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Apathy and refunds are more dangerous than piracy.
by Tommy Refenes on 03/18/13 05:10:00 pm   Expert Blogs   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

I think I can safely say that Super Meat Boy has been pirated at least 200,000 times. We are closing in on 2 million sales and assuming a 10% piracy to sales ratio does not seem unreasonable. As a forward thinking developer who exists in the present, I realize and accept that a pirated copy of a digital game does not equate to money being taken out of my pocket. Team Meat shows no loss in our year end totals due to piracy and neither should any other developer.

For the sake of argument, some of those people that did pirate Super Meat Boy could have bought the game if piracy didn’t exist but there is no actual way to calculate that lost revenue. It is impossible to know with certainty the intentions of people. With the SimCity fiasco and several companies trying to find new ways to combat piracy and stating piracy has negatively affected their bottom line I wonder if they’ve taken the time to accurately try to determine what their losses are due to piracy.

My first job outside my parents cabinet shop was at KMart. KMart, like countless other retailers, calculates loss by counting purchased inventory and matching it to sales. Loss is always built into the budget because it is inevitable. Loss could come from items breaking, being stolen, or being defective. If someone broke a light bulb, that was a calculable loss. If someone returned a blender for being defective, it wasn’t a loss to KMart, but a calculable loss to the manufacturer. If someone steals a copy of BattleToads, it’s a loss to KMart. All loss in a retail setting is calculable because items to be sold are physical objects that come from manufacturers that have to be placed on shelves by employees. You have a chain of inventory numbers, money spent and labor spent that goes from the consumer all the way to the manufacturer. A stolen, broken, or lost item is an item that you cannot sell. In the retail world your stock is worth money.

In the digital world, you don’t have a set inventory. Your game is infinitely replicable at a negligible or zero cost (the cost bandwidth off your own site or nothing if you're on a portal like Steam, eShop, etc). Digital inventory has no value. Your company isn’t worth an infinite amount because you have infinite copies of your game. As such, calculating worth and loss based on infinite inventory is impossible. If you have infinite stock, and someone steals one unit from that stock, you still have infinite stock. If you have infinite stock and someone steals 1 trillion units from that stock , you still have infinite stock. There is no loss of stock when you have an infinite amount.

Because of this, in the digital world, there is no loss when someone steals a game because it isn't one less copy you can sell, it is potentially one less sale but that is irrelevant. Everyone in the world with an internet connection and a form of online payment is a potential buyer for your game but that doesn’t mean everyone in the world will buy your game. 

Loss due to piracy is an implied loss because it is not a calculable loss. You cannot, with any accuracy, state that because your game was pirated 300 times you lost 300 sales. You cannot prove even one lost sale because there is no evidence to state that any one person who pirated your game would have bought your game if piracy did not exist. From an accounting perspective it’s speculative and a company cannot accurately determine loss or gain based on speculative accounting. You can’t rely on revenue due to speculation, you can’t build a company off of what will “probably” happen. Watch “The Smartest Guys in the Room” and see how that worked out for Enron.

Companies try to combat piracy of their software with DRM but if loss due to pirated software is not calculable to an accurate amount does the implementation of DRM provide a return on investment? It is impossible to say yes to this statement. Look at it as numbers spent in a set budget. You spend $X on research for your new DRM method that will prevent people from stealing your game. That $X is a line item in accounting that can be quantified. Can you then say “This $X we put into research for our DRM gained us back $Y in sales”? There is no way to calculate this because it is not possible to quantify the intentions of a person. Also, there’s no way of accurately determining which customers would have stolen the game had there not been DRM.

To add to that, the reality of our current software age is the internet is more efficient at breaking things than companies are at creating them. A company will spend massive amounts of money on DRM and the internet will break it in a matter of days in most cases. When the DRM is broken is it worth the money spent to implement it? Did the week of unbroken DRM for your game gain you any sales from potential pirates due to the inability to pirate at launch? Again, there is no way of telling and as such cannot be used as an accurate justification for spending money.

So what should developers do to make sure people don’t steal games? Unfortunately there is nothing anyone can do to actively stop their game from being pirated. I do believe people are less likely to pirate your software if the software is easy to buy, easy to run, and does what is advertised. You can’t force a person to buy your software no more than you can prevent a person from stealing it. People have to WANT to buy your software, people have to WANT to support you. People need to care about your employees and your company’s well being. There is no better way to achieve that than making sure what you put out there is the best you can do and you treat your customers with respect.

Lets loop back to what’s going on with SimCity. I bought SimCity day one, I played it and experienced the same frustrations that countless others are experiencing. For total fairness, I know the always on DRM isn’t the main issue, but I can’t help but think that the server side calculations are a “wolf in sheep’s clothing” version of DRM. I won’t claim to know the inner workings of SimCity and this isn’t a Captain Hindsight article because that is irrelevant. EA and Maxis are currently facing a bigger problem than piracy: A growing number of their customers no longer trust them and this has and will cost them money. 

After the frustrations with SimCity I asked Origin for a refund and received one. This was money they had and then lost a few days later. Applying our earlier conversation about calculable loss, there is a loss that is quantifiable, that will show up in accounting spreadsheets and does take away from profit. That loss is the return, and it is much more dangerous than someone stealing your game.

In the retail world, you could potentially put a return back on the shelf, you could find another customer that wants it, sell it to them and there would be virtually no loss. In the digital world, because there is no set amount of goods, you gain nothing back (one plus infinity is still infinity). It’s only a negative experience. A negative frustrating experience for a customer should be considered more damaging than a torrent of your game.

Speaking from my experience with SMB, I know for a fact we have lost a lot of trust from Mac users due to the Mac port of SMB being poor quality. I could go into the circumstances of why it is the way it is but that is irrelevant...it’s a broken product that is out in the public. We disappointed a good portion of our Mac customers with SMB and as a result several former customers have requested and received refunds. I’d take any amount of pirates over one return due to disappointment any day.

Disappointment leads to apathy which is the swan song for any developer. If people don’t care about your game, why would people ever buy it? When MewGenics comes out, I doubt many Mac users are going to be excited about our launch. When EA/Maxis create their next new game how many people are going to be excited about it and talking positively about it? I imagine that the poison of their current SimCity launch is going to seep into potential customers thoughts and be a point of speculation as to “Is it going to be another SimCity launch?”. 

This is not a quantifiable loss of course, but people are more likely to buy from distributors they trust rather than ones they’ve felt slighted by before. Consumer confidence plays a very important role in how customers spend money. I think its safe to say that EA and Maxis do not have a lot of consumer confidence at this point. I think its also safe to say that the next EA/Maxis game is going to be a tough sell to people who experienced or were turned away by talk of frustration regarding SimCity.

