How Much Will Piracy of ‘The Expendables 3′ Cost Lionsgate?

The Expendables 3

Lionsgate

The third movie in Sylvester Stallone’s franchise has been downloaded more than two million times over the past week

A leaked copy of Lionsgate’s “The Expendables 3″ will cost the studio millions in revenue at the box office, experts in intellectual property and piracy tell TheWrap. People have downloaded the movie two million times since it leaked this past weekend, and two weeks remain before the third installment in Sylvester Stallone‘s action franchise opens in theaters.

It is difficult to calculate the precise effect of piracy on a movie’s box office take, but lawyers and professors agree a leak this far in advance of a movie’s release date will curb ticket sales. The real question for Lionsgate and Avi Lerner, the producer of the film, is how much they stand to lose.

Pierce O’Donnell, a lawyer who specializes in intellectual property at Greenburg Glusker, predicted Lionsgate would suffer “millions and millions in lost revenue.”

Also read: Forget Piracy, Here’s a Movie You Can Share for Free Once It Opens in Theaters

“There is significant potential for dilution of the film’s revenue, both at the box office and on cable, DVD and Blu-Ray,” O’Donnell told TheWrap.

The movie ranks as the most popular download in the world according to Torrent Freak, a site that tracks intellectual property matters. Ernesto Van Der Sar, the founder of Torrent Freak, said there was no question the leak would hurt the movie.

Also read: Why America Is Looking to UK for Help Fighting Piracy

“I’m not a person who would say it has no effect at all,” Van Der Sar told TheWrap. “Of course people are downloading the movie, and some of these people will not see it in theaters. That’s a loss.”

Though not as popular a download as past movies, such as “Divergent,” those movies did not leak weeks before their theatrical release.

Also read: Avi Lerner Rips the President for Not Fighting Piracy: ‘Obama is Scared of Google’

Van Der Sar does not believe the loss will be as significant as some in Hollywood would have you believe. People who download a movie are less likely to go to a theater in the first place.

“I don’t think one downloaded copy is one missed visitor at a movie theater,” he said.

The financial impact of piracy remains a subject of great debate, and some technology enthusiasts accuse Hollywood of playing the victim. David Pierce, an editor at prominent tech news website TheVerge, recently wrote a piece in which he argued piracy would not hurt the movie’s financial performance.

“Leaking a month before its release might just be the best thing that ever happened to ‘The Expendables 3,'” Pierce proclaimed, arguing the positive buzz from people who see it early will boost a movie critics are bound to savage.

Also read: Sylvester Stallone Reloads for One Last Ride in First Full ‘Expendables 3′ Trailer (Video)

That argument makes sense to some in the television industry. “Breaking Bad” creator Vince Gilligan has said pirated copies helped attract new fans for later seasons. “Game of Thrones” ratings have increased since the show’s debut even though it is the most pirated TV show in the world.

Unlike TV, movies rely on people to show up that first weekend, but Pierce also argues people pay to see a movie in the theater for the experience and will return to see “The Expendables 3″ in theaters for the larger screen and communal experience.

This contradicts some recent academic research regarding film, the most prominent example being a 2011 study by Carnegie Mellon professor Michael D. Smith. In “An Empirical Analysis of the Impact of Pre-Release Movie Piracy on Box-Office Revenue,” Smith finds that movies lose 19.2 percent of potential box office revenue when pirated copies surface before a movie’s release in theaters.

Also read: How Companies Like BroadbandTV Have Helped Hollywood Turn Piracy Into Millions

The two previous “Expendables” movies grossed an average of $94 million in the United States and $290 million worldwide. This movie is expected to gross less than that in the U.S., but should have a strong showing overseas.

Reached by phone while on vacation, Smith told TheWrap there was no question the leak would hurt the movie’s ticket sales.

“Particularly given how early ‘The Expendables’ leaked, you would think it would show some pretty significant loss,” he told TheWrap.

Also read: ‘Game of Thrones’ Brutally Decapitates Yet Another Piracy Record With Season Finale

Smith and his colleagues focused on pre-release piracy in their study because it presented a clearer test of economic effect. Pirated copies that surface after a movie has run its course in theater may affect DVD or iTunes sales, but the correlation is harder to determine.

If a person can find a legal copy of a movie online and still chooses to download an illegal copy, there is a greater chance they were going to download it anyways. Convenience is no longer a motivation, but price is.

Also read: ‘Game of Thrones’ Tops ‘Breaking Bad’ as 2013’s Most-Pirated TV Show

Yet when the leak surfaces before a movie comes out, people who were going to pay will also download it. Despite Pierce’s argument that more people will still show up, Smith believes the net effect on a movie’s financial performance is irrefutable.

“If excitement created more box office revenue, we’d see it in the data,” Smith told TheWrap. “The data doesn’t show piracy helps. If it did, studios would use it.”