An ASX-listed maker of software that claims to make videos piracy-proof says the likes of The Pirate Bay could be paid to distribute the movie files it is making for studios like Village Roadshow and Warner Brothers.

Linius Technologies, which has raised $10 million for a $20 million total since it reverse-listed on the ASX in April 2016, has patented technology that "virtualises" videos. It was used on the set of Village Roadshow's remake of Romper Stomper last year to protect each day's rushes from theft by hackers.

Linius says its "video virtualisation engine" strips away the "containers" that have hitherto allowed video files to be played and known to online pirates by file extensions like''.mp4" or ".mov" and instead exposes the raw video and audio data in the files, requiring an authenticated connection to their original hosting location for them to be playable.

The exposure of the data also allows business rules to be applied to the files, which is where The Pirate Bay might one day be cut in on the action.

"You pay for and download one of our virtual videos, then want to go and watch it at your neighbour's house? Fine, but here's a four-digit code we sent to your smartphone to open it first," explains Linius chief executive Chris Richardson.

"It's not yours? Here's a payment gateway that will allow you to rent it for 24 hours or whatever. We can see a future model where the studios will want to share our virtual files on purpose, and perhaps even cut in the torrent networks to display them to their audience, because then everybody gets paid."

Billion dollar problem

A recent study by Cornell University put the price of theft of a pre-release copy of a movie at 19 per cent of its box office takings, extending to 40 per cent of its whole-of-life revenues.

"It's a billions-of-dollars annual problem which the studios are very keen to solve," Mr Richardson said.

Earlier this month Linius announced a collaboration agreement with Warner Bros Entertainment, in which the studio will test the "video virtualisation engine" for a planned TV-on-demand rental service.

Mr Richardson said he was confident that Linus' virtual videos would be pirate-proof.

"With virtual videos we're just accessing the data; it doesn't have to all come from the same spot," he said.

"A master file of the completed film doesn't have to be created. We can draw it from 300 different randomly named files and reassemble it on the fly. That's a lot of bits and pieces for a pirate to try to put together."

The breaking down of traditional video files into data blocks also had applications for more accurate video search, and greater personalisation of inserted advertisements, Mr Richardson said. The company has launched a software-as-a-service arm for any business producing video to use its virtualisation technology.

The inventor behind Linius is Melburnian Finbar O'Hanlon, who is now only involved on a consultative basis but whose associated vehicle, Phoenix Myrrh Technology, owned 30 per cent of shares before the latest raising, the new shares from which are due to be issued before March 2.

Village Roadshow and its chairman Robert Kirby are also substantial investors.