As a result of piracy developers feel their hand is forced to implement measures to stop piracy. Often, these efforts to combat piracy only result in frustration for paying customers. I challenge a developer to show evidence that accurately shows implementation of DRM is a return on investment and that losses due to piracy can be calculated. I do not believe this is possible.

The reality is the fight against piracy equates to spending time and money combating a loss that cannot be quantified. Everyone needs to accept that piracy cannot be stopped and loss prevention is not a concept that can be applied to the digital world. Developers should focus on their paying customers and stop wasting time and money on non-paying customers. Respect your customers and they may in turn respect your efforts enough to purchase your game instead of pirating it.


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Comments


Andy Satterthwaite
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A good argument and one that, in part, can be spread to DVD sales too.

I would anecdotally say that inconveniencing a paying user actually encourages piracy.
e.g. Every time I put on a DVD for my kids and they have to waste 5 minutes of their 30 minutes TV time watching logos, FBI warnings, anti-piracy adverts etc., it occurs to me that by watching a pirated download I could skip it all ...

And don't even get me started on Disney Fastplay.

Chris Clogg
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Totally agree.

We seriously need a system in which you can just go to a website, pay a reasonable amount (NOT a $30 bluray!), get a (legal) high quality movie in AVI or w/e format, and then be free to do whatever you want with that file (no DRM!). The only alternative, streaming, is kind of lame in my opinion :/

Regarding the article, I concur with the points, but it doesn't seem to matter for big corporations I guess. EA still sells enough copies regardless of issues like DRM, or destroying franchises etc (though this SimCity debacle is finally a big example)... we're just suckers for the things we used to love. I've personally stopped buying anything EA for years now, but the upcoming CnC release is whispering into my ear!! Arg lol.

Steve Cawood
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Agreed! In fact our kids have a nasty habit of throwing the dvds around the room and ruining them in the process (as do most kids I imagine) so I back them up on to one dvd-r disc.

Luke Quinn
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I agree with you on this 150%!
I absolutely can't stand all that BS the movies companies deem reasonable to force me to watch on a DVD that I just paid upwards of $20 to watch, so I never actually use the DVDs I buy; Instead, I purchase the DVD and then hop onto uTorrent to get the version I'll actually watch (except for brand new or obscure DVDs which can be difficult to get torrents for).
I can tell you how tempting it is (very) to simply skip the 'buy the DVD' step in there, because all I'm buying for my money is inconvenience, especially when you factor in the fact that I wouldn't be wasting a large portion of my back-room cupboard storing all that useless plastic.
I don't like streaming because I don't like the potential for lag, and I don't want to just pirate en mass because it devalues the content (like downloading every PS1 ROM ever and then never playing any of them because you can never decide which to play).
All I want is what Chris Clogg asked for: A DRM-free high-quality download for which I'm charged a one-off reasonable fee, <$10 seeing as there's no physical media or distribution costs.

James Yee
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Which is why I've done the perfectly legal thing of ripping my daughter's DVDs and burned "clean" DVD's that just play the content. As well as having my TV PC set-up with directories of episodes.

Simon Ludgate
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Don't forget that piracy can actually GENERATE sales, not just account for lost sales. Someone might pirate a game because they don't think it's any good, only to be pleasantly surprised with how good it actually is. They might then buy the game after all, or perhaps buy the company's next game.

The interaction between piracy and purchase is complex and cannot be distilled down to lost sales, as Tommy rightly points out. I totally agree that the best way to make people buy a game is to make them WANT to buy a game.

Aaron Fowler
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I hear people say this all the time. However, I wonder how many people actually do buy a game later on after they pirate it? I mean why should they pay for something they already have? Maybe I'm wrong. I hope I'm wrong. But like most other topics involving piracy you won't actually know for sure whether this is the case or not.

James Yee
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We can only guess based off the experiments of the MOJANG documentary and that other game that showed up on the pirate bay that those experiments did result in more sales.

Personally I have bought games from companies after pirating things. I've also avoided companies after pirating their games. I'm weird like that.

Rob Graeber
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On a micro level sure anything can happen, piracy can have a positive or negative effect on sales depending on a number of factors.

On a macro level, piracy is likely putting downwards pressure on game industry revenues as a whole through diverting people's leisure time to unpaid products, hurting perceived value, raising costs of server-based games that didn't properly secure it, etc.

Wes Jurica
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When I was younger and broke I would pirate nearly everything I played, save for a few beloved franchises.

As I got old and got money, I would still pirate games. At the same time I would spend a crap ton buying games (my biggest year was easily over $3000). Many of the games I bought were games that I had pirated previously.

As of yesterday, I have publish my first game, Rock Racing (http://www.gigabitgames.com). I fully expect it to get pirated when the full version is released. In fact, I would be disappointed if it wasn't.

Somewhat relevant here, I pirated Gish when it was first released. That game had me watching McMillen like a hawk over the years. It wasn't until he released A Cry for Help that I was able to repay him. I got a nice plushy (made by his wife?) out of the deal too.

Alfa Etizado
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@Aaron, I too think it is unlikely someone who pirated would buy it because they liked it. It isn't impossible, but I don't think it happens all that often. If someone pirates and buys it, most likely it'll be to enjoy some online functionality that pirates didn't quite cover.

What I do think happens more often is people buying the next game, like Simon said, and people getting into video games because of piracy. People from outside US, Europe and Japan or young people that don't make much money, these are the kinds of users that without piracy would not have gotten into games.

This is my case. Where I live every game goes for nearly three times its price, growing up I couldn't afford this. If I acquired only legit games my library would have been 5 or so games. Nowadays not only can I afford it but there is also digital distribution to adjust the price for each region and I now I just buy games. I'm 100% sure that without piracy I wouldn't game as much as I do today, possibly not at all.

Salwan Hilali
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I agree to this... I know of a "guy" who a long time ago pirated Battlefield 2 just to see what its all about, then because of how good it was not only bought it for himself but bought another copy for his younger brother...
Guess what happened when Battlefield 3 was released? he bought one for himself and another for his brother and he didn't have to do a pirate-to-make-sure step in the middle this time.

Ron Williams II
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I agree to this point. Also, may we entertain the idea that piracy is also free advertisement in a sense. The more people playing the game, the further it reaches; in turn providing word-of-mouth advertisement (which is the most effective by far!).

We are not saying that piracy does not detract from sales for the developer, but when you can't prevent it you might as well just look on the bright side!

Matt Wyatt
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I do think that the cumbersome DRM policies don't pass the cost/benefit analysis test, but that's just my gut telling me that.

