piracy.jpgAround 126m video disks were sold in China in 2006, but as many as 2bn counterfeit discs were in circulation at the same time.

Understandably, piracy rates of around 95% create a “major
challenge” for any company trying to make a profit in China's film and
home entertainment market, according to Screen Digest, the London-based media analysis firm.

Major western titles are often available to the Chinese home movie
fan a month before their official release, at far less than the
relatively high cost of purchasing a legitimate DVD. Pirated copies of
the latest James Bond film Casino Royale were available over a month
before the film's scheduled release date.

Nevertheless, Screen Digest finds some positive developments for the
film industry. First, China's authorities are taking “meaningful steps”
to address the country's severe shortcomings in IPR enforcement.

Second, the government is supporting a strategy to bring cinema to
both rural Chinese and also even more urban areas to help the film
industry expand its market.

Screen Digest forecasts that by 2010 the Chinese will be spending in
excess of $500m on DVDs. But the market will continue to fall short of
its true potential and remain unattractive to western investors because
of the issues of piracy and disputes over DVD royalty payments.

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