Warner Brothers (TWX) selling DVDs in China - can it compete?

| About: Time Warner (TWX)

Faced with growing concerns over DVD piracy, Time Warner's
(ticker: TWX) Warner Brothers Entertainment is taking steps to fight
(WSJ subscription required) the sale of illegally manufactured home videos in
China by offering their own.
Details and a quick thought:

Warner plans to release more than 125 movies on DVD in
China at below-market prices. Some will be bare-bones versions of the films and
priced at $2.65. Others, which will contain additional features such as more
language selections, interviews with actors and behind-the-scenes footage will
be priced at $3.38.

Quick thought: Nice idea, fighting
the world's battle against piracy. But the average Chinese consumer doesnt care.
As you will find in cities like Beijing, the Chinese have no qualms about
acquiring pirated DVDs.  Not only that - but DVDs are available everywhere. You
find DVD stores on every street, and DVD selling-street vendors on every street
corner. And the DVDs are all selling for $1 -$2 a piece.

Even more puzzling about this move from Warner is that
(courtesy of the the WSJ):

Although a handful of Warner titles were released on DVD
last November, including "Troy" and "The Last Samurai," the studio's sale of
DVDs in China has been relatively small.

On the bright side, the Chinese government appears more intent on fighting
piracy. Or maybe they are simply upgrading cinema technology to satisfy a desire
for a more appealing theater-going experience.

China recently signed a
30-year exclusive agreement with Alpha Spacecom (ticker: ASPC.ob) to convert
Chinese movie theaters and multi-cinema complexes to digital projection. Digital
projection and distribution technology does not allow films to be recorded from
the screen by a camcorder (a common piracy practice), transferred from the
digital film pack, or from an otherwise encrypted signal. The digital process
promotes international intellectual property rights protections as set forth in
China's accession to the WTO.

(Reproduced from The China Stock Blog. Full permission granted.)

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