Warner Bros, one of the largest film production companies in the United States, has decided to drop its DVD prices in China in an attempt to stem the tide of piracy in the country. It is offering some of its films for less than HK$20 in major Chinese cities, and although this figure is still twice as high as the average price of pirated DVDs, Warner Bros believes that people will be willing to pay a little more for the real thing. If they turn out to be right, the price reduction could represent a major victory in the war against piracy.

'The reason why piracy came along is that there weren't enough products on the market at the right price,' explains Tony Vaughan, managing director of Warner Bros' distribution company in China. According to him, the studio's strategy is to lure the Chinese consumers with very attractive prices for legitimate DVDs. Instead of relying only on lawsuits and police raids, which were the studio's weapons of choice in the past, Warner Bros has set out to take back a share of the DVD market, offering less expensive products that guarantee both quality and peace of mind — a guarantee that can't be matched by pirates.

Warner Bros isn't the only company looking for new ways to fight piracy. Microsoft has developed a new program to authenticate their products. The Windows Genuine Advantage program allows the company to check the validity of users' software. If it is found to be legitimate, Microsoft will then provide them with a wide variety of services. Like Warner Bros, Microsoft has also begun to sell low-cost versions of its software in developing countries, where pirated programs far outnumber legitimate programs. Selling the products at such reduced prices would result in huge losses in stable markets, but Microsoft understands that, in these countries, a small profit is better than no profit at all.

It has been estimated that the sales of pirated products bring in more than HK$5,000 billion worldwide each year. Much of this revenue is generated in China. Nearly 70 per cent of the pirated goods seized by US Customs can be traced back to China, which is not only the most populous country in the world but also the most active producer of pirated goods. Experts estimate that as much as 90 per cent of the country's computer software is pirated, and the percentages for pirated DVDs and CDs are equally high. Despite the Chinese government's attempts to control piracy within its borders, experts agree that piracy has become a culture in China — and culture can't be easily changed. Bill Gates has said that he believes it will take at least ten years to get China's piracy problem under control, but it can be done. However, not everyone shares the optimism of the founder of Microsoft.

Pirates have had the upper hand for years, and defeating them will be difficult. They are constantly developing more advanced technologies to produce and distribute pirated products, and in recent years they have begun selling them in western countries. 'For every preventative measure that companies take to protect themselves against piracy, the pirates always manage to find a way to get around it, and then they find themselves back to square one,' says Lee Bromberg, a lawyer specialising in copyright law. 'The good guys aren't winning yet.'

However, Warner Bros and Microsoft are confident that working with retailers to put their products on shelves alongside their pirated counterparts will prove to be the first significant victory in the war against piracy. Even though they understand that the war won't be won overnight, for the first time in years, they are viewing the future as bright instead of bleak. 'It's part of the strategy of gradually converting the market,' says Vaughan, referring to his company's recent price reductions. 'This is just the beginning.'

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