How Hollywood Loses Money

29. June, 2011

Apparently, making big feature films is a risky business. Let’s take unsuccessful movies like “Harry Potter and The Order of the Phoenix.”

“Wait a minute,” I hear you say, “Potter is a loss?”

Sure. It grossed only $1B so far. What a sad failure! Now, the corporate entity responsible for this blunder is $167M in the reds. Which means that no one in the “net-participation” list will see any money.

Cory Doctorow posted more details in his blog.

Apparently, this is just an example of creative money moving. All participants in the game are parts of Warner Bros. For example, the movie needs advertisement. Luckily, they have a subsidiary for that. But, oh bother, they are expensive. So what, we only want the best. So money goes round and round and round until everyone is spin dizzy.

Think again when the content industry blames losses on “piracy.”

But wait … isn’t that … yes … it kinda is piracy! Just not by the people at which Hollywood is pointing.

What was the old saying? “When you point your finger at someone, three fingers are pointing back at you.” So true.

PS3 was hacked

6. January, 2011
Tux, the Linux penguin

Image via Wikipedia

Like so many people, I was upset that Sony discontinued support for Linux. I understand that it was a security risk (people were dabbling with the encrypted hypervisor and the encryption) but no one really cared enough to actually invest the huge amount of time necessary to really break it. I also understand that supporting Linux was a cost issue for Sony while it didn’t bring that many customers. At the same time, I knew I could run Linux on my PS3 but never did.

So it wasn’t an actual issue for me either, it just upset me. I bought the PS3 for many reasons and being able to run Linux had been one of them. Not the major point but I still got mad when they took that from me.

At the 27C3, they showed how it was hacked but I was intrigued by short appearance of a guy who had analyzed the time it took to break a console and why it was hacked. While piracy is a side effect of hacking a console, it’s probably not the driving force. The statistics say that it took at most 12 months to hack a console make Linux run. The PS3 was unscathed for three years – until Sony stopped support for Linux. After that, the hackers really dug into it and – what surprise – they pwn3d it.

Made me wonder why Sony dropped support? As we know from the history of Microsoft, piracy is actually a major driving force for software sales. The calculation goes a bit like this: If you don’t want to pay for something, it’s hard to force you. But once you’re used to something, and you like it, you stick with it. A good example was Office 97. It wasn’t that great but companies were forced to buy it quickly because all people working at those companies had got free, time limited copies along with their PCs. I’ll let you assume how many people bought the product after the time was up.

The thing was: People took work home (good for the companies), work on it and then bring it back to work. Then, something happened: The “old” Office 95 did display a warning, about 90% the size of the screen “I can’t open this! You may lose your work! Help!” So suddenly, there was a strong pressure on the company to upgrade 95 to 97 – because everyone had got a free copy of Office 97!

The key here is to be able to balance sales with piracy. Microsoft knows the Spiel best: Really smack down on people selling pirate copies but leave the home users alone. C= (and the Amiga) couldn’t play it. In the end, piracy overtook sales and the platform died. The lesson we learn here: Piracy is something that must be managed carefully. No piracy and sales will be much lower than they could be; too much and you go bankrupt.

So here is my heretic thought: Maybe Sony didn’t have enough piracy. ^_^

References: Video of the 27C3 talk “”. Go to the documentation site and search the download links for “console_hacking_2010”. The statistics part is at 05:33.