Pirates 'streaming' Hollywood's latest into your home

Studios losing millions to growing popularity of websites that give you new movies for free

British cinema goers will have to wait until it opens next week to see if The Curious Case of Benjamin Button deserves the Oscar and Bafta nominations showered upon it. But thousands of people across the UK have already watched the film on their computers at home, thanks to the latest internet piracy phenomenon: live "streaming" of movies on YouTube-style websites.

Film piracy watchdogs are so concerned about the rapidly expanding phenomenon that they have now launched a major clampdown.

Films not yet released in this country, such as Marley & Me, with Owen Wilson and Jennifer Aniston, or Revolutionary Road, with Kate Winslet and Leonardo DiCaprio, can be seen on sites such as Watch-Movies. net, which operate in the grey area of copyright law. The films have already been released in other countries, where they are copied, mainly by camcorder in a cinema.

"Streaming is increasing exponentially because you don't need to download and you can watch it straight away," said Eddy Leviten of the Federation Against Copyright Theft, an alliance of British and American film studios. "We are conducting a major investigation and are planning court actions. There are a number of sites were looking at. Streaming has become increasingly popular over the last year to 18 months.

"The problem is that the website server may be in one territory, the person who uploads the film in another, and the site on which the film is hosted in a third, so it requires a lot of international co-operation."

Piracy experts say that the Watch-Movies website has around 15 million viewers a month, making it the 240th most popular website in the world. While it is still some way short of the 30 million viewers that top download sites such as Pirate Bay can gather, it is testament to the growing popularity of streaming, rather than downloading, which has "blossomed", according to David Price, a piracy expert with the internet consultancy Envisional.

He says the websites are difficult to shut down because they have four or five servers spread around the globe, and in most countries are not doing anything illegal.

"They do not hold the content themselves," he said. "The films are uploaded on to sites such as Megavideo, which is hosted in Hong Kong, or embedded in blogs, and Watch-Movies will merely provide a link to it. All the industry can do is chase down the links. It's a game of cat and mouse. Even if they discovered where one of Watch-Movies' servers were, it could simply switch to another."

According to the British Film Council's latest figures, digital theft cost the film industry in the UK around £100m in 2007. Globally, the film industry lost £11bn in 2005, according to the Motion Picture Association of America.

Dr Price points out, however, that the true extent of the loss is impossible to quantify. "What they've done is make it easy for people to watch movies. You just click and there it is. Ultimately the film industry is going to have to offer the same service – as the television companies have done. People would rather watch legitimate content on the BBC's iPlayer, for example, than from a pirate site."

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