It would be interesting to see a peer-reviewed study to determine the loss of revenue due to game piracy. Everything I've ever read is anecdotal and/or part of a campaign to justify oppressive DRM. It would seem that some percentage of piracy represent a loss of Income, but 1%, 10%, XX%? Who knows?

William Johnson
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Well, with music, traditionally pirates are enthusiasts and spend more then non-pirates. My assumption is that this is also true in the game industry too. The people that pirate games probably are tech savvy and are the kind of people that probably discuss games a lot, so will lead to building hype for a product and help increases sales in an indirect manner.

The same is EXTREMELY true of used games. Publishers that have used online passes to hurt used sales have effectively hurt their own sales on new products. Its one of my theories on why retail is hurting as much as it is right now.

Thomas Bedenk
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Your article reflects a lot of my own thoughts. However I can see there theoretically being good working DRM systems that are not intrusive to the customer. It's just that most systems in place are not like that. For example a lot of the music streaming flatrate services are the result of earlier tries of pushing very strong drm on digital music. Now part of that change was a change in sale strategy and we see some similar trends coming in digital distribution of games. Some to the good and some to the bad.

I would also add: On a returned digital sale not only do you get nothing back you, still lost all the processing fees without a chance to make up for it by selling the item again.

Stephen Richards
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You may be right in arguing that adding DRM probably doesn't increase profits. But profits may not be the only motivating factor behind attempts to stop piracy. For example, the designers, programmers and artists making a game may feel that given the amount of work they've put into it, it isn't fair that others will pirate it.

It's a bit like spending three months painting a picture, then someone breaking into your house in the middle of the night, scanning a copy of your painting, then leaving your painting and house in the exact same condition. You haven't been harmed by this burglar, but you're justified in wanting to stop them taking your work without permission.

So even if you lose money by using DRM, I can still see why you might want it. That said, DRM that intrusively affects paying users is a huge problem and I think it can easily eclipse the right not to have your work stolen.

Tommy Refenes
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Yea I thought about DRM being implemented for peace of mind. I am personally of thinking that locks don't keep people out and that if someone wants to steal something out of my house bad enough, no lock will ever keep them out. But that's just how I feel about such things.

Luis Guimaraes
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So they diminish from all the customer service generated from that hard work to make it feel as if the hard work was worth it...

Kyle Jansen
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That's a rather illogical view for someone to take.

Which would you rather have - 10 people buy your game, and zero pirates, or 100 people buy the game and 1000 pirate? The completely rational actor used in economic theories would prefer the second, not caring at all about "what is right" or "what is fair", merely "what is profitable". As would I, but for a different reason:

I would prefer to maximize two things: the number of people buying my game, and the number of people playing my game. The former allow me to create a new game, and the latter gives my next game an audience. Certain people are going to pirate every game they play - to paraphrase Bill Gates, "if they're going to pirate games, I want them to pirate mine", simply for the PR they can provide.

Which leads me to a rather odd, but interesting question: we've been focused on those gamers who play our games without paying for them. I wonder what effect gamers who buy games they never play have. Certainly helpful to the bottom line, but they can't be a reliable source of income now, can they? And the word-of-mouth PR wouldn't be that good - "Yeah, Super Meat Boy? I think I have that game. Haven't played it yet though."

E Zachary Knight
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Interesting comparison, however, it is not a very good analogy for game piracy.

To properly compare game piracy to your portrait piracy, the picture taking/scanning would happen after the painting is placed in an art gallery where anyone with access to the gallery has access to your painting and can take a picture.

The question then becomes, do these pictures people are taking diminish the value of your work or enhance it? If people can't see your painting without going to the gallery, how do they know if they even want to see it? If on the other hand someone sees a picture of your painting and likes it enough to want to see it in person, why would that be bad?

Kevin Alexander
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This isn't that illogical of a point.

Go down to Juarez and try and take a picture of someones zebra painted donkey with YOUR OWN camera and see what happens... 10 bucks says you get shanked.

Jamaal Locke
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@Kyle But I think you put together an over-simplified example where 99+% of people would agree with you. What if options 1 and 2 change slightly. Option 1 is 100 people buy your game and 1 pirates it. Option 2 is 10 people buy your game and 1000 pirate it.

Now you have some options that really lead to some thought and discussion. It's easy when you can maximize the 2 things you care about with the same one decision. It's far more difficult when you have to make a decision as to what is your top priority and then make a choice that boosts your top priority and simultaneously harms your second priority.

After you've made that decision, consider if your decision changes when I multiply the numbers.. Big option 1 is 100,000 people buy your game and 1000 people pirate it. Big option 2 is 10,000 people buy your game and 1,000,000 people pirate it. If your option stays the same facing those normal and big options, you've likely nailed what you deem as your #1 priority (paying customers or people playing the game). If your option changed between the examples, you might not be as far from the thinking of the big publishers as you think...

Gareth Eckley
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I have never played Super Meat Boy, despite how well received it has been.

If it had been made available to me more freely (even via piracy) I guarantee you the chance of me buying it would have been infinitely higher.

I'm sure there was probably a demo, but due to industry practices in the last decade, the only purpose of a demo is to get a vague idea if your PC can (probably) run a game. You cannot make any meaningful judgement regarding quality of gameplay/narrative or final code.

Kenneth Blaney
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Super Meat Boy has been involved in any number of Steam sales and cheap bundles. Not to mention that you can pirate it very easily since it has been sold DRM free at some point.

James Yee
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Don't forget the multiple times it's been in the Humble Bundle. I have a copy of the game that I'll never play (I DESPISE platformers because I suck. :p) that cost me a dime. (Literally)

Gareth Eckley
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In other words, an excellent article that helps to explain the unseen costs of user disengagement.

Lex Allen
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Well, I hate to be a wet blanket, but if people can get something for free, they are less likely to pay for it and this means that you make less money. If you have already sold 100,000 copies, you may not care, but for the rest of us, this could really hurt.

"Because of this, in the digital world, there is no loss when someone steals a game because it isn't one less copy you can sell, it is potentially one less sale but that is irrelevant."

I don't see how having "one less sale" could be "irrelevant", because this could be a step away from having 1,000 less sales or 10,000 less sales. You may even reach a point of 0 more sales if pirating your game is that easy, or even worse, you find yourself beaten in Google's search results.

The argument is that pirates don't pay for software, but this isn't true. Pirates will pay for something that the can't find on torrent.

Often times, stronger DRM can result in increased sales, especially if the piracy rate of that game is exceptionally high: http://www.gamasutra.com/php-bin/news_index.php?story=17350

This doesn't always work, but it makes sense.

In some cases, you may be able to make piracy work for you, but we need to stop making excuses for people to pirate games illegally, even though, in some rare cases, you may find a clever way to profit off of their deviance.

