158: Piracy and the Underground Economy

[ryansumo]

Piracy and the Underground Economy

"I want to introduce you to an entirely different perspective: Piracy supports an underground economy and the livelihoods of thousands of people in Asia, especially in countries where most people live below the poverty line. This underground exists primarily because its participants cannot afford the exorbitant prices charged by game publishers. It's a point of view that isn't often raised in American or 'industrialized' media, but it's easy to miss when you aren't surrounded by piracy on a daily basis."

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[Eagle Est1986]

Very good article, some very good points, well made. Although I doubt the industry will ever change it's stance on the subject of piracy.

 

[ryansumo]

Thanks. I don't think the industry ever will either, but I just wanted to let people know that there was another side to the story.

 

[L.B. Jeffries]

That was a good argument but one thing confused me. If the game companies start selling low budget versions of their games for 5 bucks, doesn't that raise the question of still hurting the pirates with families? I think it's a great idea to make video games realistically priced (they aren't even realistic in America), but what do the game companies need the pirates for? Why not just directly compete with the pirates by using people who are already with the company?

More importantly, what do the pirates need the companies for in that model? The game company is going to want a cut of that 200 pesos that the vendors, aside from their newfound peace of mind, aren't going to feel obligated to pay.

 

[ryansumo]

That was a good argument but one thing confused me. If the game companies start selling low budget versions of their games for 5 bucks, doesn't that raise the question of still hurting the pirates with families? I think it's a great idea to make video games realistically priced (they aren't even realistic in America), but what do the game companies need the pirates for? Why not just directly compete with the pirates by using people who are already with the company?

More importantly, what do the pirates need the companies for in that model? The game company is going to want a cut of that 200 pesos that the vendors, aside from their newfound peace of mind, aren't going to feel obligated to pay.

Very good points. Now that you mention it, that's is a section of the article that could have been more in depth.

My idea was that since the pirates already have established distribution networks, it would be much simpler to work with them than to uproot them. Yes, the game companies would take a cut of the profit from the erstwhile pirates, but it would also give them legitimacy and allow them to breathe easy.

Every time election season rolls along or when the US government puts pressure on the Philippines, there is a big show about smashing pirate stalls, collecting their wares, and crushing them with steamrollers. Being legit means they'd never have to worry about that kind of thing happening.

 

[Dom Camus]

This is a good article, but I'm not convinced this is really the kind of piracy the games companies care deeply about.

There are people in the Western world who have more than enough money to buy games, but instead choose to obtain them for free. This isn't to say that they would buy them if pirated copies weren't available, but they definitely could afford to. It is primarily these people that the games publishers are looking at with dollar signs in their eyes.

 

[ryansumo]

That's a good point Dom, but it's also true that "anti piracy" dogs in Malaysia are being celebrated for their efforts in shutting down piracy. So you have to think that they do care about piracy in this region some.

 

[Pat M.]

i liked the article. i doubt sony would have an easy time setting up a distribution deal with every random shmuck who sells copied PS2 games, though. if anything, i think the anti-piracy pressure comes less from the games industry and more from the governments themselves, because they want to shake the counterfeiting reputation. hence the election season business.

whenever i visit my uncle's house (quezon city) i find that he's more boned up on american movies than i am, thanks to readily available bootlegs, and him and my aunt both work at solid white-collar jobs in makati so it's not like they can't shell out more than 200 pesos for a game.

apparently he's got a modded wii, too.

 

[John Funk]

I spent a semester studying abroad in Nanjing, China. Since things were much cheaper there, I decided that it would be great to pick up some new DS games for my flight home, so I asked one of my Chinese friends to show me where I could buy video games. He takes me to a street with a bunch of game stores and leads me to his favorite--I ask the man at the counter what DS games they carry. He looks at me quizzically and admits, "Uh, we don't actually sell those here... but we can sell you a flash cart and download ROMs onto it for you!"

This was a legitimate gaming store over there, like a Gamestop over here. This was this man's livelihood, and not just a shady out-of-the-way pirate nest, but a store publicly displaying his 'merchandise.' Not just DS piracy, but Playstation and Xbox and others as well (the consoles he sold seemed to be legitimate though).

