piracy in the videogame industry
polycounter lvl 18
these days, i've been hearing tons of stuff about how music companies think that piracy is hurting them, but little from the game business. i was talking to a friend who admitted he pirated games, and he admitted to downloading what would have been 250 dollars worth of games. how rampant is this, and as people who work in the industry do you feel that it is taking away from you?
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Not every game can be 'valued' the same. Barbie's magical adventure isn't the same as Call of Duty 2 for example.
So to generalize everygame is 'worth' $50 a piece is pretty vague to begin with. I've seen 'new' games come onto shelves one week only to be toss into the 'bargin bin' a month later. Effectively taking a $55 game and making it a $20 one.
If someone pirated 10 copies of Quake1 way back when compared to now, the price difference is like $500 compared to $100.
Most publishers (atleast the ones i'm familiar with) usually pay a dev house for their game upfront with some royalties off the backend. So its upto the publisher to do the grunt work and sell-sell-sell that title to the public and make a profit.
I'm with EarthQuake on this one, pretty sure it hurts the publishers more than the dev houses. But that 'hit' on income gets passed onto the dev houses, meaning smaller budgets and smaller income for other projects.
I think the RIAA and music labels are mostly raising hell because its far easier to pirate a song than a game (file size anyway and less security) That and they are used to the huge amount of money they used to rake in before computers and such.
I myself am a former music and game pirate; back when I lived on $150 a week working as a cashier. I'm not noble or anything now, but I pay for my entertainment.
Maybe its just me but I make next to nothing and I still pay for all my games and software, because I like them and want to support the people making it.
In Japan they have made it illegal to resell or rent games, but then their game market is shrinking and ours is growing.
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Not sure about renting, but a million places there sell used games.
Nothing can be done about it, a pirate is a pirate is... I know people that pirate everything on their hard dives, I worked with a guy who'd pirated his antiviris software. They aren't going to buy the game no matter what you do to it. They'd rather not play than pay. So all you end up doing is making it harder on legitimate users.
Maybe its just me but I make next to nothing and I still pay for all my games and software, because I like them and want to support the people making it.
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Well said. The pirates I know just put 5 things in their torrent queue every night and go to sleep. If it didn't work, they'd rather just not play it than end up paying for it.
In Japan they have made it illegal to resell or rent games, but then their game market is shrinking and ours is growing.
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hmm.
not sure about that one. Maybe in Tokyo, but certainly not outside. I used to rent anything from games to mini discs, from my local chain.
There's a different scene in Tokyo, but you can rent ps2 games thats for sure.
The games market is zero for xbox but nintendo are still floating above water. Sony are drowning with the loss they make on hardware / being out classed by DS. Sony pictures on the other hand is doing well, off the DVD player that once used to play games.
In short, games are very much part of everyday culture here, with game centers on every street corner and mario brothers being used to promote the biggest department store in Tokyo. If the game market is srinking, it's not very apparent.
Some people don't want to spend $50 on a game, but you know, that's just how capitalism works. You get what you pay for. If you're unsure about a game, at least rent it, or play it at a friend's house who owns it. I wish more companies would release demos like the past. Demos are a great way of giving a free version of your game so people can decide whether or not to sink the fifty bucks into your product.
The extent of my 'piracy' anymore is pretty negligible. For example, I bought Unreal Tournament 2004 when it came out. My disks were ruined by a wonderful television I accidently dropped on the box, so I copied the the cd's from a friend. I know that somehow it still contributes to the pirates and what-have-you, but I suppose I can justify it, at least to myself. I know there is still contraversy about the legitimacy of 'backup copies' of data, but doing that didn't make me feel like I was harming the company in any way. Without the game that I legally paid for, I can't play the game.
I'd like to see what other people think about the whole games distribution system as a whole, and this particular aspect of 'piracy'.
And copying has always been positivly used by the game industry. The free advertisement helps (if it is a good game), and why do you think the PSX became so popular?
I bet that is also one of the major reasons why MS went with regular DVDs for the Xbox360 (besides technical difficulties and high prizes of next gen drives).
