By Ellen McCarthy
Washington Post Staff Writer Monday, October 14, 2002; Page E05
When the lights go down in a movie theater showing a sneak preview, camcorders sometimes come out. These digital pirates record surreptitiously, moviemakers say, and quickly duplicate and sell bootleg copies of the film overseas and on the street, sometimes before a movie is officially released.
The motion picture industry says it loses about $3 billion per year from piracy, and this low-tech technique is among the most widespread. But the nine employees of Herndon-based Cinea Inc. think they have cracked the case on how to prevent these bootlegs from making it to market.
The National Institute of Standards and Technology's Advanced Technology Program thinks Cinea is on to something, too. Last week the institute awarded a $2 million grant to help accelerate the work.
Rob Schumann, Cinea's founder and chief executive, said it took three years for his team to figure out how to capitalize on the notion that video recorders view images produced on film differently than the human eye. The emission of light often causes a distortion in the recorded image that is not visible to the average moviegoer.
"Your eye just sees motion, not a sequence of still images. Camcorders take discrete images of the world. It's actually a much more accurate version," Schumann said. "But if you take a camcorder and point it at a monitor, you'll see bars across the monitor."
Cinea's project intensifies the distortion, making films recorded by camcorder so marred that they become worthless. Those who pay for legitimate copies, Schumann said, would see no difference.
The company's executives estimate this could cut film piracy loss in half. Richard Taylor, a spokesman for the Motion Picture Association of America, said it was impossible to say how much of the industry's loss actually stems from camcorder-based theft. Movie pirates also obtain copies of films by tapping satellite feeds, breaking into film labs and bribing studio employees.
"There are people who are determined to make profit or do damage to the film industry through piracy. If a major release comes out on a Friday and by midnight Friday it's up on the Internet, people may not go to the film or rent or purchase a copy of it later," Taylor said.
Taylor was not familiar with Cinea, but said his organization is working with the consumer electronics and information technology industry to devise protection.
Cinea has a small-scale version of the technology to prove the concept and will use the federal grant to develop and test a working model over the next two years. The project is expected to cost $2.3 million. The federal program generally splits the cost of development almost equally with the company, but it is contributing most of the money for Cinea's two-year project. In January Cinea landed a $2 million round of venture funding led by Monumental Venture Partners LLC of Tysons Corner.
Schumann set out to solve the camcorder problem after Divx, a DVD encryption project he worked on for five years, was dumped by its main backer, Circuit City Stores Inc., in 1999.
Many other attempts to create secure encryption for films have failed because of either hackers who figure out how to crack the code or opposition to proposals to create industry-wide standards.
"I recognized there was still a tremendous need for video security," Schumann said. "This is the anti-camcorder piece, which has been a problem for quite a period of time. The quality of camcorders gets better and better. The real economic piracy, the true lost revenue to the studios, occurs primarily with people going to first-run movies in the [United] States and shipping copies to Asia."
Michael Newman, a spokesman for the National Institute of Standards and Technology, said its awards go to projects that are often too risky for general investors but have the potential for broad economic benefits. A total of 40 awards, worth $101.6 million in all, were given out last week.
Schumann hopes the film industry contacts he made while working on Divx will bring Cinea to the attention of major studio companies. The reception so far has been positive, he said.
Taylor, of the motion picture association, believes anything that can cut down on piracy losses should be fully explored.
"The bottom line is that the loss of revenue harms legitimate consumers. It drives up the price for lost sales or rentals, and then you start talking about jobs being lost. If the chain of economic recouping is shattered, you can imagine the damage done," he said.
