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Retailer Losses to Internet Piracy

We Do the Math

There were 500,000 illegal movie downloads per day worldwide in 2002

Assume growth of 20% in illegal movie downloads since 2002 =
600,000 illegal movie downloads per day in 2004

Assume 2/3 of illegal movie downloads occur in the U.S. =
400,000 illegal movie downloads per day in U.S.

Assume 3/4 of illegal movie downloads in the U.S. are lost sales or rentals =
300,000 lost DVD sales and rentals in the U.S. per day

Assume 1/3 of lost transactions are sales and 2/3 are rentals =
100,000 lost DVD sales and 200,000 lost DVD rentals per day in the U.S.

Assume an average DVD sale price of $20.00

100,000 lost DVD sales per day x $20.00 per DVD =
$2,000,000 in lost DVD sales revenue per day

Assume an average DVD rental price of $3.20

200,000 lost DVD rentals per day x $3.20 per rental =
$640,000 in lost DVD rental revenue per day

$2,000,000 in lost DVD sales revenue + $640,000 in lost DVD rental revenue per day =
$2,640,000 in lost DVD sales and rental revenue per day

$2,640,000 lost per day x 365 days =
$964,000,000 – or approximately $1 billion – in lost DVD sales and rental revenue per year

$640,000 in lost rental revenue per day =
$30 in lost rental revenue per store per day

$30 lost per day x 365 days =
$11,000 lost per U.S. rental store per year