Consumer File Sharing of Motion Pictures

Abstract

Illegal consumer file sharing of motion pictures is considered a major threat to the movie industry. Whereas industry advocates and some scholars postulate a cannibalistic effect on commercial forms of movie consumption, other researchers deny this effect, though sound evidence is lacking on both sides. Drawing on extant research and utility theory, the authors present hypotheses on the consequences and determinants of consumer file sharing and test them with data from a controlled longitudinal panel study of German consumers. The data contain information on the consumers' intentions toward and actual behavior in relation to the consumption of 25 new motion pictures, allowing the authors to study more than 10,000 individual file-sharing opportunities. The authors test the effect of file sharing on commercial movie consumption using a series of ReLogit regression analyses and apply partial least squares structural equation modeling to identify the determinants of consumer file sharing. They find evidence of substantial cannibalization of theater visits, DVD rentals, and DVD purchases responsible for annual revenue losses of $300 million in Germany. Five categories of file-sharing behavior drive file sharing and have a significant impact on how consumers obtain and watch illegal movie copies.