Just seconds before the start of the summer's first blockbuster, the Warner Bros. epic Troy, a slide appears on the giant screen of downtown Toronto's Paramount theatre explaining that video recording of the movie is illegal and that any one caught taping it will be prosecuted.

And anyone who sees someone taping the movie should contact theatre staff, it reads.

It's a key moment for the Canadian movie industry -- a sign that an epidemic of the American movie business has drifted North.

While movie makers have run commercials talking about the evils of movie piracy in theatres in recent months -- which often garner chuckles from the audience -- the industry has never before told patrons so prominently that recording, or "camcording" as it's commonly known, could result in a criminal record, and to rat out anyone caught copying.

The slide was placed on-screen by Warner Bros., according to Famous Players Inc. spokeswoman Nuria Bronfman. "[Camcording in Canada] is not rampant, but it certainly does happen -- enough that it raises our radar."

Indeed, as Internet service providers jack up download speeds and as copying technologies become cheaper, Hollywood is frightened that the movie industry will be the next victim of illegal downloading, and industry executives have launched an offensive to prevent films being as rampantly shared and passed around as music.

Signs that movie piracy is on the rise have come from a number of high-profile busts involving illegal movie copying:

Last December, RCMP in Richmond, B.C., arrested a shopkeeper in an investigation related to counterfeit goods. More than 10,000 CDs and DVDs were seized. Last month, he was charged with 63 counts of violating the federal Copyright Act.

In April, nearly 2,000 bogus movies were seized from a Toronto retailer.

Also in April, Los Angeles police announced one of the largest bootleg busts in U.S. history, shutting down two operations that together could illegally copy 2.7 million DVDs a year.

Illegal video recording is the No. 1 way that movies wind up on the Internet and on the streets, according to Serge Corriveau, national director for the Canadian Motion Picture Distributors Association's (CMPDA) anti-piracy program. The CMPDA is affiliated with the powerful Motion Picture Association of America (MPAA), an industry group made up of all the big Hollywood studios such as Walt Disney Co., Sony Entertainment Inc. and Metro-Goldwyn-Mayer Inc.

Professional copiers use tiny handheld digital cameras to shoot a movie, dump the file on to a computer, edit the audio and video quality, then sell it to someone who mass-produces bootleg DVDs for sale on the street -- all within a matter of hours after a release.

Or, it can be placed into "shared" file folder on a computer and accessed by millions of users on the Internet via peer-to-peer file-sharing programs such as Kazaa or Limewire (programs that have pummelled the music industry as users downloaded and swapped songs for free). The movie file can then be burned to a DVD and watched on a home entertainment system.

Video recording "is a major issue in Canada right now -- something we've never had in the past," said Mr. Corriveau, formerly a 26-year veteran with the RCMP.

During the first five years since Mr. Corriveau moved into his job in 1998, Canada had a couple of movie video-recording busts each year. However, this year alone, that figure already stands at more than 20 cases, he said.

He attributes that increase to a series of seminars and a keynote address on the issue at this year's Show Canada -- an annual movie industry event, which was held in Vancouver a few months ago.

William Murray, co-chief operating officer of the MPAA, told the conference that piracy was once an afterthought within the industry as copies of movies were sold in flea markets and by street vendors in New York. Now, "times have changed" as a digital revolution has swept across the industry.

"Pirates no longer have to work in their dusty, cold garages with old VCRs patched together with cords and tape; instead, they can go on-line from the comfort of their own bedrooms," he said.

"We believe that digital piracy represents an enormous threat to our business -- unlike anything we have ever seen, and while we are doing much to combat this thievery, much more needs to be done."

As a result of illegal downloading, music sales in the United States declined 26 per cent between 1999 -- the year Napster became a household word -- and 2003, according to Mr. Murray.

"So let me ask you: Could you survive if your business were to decline by 26 per cent? We know we couldn't . . . We might like to think that we are immune from what has happened to music but, as my friends in China would say, the signs are not auspicious."

According to a recent article in magazine Business 2.0, there are approximately 16 million movie files on the Internet -- up more than 85 per cent from 2003.

Statistics from the MPAA released in July show that 2.6 billion files (including movies, music and software) are copied from the Internet each month worldwide and that one in four Internet users have downloaded a movie. More than half of all worldwide movie downloaders said they plan to continue grabbing movies on-line while 17 per cent of those who have not downloaded a movie say they plan to start some time soon, the study said.

It also reported that, "although they profess to be active movie-goers, a large percentage of downloaders claim to be attending movies less often than they have in the past. This is especially true with the mature [South] Korean market where nearly one in three people who pirate movies are going to the cinema less frequently than in the past."

As the cost of producing movies continues to climb, a decline in attendance could lead to a drop in much-needed box office revenues, the industry fears. That said, the North American box office is poised to pull in record sales figures for 2004, with some analysts forecasting total receipts of more than $9.6-billion (U.S.), compared with $9.2-billion in 2003.

Officials with Canada's publicly traded movie companies -- Alliance Atlantis Communications Inc. and Lions Gate Entertainment Corp. -- declined to comment on the matter.

However, Jeff Sackman, president and chief executive officer of independent Toronto distributor ThinkFilm Co. Inc., said the "driving fear" behind the industry is the speed in which technology is changing.

As opposed to song files, which are relatively tiny at about three megabytes, an average movie file is hundreds of megabytes in size and often takes hours to download.

But with file compression software improving and download speeds rising dramatically, that could very likely soon change to minutes.

"The movie industry is benefiting from the downloading time . . . because it's so much more difficult than music, it's giving the industry time to come up with a solution to the problem," said Mr. Sackman, whose firm is responsible for bringing the documentary Spellbound to Canada and the recently opened rockumentary Festival Express. (Mr. Sackman used to head Lions Gate, the distributor of this summer's smash hit Fahrenheit 9/11.)

One school of thought to battle the piracy problem is the roll out of studio-quality movies on-line, akin to the handful of popular pay-per-download music sites residing in cyberspace.

However, analyst Jeff Rath of Canaccord Capital Corp. in Toronto said in a research note that the rise in illegal downloading of movies is creating a dilemma for studios that may be pondering on-line distribution of their films.

"On one side, studios have witnessed the difficulties in the music industry (which did not react quickly or decisively), but on the other side, studios presently derive 40 to 50 per cent of their profitability from DVD sales, making the transition to digital distribution a very difficult prospect," he said.

He noted that both Sony and Microsoft Corp. are expected to offer legal movie download services in the coming months, along with the launch of portable movie players.

Another tactic is to police Canadian theatres more aggressively for illegal recording, thereby cutting off the supply at the source, a strategy used by U.S. authorities.

In the United States, the MPAA offers rewards of up to $500 for information leading to the conviction of a pirate, which is leading to arrests and legal action.

Hollywood is also reportedly in the trial stages of a spy-cam device placed in theatres that scans each row and detects heat coming from camcorder batteries.

Famous Players' Ms. Bronfman doesn't expect that type of device to catch on in Canada any time soon, but admits the industry will be keeping a keen eye on what happens in the United States.

"We want people to feel comfortable in our theatre -- we don't want it to be a war zone," she said, adding that another issue surrounding the implementation of those devices is who covers the cost -- the exhibitor or the distributor.

For Mr. Corriveau and the CMPDA, the key element is halting piracy at the source

"They're [the industry] very worried. That's why we're putting so much emphasis on these campaigns and trying to stop it. We don't want it to be the same as the music [industry]. That's why we're trying to catch it at the beginning."