CAV Warner Home Entertainment Co. faced significant losses from DVD piracy in China. To combat this, Warner adopted a flexible pricing strategy, offering DVDs at various price points to appeal to different customer segments. They also reduced the time lag between a film's theatrical release and its DVD release in China. Similarly, Fox Entertainment and Microsoft both adjusted their strategies in China to deal with piracy issues, such as introducing restricted software for pirated copies and focusing on changing consumer attitudes rather than directly confronting pirates. While piracy remains a problem, China has taken steps to strengthen intellectual property protection through campaigns and legal reforms.

1. How did CAV Warner Home Entertainment Co. cope with DVD piracy in China? BMAN20152 Susannah Jones, Sophie Smith, Dionne Woodward

2. THE PROBLEM? 95% in 2005 USD $2.7 billion loss per year

5. FLEXIBLE PRICING STRATEGY... BASIC VCD 10RMB SILVER DVD 20-30RMB GOLD DELUXE VERSION + Bonus features >30RMB

6. CUSTOMER VALUE HIERARCHY

8. Similar moves made by Fox entertainment http://articles.latimes.com/2006/nov/14/business/fi-news14

10. SALES OUTLET http://www.slate.com/id/2115921/

12. However, a survey conducted on Chinese consumers found that 60% were hostile towards the new strategy. Consumers complained that the problem was more deeprooted in the pricing strategy of Microsoft, and that setting the same prices as the West was unrealistica and unreasonable, considering the economic situation in China.

13. THE FUTURE FOR PIRACY IN CHINA? Although DVD piracy is still rapant in China, increasing moves are being made to protect intellectual property rights (IPR). e.g July 2006 – 100 Day Campaign Against Piracy launched, backed by 10 different government ministries and departments. It not only raised general awareness of the issue, but 58 million illegal publications were also seized during the 3 month campaign Reform of the legal system on IPR protection in China and strengthened cooperation with foreign organisations are also good signs for the future.

14. QUESTIONS?

15. REFERENCES Kotler, P., Keller, K. and Lu, T.H. (2009) Marketing Management in China, Singapore: Prentice Hall, pp. 106-108. http://english.peopledaily.com.cn/200703/29/eng20070329_362038.html http://www.china.org.cn/english/China/174728.htm http://english.peopledaily.com.cn/200610/25/eng20061025_314817.html http://english.peopledaily.com.cn/200703/20/eng20070320_359247.html http://english.peopledaily.com.cn/200611/27/eng20061127_325640.html http://english.peopledaily.com.cn/200703/29/eng20070329_362038.html http://www.wired.com/epicenter/2008/10/microsoft-peeve/ http://www.china.org.cn/china/national/2008-10/17/content_16630207.htm