Seriously piracy isn't a problem as long as it isn't done commercially, and every one who says that game rentals and 'used copys' sale is hurting the industry is neclecting basic customers rights (and is so far up the ass of these multi billion dollar corps that he lost sight of a regular sane marketeconomy).
EDIT: I buy most of the games I play, because those are usually really worth every penny
I agree with JK to an extent. For example, as far as I can tell 3DS Max was successful for one reason only, and that is that it was easy to pirate. You simply can't expect people who are just learning to pay even $400 for the learning edition. Most people who can afford to spend the money do. We aren't talking about a bunch pre-teens downloading 50 cent, the people who use Max are smart and motivated and build a lasting relationship to the product.
Games are WAY different from a lot of other entertainment products. If games companies wanted to, they could eliminate piracy completely. Look at the MMORPGs. They could make every game of theirs require you to log in and play on their machines.
I'm sure game companies understand the economics of piracy, and that some piracy is okay or even good for them, but they maintain that level of piracy by taking the stance that it is completely bad.
I used to be as ignorant as you are now. Piracy IS a problem no matter how it occurs. As for game rentals, there are some statistics on this page that show you that game rental stores make about 10% of the total money generated by video games, in the U.S. Yes I believe this has a negative impact on the amount of money publishers and developers make. And no, I don't have my head up anyone's ass.
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At an event recently, your colleague Tim Willits said that id were seriously hurt by piracy. Has that influenced your decision to move to Xbox?
The PC market in general is getting really, really torched. Todd mentioned a statistic: last year was half the gross revenue of three years ago. A really grim number. People in the PC space are looking at games that, one way or another, require subscription or internet connection.
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But this recent nonsense about game rentals and used copys is really starting to annoy me.
Why do you think people rent games or buy used copys? Because they think it's not worth shelling out the 50 bucks! Take that option away, and they will not buy that game either.
And both 'second market' types actually generate some money for the industry, as game rentals have to pay royalities for every rentable copy they have (at least here in Europe), and the used game market is surly adding to the normal retail market as people are more likely to buy a game if they can sell it later for a fair price (but to be honest this used games market you speak of is next to non existant here in Germany).
EDIT: Ok after reading TelekineticFrog's reply I somewhat agree that if EB is doing that to this extent, than it is somewhat hurting the real sales, but I wasn't aware of it as it is practiacally unheared of here in Germany. But I still think that generally it isn't much of an issue as long as it isn't done to that extent (just like piracy only hurts when done commercially).
Oh, and if you want to prevent game rentals, just make your games longer than 8 hours
@Keg: I very much doubt the PC market is exspecially beeing hurt by piracy lately, it is just very generally not in a good condition due to several, mostly console related, issues.
I think the big problem with PC games is that they have very little added value. I buy a new console and I can buy games for it for 5 years. I get a new PC, and if it will play games at all out of the box, I can only get it to play games well for 2 years maybe without upgrading. I liked PC games just fine, when I didn't have anything to do, but now I have to clear a couple of hours just to get the thing installed, update my drivers, and then often the game still doesn't run. Consoles since the Dreamcast have offered online play, and that was one of the last best things PCs had over consoles. I used to play a lot of PC games, but I haven't bought a PC game since Homeworld 2. Plus, this is the worst time for PC games in the game dev cycle. The new consoles are just now coming out, so the PC games don't even have better graphics.
In regards to piracy:
I have a degree in this stuff. I think I understand the situation pretty well. If you sold games at a billion dollars each, then piracy would never hurt you because you would never have a buyer willing to pay that much (either way you would sell zero copies). As you lower your price you find more people willing to pay it, and at some point you hit a sweet spot where you maximize profit.
I do personally believe that for games, piracy probably does hurt the game developers. Resale and renting hurt them too. It is really hard to say how much though, because the numbers that game publishers give out for losses due to piracy are absurd (just because a 100,000 pirated your game DOES NOT mean that all those people would have bought it at full retail) but they look good on their taxes.
