189: A Nation of Pirates

[trakinas]

Vert, on a second thought you forgot to mention some important things...

"Computering" (video games are computers) piracy was always present here in Brazil. Think back ago when there were this law which, if Im not wrong, would forbid any importation of eletronics in favour of local manufacturers. When "local manufacturers" read producing computers based on MSX, Spectrum and Macintosh clones and also Famiclones and Atari clones (though we had one licensed company - Polyvox). This had held down technology progress in Brazil to a level you still see its damages.

One of the Famiclones producers were Gradiente - which later would make a partnership with a toy manufactures (Estrela) and then become a licensed Nintendo reseller. But before that, only TecToy and Polyvox would sell legal carts and hardware. In spite of these 2 companies, every other hardware and software were pirated - I have a huge collection of "Datactar" and "Mania" cartridges for the Atari, plus a Famiclone (BitSystem) and some NES pirated games - before Playtronic (Gradiente + Estrela) existed. Those Dactar and Mania cartridges used to have 4 games each. And most of the people I knew by that time had a pirated game because they probably owned a Famiclone.

So piracy is here since the begin.

Cheers!

 

[trakinas]

trakinas: yes, our goverment sucks, but surely that means that you should try to make a difference through action, such as protesting against corruption, helping spread support for laws that fight corruption, supporting anti-corruption NGOs... than not paying taxes?

I didnt mean that. Piracy or not paying taxes are not a mean of protest, though is a real pain when you see how many taxes we pay (not only with games) and see no return - public schools where kids have no a bent to sit, for example.

But we would be getting out of the track here, right?

 

[Vert]

.N.o.M.a.D.: Sorry, but I think you're oversimplifying things with that example. It's more complex than that, but after writing my (big) previous posts, I don't have time to tackle this more in depth.

trakinas: You're refering to the pre-16 bit generation when yes, there was a significant amount of piracy, but for a significant period in the 90's, piracy wasn't so extensive.
And I completly apologise for my previous post, I misunderstood what you meant. Sorry!

 

[dandrea]

The article is very good, Pedro. But I think that it falls short in demonstrating the full picture of what a Brazillian gamer have to go through to stay a 100% legal.

While this does not morally justify piracy, there are a few facts that would serve the purpose of demonstrating that while piracy is censurable, it is the only viable way for games in Brazil. I ask you to pay special attention to the item 4.


1. Videogame consoles that are legally imported are extremely overpriced. Your article touches this subject, but the 45% figure is short compared to the facts. While a PS3 80GB costs US$ 400, a legally imported one in Brazil costs R$ 2500 (around US$ 1100).

2. Even being overpriced, imported consoles have little to no support in Brazil. The store that sold the console can exchange it for a new one, but only if it breaks within one month from the buying date. Got RRoD? It is unlikely you can send your 360 to US to get a fixed one from Microsoft.

So, why would people buy a legally imported console, just to pay more and have none of the imediate benefits it would give them?

3. Individual games are just as overpriced. A game that usually sells for $40 in the US, in Brazil costs R$250 (around $110).

4. ***If the overprice was not enough, the relative cost of a game copy makes the difference abyssal.*** I wonder the impact on piracy if game prices changed from $40 to $110, but lets attain to the normal $40 price. Now let's pick something that is more like a basic human need: food. Let's assume an ok meal in a decent restaurant costs around $10 in the US (please, tell me if the value isn't proper). That would make a game cost the same four meals do. Problem is that ok meals in a restaurant in Brazil costs just around R$ 10 to R$ 15. And that's the price charged by a restaurant on food, it's something already out of reach for a great portion of the population. If a meal costs from R$10 to R$15 and a single legal game costs R$250, the price would go from four meals in US to more than 20 meals in Brazil.

5. Take into account that one will pay such price to have a game in a foreign language and with poor to no local support.

The solution for the situation is not employing further effort in law enforcement agains piracy, but in the government taking the adequate actions to make the legal product be worthy to the consumer. Allowing software and hardware to have a reasonable price through diminished taxes and incentives, this is the first thing that comes to my mind.

