By Kate Chapman of NZPA

Wellington, July 29 NZPA - Hollywood blockbuster movies will survive piracy but festival movies will not be made and less options will be available for rent at your local video store, politicians were told today.

The Video Dealers Association said the number of movie and game rental stores had decreased by 13 percent over the last two years and the revenue dropped by $28 million in the same period.

Illegal downloading and piracy were the biggest threats to the rental industry, the association said in a submission to Parliament's commerce select committee.

The committee was hearing submissions on the Copyright (Infringement File Sharing) Amendment Bill which would put in place a three-notice regime to deter illegal file sharing.

The bill also extended the jurisdiction of the Copyright Tribunal, enabling it to hear complaints and award penalties of up to $15,000.

Copyright owners could also seek suspension of an internet account for up to six months through the district court.

Video Dealers Association spokesman Peter McConnell said lost revenue because of illegal downloads would mean less consumer choice because a percentage was invested in buying new titles.

Video Ezy managing director Kevin Petersen said 18-35-year-olds were their target market and the most avid illegal downloaders.

The fall in rentals flowed back to the big studios who made the movies, he said.

"They'll probably still have the Avatars and the New Moons and the A-Teams but the things that won't get made are the high risk ones which are more your festival films...so what we're doing is taking away choice."

There was a generational difference where younger people did not believe in stealing but did not see illegal downloads as stealing, Mr Petersen said.

"We need to say sorry son, you need to wait until that movie is available."

The current video rental business model could not survive, Labour MP Lianne Dalziel told Mr Petersen today.

"When we get decent broadband in this country you will not survive under your current model."

Labour MP Clare Curran asked what people were supposed to do when New Zealanders had to wait seven months for a film like the Hurt Locker was had won an Oscar in the mean time.

Mr Petersen said that was an extreme example of a studio stuff-up.

Most of the movie industry's revenue came from DVD sales and rental, he said.

Library and Information Association chairman Tony Millett said libraries were concerned about the impact of provisions in the bill to suspend internet services following repeat infringements.

Libraries offered free internet services and could not tell who had been logged on.

Mr Millett said suspension should only be for multiple infringements were by the same user, not different users at the same IP address.

He suggested libraries and possibly schools and universities be exempt from the provision.

The New Zealand Society of Authors said with the growing demand for e-books they were disappointed literature was not specifically included in the bill.

New books would not exist if authors stopped getting paid, president Tony Simpson said.