happily pay for access to the  material (and continue to do so).  But let’s take a lesson from Shanghai’s movie theater business:  we need to carefully structure our digital rights laws to encourage and enable legitimate use, not to further encourage piracy.

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