Russian DVD market turns corner

Sale of legal product explodes as piracy battle heats up

Sales of licensed DVDs in Russia have grown nearly tenfold in the past three years as the war against piracy gathers pace, the Russian Anti-Piracy Organization said Monday.

Last year, 44 million licensed DVDs were sold in Russia, compared with 22 million in 2005 and 5 million in 2004, RAPO chief Konstantin Zemchenko said.

"According to our members, who distribute licensed product — both Russian and Hollywood movies on DVD — the number of legitimate copies sold is soaring," Zemchenko said.

After a wave of raids over the past two weeks in St. Petersburg that closed down two optical disc plants — Gamma in the city center and Victoria on the outskirts of town, both situated on the grounds of vast, old Soviet-era factories — the shortage of pirated product was being felt on the streets of Russia's second-biggest city.

"We haven't yet won the war, but we're scoring some major victories and, as a result, the market already is changing, with the prices for pirate DVDs up by around a quarter, from $3 last year to $4 now. At the same time, legitimate product is available for between $7 and $10 and it is clear consumers are increasingly choosing quality over cost-cutting," Zemchenko said.

The recent raid on Victoria netted RAPO investigators eight DVD lines capable of producing 800,000 pirated movies a month each, five molds and 285 DVD stampers with titles including such recent Hollywood hits as "Ghost Rider," "Night at the Museum," "The Last King of Scotland" and "Eragon."

The result of an investigation launched in November when RAPO and Russian Culture Ministry forensic tests confirmed that "Casino Royale" discs purchased in St. Petersburg were pirated, the Victoria raid also netted the mold used to copy the latest 007 movie.

Evidence that the owners of the plant were tipped off in advance about the raid was found in a vast warehouse where massive sacks that contained seven tons of shredded DVDs were found.

The raid on Victoria followed an earlier one on Gamma — the largest-ever pirate plant found in Russia located at the former Leningrad Pipe casting plant in St. Petersburg's Kolpino district — where nine DVD lines were seized along with 150 stampers and 60,000 pressed discs.

RAPO investigators, assisted in the raids by tax and organized-crime police, found evidence connecting the ownership of the two plants.

Zemchenko said that the raids and increasing popularity of licensed product are reflections of a new willingness by Russian authorities to take piracy seriously.

"Partly it is related to Russia's membership in the World Trade Organization and partly to a wider approach with the Ministry of Interior, FSB — the federal security service, a successor body to the KGB — and the prosecutors office all sharing responsibility for tackling piracy," said Zemchenko, who operates from nondescript offices in one of Moscow's central districts.

The number of criminal cases opened against pirates has skyrocketed from just a handful a few years ago to 2,500 in 2005 and 7,000 in 2006, a year in which 3,000 pirates were given prison sentences, according to Zemchenko.

In the past, when evidence of piracy was found, an optical plant's license would be suspended. Now, it is revoked — a fate suffered by five plants in the past year.

RAPO, which set up a special retail division last year following a visit to Moscow by Motion Picture Assn. head Dan Glickman, is even notching up successes at the Russian capital's notorious Gorbushka market, which is a major source of pirated DVDs and music CDs.

The market used to specialize in the prerelease of pirated films just before new movies opened at cinemas or were released on DVD. Now, RAPO's retail division ensures that a list of cinematic release dates is presented to the market's managers every month — along with a warning that any DVDs of those films appearing before the legitimate dates will be subject to seizure.

"Russian pirates now know we are after them," Zemchenko said. "We may not have won the war yet, but the pirates are on the defensive."