The game market has been growing like crazy here. There really isn't a problem yet.
I think a lot of piracy happens because people are not willing to pay a rather large amount of money on a title that has gameplay mechanisms that are almost identical to dozens of other games. But you need them nontheless if you want to play on lanpartys. This is at least what I observed.
I myself used to copy games when I had no money, but now that I am involved in the industry, I changed my view and my bank account changed too
And this is also one area where PC games shine.
BTW there was that roundtable talk at last years GDC where this very question was raised to a few well known developers (not publishers). Including Warren Elliot. They basically stated as some said above anyways. Pirates wouldnt purchase their game anyways even if forced to. So its really not lost revenue. In fact, one went as far to point out it might increase word of mouth.
The publisher has already made some profit from selling the game in the first place. If the game is any good there won't be shitloads of re-sells, simple.
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The probability of a retailer purchasing more copies of a game from a publisher to feed consumer interest is close to fleeting often. I remember picking up several titles (because i was forced to preorder) to see other people go to buy it to be told oh you didn't preorder...tough and then not being able to find a copy till a couple months after. The publisher/developer is entitled to profiting from the game's sales more so than a retailer. They are in fact the ones that put up the investment to create the product. The lack of sales (and I refer to true sales numbers not resale numbers of used games) add up to quite substantial amounts when compared to if they had actually been all true sales of new product at retail. This financialy can sink a small developer even if the game is seen as "good" by the gaming community. Psychonauts is a great example of how this hurts us...It was critically acclaimed by many a people and press writer yet it didn't sell a ton of copies. This isn't because the game wasn't published in accurate amounts to feed interest. The game was purchased in small amounts by retailers fed out to those that pre purchased the title and the random few that were able to buy copies thereafter in small amounts. The retailers then did not purchase further orders of the title because of it's obscure nature. The ones being sold at retailers like EB/Gamestop/Gamecrazy are used copies being thrown back into their 100% profit pool where they buy it at 8 maybe 12 bucks from a customer selling it to them and turn around and sell it back to the customer who wasn't able to obtain a copy new because the retailer didn't order any at 32-39 bucks used because even though it was deemed too obscure or not worthy of shelf space but is now seen as a game that people are looking for because it is "in" after the fact. This is 20 - 31 bucks in sheer 100% profit going into their bank while had they sold the game new after buying more copies to feed the demand will have only made maybe 10 bucks profit at best. Therefore in the end good ole developer Double Fine sees less share in profits from their publisher which leads to Psychonauts 2 more than likely being deemed not viable for a sequel or further development, not because it's a bad game but not a financial "moneymaker" secure project. This can end in even a worse scenario where the developer can't find a publisher to take a risk on yet another excellent game but one not deemed worthy in the financial profit arena. We as consumers and more importantly game players get crappier uninspired games with no original content and worse for me as a developer and many of you the risk of loss of employment because our development houses run the risk of having to shut down if that scenario is played out more than once and sometimes once is enough. Right now I am employed by a publisher but even so if that happened to the games i made im sure they wouldn't hesitate to shut down the internal dev studio if it was cheaper and less a risk to hire a small cheap studio to do quick and dirty games and even then those places drop like flies left and right all because of the bottom line.
Rentals don't have as much of an impact. Why? Well, rental copies cost quite a bit more than normal copies, we're talking about 100+$ here. The publisher makes more money on those rental copies, even though they might reduce the sales of single-user copies.
Either way, rentals and used games are an undeniable part of the economy and they have a right to exist.
As for piracy, the measures taken against that are completely misguided. Anti-copy systems become more and more intrusive and produce more false positives than ever before. Buying legal means jumping through hoops until the game works. Hell, some companies are retarded enough to require you to uninstall all burning software you have to run the game. Buying legal means always having the CD at hand and switching CDs whenever you want to play something else (plus sometimes Windows won't boot if the CD drive can't read the CD so you have to remove it to boot). Buying legal means you can't install it on every computer in a LAN and play multiplayer. Pirates have none of those problems, they get the game pre-cracked, it just works. Buying retail doesn't add value, it subtracts value. With shit like Steam foistered upon me I sometimes think that reverting to piracy would be the more convenient solution, just because it means the games WORK!