I personally am moving towards a free model to appeal to a broader market, but I'll continue to make commercial games since it's getting harder and harder to monetize F2P.

I think that the acceptance of piracy may end up being more dangerous than the piracy itself.

Luis Guimaraes
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"Pirates will pay for something that the can't find on torrent."

They'll just play something else. Counting pirated games and free2play games they have just too many games to play and too little time for it.

Jane Castle
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@Luis exactly if a pirate is thwarted and can't get your game for free easily, they move on to an easier target. It is naive to think that they will pay because they can't get it for free. If that was the case they would have bought it in the first place.

Michael Patrick
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The comments on the article you linked show that the gains "improving" your game's DRM are minimal at best(70% of 8%). As has been said by many people much more knowledgeable about the industry than myself like Tommy and Gabe Newell, people want to support a great product or great company.

As the post says and has been proven over and over, piracy doesn't equal lost sales. The idea that a pirate is (always) some leech who wants to play your game for free and you can take a walk if you want money for it is disingenuous. There are articles everywhere on the types of pirates, their motivations, everything so I'll not waste space on that.

Tommy's post and others for years now have debunked the idea that piracy = lost sales at all. There will always be a portion of people that will want everything for free so DRM serves only to potentially frustrate and aggravate a paying customer where it just presents an even more enticing challenge to the groups that crack DRM as a hobby. On the PC outside of the AAA console port space quality games generate buzz and quality games move units.

People should support everything they can from the single man operations up but if some guy comes along who isn't convinced by my recommendation that a game is worth his cash, why should I begrudge him if he wants to try it first? Or the decidedly selfish but completely human "I want it NOW but I'm broke until next week". Calling those lost sales because a number ticked up one on a torrent site is approaching "you watched our movie at your friend's house how dare you put your eyeballs on it without paying first" territory. A bit hyperbolic but not accepting the actual reality of piracy and instead perpetuating biased myths leads down that path.

Lex Allen
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Yeah, they could play something else, but if they really want to play YOUR game, but can't find it elsewhere, there is no other option than to pay.

Simon Ludgate
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"if they really want to play YOUR game, there is no other option than to pay"

No, they still have the option of NOT PAYING.

By your argument, it follows that if a company were to produce a game that you really wanted to play, had perfect DRM so you couldn't pirate it, and charged $1 million to play it, you would fork over $1mil to play it, rather than turning up your nose at the price and not playing at all. Really?!

There is always the option of turning away. No matter how much someone wants to do something, they ALWAYS have the option of saying "no, I'm not paying for that."

Eric Salmon
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@Lex
I think you meant "No other option but to wait half a day for pirates to crack your game." If the game's good, that's about the amount of time it will take. The only sort of DRM that can stop pirates (or not, as the case usually is) will frustrate your customers far too much to make it worth the cost. I'm fairly sure there are enough of us in the anti-DRM crowd who refuse to buy these games at all to offset any forced pirate purchases.

Also keep in mind, the actual pirates aren't sitting there thinking "Crap, now I've got to crack this new DRM." It's a game itself to them.

I'd argue for a minimal design in DRM; just enough to keep your average Joe from copying the folder and passing it on to his friends. Anything else is a waste of money and your customers' time, because it won't even be in the pirated release. Just makes it more difficult to compete with them.

E Zachary Knight
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Lex,

Your line of reasoning fails when compared to real life statistical data. Several research studies have been performed on the buying habits of pirates vs non-pirates and pirates spend more money on legitimate offerings than those who only get media through legal means.

http://www.techdirt.com/articles/20121126/00590921141/dear-riaa-p
irates-buy-more-full-stop-deal-with-it.shtml

http://www.techdirt.com/articles/20121016/15321720721/yet-again-f
ile-sharing-correlated-to-biggest-buyers.shtml

http://www.techdirt.com/articles/20130210/15563721940/lies-damn-l
ies-statistics-how-bpi-cherry-picks-its-averages-to-pretend-file-
sharers-spend-less.shtml

http://www.techdirt.com/articles/20121114/07180721044/riaa-prefer
s-customers-who-buy-little-to-pirates-who-buy-lot.shtml

http://www.techdirt.com/articles/20120717/09133719731/is-this-che
mical-why-file-sharers-buy-more-music.shtml

I could go on, but why?

Arnaud Clermonté
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"Stastistical data" also indicates that hospitals are the most dangerous places to be.
It proves nothing.
Buying and pirating both serve the same need.
That's why those who pirate more also buy more.
And that's why if you deny them the pirating, they'll have to buy.

E Zachary Knight
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"And that's why if you deny them the pirating, they'll have to buy."

Yep. They will buy. However, they will buy far less than they would if piracy was still an option. Which would you rather have, someone who pirates a lot and buys a lot at the same time, or someone who buys little?

Lex Allen
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I understand where people are coming from, but not all pirates can crack games. So, the average person trying to find the game for free will pay for your game, if they have money, and if they really want to play it. This especially applies to niche games because they can't just "find another one", since there aren't many out there.

People will likely try to get your game for free first. The top searches to my site often have "full free game" or something to that extent, not "buy (game's name)".

Yes, you have the option of not paying, but if you want the game and can't get it for free, you have to pay (unless you can crack it yourself). I'm not sure what was confusing about that.

To say that pirates pay more is... well, it really depends on what you're talking about. This may be true in exceptional cases. Most people pirating software may not have any money at all and or are not paying.

And, sorry Zach, but those Tech Dirt articles are extremely one-sided. There is a plethora of information online about how companies are losing money on piracy.

It's naive to think that people aren't losing money on piracy. The vast majority of studies show that piracy has a negative effect on revenue.

If you'd like, we could all give our games away for free and switch to a donation system. I've tried this before, and I wouldn't recommend it to anyone.

Would anyone else like to operate on a donation system?

Hakim Boukellif
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"but not all pirates can crack games"

This is the internet. The moment even one person manages to crack a game (and any game that executes its logic on the player's hardware IS crackable), turns it into a patch and uploads it somewhere, anyone can easily crack the game. In fact, that download you'll find by searching for "full free game" will likely either have that patch already applied or have the patch installer be part of the download.

Henning Neumann
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I absolutely support the theory of piracy generating sales for two reasons!

Back in the schooldays you just don't have the money to buy a lot of movies or games, nowadays I spend tons of money for steam games and blu-rays without actually touching them, just because I had a great time with them some years ago.

If your marketing budget is not that big, piracy can also push your advertising. I remeber picking up the first Witcher game with it's so-so reviews or the Serenity/Firefly movie and series that never aired in Germany. Both seemed interesting but I would never have spent mymoney on that stuff upfront, now I got movie andseries on DVD and Blu-Ray Collector's Edition and own a total of 5 copies of the Witcher games (plus all books andthe awful movie)

Arnaud Clermonté
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Zachary, you're making the exact same mistake as your previous post.
I told you what was wrong with your reasoning and you keep making it.
You're basically saying that if you kick a sick person out of the hospital, he will become healthier, stats prove it.

