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Video Industry Has New Weapon in War Against Pirates

July 9, 1986

LOS ANGELES (AP) _ The film industry, which is losing $1 billion a year to video pirates, is trying to fight back with Macrovision, an electronic spoiling system that could soon be found in up to 80 percent of all new cassettes.

Aimed primarily at the casual offender, Macrovision is considered by industry leaders to be the only reliable system to date to stymie the piracy problem, which accounts for one of every five tapes sold.

With the purchase of several thousand dollars in electronic gear, professional pirates can probably beat the Macrovision system, officials say.

″But for the average homeowner with an average machine, it should stop duplication,″ said former FBI agent Richard Bloeser, who heads the Los Angeles film security office of the Motion Picture Association of America.

Typical household piracy involves the duplication of a legitimate video tape, usually a rented feature-length movie, using two interconnected videocassette recording machines. One machine is used for playing the legitimate tape and the other for simultaneously recording it on a blank tape, which is then kept for unlimited home viewing.

Three-year-old Macrovision Inc. of Torrance, Calif., already has signed contracts to sell its system to a number of top videocassette companies. Within the next three months, it expects to have a lock on more than 80 percent of the industry, according to Chief Operating Officer Gary Gwizdala.

″It’s the best system we know of. That’s why we’re using it,″ says Phil Pictaggi, senior vice president of MCA Home Video, which employs the anti- piracy system on about 75 percent of its cassettes at a cost of a few cents a copy.

Bud O’Shay, senior vice president of the 20th Century Fox portion of CBS- Fox Home Video, the biggest in the industry, acknowledges that Macrovision most likely will not thwart the hard-core pirate.

″Probably anyone who wants to build a black box can defeat any system,″ he said.

However, that’s not deterring CBS-Fox from its plans to use Macrovision system on all its videocassettes.

Besides MCA and CBS-Fox, other home-video leaders who have turned to Macrovision are MGM and Disney, and agreements are near with Thorn-EMI, Warner Bros., RCA-Columbia, Vestron and Karl-Lorimar, Gwizdala said.

Those companies account for the bulk of the industry, which last year delivered 53 million videocassettes to retailers and this year expect the number to increase to between 65 million and 80 million.

Last year, the home-video industry had estimated revenues of $4 billion, and another $1 billion in business was lost to household and commercial pirates, officials estimate.

By comparison, the box-office take at movie theaters in 1985 was $3.9 billion.

The home-video industry is growing by leaps and bounds, and the potential for piracy is growing right along with it.

In 1985, there were 25 million videocassette recorders in American homes, compared to a scant 1 million just five years ago. Bloeser estimates that 10 percent to 20 percent of those VCR owners have made illicit copies, at least occasionally.

Through implanted electronic pulses, the Macrovision system forces a recording VCR to significantly degrade the picture quality, causing distortion when it is played back on a TV screen.

Macrovision’s system has had a number of forerunners, but all were quickly overridden by changes in technology. One system disrupted vertical synchronization, causing a copied program to scroll continuously on the TV screen. But it was short-lived.

″The Japanese immediately rewired their machines to circumvent it,″ Bloeser says.

The Motion Picture Association of America is constantly expanding efforts to thwart pirates. Its film-security budget has swollen to $15 million a year, three times larger than it was in 1981. In addition to its sizable domestic operations, it has agents in 20 foreign countries.

Commercial videocassette pirates, who account for an estimated 80 percent or more of the counterfeiting, range from operators of mom-and-pop video stores to sizable syndicates.

″A lot of little video stores will buy one or two copies of a cassette, then go into their back room and run off a dozen copies,″ Bloeser says. ″They feel they have to do it to compete with the big chains.″

Although not aimed at the commercial pirate, the Macrovision system may discourage some of these smaller-time operators, he said.

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