Thorsten Hennig-Thurau, Victor Henning, & Henrik Sattler
Executive Summary
Ever since the ascent of Internet file-sharing services and the parallel sharp decline of the music industry's worldwide sales, movie executives have feared that their industry would be similarly affected by illegal file sharing. The Motion Picture Association of America claims that illegal movie trafficking represents the greatest threat to the economic basis of moviemaking in its 110-year history. Whereas several industry reports and some scholars postulate a cannibalistic effect on commercial forms of movie consumption, other researchers deny this effect. Sound evidence is lacking on both sides.
On the basis of data from a controlled longitudinal panel study of German consumers, the authors examine both the drivers of consumer file sharing and its effect on movie consumption in legal channels. The data contain information on the consumers' intentions and actual behaviors toward consuming 25 new motion pictures, enabling the authors to study more than 10,000 individual file-sharing opportunities. By conducting a series of ReLogic regression analyses, the authors find evidence of substantial cannibalization of theater visits, DVD rentals, and DVD purchases, responsible for annual revenue losses of $300 million in Germany.
Three major implications arise from the results. First, the movie industry is right to proclaim that consumer file sharing destroys a significant amount of its revenues. Second, it is mainly the consumers' intentions to engage in file sharing that cause them to forgo theater visits, legal DVD rentals, and legal DVD purchases, not the availability of pirated copies. Therefore, decreasing consumers' intention to watch illegal movie copies may be the most powerful way to fight movie piracy. An isolated reduction in the number of illegal copies would have a much less of an impact (or even no impact) on piracy, as long as intentions remain unaffected. Third, although the nationwide estimates represent bold numbers, they also demonstrate that recent industry claims exaggerate the true impact of file sharing.
This analysis also shows that file sharing occurs because of various factors, several of which offer antipiracy organizations starting points for countermeasures. Specifically, five categories of determinants (i.e., the degree of substitution between original and illegal copy, the utility of the original as perceived by the consumer, the costs of the illegal copy as perceived by the consumer, the specific utility of the illegal copy as perceived by the consumer, and consumer knowledge about file sharing) drive file sharing and have significant impacts on consumers' obtaining and watching illegal movie copies.
Biography
Thorsten Hennig-Thurau (PhD, University of Hannover) is Professor of Marketing and Media Research at Bauhaus-University of Weimar's School of Media and Professor of Movie Marketing in the Film Business Academy at Cass Business School London. Dr. Hennig-Thurau has published articles in Journal of Marketing, Journal of the Academy of Marketing Science, Marketing Letters, Journal of Service Research, International Journal of Electronic Commerce, Journal of Interactive Marketing, Psychology & Marketing, and Journal of Consumer Affairs, among others. He is founder and director of the Weimar-based MovieSuccess Research Center and has done consulting work for various clients in the film industry. Dr. Hennig-Thurau has authored two books and is coeditor of the monograph Relationship Marketing, which has been translated into Chinese. He also is a member of the editorial board of three journals and serves as reviewer for Journal of Marketing and Marketing Science. Dr. Hennig-Thurau has won ten best-article and best-paper awards, including the Overall Best Paper Award of the 2005 AMA Summer Educators' Conference and the 2002 Journal of Service Research Excellence in Service Research Award. His research interests are in media marketing, services marketing, and customer relationships.
Victor Henning is a lecturer and doctoral student at the School of Media at Bauhaus-University of Weimar, where he conducts research on hedonic consumption and the motion picture industry. He has published articles and case studies in Journal of Marketing and Media, Culture & Society, at theEuropean Case Clearing House, and in several invited book chapters. His research is funded by the German Federal Ministry of Education and Research through a doctoral dissertation scholarship from the Foundation of the German Economy and has been widely reported on in the news media (e.g., Financial Times, Variety, Screen International, The Hollywood Reporter, Frankfurter Allgemeine Zeitung, Die Welt, Wirtschaftswoche, Wiener Standard, Stern). At the 2005 AMA Summer Marketing Educators' Conference in San Francisco, he won the Overall Best Conference Paper Award and the Best Paper Award in the E-Commerce and Technology Track. Victor Henning is also a researcher at the Weimar-based MovieSuccess Center and has done consulting work for various companies in the film industry.
Henrik Sattler (PhD, University of Kiel) is Professor of Marketing and Management and head of the Institute of Marketing and Media, both at the University of Hamburg, Germany. His research interests include branding, pricing, measurement of consumer preferences, and innovation management. He has published four books and more than 60 articles in these fields, including Journal of Marketing, International Journal of Research in Marketing, Journal of Retailing, International Journal of Technology Management, and International Business Review. He was on sabbatical leave as a visiting research fellow at Cornell University, Massachusetts Institute of Technology, and Australian Graduate School of Management. Dr. Sattler has received several research awards (e.g., from the World Association of Research Professionals, German Brand Association), and he has done consulting work for various companies (e.g., PricewaterhouseCoopers, GfK, Unilever). In 2003, he founded the Center for Branding and Marketing at the University of Hamburg.
Journal of Marketing, Vol. 71, No. 4, October 2007
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