By TIMOTHY L. O'BRIEN
SHORTLY before Christmas, Universal Pictures plans to unveil its $150 million remake of "King Kong," the 1933 sci-fi classic featuring an overgrown beast with a soft spot for blondes, a craggy, fog-shrouded island inhabited by dinosaurs and a squadron of biplanes buzzing the Empire State Building.
The new version, aimed squarely at the hearts, minds and wallets of the teenage-to-mid-30's set that Hollywood prizes, has blockbuster written all over it. Peter Jackson, the maestro behind the "Lord of the Rings" trilogy, is directing; Naomi Watts is stepping into Fay Wray's shoes as the imperiled, scantily clad heroine; and the film is rumored to be embroidered with mind-blowing special effects.
But even the mighty Kong may not be safe from the clutches of a nebulous, tech-savvy network of film pirates who specialize in stealing copies of first-run movies and distributing them globally on the Internet or on bootleg DVD's. While Hollywood has battled various forms of film looting for decades, this time seems different. Piracy in the digital era is more lucrative, sophisticated and elusive than ever -- and poses a far bigger financial threat.
"Piracy has the very real potential of tipping movies into becoming an unprofitable industry, especially big-event films. If that happens, they will stop being made," said Mr. Jackson in an e-mail message from New Zealand, where he is putting the final touches on his version of "King Kong." "No studio is going to finance a film if the point is reached where their possible profit margin goes straight into criminals' pockets."
Film piracy is taking place against a larger backdrop of technological and demographic shifts that are also shaking Hollywood. Elaborate home theater components -- like DVD players, advanced sound systems and flat-screen TV's -- are helping to shrink theatrical attendance, as more and more film fans choose to watch while stretched out on their couches. And with the advent of high-speed Internet connections that can deliver large film files to personal computers, the movie business is confronted with the same thorny challenges that the music industry encountered several years ago with the emergence of file-sharing programs like Napster.
Hollywood reported global revenue of $84 billion in 2004, according to PricewaterhouseCoopers, the accounting firm. With most theatrical releases amounting to little more than an unprofitable, expensive form of marketing, DVD's have become Hollywood's lifeblood: together with videos, they kick in $55.6 billion, or about two-thirds of the industry's annual haul, with box-office receipts making up most of the rest.
The Motion Picture Association of America estimates that piracy involving bootleg DVD's deprived the film industry of more than $3 billion in sales last year. That figure does not include lost sales from pirated works peddled online, for which industry insiders say they have no reliable estimate but which they assume to be substantial.