Although the central and local governments have made a great effort to tackle the scourge, piracy has stunted the healthy growth of the film and VCD/DVD product industry.

Film fans in many Chinese cities can easily purchase pirated editions of the latest domestic and Hollywood blockbusters with loose change. This has caused a sharp drop in cinema revenue as well as in sales of original video products.

Film production has received strong support from foreign investors, and with the success of blockbusters such as "House of Flying Daggers" (Shimian Maifu) and "Kung Fu Hustle" (Gongfu), signs of winning the battle against piracy have appeared.

But even the success of films at the cinema does not guarantee high sales of their VCD/DVD products. It seems people prefer to either only go to a cinema, or buy a cheap pirated DVD from street vendors.

In late February, Warner Home Video, which operates the largest global video distribution system in the world, announced the formation of a joint venture with China Audio Video (CAV).

CAV Warner Home Entertainment Co, the newly-founded company, is the first in-country DVD/VCD distribution and marketing operation established by a foreign studio in China.

Insiders have pointed out that despite the current adverse situation, the new company shows the confidence of the world's leading entertainment giants in the potential of the Chinese market.

Shanghai-based CAV Warner Home Entertainment says it began researching the market a year ago.

During that period, the company carried out an "extensive analysis of the dynamic Chinese home video market and its potential for continued growth."

The result of the research consolidated Warner's optimism, making it finally decide to capitalize on China's enormous consumer demand, which is projected to exceed 1 billion units this year.

"China has been an important market for years, but too often Chinese consumers have had to choose inferior products on the illegitimate market that were available sooner but with poor quality," said Jim Cardwell, president of Warner Home Video.

According to CAV Warner Home Entertainment, it is committed to creating "a better consumer experience," which it regards as its best weapon with which to defeat piracy.

As Warner claims, the "better consumer experience" includes "world-class quality and enhanced content."

"Sometimes people don't know what high quality is before they have a chance to experience it themselves," said John Quinn, executive vice-president, Worldwide Supply Chain Management, Warner Home Video.

"We will offer consumers a better alternative to pirated discs because our products will feature content not yet available from the pirate market," said Cardwell.

According to Quinn, each title will have both Chinese dubbing and subtitles.

The release window will also be shortened, which means DVD/VCDs will be released in China more quickly; within eight to 12 weeks of the theatrical premiere in the United States.

That period is currently six to 14 months for authentic DVD/VCDs.

Disc prices will also be reduced as far as possible.

A DVD title will be sold for 22 yuan (US$2.65) or 28 yuan (US$3.37), depending on its content, while all two-disk VCD titles will be priced at 16 yuan (US$1.93).

On the black market DVDs cost between 6 yuan (US$0.72) and 10 yuan (US$1.20).

According to Quinn, as a precursor to the full-scale nationwide rollout of CAV Warner Home Entertainment, China's foremost retail and video outlets including Wal-Mart, Xinhua Book Store, Carrefour and Maya began carrying selected new releases last November, including "Troy" and "The Last Samurai."

The films debuted in key cities such as Beijing, Shanghai, Guangzhou and Shenzhen, and received a warm welcome from Chinese consumers.

This year, more than 125 titles will be available, including "Harry Potter and the Prisoner of Azkaban."

By the end of the third quarter in 2005, CAV Warner Home Entertainment's products will be available throughout the country.

Warner Home Video has operations in 90 countries and regions and commands the largest distribution infrastructure in the global video marketplace.

Its film library is the largest of any studio offering new and vintage titles by many of the world's leading studios.

Quinn admitted that picking the right titles is very difficult, because "there are so many to choose from."

"We will choose those titles that Chinese audiences tell us they really want to watch," he added.

The company will issue new releases on DVD in a two-tier product release programme.

"Silver Release," available shortly after a film's theatrical release in the United States, will feature English and Chinese dialogue tracks and Chinese subtitles.

"Gold Release," which will be available later, will roughly correspond to US market release dates.

These will have all the features of a "Silver Release," as well as enhanced extras such as additional language selections, behind-the-scenes footage, interviews with actors and director's commentary.

Quinn said he is very confident of making money.

"This is truly a precedent-setting event for our industry," he said. "Our strategy is to not only create tremendous consumer demand by offering a superior product at a competitive price, but also to create job opportunities, new tax revenues and increase consumer satisfaction."

However, many ordinary film buffs were suspicious of the company's confidence.

"Chinese dubbing is not such a good approach. They don't know the Chinese market," said Wu Hao, a reporter from a local newspaper in Beijing.

"Many people don't like listening to Chinese dubbing while watching foreign movies. It always sounds so unnatural and artificial," she said.

In Wu's opinion, which is shared by some others, the difference between pirated and original DVDs is small.

"The quality of pirated DVDs is already good enough. Although the price of CAV Warner DVDs is very cheap compared with other DVD products, it is still twice that of pirated DVDs. How many people will pay twice the money for a negligible improvement?" she said.

(China Daily 03/11/2005 page13)