Last week’s “Breaking the silence” column has been greeted by a great number of comments and I was happy to see how many European readers we actually have. Some of you pointed out that my legal discussion on importing region coded DVDs may be wrong. Well, I am the first one to admit that I am not an entertainment lawyer and that I do not have the slightest interest in becoming one. For that matter most of my writing has been based on information I had been gathering and experiences I have made in another industry that deals with properties that are not too dissimilar from movies. Nevertheless, my main point in the column was not to go into the exact legal issues surrounding region coding, but to show you what thoughts and mechanics made region coding a necessary tool for the studios. I hope I have been able to make the whole region coding myth more tangible and easier for everyone to understand. Here however are some comments that I would like to exemplarily address publicly.

One reader from Manchester stated that he had asked a high street salesman about the situation and that the salesman’s reply was that they are in legal territory as long as certain rating requirements were met. Assuming this salesman is not an entertainment rights lawyer, too, I would be tempted to say, he is wrong. Traditionally I have seen high street stores doing the weirdest things without caring about legal implications in the UK and they’ve been burned a couple of times, too. First off all, I would like to point out that region coding has been put in place on DVD by the studios for a reason and of course, they made sure that they have the leverage to enforce those region codes. The studios do not spend that kind of money and time on something they have no power to enforce over. The Video Recordings Act spells all the details about this situation out quite explicitly and is, according to the Video Standards Council, fully adaptable for DVD. This Act makes selling NTSC Laserdisc imports illegal and the same is true for DVD. Breaking this Act can result in six months of jail sentence and a 20.000 pounds fine, from the information we have been able to gather. In order to legally sell video products in the UK, the product needs to be rated by the BBFC, and since the MPAA rating system is not applicable for British standards, imported videos are not rated, which makes the illegal according to this Act. Even with region coding out of the picture, importing NTSC discs for release in the UK is and remains illegal from what I understand. Add to that the fines the studios will impose and you will get the idea. High street stores might feel safe because they have been selling this kind of products in the past, from imported laserdiscs, gaming consoles and computer games all the way to DVD, without being enforced. With Hollywood breathing down their necks these days, this might change however and they might need to adapt a new attitude.

Some readers also pointed out that while my points were valid and understandable, the question still remains, why catalog titles are region coded. The answer to that question has still to do with domestic markets. Just like theatrical releases are timed, so are video releases. Especially brand new releases, but also catalog titles. It is in the publisher’s best interest to have full control over where and when the products are available. Rating systems also come into play, because if a film is banned or censored in a certain country, it usually not very well perceived if unrated import versions become available. On top of it all, it still has monetary implications. The studios need to protect their domestic publishers and distributors. It is not fair business practice if titles they might be contractually bound to sell, are available at a cheaper cost through import, cannibalizing their market and all their profits. Just as imports can hurt theatrical releases, they can hurt video sales. Given the geographic distance, it is not possible for all publishers in the world to release even a catalog title at the same time. Now, we all know how frenzied people can become if certain titles become available every once in a while and I am also sure that many would rather have an imported version from the US a week or two ahead of time than wait until the domestic release becomes available. While nice for the consumer, this is unacceptable from a business standpoint because the local publisher is depraved of his sales and profits  the two things they are in the business in for in the first place. It is a proven fact throughout industries and markets that gray imports are bad and damage local markets, and are thus to be avoided. Region coding allows publishers to somewhat reduce and control this gray flow of products into territories where they should not be. I wholeheartedly agree that it would be nice if catalog titles were not region coded, but again, we have to think in studio terms to understand why they do it the way they do it.

Another interesting issue was regarding the offering of tampered DVD players that allow you to play discs from all regions. Just to begin with, these so-called no-zone players are not legal! Let me point that out again. Studios have put region coding in place to protect their properties and markets. Although they might not enforce it at this point, it might be only a matter of time. If Hollywood gets better organized than the software industry for example, they can actually make sure that these players and illegally imported discs disappear from the market. And maybe, so time they will. Right now, there might be a lot of reasons why they do allow these players to be sold. One could be because they are too busy to notice the impact it might have over time. Maybe they are more interested in growing the market at this time  especially since the European DVD market did not get started until late into this year at all  tolerating these players as calculated variances. I do not have the answers to those questions, although my guess would be that they simply do not have the mechanics in place yet to successfully tackle the issue.

Why did Polygram release “The Borrowers” as a non-region coded disc? Maybe they don’t believe in region coding. Maybe it was an oversight on the studio’s end. Maybe they needed the revenue to make up for the film at any cost.

Why does Criterion release films that are not region-coded, although they do not have the rights to territories other than the US? Legal issues come into play here, I would assume. Criterion’s contracts are probably years-old, dating back to a time when region coding was not even existent. Of course those contracts do not cover this aspect, implicitly allowing Criterion to not region code their discs  certainly much to the dismay of the original licensor. Criterion is such a small publisher that they need all the money they can get to recoup their investments. Making sure the product is sold and available world-wide is one way to do that. The same is true with all those budget films and the publishers from Hong Kong, for example. These companies can use every penny they can make on their releases and they would be stupid to region code their products, intrinsically limiting their audience.

No one region codes discs because he’s afraid of piracy. That’s what copy protections are for. Region coding is there to protect markets as good as possible and I am sure every distributor in a country outside the US appreciates that a great deal. Stores however don’t care where the product really comes from, which from my point of view is short sighted, because not only do they walk in legal limbo, they also hurt their own economics.

That’s it for this week. I hope you enjoyed it. Until the next time, take care and keep those DVDs spinning.

 October 19, 1998

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