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. 
 
------- 
Summary 
------- 
 
¶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. 
 
------------- 
DVD Club Tour 
------------- 
 
¶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. 
 
--------------- 
Piracy Concerns 
--------------- 
 
¶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. 
 
------- 
Comment 
------- 
 
¶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