You think that gamers who buy lots and pirate lots can transform into gamers who buy little.
What I'm trying to explain you is that those are different people.
You can't transform one into the other.
If you cut the piracy option to a high-demand gamer, he will not tranform into a low-demand one. He will have to buy more to satisfy his demand.

William Johnson
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@Arnaud Clermonté

Do you honestly think a pirate is going to support a game they know has terrible DRM that can't be cracked?

Or do you think they'll just find an easier game to pirate or even play a F2P game instead?

What game on earth, is so good, that a tech savvy consumer would put up with bullshit DRM for?

Ara Shirinian
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This makes me fantasize about where game development and its economy would be if consumers could return games they didn't like.

Christian Nutt
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At Electronics Boutique in 1995?

Seriously, this used to be possible. I used to do it.

Victor Ireland (Working Designs/Gaijinworks) said this was a big reason he made the shooters he released harder -- people would credit feed them and then return them to EB. Then they'd get hit with "unsold" stock returns...

Alexander Womack
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The question of "What would my sales have been without anti-piracy DRM?" is both easily answerable and a logical fallacy. The answer is exactly what they were, or higher....
Ladies and Gentlemen, you are already in that world. The assumption that a your DRM game is protected for even a week is pure delusion. Many cracks are zero-day, some are pre launch. I am not condoning it, I am not making light of it... it is the reality we live in. Even service based games have work arounds and private servers. The only time content was ever guaranteed protection was in the earliest days of console infancy.

3 clicks...
Sometimes 5...sometimes one....(To crack) If your DRM adds any more steps or headaches then this, then you are factually losing customers. Always bet on people's darker natures and you will seldom be disappointed. This assumption that the average user out there is not capable (or not willing) of breaking 95% of DRM in the time it takes to read this post belongs up there with the internet being a 'series of tubes'. It is the mentality of people who do not notice that little Timmy is far better with those newfangled devices then you were at his age. The average consumer is getting more technically literate all the time. If the average age of gamers is now 30, just imagine the situation the industry will be in when those younger come of age. They can either be made to feel there is value in paying for games when they start making buying decisions or not... expecting them to find virtue in doing so is hopeless romanticism.

I have, in fact... stopped purchasing EA games as well as Ubisoft due to their directions as companies as well as due to the ebbing quality of their games. I can also think of six occasions with their products were I had to crack software I legally owned (from them) to get their use after limited installs or broken DRM schemes. I will tolerate no more...and this from a man who has some of EA's first games on his shelf.

Simone Tanzi
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First of all, we have to separate Core gamers from casual gamers on this issue.
Mainly because of their motivation.
Casual gamers just want to kill some time. Gaming is not a big part of their life.
Casual gamers will probably prefer free games and will get any chance to play something without paying for it. It is true that generally a casual gamer is a little less educated on cracks and piracy but the truth is, cracks are incredibly easy to access today.
Core gamers are a different species. They do play games as their main hobby.
I am 100% positive that most core gamers have a huge amount of illegally downloaded games.
I'm also 100% positive that all the money a core gamer can spare is spent into legal copies.
In the end they cannot pay more than they are actually paying, but they are consuming much more than what they could afford.
Most people in the industry seems to not understand that but that's actually a good thing.
It means that for every illegal copy of your game there is a new potential customer hooked to your games.
Let's pretend that once that player has an illegal copy of the game will never decide to buy a legal copy of the same game (we all know it can very well happen but let's examine the worst case scenario).
The next time that player has money to spend for games he will know your games and if he enjoyed them he will probably invest his money on other games from the same developer, especially if is a sequel of the same game.
Without the chance to play the game for free he wouldn't experience your games and wouldn't be interested in your sequel either.
Also... gamers tend to stick together, creating communities.
If a gamer download a game of yours and enjoys it. chances are he will talk about that game and other gamers will buy it.
Basically if you sell a million copies and get downloaded illegally 500k times the issue is not that you are losing 500k sells (chances are the people who downloaded it didn't had the money to buy anyway) but rather that you have a million and a half total of people hooked to your games, so, just a popularity boost.
So, all in all I feel piracy is more of a blessing than a curse in this business.

Dan Jones
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"I am 100% positive that most core gamers have a huge amount of illegally downloaded games."

I'd be interested to see actual numbers, if anyone has done a study on that. Because when I look around at myself and the "core gamers" in my circle of friends (I dislike those labels, for what it's worth) I don't see ANY illegally downloaded games. Sure, maybe back in school guys would pirate a game here and there, but I don't really see it happening anymore.

I don't say that to refute your overall point, just to highlight the danger in using anecdotal evidence to support theories. From where you're standing, it might look like all core gamers pirate a ton of games, and from where I'm standing it looks like all core gamers respect the devs too much to pirate. And within our small sample size, we're both right. But I doubt either of us can use those observations to then accurately extrapolate any useful information about the gamer pool as a whole.

Dave Hoskins
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"chances are the people who downloaded it didn't had the money to buy anyway."
In an ideal consumer society, maybe. But in most of the world, people get stuff for free because it's there for the taking, and with no chance of being caught downloading it.

Simone Tanzi
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Sure but is still people who wouldn't buy the game anyway.
It's still money that the market would never see no matter what.

So the real issue remains.
Considering that getting money from certain people is out of the question would you rather have them not play your game or letting them experience it anyway.

Don't get me wrong, I'm not saying that you should make the games available for free on purpose. What I'm saying is that if you can't have that money, the fact that there are people who are willing to search through the internet, navigate through viruses, false torrents etc.. to play your game and possibly generate some buzz about it that's not harmful at all.
And for sure going as far as damaging your paying customers to stop the phenomenon is a sure way to shoot yourself in the foot.
For example, I paid perfectly good money for settlers 7.
After a couple of times where I couldn't connect to the servers or I wanted to play to kill time while my connection was down I realized I would not buy a new settlers with DRM.
So next time I browse to a game store and two games strikes my eye, chances are the one with the DRM will stay on the shelf.

Michael Joseph
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Nice article.

Sure sounds like the pyschology behind DRM use is a bit pathological. But as someone above mentioned, "DRM is not just about sales" is right. It's also not just about entitled developers brooding over the illegitimate fun somebody is having when playing a priated copy of their game.

With server based DRM customers are no longer anonymous even if they picked up the box copy on a store shelf. They are now records in a database to be used for future marketing. These customers are also one step away from being able to buy their next game on company's digital distribution platform.