I agree with this article 100% - Piracy is simply a fact of life in these areas, and just trying to force it won't solve anything.

 

[Flionk]

I like this article for being an extremely good compliment to this article [http://www.escapistmagazine.com/articles/view/editorials/op-ed/5040-Sink-The-Pirates], especially since I read them not 5 minutes apart.

I like the idea of reducing the price point for games by removing unnecessary packaging materials, but in the end I doubt that would work. Big-name retailers, at least in America, would never stock a product without professional-looking packaging, and publishers would never consider attempting it - both would be too paranoid about the potential loss of sales. All commercial industries here live and die on appearances, and they go to great lengths to make the customer think their product is superior to their competitors.

Honestly, I don't see the game prices ever becoming reasonable. It started out as a luxury hobby, back when only the wealthiest people could afford a computer, and games have always been at the fore-front of technology. The big publishers are too focused on making sure that any games they release use the absolute best (read 'most expensive') tools and technologies, meaning that the biggest games will always have that luxury price. I'd really like to see more companies making lower budget titles, with lower prices, that still get just as much publicity and attention as the huge AAA titles - basically take a step back and produce something that would have been a AAA title a few years ago, and targeting the people who buy old used games because they can't afford the latest and best.

 

[ReverseEngineered]

You have some excellent points Ryan. Great article.

Studios paint pirates as evil people who want the world for free. They love to harp on the fact that they are losing money, but that very argument always implies that the people getting games for free would have paid for them otherwise. This is rarely the case. $60 is a lot of money for entertainment, and with some of the crap that's being developed, you really have to question how much entertainment you're getting for $60.

I pirate games all of the time. I have a couple of consoles, a powerful PC, and a small collection of legitimate games. I was quite willing to pay for (most of) them, because I honestly wanted and enjoyed them. I also have a pile of pirated games. Most of these I just wanted to try out and few, if any, did I play more than a day or two. I refuse to buy a $60 game just to find out that I don't like it. Sure, sometimes you can rent them and see if you like them, but that's not often a choice with PCs, digital distribution, and subscriptions. Even demos and trials don't work because companies will make the demo good enough to get you to buy, only for the full thing to be sub-par.

As always, the companies miss the big picture: lost sales can't always be made. Your example of a $60 game to a family with a $3400 annual income is perfect proof. It doesn't matter how good that game is, $60 is just not affordable. It's impractical. It's ludicrous, even. Even to an "average American family" $60 is a considerable amount of money. As a university student, and now as a new graduate with several tens of thousands of dollars of debt, $60 is an amount I can only pay for a lasting gaming experience, and only a few times a year. Driving piracy into the ground isn't going to convince me to forgoe student loan payments so that I can buy a new game, it's just going to prevent me from playing the game.

The people the studios really need to hit are the ones who can and would pay for the game, but pirate anyway because it's easy enough and saves them $60. There's no clear way to do that right now, especially because it only takes a crack from a single person to make a piratable by an entire population. This is the demographic the studios spend hundreds of thousands of dollars trying to thwart, and considering the numbers, it seems unlikely that that investement rarely pays off.

 

[NCGrimbo]

Let's do the numbers

Let's say there's 50 businesses of 4 people that have each person go out and steal $1000 tv's each night and sell them for $100. In one month, all the groups can earn $600,000. They use this money to buy food for their families, so I guess it's OK to steal.

Wrong! It's still stealing no matter who they are or what they steal. It's funny to hear people who support piracy. They'd be the first to get mad if their tv was stolen by one of the goups mentioned above.

 

[MossStone]

If you sell games at $5 a piece in the developing world (sans packaging), and then sold them at $60 in the rest of the world, then the game would be worth $5. If people found out that they could buy games cheaply in another country and then import them, they would. And in fact they do now. The only reason a game is worth so much is because that's what people are willing to pay for it. Making your game worthless is not a winning strategy.

