- A website created in a bedroom is attracting lawsuits from international companies
- Cuevana.tv offers its Latin American customers links to watch free movies
- Founder Tomas Escobar says 15 million people are using the site each month
- HBO Latin America and Turner International Argentina - both, like CNN, part of Time Warner - among firms taking legal action
Tomas Escobar created a website in his bedroom in rural northwestern Argentina hoping to help people locate free movies online in a more efficient manner.
From that small start in September 2009, Escobar´s site, Cuevana.tv, has grown to one of the most popular entertainment sites in Latin America, attracting 15 million unique monthly users, according to Escobar.
"It was a hobby, a small thing. And it exploded in my hands," Escobar tells CNN.
But it has also attracted the attention of international media companies armed with lawsuits.
The success has transformed the unassuming and unkempt 22-year-old college dropout into something of a cult hero in the Spanish-speaking world. It took weeks of negotiations to get Escobar to agree to an interview with CNN, his first-ever with an international TV news organization.
"Cuevana has a lot of complications now that weren't thought of in the beginning, like servers and traffic. We are now trying to solve them in steps," Escobar says.
Visitors to Cuevana can access thousands of titles -- the majority of them big-budget Hollywood productions with Spanish subtitles -- entirely for free. According to Escobar, Cuevana doesn't host the titles itself -- it simply serves as a content clearinghouse.
"It's the same concept as Google. You have a lot of links and indexes, and the user searches for these, and you give them the links," he says. "So really, the legal compromise is on the other sites, not on Cuevana," Escobar says.
But many companies and artists disagree. In November, HBO Latin America and Turner International Argentina - both, like CNN, part of Time Warner - took legal action against Cuevana in Argentina.
HBO declined to provide CNN with details of its lawsuit against Cuevana, which alleged infringement of HBO's intellectual property rights.
Turner Argentina asked a judge to block Cuevana from providing access to three of its original series, including the Steven Spielberg-produced "Falling Skies." The three shows are no longer on the site.
"It is one of the first judicial decisions in Argentina and Latin America, so we are proud to defend the intellectual property laws, we are proud to defend our own productions, and we are proud to defend the assets of our company," says Victor Roldan, director of legal affairs for Turner International Argentina.
But it is not only deep-pocketed international studios taking Cuevana to task for providing free content without compensation. Local Latin American producers say they are feeling the pinch too.
"The problem is that all regulations were skipped, and all the control was given directly to the Cuevana users. This is damaging to producers, directors, and the entire film industry here," says Cristina Agüero, president of the Argentina Association of Film Producers.
Yet, Cuevana is still going strong and gaining more users every day. Escobar says many filmmakers are anxious to have their work available on the site, as it exposes them to a much-wider audience.
"They end up making more, not less, money," Escobar says.
For millions of Cuevana users, the choice between watching a movie for free in the safety of their own home and leaving the house to spend money on a DVD rental is an easy one.
"I am not in favor of piracy, but I think sites like Cuevana should exist where you can access free movies. But the sites should pay the producers with money they get from advertisements," says
Federico Troilo, 38, a Cuevana user in Buenos Aires.
Cuevana does make "thousands" of dollars in monthly advertising revenue, according to Escobar, but all the money goes to maintaining the site. Cuevana has no employees, only volunteers, but Escobar concedes that the website could one day make him very rich.
"Right now we are just working hard to improve and continue to be the number 1 option in Latin America," he says.
The key concept that Escobar and many of Cuevana's users are trying to promote is that major studios need to accept that the paradigm is changing.
Escobar points to the music industry as a cautionary tale, and says executives must realize that users will ultimately decide how content is consumed online, and how much they will pay for it.
"The music industry had the opportunity to legalize all music, and by not doing so, it just grew and then you had like 10 Napsters," says Escobar.
Increasing access to technology, and overall lower salaries in the region have also contributed to the Latin American mindset that content should be free, and it may be too late to change that, according to Escobar.
"There has been a major change of mind -- and in Latin America probably most of all -- because services like Google, Facebook and Twitter are all free, and the user has started to expect those services for free," Escobar says.
Some companies are betting that Latin Americans will start paying for movies and TV shows online.
Netflix entered the Latin American market in September offering streaming content for about $9 dollars a month. Like Netflix, Escobar says he wants to strike legitimate distribution deals, so that both Cuevana's users and the studios will be happy, but he says it needs to be done with Latin American tastes in mind.
"People in Latin America are already complaining that Netflix doesn't have enough content specifically for them. Until they do, I don't think they will be successful," Escobar says. "Consumers here just want to be treated as equals to U.S. consumers."