In fact they were filling a need because there was a demand for their services. Obviously, they were breaking the law -- but that has nothing to do with the demand.
The film companies, in their typical business wisdom, only saw the copyright issue and not the business opportunity that was handed to them.
If a director wants to sell a neutered version of his work, then its OK, but its his decision, its his property.
Its funny how everyone here is for property rights when the government takes land, but no one is outraged that this company went in and stole property from the film directors?