May 20, 2010

On Piracy and Value

Posted in Commentary at 2:14 pm by gloriouscomputing

This is in response to an article entitled “PC Game Piracy Examined“.

I just spent a good amount of time reading this article. It started off sounding unbiased, but that quickly faded. Anyone who knows me knows that I’m much further aligned with the opposite side of the stance that the above article took. So let me reply to the initial article:

The author forms his conclusions about the loss of sales due to piracy not from data, but based on opinions of companies. ~”All these companies noticed lots of people downloading game ISOs, and they all think that a substantial quantity of those downloads are lost sales, so that must be true!”

He had absolutely zero facts on the ratio of lost sales based on known torrent downloads. If you look at the recent study saying only about 1 in 1000 ISO downloads would have been an actual sale, it is impossible to form the conclusions he arrived at.

I can imagine he is right about the following: 1) Console games are purchased more 2) Piracy on consoles is less. 3) Some fraction of piracy is actually lost sales.

However (on points 1+2), console gamers buy more console games because that’s just the sort of people they are. iPhone people buy more Apps than Android people. It’s not just the ease piracy. It’s the mindset/environment.

Consoles have more sales and less piracy partly because of the audience. Consoles exist solely for gaming, but gaming PCs are still PCs. I myself had a gaming PC for a while, while only playing few games for years. You can’t conclude that because there are as many gaming PCs as Xbox360+PS3+Wii that the most significant reason that the PC edition of games sell less than their console counterparts is piracy. That’s just an opinion, not based on any fact.

I believe console people just buy more games. PC people might just buy less games. Simple as that. Console people are like iPhone people: They live in a happy bubble which encourages rapid buying. The fact that it’s super easy to pirate iPhone games is not a deal breaker. iPhone people buy lots of games despite how easy it is to pirate on the platform.

Which brings me to my final opposing point (3). If rather than the author’s lack of any figure, you consider the recently given ratio of 0.1% (that only 1/1000 downloads of a game was an actual lost sale), the damage is still real, but not a deal breaker. Taking the author’s figure that 830,000 copies of CoD4 were pirated and assuming 1.5 million sold (his average, not sure what the actual number was), the lost sales that would have come on top of that are only 830, a tiny fraction of actual sales. It’s a loss, but nothing to lose sleep over, even if it was twice that.

— tl/dr —

None of this really matters. There is only one thing to consider: What is the worth of the benefit of playing the game legit, vs playing the game illegitimately? How much money are your customers willing to pay for the benefit you are providing them with for paying for your game, as opposed to getting it for free?

— end of tl/dr —

If your game is providing services such as support (which by the way should only be given to users who register with their serial key… the whole issue of pirates getting tech support can easily be avoided), such as the ability to download and play the game on any PC world wide, the transparent streaming of official updates and free extra content over time, not to mention multiplayer, you are giving your customers a lot of value which pirates have to struggle for.

Bittorrent is still slower for me than Steam downloads. If I want support, I’d have to deal with all the middle men who got the game to me, and rely on them, being cut off from official forums (since I have no valid serial key, don’t let me ask for support on your forum, stupid). If I got word of an update having been released, I wouldn’t get it automatically applied, I’d have to search around torrent sites, and probably also find a new crack. You also have to consider the risks of viruses.

If you provide good service, and the prices of your games are reasonable, then enough people will be not just able, but also willing to pay for your games. Not everyone, but enough.

Ask Valve why they aren’t discontinuing Portal 2,  TF2 or Left 4 Dead 2 on the PC. They understand how to give value to legit buyers. Pirate if you want, but the water’s warmer in this pay-only pool.

On the other hand, if your added value for your customers is negative, like limiting them to installing the games on only so many PCs or requiring constant internet, versus pirated copies having none of these limitations, it’s actually the pirates who should be charging for their copy, not you, for you are offering an inferior product to the illegitimate one.

This is of course ridiculous considering you spent a lot of money to make this product, but you can’t forget that the technology to copy bits does exist now, and won’t go away, meaning the consumer does have a choice, so you must offer additional value unless you wish to depend solely on your consumer’s morality.

I agree that piracy just is. It doesn’t need to be justified; it exists, and it won’t go away. But if you give paying consumers a choice between the hassle of piracy and a seamless experience that just works, people who can afford the latter will choose it, just out of selfish reasons, or perhaps even because they want to support your product and actually like you (the opposite of what punishing paying customers with intrusive and dumb DRM results in).


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