The sales facts don't matter. They're going to use DRM no matter what.


Craig Dolphin
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As someone who lives in rural america, always online DRM, or digital download-only, is something that forces me to not buy the game. Something like 25% of the US does not have access to broadband. So, you can shove DRM as far as I'm concerned.

And I speak as someone who has not pirated a game in about 25 years. I also used to always buy my games new, not used. Now, if EA packages a game I want with Origin for the pc version, they'll get nothing from me: I'll buy second hand for console to avoid the online DRM crapware and to ensure the publisher doesn't get a cent as a matter of priciple. If the dev/publishers disrespects me like that, why would I want to support them?

Right now, EA games are almost universally uninteresting to me so it's no big loss for me to write them off going forward. There are alternative publishers who actually still value my business (kickstarter, CD Project, etc) and they don't treat me like crap. They'll get my business and EA/Activision can get stuffed.

Jimmy Albright
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Does anyone *Really* feel that DRM is the reason and justification for software pirating? People pirate all sorts of content that has no "intrusive DRM", visual novels, comics, ROMS(that's sort of a different story), movies, etc. People were making CD cracks for games like Unreal Tournament in 1999 when "intrusive DRM" was a GUID taped to the back of the CD case.

I agree that pirating doesn't exactly equal to stealing, but at the same time it doesn't make it any better. You're taking something for free that the creator expects you to pay for, like everyone else.

Kujel Selsuru
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I think adding no DRM is the best option as someone will always crack what ever copy protection you can dream up. Rather then waste resources developing and pissing off customers when it gets in the way, just go with out and focus on making a great game. People will be much more willing to support a developer who doesn't treat them like shit then they will one who does. Yes it is true any PR is good but good PR still goes a much longer way then bad PR and PR is really important to even get people to try our games.

Tyler Shogren
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Piracy doesn't equate to lost sales, not only because the pirate might not have bought the game to begin with, but also because _the pirate might still buy the game if they think it deserves to be bought_.

In fact, if pirates held themselves to buying the pirated products they truly enjoyed, the music they listened to repeatedly, the games they invested hours in, it should be a non-issue.

Jon Simantov
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I don't know if saying 10% of people pirate the game is an accurate assumption.

Ubisoft has reported piracy rates in the 95% range for its PC games. [1]

For mobile games, some have said 60-80% depending on platform, or even higher! [2]

I wonder if "don't worry about it, it's not affecting your revenue really" is still the right attitude in light of these numbers?


[1] http://www.eurogamer.net/articles/2012-08-22-ubisoft-has-endured-
a-93-95-percent-piracy-rate-on-pc
[2] http://www.theverge.com/2012/8/7/3225154/dead-trigger-dev-intervi
ew-piracy-android-ios

Kujel Selsuru
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I'd ask how do we know these numbers are accurate and how did they come to these percentages?

Mike Jenkins
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World of Goo, 80%+ piracy

http://www.gamasutra.com/php-bin/news_index.php?story=21123

Kujel Selsuru
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@Mike it should be noted that at the end of the article you linked to they suggested DRM probably isn't worth the time and money to develop and maintain so now we have to figure out how to better reach gamers and ignore the thieves.

Alex Boccia
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Living in a digital world where things can be copied means you need to generate demand for your product, and this article highlights the importance of that. Good work!

Sebastien Valente
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Pretty clear article that sums it all and apart video games I instantly thought about those DVD "anti-piracy screens" that are so annoying to honest buyers, but also the Bluray playing issues in general.

Andrew Traviss
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There is actually a potential calculable loss due to piracy; investors who don't understand the principle expressed in this argument may take their investments elsewhere. It's more a song and dance routine to keep unsavvy investors pacified than it is a serious attempt at loss prevention. At least that's what I think.

Filip Lizanna
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At the end of the day, piracy will exist forever. The only thing developers/publishers can do is hope for people to want to support what they do. I know of people that use pirating as a means to separate the worthy products from the not so worthy products. Good ones get purchased by them more often than not. Terrible stuff falls by the wayside, as it should.

Simon Tomlinson
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While I tend to agree that DRM is futile, I cannot agree with your logic. It relies on the idea that there is potentially an infinite number of possible units of your game. This not true. There are a finite number of people on the planet, a smaller finite number of game players and a smaller again finite number of people who might like your game. You can say there are potentially an infinite number of copies, but in practice there will only be a finite maximum number of people who might eventually play your game (pirate or not). So any piracy is always a fraction of that finite number. Now I would argue that you are probably still correct, because that fraction is small. However, when you develop an app you have to cover costs before profit. So for some games who may only acheive 20-30% profit over dev cost, a piracy rate of 10-20% of total sales is a large fraction of your sales over cost. So it isn't impossible to do a calculation it is just that such a calculation is always an estimate, against which you offset the cost of DRM.

Which brings me to a second point. You say you cannot consider sales other than those you actually have in hand - you cannot guess whether a person will or wll not buy your game. The rather ridiculous extension of that logic is that you never make a game - becuase you cannot assume that even one person will actually buy it.

Having said all that, and without doing the numbers, I exoect that if you did do a chain of sensible estimates agianst a maximum sales potential you would still indeed find that the minimal protection DRM gives you is not a good return on cost.

E Zachary Knight
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He is correct. In the digital world, the supply of a game is always infinite. You are arguing something else entirely. You are arguing that demand is finite. Which is true. However, that is not something that Tommy was arguing against.

What he is arguing is that with an infinite supply, meeting a finite demand without placing unnecessary roadblocks in the path of customers should not be that difficult.

Simon Tomlinson
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Mr Knight: I think maybe I was just being pedantic, but my point was refuting the idea that the cost effectiveness of DRM is fundamentally unquantifiable. It is quantifiable, using some form of sensible estimation, in the same way you estimate likely sales against development costs to decide if a project is commercially viable in the first place. But to pick up on Tommy's penultimate paragraph I think he is right; even sensible estimates will probably not be able to prove DRM is in fact cost effective. And to pick up your second comment, an infinite supply only means your cost per unit demanded is zero - which is of course a good thing. But you, and Tommy, are right - DRM does present a roadblock to paying customers, and the negative effect of that should also be considered in the long term profitability of current and future products. OK, as I say, I'm a pedant.

Brett Williams
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In my mind Finite demand is actually very similar to supply.

Assuming you reach max demand and everyone in that demand plays your game. You have a percentage of purchasers and pirates. Applying any hindrance to the process will cause two potential things:
- Lower the max demand for the product.
- Convert a pirate to a purchaser.

In neither scenario does the modification actually cause the product to increase in demand. The demand of the product is fixed based purely on the product with no hindrance.

