Well piracy, yes, but he was referring to the US DVD market which is driven by endless upgrades and variant releases. There's consumer fatigue in that part of the world, and the only bright spot is HD, at least for now.
I was asked a lot about downloads, btw. That seems to be an evolving component of their strategy. And yes, they're aware of online piracy, but rather than fight it, which is extremely difficult, they want to provide a better alternative that local consumers will willingly embrace. For example, would you buy videos from a local iTunes-type store if it were priced like a mobile MP3 file? Would you download copy-protected WMV/AVI files from vendo machines to your personal USB drive at Php50 per film?
If it contains the entire Warner, New Line, HBO and Showtime catalog of more than 15K selections - I probably would.