 

[deathyepl]

They'd be the first to get mad if their tv was stolen by one of the goups mentioned above.

Would you care if, at the end of it, you still got to keep your TV but the people with the starving families got to go sell a copy of your TV?

You're comparing apples to oranges here, mate, which just goes to show that you really don't know much about the deeper subtleties of the issue. Either that, or you're deliberately using spurious arguments.

 

[unangbangkay]

As Gabe Newell mentioned some time ago, the problem is less one of pirates "stealing" sales but of potential customers going unserved. Eliminating piracy entirely would only result in a token increase in sales for publishers, mainly because the vast majority of people who buy pirated couldn't buy "legit" in the first place. It's the same practically everywhere piracy is rampant.

Therefore, bringing equivalency to the market suddenly expands it exponentially. People who'd otherwise buy pirated would well chose to buy legit, mainly because they suddenly can afford the better option.

 

[TheDon]

Yeah I have to say, trying to eliminate piracy isn't going to work. There is a delicate balance you see. There are $60 games for the majority who will buy them at such a price, there are torrenters/pirate's customers, and there are pirates(who obtain the work). The original games are there so that the legitimate workers make money. The Torrenters are there to spread product advertising("Hey what is that game you are playing?"). And the lovely Pirates are there to provide the poor with entertainment, and also as mentioned in the article act as a special underground economy for poor countries.

 

[dusparr]

Let's do the numbers

Let's say there's 50 businesses of 4 people that have each person go out and steal $1000 tv's each night and sell them for $100. In one month, all the groups can earn $600,000. They use this money to buy food for their families, so I guess it's OK to steal.

Wrong! It's still stealing no matter who they are or what they steal. It's funny to hear people who support piracy. They'd be the first to get mad if their tv was stolen by one of the goups mentioned above.

Except that I am not taking your TV, I am making a copy of it and selling it for 100. (Selling copies)
Or even better, I am getting an infinite amount free TVs that ar a copy of your TV, and modifying them so that others can use them and giving them away as such. (Cracking a downloadable game)

 

[ChumpyMcChump]

The fact that there are people making a living off of a criminal enterprise does not legitimize said enterprise. The fact that people want something that they can not afford does not entitle them to said something. The fact that you can justify all sorts of illegal behaviours does not make those behaviours suddenly legal.

They'd be the first to get mad if their tv was stolen by one of the goups mentioned above.

Would you care if, at the end of it, you still got to keep your TV but the people with the starving families got to go sell a copy of your TV?

You're comparing apples to oranges here, mate, which just goes to show that you really don't know much about the deeper subtleties of the issue. Either that, or you're deliberately using spurious arguments.

Morality does not equal legality; believing that something is ok does not make it ok in the eyes of the law. There really aren't "deeper subtleties".

 

[tendo82]

The question of right or wrong really becomes a trivial value judgement when we start looking at game piracy in developing nations. The simple fact is that pirated games are available and will continue to be available.

So, unlike the recording industry, game companies need to accept this reality and instead focus on scalable entertainment solutions. They also need to consider subsidizing certain developing markets with the knowledge that once these consumers reach economic parity with the developed world, they will be converted into full blown consumers.

I think to a degree we see Blizzard doing this with WOW in China, where the game's pricing model takes into consideration both the reduced spending power of the player and the public nature of internet and computer access. The other thing to mention is that the legal infrastructure to deal with pirates simply isn't there in many developing nations, nor can those governments afford to make it a major concern.

 

[GregorV]

Those are good points in the article. It amazes me that, for an industry that supplies so little of an actual manufactured product, the prices remain so rigid from market to market and in fact even show a negative correlation to the income in the less developed markets where the competition isn't as good. Even car prices of the same model get better adjusted to local realities than games.

Games, music, films and all other goods that depend on relatively cheap manufacture of identical copies should, save for relatively minor fixed costs, really only be determined by what the public percieves them to be worth and then just how much the publisher can push the price above that value so that the profits are maximized without hurting sales too much. This point should vary from market to market, so a one price fits all approach is really surprising.