That being said your max demand is typically immeasurable and usually an estimate. So it's all just a guessing game. Unaccounted sales are not necessarily piracy, but it's an easy label to apply.

Michael Pianta
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Economically speaking, if demand for a product is finite and supply of that product is infinite then that product should be free.

Simon Ludgate
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It's important to think in terms of the marginal cost to increase supply rather than the "amount" of supply. The "amount" of supply in almost any industry is "infinite" in so far as manufacturers will produce more so long as the marginal cost to supply another unit is lower than the marginal revenue for selling one additional unit.

Rather, the cost to supply 1 "copy" of a game is astronomical, and the MARGINAL cost to supply each ADDITIONAL copy is zero, you just copy it. So you can't really say the supply is "infinite" so much as the cost to increase the supply is high from none to 1 and zero from 2 to infinity. Once you have the game, the cost to supply infinitely more of the game is zero.

Getting the game in the first place is the tricky bit. Private economic proponents suggest building an artificial scarcity by making the good excludable. But while that may work in principle, it fails to work in practice.

Instead, some might suggest that the goods be treated well and truly as public goods, funded either publicly (taxes, such as public broadcasting) or privately (patronage, crowdfunding). This is why works of art traditionally relied on patronage rather than the free market to exist.

Andrew Traviss
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Someone who has pirated your game is still a potential sale, though, so you can't even say it has reduced potential demand. It isn't possible to figure out how many instances of piracy are correlated with sales and how many represent players that never pay. When someone steals a physical product, there isn't any means for them to later pay for the item. The loss is fundamentally irreversible. Not so with digital content.

Michal Butterweck
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You are right, 100%. I have so many issues with instalation of one of the big publisher's "shop" software
and drm'ed games in it. Now, I am not buying games from that source anymore.
DRM treats people which buy your game as a potential criminalists, this is injustice.

Or a proposition - put your game (in day one) on torrent.
But a changed version of game with some anoying traps.
But of course, this can make various results
(like with Witcher - bad reviews signaling errors in game ;) ).

Dave Long
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Some issues in the core logic of the argument in the article - namely in:

"Because of this, in the digital world, there is no loss when someone steals a game because it isn't one less copy you can sell, it is potentially one less sale but that is irrelevant."

No it's not! Piracy decimated PC gaming in the 1990s - the lost sales then were the opposite of irrelevant, and saw many genres moving development to console because of it. Sales of games in most core genres still dominate on console, in no small part because of the widespread impact of piracy in the 1990s.


"Loss due to piracy is an implied loss because it is not a calculable loss. You cannot, with any accuracy, state that because your game was pirated 300 times you lost 300 sales. You cannot prove even one lost sale because there is no evidence to state that any one person who pirated your game would have bought your game if piracy did not exist. From an accounting perspective it’s speculative and a company cannot accurately determine loss or gain based on speculative accounting. You can’t rely on revenue due to speculation, you can’t build a company off of what will “probably” happen. Watch “The Smartest Guys in the Room” and see how that worked out for Enron."

The logical holes in this are huge (not having a go here - Tommy is a game developer, not a philosopher) - going by his argument, given we can't accurately measure the costs of climate change, or individual action on climate change, we should let the world burn? Yes, it's a dramatic analogy (and climate change a far more serious issue), but it's a similar one.

I also think it misses the point, and misunderstands the dynamics in software piracy (particularly on PC, where it is still at its most rampant - I'd be interested in seeing SMBs piracy rate estimates per platform).

The big difference in piracy on PC now vis-a-vis the 1990s is that you can get most games for a fraction of their cost not too long after release, so unlike the 1990s, while PC revenue (relative to number of units sold) is down, the proportion of units sold as opposed to pirated is up. Thanks to Steam's prices and its frequent sales, it's easy to get PC games cheap, and so the opportunity cost of piracy is much lower, so we get more paid customers.

Totally agree that paying customers shouldn't be demonised to fight pirates though - it's the reason the console model still accounts for such a large proportion of core gaming revenue, despite being a less flexible platform for developers - a fair greater proportion of games played on console are paid for, because the DRM is built-in, with no obvious cost to the consumer (ie, they don't have to do anything beyond own the console for the DRM to work, which given consoles often are effectively subsidised by hardware manufacturers, isn't a terrible deal).

Adam Steele
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Diablo 3 brought in always online DRM and some of the worst core mechanics I've seen in any sequel.

Due to this I refused to by Star Craft 2: HotS. They are so determined to make a quick buck on their AH that Blizzard is punishing players that just want to enjoy the game. I used to buy Blizzard games to support them even if I might not get around to the game for a few months. I'm seriously thinking about ending my wow subscription again. Only picked it back up to play with my finacee.

This is the point he is trying to make. Is that with all these business, being driven by greed and making that quick buck, they are rubbing their consumers the wrong way. Blizzard has now lost $40 from for one game. I won't be buying the expansion for D3 unless something drastically changes and even then I won't touch for a minimal of 3 months after release, if at all. So there's another $40-$60 right there.

Now I'm not the only one that feels that way. Go read the Diablo 3 forums. This is what happens when you let greed control you. Your costumers will learn to despise you and it is only a matter of time before we abandon you completely.

Josiah Manson
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When reading comments about the article, I did not see anyone mention the logical flaw that I thought was the most prominent and devastating. The argument is that it is impossible to prove that DRM increases the number of sales, and thus that its effect is unquantifiable, and furthermore that DRM generates ill will that will actually decrease sales. Interesting, but the negative effects are also unquantifiable by that argument.

Lets look from another angle. Advertisements and articles promoting a game cost a lot of money and effort with no quantifiable gains. There is no way to say that just because someone read a favorable review of a game that they will buy the game. In fact, if there is any connection, the connection is tenuous, because the person may buy the game days or weeks after reading the review or seeing the advertisement.

I doubt anyone would believe that advertisement is useless though. Just because it is difficult to quantify the effect of a thing does not mean that thing (DRM, advertisemenst, etc.) has no effect and should be ignored. What it means is that you should probably try harder to quantify the effect, especially when profit is directly tied to the thing of interest.

Andrew Traviss
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We accept that advertising works because the advertising industry has collected statistics by tracking the behaviour of people who interact with it, and gathering metrics to demonstrate its own usefulness. They've done this using data from a massive number of product launches in pretty much every industry there is. Before that was available, advertising at least banked on well-establish psychological research. No such credentials exist for DRM.

I would wager that you couldn't even assemble a study with statistically significant results if you collected all of data generated by all past DRM efforts by every company.

Josiah Manson
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@Andrew I believe that is precisely the point. Advertisements have been around for a long time and have been well studied. Anti-piracy measures have not, or at least those studies are not publicly available. The problem is that piracy is an emotional subject, because almost everyone has been a pirate at some point and nobody wants to think they are in the wrong. If digital distribution of games, movies, songs, etc. is going to progress, we need cold hard numbers instead of ideology.

