VZCZCXRO3671
RR RUEHLN RUEHVK RUEHYG
DE RUEHMO #0812/01 0851109
ZNR UUUUU ZZH
R 251109Z MAR 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 7278
INFO RUEHLN/AMCONSUL ST PETERSBURG 4869
RUEHVK/AMCONSUL VLADIVOSTOK 2742
RUEHYG/AMCONSUL YEKATERINBURG 3083
RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS SECTION 01 OF 02 MOSCOW 000812
SIPDIS
SENSITIVE
SIPDIS
STATE FOR EUR/RUS, EEB/TPP/IPE
STATE PLS PAS USTR SMCCOY, JGROVES, PBURKEHEAD
USDOC FOR WPAUGH, SWILSON, JBROUGHER
E.O. 12958: N/A
TAGS: ECON ETRD KIPR RS
SUBJECT: An Inside Look at a Russian Optical Disc Plant
This message is sensitive but unclassified and is not intended for
Internet distribution.
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Summary
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1. (SBU) On March 18, Embassy and European Commission IPR officers
and a representative of the Russian Anti-Piracy Organization (RAPO),
toured a successful optical disc production plant, DVD Club - a
producer of legitimate DVDs. RAPO has 24 hour access to the plant.
Afterward, they discussed piracy concerns with the British
part-owner and the plant's Russian director, who noted that an
illegal plant with the right equipment can quickly churn out a large
volume of high quality discs. BluRay, the next generation of
optical discs, has more anti-piracy features but they predicted it
would also be quickly hacked placing a premium on law enforcement
efforts to identify the purchasers of such equipment and to monitor
their activities. End summary.
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DVD Club Tour
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2. (SBU) On March 18, Embassy IPR Attache and the local European
Commission IPR officer joined Konstantin Zemchenkov, head of the
Russian Anti-Piracy Organization (RAPO), for a tour of an optical
disc production plant located just outside Moscow's city center.
DVD Club, a licensed plant that mainly reproduces for Sony and
Disney studios, is operated by holding company Video Services with
partial British ownership. RAPO has full and immediate 24-hour
access to DVD Club, and considers this plant fully legitimate.
3. (U) Security was strict as the group was required to check bags
and don lab coats and plastic shoe covers before entering the
hospital-clean operation. The plant's director and floor manager
explained to the visitors the highly technical, largely automated
process of DVD reproduction from making a disc from silicon
bicarbonate, marking the surface, layering a metal(either silver or
aluminum depending on the quality and format desired), followed by
an added electrolyte and a photoconductor. Voltage is then applied
with a desired anodization color, so that when a laser hits the
disc, it can be read.
4. (U) In a noisy production room, six lines run high-tech equipment
24-hours a day, with a capacity to produce a DVD every 2.3 seconds.
The in-line production machines, from German company Singulus
Technologies, have built-in "vision inspection" of discs during
printing and automatically reject faulty items. Products are
weighed at a partitioned section of an accumulator and separated
into bundles of ten. Final quality control manually inspects one
disc of every 1000, or fewer for a smaller batch. The discs are
then packaged with cover inserts in jewel cases before shipment.
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Piracy Concerns
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5. (SBU) DVD Club's director explained that once the expensive
production equipment is bought, optical discs are cheap to
manufacture and easy to distribute -- two features that make them
highly vulnerable to piracy. He said a production facility can
churn out a large volume of illegal discs in a relatively short
time. Moreover, he said the quality of a digital pirated disc,
unlike those made with traditional analog technology, is as high as
the original.
6. (SBU) Industry representatives tell us that while some western
movie studios reproduce their own discs in Russia, most contract out
to licensees. BUR, the British part-owner of Video Services which
operates the DVD Club plant, holds the license to reproduce for Sony
and Buena Vista/Disney productions. The visitors to the plant
noticed that the "Masters" (original hard-copy tapes sent by the
film studios) are kept in a safe.
7. (SBU) In discussing piracy problems, BUR's manager John Gordon
attributed the high piracy rate to technological advances,
corruption, and weak rule of law. He noted that BluRay, the
next-generation of optical disc format, allows for better
anti-piracy controls. However, so far, only one Russian company,
LazerVideo, has purchased a multi-million dollar BluRay machine,
although DVD Club has one on order for delivery later this year. He
predicted that savvy Russian pirates will likely hack BluRay's
anti-piracy software in no time, and asserted that manufacturers of
production equipment (in this case the German company Singulus)
MOSCOW 00000812 002 OF 002
should tell government agencies who bought their equipment so as to
make it easier to identify pirate operations.
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Comment
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7. (SBU) When inspecting plants such as DVD Club, RAPO's access is
full and immediate. Plants located on RARES (restricted access
sites) sometimes make RAPO wait outside, however if access is not
granted within 15 minutes, the inspectors leave and file a complaint
with the authorities. According to Zemchenko, 15 minutes is not
enough time to hide all evidence of pirate activity making regular
RAPO inspections effective.
BURNS