Hollywood studios remain concerned about piracy

NEW YORK — Piracy is a long-running and even routine issue for Hollywood, whether it’s vendors hawking bootleg DVDs on street corners or video uploaded to file-sharing sites like Pirate Bay. Now cybercriminals are also putting embarrassing chatter and other company secrets at risk.

The cataclysmal event in the back of everyone’s mind is the Sony hack in 2014 . While unreleased movies were leaked, what’s remembered is the chaos unleashed amid a network shutdown and the disclosure of derisive comments about such well-known actors as Angelina Jolie and Leonardo DiCaprio and racially insensitive remarks about then-President Barack Obama.

Although the recent HBO leaks so far have fallen well short of the damage inflicted on Sony, there were concerns early on that hackers were setting the stage for an embarrassing sequel for Hollywood.

Piracy still a problem

Some people believe video leaks can help gin up media and viewer attention for a show or movie, but leaking shows and movies does hurt Hollywood’s take, especially if it happens before the official release, Carnegie Mellon professor Michael Smith said.

In a 2014 analysis, Smith and his co-authors concluded that a movie’s box-office revenue dropped 19 percent, on average, when it was leaked ahead of the theatrical release, compared with a leak after the movie hit theaters.

One way to overcome pirates is to make programs widely and cheaply available. Netflix has many shows and movies that are easily accessible around the world for a single monthly price. In April, hackers leaked most new episodes of Netflix’s “Orange is the New Black” before their official release in early June. That doesn’t seem to have driven customers away. Netflix added more than 5 million subscribers in the April-to-June period.

Separate from HBO’s recent run-ins with hackers, upcoming “Game of Thrones” episodes have leaked several times, and it is TV’s most pirated show. The show is still a massive hit for HBO. As for the recent hacks, episodes of “Curb Your Enthusiasm,” ″Insecure,” ″Ballers” and several other shows leaked.

It helped that entire seasons weren’t released, forcing viewers to subscribe to view the whole show.

Comparisons with SONY

In the Sony case, hackers crippled Sony’s network, wiped the company’s data and dumped thousands of internal emails and documents, including sensitive information such as employees’ salary information and Social Security numbers. Racially insensitive comments made by the former co-chair of Sony Pictures Entertainment, Amy Pascal, paved the way for her exit a few months later.

Michael Lynton, who left as Sony Pictures’ head in January, said that press coverage of the emails hurt the studio’s standing in Hollywood and that the public airing of employees’ private information and conversations “took a long time to deal with,” the trade publication Variety reported .

The movie studio said in April 2015 that “investigation and remediation expenses” related to the hack cost it $41 million, or about 8 percent of the film and TV division’s profit that fiscal year. It later reached an $8 million settlement with current and former employees.

Studios are learning to be cautious.

“I know people in the industry that now don’t do deals over email,” Smith said. “They do deals over the phone because it’s not archived.”