Movie pirates have now taken advantage of a technological twist to make cheap copies that are difficult for consumers to spot, without resorting to expensive recordable Blu-ray discs.  Thanks to AVC HD's superior video compression, the pirates re-encode Blu-ray movies to the AVC HD video format using a lower HD resolution of 720p instead of 1080p, which allows them to compress the video enough to place these re-encoded movies on ordinary blank DVDs.  This process is carried out using easily available software.

The pirates then package these counterfeit discs in the familiar blue colour Blu-ray disc cases with cover art including holograms to make them look like the real thing.  They also rely on the fact that many viewers cannot tell the difference between 720p and 1080p, especially since even 720p still offers a noticeably sharper picture on HDTV sets than upscaled standard definition DVDs.  Some merchants on eBay are warning users to look out for these counterfeit discs, where one tip-off is to check how easily they attract fingerprints, as fingerprints show up stronger on real Blu-ray discs than the imitations. 

Chinese authorities uncovered this operation after raiding a large quantity of pirated discs in China last month, in which a warehouse contained 800 of these discs including several very popular Blu-ray titles.  The Motion Picture Association estimates that piracy of high definition discs could reach 10% of movie sale losses caused by piracy in China within the next 6 months.  These pirate discs sell for as little as $7, while legitimate Blu-ray discs typically cost up to around $30. 

This threat comes at a bad time with the movie industry trying hard to make Blu-ray compensate for falling sales of regular DVDs, especially with consumers trying to cut costs now with the economic crisis.  So far these fake Blu-ray discs have not appeared outside of Asia, but they are worried that they could start appearing in places with lower broadband penetration, where consumers have difficulty downloading high definition movies.

While this is surely bad news for the movie business, Blu-ray piracy was bound to happen, especially with Chinese pirates quick to spot market opportunities.  This is also not the first time downscaling technology was used to make cheaper imitation copies of movies.  Before recordable DVD discs became affordable, pirates often re-encoded DVD movies to the inferior VCD format to sell movies using the cheaper CD-R format at the time.  However, there was a much more noticeable difference between the picture quality of VCDs and DVDs and many movies required two VCDs, which also made it easier to spot counterfeit discs.