Luke Quinn
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I agree totally with the sentiment here, especially after a recent experience turned me completely sour on DRM.

I'm a pretty busy guy, but I absolutely love civilisation builder games which just happen to be among the most time-consuming genres ever devised.
I recently bought Anno 2070 via Steam on a day when I suddenly had some time free and installed it hoping to jump right into playing, however Ubisoft decided that it really really needed to make sure that I actually owned the game I just bought through a DRM client ( >:| ) and saw fit to waste well over half an hour during the installation/certification process, forcing me to sign up to some third party client in order to play the game I just paid 60 f*cking dollars for (in digital form mind you), despite not mentioning the fact that I'll be required to agree to a whole other set of T&Cs BEFORE I made my purchase.

Needless to say, by the time the damn thing did finally load, I was completely over it and have not had the urge to play it since.
I will now be avoiding anything published by Ubisoft and I have noticed that I've bought barely anything via Steam since...

Mike Weldon
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"I’d take any amount of pirates over one return due to disappointment any day."

I just wanted to repost that so I could read it again.

Robert Hewson
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A very well reasoned argument. It reminds me of some of the more compelling insights in the book Wikinomics (see http://www.wikinomics.com/book/). We are in the midst of a major paradigm shift in the games industry. It's hard to see it when you're in the middle of it, but surely in the future we will look back on this period as sea change in the way we create and distribute games and the way we interact with our customers.

@Josiah Manson I think you make a fair point regarding advertising and reviews. However good reviews are the by-product of a good game. You can't reliably ensure you get good reviews if you make a bad game (and of course you shouldn't attempt to, though people do), the most you can do is work to make sure you encourage people to make reviews. You are right that the benefit of reviews and advertising are difficult to quantify too, but both are fundamentally disconnected from the experience of playing the game. DRM can be intrusive to the experience and sense of ownership of the product, and may ultimately be circumvented anyway. It can also backfire and turn consumers against you and your product. So as you rightly point out, DRM, advertising and reviews all have a difficult to quantify effect on your product, but the difference is the risks and potential down sides are negligible for advertising and good reviews, but potentially very significant for DRM. It only makes sense to spend time and money on a non-quantifiable if it is likely to have a positive impact and highly unlikely to have a negative one.

Wikinomics makes a very strong case that trying to fight for control against the influence of online communities interacting with your products is both futile and foolish. It's much more effective (and ultimately profitable) to find ways of encouraging and enabling interaction between your consumers and the products and services you create. Games are about interactive participation rather than passive appreciation, so we should intuitively understand this more than other entertainment industries.

Matthias Meyer
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Basically I agree with the "product quality vs. piracy" argument made here. However, every now and then a developer explains how piracy is not that bad and DRM alltogether wrong. IMO, there are two notable aspects of publishing such a statement:

#1 By doing so the writer earns a lot of street credibility and customer sympathy, which might result in increased sales with his own products. There might even be a vote-with-your-wallet-incentive to certain people - I know, me and some of my friends have been affected this way in the past.

#2 Market acceptance for DRM is lowered. There are a lot of people who already feel they are somehow entitled or justified pirating software. Or that it is a kind of "resistance" thing to boycott Steam. Articles like this are highly welcome. Good job!

Effect #1 is only beneficial to the author, and only when very few studios are doing it.
#2 is damaging to all developers who use DRM to protect their software.

Therefore, there is not much respect I have for making such a statement.

+++

To the effect of DRM: I know of a game that sold 10000 copies (no DRM). There was also an addon, which required the main program to be installed. The addon was DRM protected. Unexplicably, the addon sold 50000 units. Anybody remember the Stardock Demigod release?

DRM can be annoying. One of the games I was a developer of, received an aggressive DRM system that fried my DVD drive at home. But there are a lot of DRM system which are doing a very good job in my opinon. IMO the widespread acceptance of piracy is a far bigger problem. Once I had difficulties explaining my profession as a game developer to a government official. He said:
"How are you going to make money with this? You don't buy software, you just get it from a friend, don't you?"
While legally wrong, I have no doubt that he was right from his personal experience.

So, its no wonder that Free2Play (say hello to your friend "online only" DRM) is a profitable business model right now, while doing an offline-only PC game can be considered a desperate venture.

Ted Chen
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I agree Matthias.

The use of a retail model for analysis instead of a more apt product counterfeiting one is an issue for me. A counterfeiter does not change the inventory levels of its target business anymore than we're talking about here. That K-mart focused microeconomics approach leads everyone to a false conclusion, while sounding quite convincing. You have to look at macroeconomic numbers in order to see the real picture.

OECD has a report http://www.oecd.org/sti/ind/2090589.pdf that details the respective turnover rates. Unlike the ESA reports or even reports from pro-pirating NGOs, they don't make money from you taking either stance, so I personally think it's a more trustworthy and balanced look.

That said, most of that turnover occurs because someone (usually not the original company) is willing to sell at a much lower cost. In certain sister-industries like book publishing, attempts have been made to provide price-points for different regions around the world more in line with CPI to combat this. So is the assumption that it's a 1-1 lost sale valid? If the company is willing to enter that market, then yes. If not, then no. Even if regional differences was out of the picture, as is the case of a global game launch, was the company planning on capitalizing on price reductions and discounts down the line to capture the curve? The answer to that is universally yes.

I can see why DRM exists. It's both a delay and legal tactic. But at the same time, apathy like the OP said dwindles the goodwill and damages the brand in the long term. In that view, I'd almost go the other way and say spend A LOT more time on it. Make sure it's unobtrusive while meeting enough due diligence standards. That would preclude using the industry-standard disc protectors given that their priority is in preventing copying, not customer satisfaction.

In a way, the always-online DRM, despite it's occasional teething problems, seems to be the holy grail when done well.

Lihim Sidhe
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My friend said it best, "Valve's DRM has a buddy list." The principle guiding that is community. Community is not something you can download or torrent. If paying for a game enables one to become part of a community then piracy is a non issue (for a good game anyways).

A shining example of this is Trent Reznor. Upon releasing his album 'Ghosts I-IV' he went to several torrent websites and uploaded the torrents of said record himself. What happened?

http://arstechnica.com/business/2009/01/free-nine-inch-nails-albu
ms-top-2008-amazon-mp3-sales-charts/

No DRM. No lawsuits. Just his record selling like hotcakes.

Simon Tomlinson
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Same subject - different media ... http://www.bbc.co.uk/news/technology-21856720

Lihim Sidhe
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Was that in response to the link I posted?


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