Streaming movies in the browser, and What the movie industry should do about it

With the rise of the new site ThePirateCity, movie industry is yet again facing a though illegal alternative for movie watching.

ThePirateCity seems to be a flash movie player with a built in torrent downloader, allowing users to watch pirated (or nonpirate) full length movies instantaneosly from within his browser. This means that the last big threshold for mainstream users not to use the bittorrent technology is gone.

No more file browsing, downloading and unpacking of files before you watch them, just go to a site and start watching movies. And what is even worse for the industry, it's easy to embed the movie player on any site, social network or blog, so the technology and movies will spread like wildfire.

It was just a matter of time before we would see this technology, but I'm a bit puzzled by it. What can the movie industry really do?
They can't count on all the states of the world to protect their creative content, since that would alianate political parties from younger voters.
It's also hard to compete in terms of usage simplicity, since the user will se the movie of choice plaing from within the browser 10-20 seconds after entering the site.

So what can they do? I have some suggestions:

* First of all, make use of social networks. Movie watching is a social activity. Having that in mind and empowering people to watch and discuss movies just as easily on a major social network would be the best thing to do. People want to watch the movie in a social context, and they want to do it on the sites they already use, trust and where their friends are.

* Add extra value and live events to the movie watching activity. This is also spinning on the social aspect. Have movie stars watch the movie together with the crowd on the social network, let them chat and interact with the actor, and create interesting events. It doesn't even have to be the top star of the movie, chatting with anyone that was on the set would do. People would feel included and closer to the movie.
This would also work as extra content later on, people watching the movie later could see historical chat, notes and voiceovers as they are watching the movie. Compare this to the extra features and director voiceover that can be foudn on every dvd.

* Give people a special "badge" for watching the movie at a special event. Lets say you watched when it premiered only. They should then get a special badge saying that they did just that. Or the "I watched this movie with nn and nn" badge, who wouldn't want to show off their connection to an actor / actress? People define themselves and their lifestyle the clothes they wear, magazines they read and movies they watch. Help them manifest their choise of lifestyle!

* Lower prices and set up a new payment model. Lower price with commercials, give away three free movies to watch each month, unlimited watching of different movies at fixed price, different levels. "$4,99 to watch the movie, $9,99 for watching the movie at a special event."

There are of course endless opportunities, but what's important is that the movie industry embrace the thought of their product as a social product. What they're offering is a social experience as well as a lifestyle, and that is what they should use to monetize their great products!