I mean, at some point you have to involve cracks anyway, especially if your DVD drive isn't compatible with the anticopy system (Mop?) or you want to play it with friends at a private LAN party. I mean, whatever happened to single-CD multiplayer? Within the last few years I encountered only ONE game that could be played over LAN with a single CD, everything else requires that every player has a copy of it. Obviously impossible for private LANs, you won't find a game that everyone owns, except maybe for Half-Life (and that requires only one copy...). Cracks have become standard equipment at our LAN parties since there's no other way to get everyone playing the same game. But I think I posted a rant about this some time ago already.
By the way, as far as products go, 10% profit is terrible on a comodity such as games which is likely to drop in price very quickly. You wonder why stores don't order any more new stock than they have to? Because they lose money on anything that's in the store when all is said and done. Think about it. If there's one copy they don't sell, that's 9 copies of profit, and you're going to complain that they try to get money out of you with magazines?
Game stores are a business like anything else, and they have a right to earn enough money to pay their employees, rent, advertising, and even make a profit if they can. It's sheer lunacy that a piece of media whose physical production cost is along the lines of a can of soda can accrue that kind of cost/profit ratio by the time it gets to the end user. We all know the money isn't going to pay the devs that made it.
As for piracy, I fully support systems like Steam as they can do a great deal to reduce costs and get more money to the developers, but-- more importantly, because I'm sick of having to find out how to break the copy protection of damn near half the games I buy, or worry about what it's putting on my system while someone who pirates it gets a nice clean, functional pre-cracked version. Yes, I trust the virus content of a downloaded version more than I do a retail CD. Can you say I'm wrong?
Great article 100% relevant to this topic, and it explains perfectly why used game sales hurt the game industry.
Now I wish I would get beautiful manuals for my money.
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What the hell is up with publishers using those cheap ass paper sleeves as well? I shelled out $50 for the game, they could at least include a real jewel case or a DVD case to store my discs in when I'm not using them.
http://www.escapistmagazine.com/issue/26/3
Great article 100% relevant to this topic, and it explains perfectly why used game sales hurt the game industry.
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That's how it tries to influence people, but really, what it's doing is explaining perfectly why big stores and publishers are hurting the game industry. Game stores can do nothing about the fact-- as it says on the first page and then fails to address the issue-- that game stores make next to nothing on new titles, and simply cannot survive as a business on them alone.
the game industry had an awesome set up but they fucked themselves. they were called arcades.
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Is the death of the arcade industry really the game industry's fault? I'm not being rhetorical, I'm actually asking a strait question, because I have no idea what caused the death of the arcade industry in the US.
because I have no idea what caused the death of the arcade industry in the US.
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Internet, and home technology that could match arcades. (Guess)
Isn't this whole 'piracy coz' I ain't getting value' a bit of a catch 22 now?
Gamers want more 'value' - someone mention an example of the way DVDs have 'extras' - but we're told develops need to keep costs down (understandably). How do you add value and keep costs downs (without adding a black T-shirt to a tin box *cough*HL2 SE*cough*)?.
Does this now mean that at some point someone (developer/publisher) will need to take an even greater risk and either add more 'real' value (content) or lower the price point on their games in the hopes they shift more units in either case?.
Is *risk* the key issue here; in terms of getting ROI and hopefully as a side effect reduced piracy due to people feeling they're now getting some value for their bucks? Are the big publishing/deveopment house in a position to even be able to do this?
Is the industry on the whole generally stuck in one mode of operation that it now can't get out of? Can they lower prices or add new content without hitting the bottom line hard?
The more shitty products there are the less likely i am going to buy somethings because it is most likely shit so some good ones get ignored.
And lets be honest, 90% of the games released deserve maybe $10.
Most games that are actually worth the asked $50 make a profit.
My advice is to stop whining and start making good games.