 

[Pepiz]

Ok at least they run away from the police, in Venezuela right on top of Brazil EVERY single game and software sold is pirated, everywhere but in 1 store brand called CompuMall, which sell olds original games REALLY overpriced. The value of any software would be around 1 euro in local currency.

Im sorry guys but buying a 50-60 euro game is as much as half a month worth of minimun wager @ 40 hours per week. Originals simply wont work over there.

Now dont understimate the population we are talking of 26 million where around a third of that would be families that are capable of purchasing consoles/pcs etc. I repeat. EVERYONE uses copied software, not 90% something more like 99.99%.

Can you guys come up with a solution for this? I think piracy isnt right, but i can really understand it when you take into consideration the value of original games.

Excuse my bad english,

 

[Unicamper]

dandrea said: "1. Videogame consoles that are legally imported are extremely overpriced. Your article touches this subject, but the 45% figure is short compared to the facts. While a PS3 80GB costs US$ 400, a legally imported one in Brazil costs R$ 2500 (around US$ 1100)."

Actually I believe the 45% figure looks fine. Think about it? US$1100 * 45% = 495, leaving US$ 605. Put in shipping and the fact you have a middle party taking his share of the overall price and you should lead up to the US$ 205 that are missing. Any way, its just not viable, one way or another.

 

[trakinas]

trakinas: You're refering to the pre-16 bit generation when yes, there was a significant amount of piracy, but for a significant period in the 90's, piracy wasn't so extensive.
And I completly apologise for my previous post, I misunderstood what you meant. Sorry!

No problem!

But during the 16-Bits era you still could buy "alternative" (as some would call it) copies for Mega Drive and SNES. Even some 'rent stores' would have some original and some pirated games. However, you are right: during the 16bits era we had much less piracy due official representation from TecToy and Playtronic/Gradiente. We had a licensed Playtronic and TecToy support here - they kept with the support until Gradiente stopped to represent Nintendo and TecToy Sega. They are still on business, though, fixing your consoles (or moding them).


Cheers!

 

[insanelich]

*snipping my post*

*snipping a whole lot making the reply excessively long*

Before we begin, piracy, in my definiton, means everything from p2p, illegal 'grey market' imports, people on the streets selling CD with 'warez', R4...
I think you may be disagreeing with me because your definition of piracy differs from mine, so don't forget that I include all of the above.

The facts:
- Piracy is rampant in Brazil. The links provided in my article show that, at the very least, this is a fact we can both agree on, right?
- 'Grey market' imports make up 80% of the games market in Brazil. Again, that's in a link of mine.
- These imports are handled mainly by criminal gangs. Now, I freely admit that this isn't based on one news source alone, but on my lifetime experience on hearing the news. I coudl provide with many individual links of cases where pirates where However, if you ask any other brazilian participating in this debate, I think you'll find they agree with this statement. I may be mistaken here, but if I am, then its only in the extent of that criminal gangs are involved and I honestly doubt it.
- Being a part of organized crime, these gangs help spread other types of crime into Brazilian society. This is pretty straight foward if you accept my previous fact.

Now here you don't have me against you.

- The goverment, publishers, developers, manufacturers, importers, retailers all lose out due to piracy. Obviously.

I wouldn't count all of those. I'd count publishers and manufacturers (often the same thing) in the decided losers group. Developers? Given that a game can be 20 meals there, whereas it's four to six in Finland - and close to that in the US. Precious few games would be sold anyway, and after the publisher takes his share, very little would be left for the developers. Heck, most would go into logistics.

Importers and retailers? They don't exist right now, so they aren't exactly in the losers group because of that only. But the same people who'd work for that now can work for something else just as easy, seeing the amount of money not going abroad.

And the government? Taxes? Well, the taxes are outrageous, but at the same time the money isn't going abroad. The government has one more crime problem to deal with, and most of those people would be doing things as bad in any case.

Piracy discourages game development, as the local market presents less oportunities for a developer/publisher to make money first. I'm not saying that this is the only thing stopping brazil from having more game development, but it surely is one of the biggest factors.

Biggest factor for the lack of supply that there isn't a market able nor willing to pay for their products? Whoah, that's real surprising.

Piracy hurts consumers who don't buy pirate games. This is economics 101, if you compare what the market would be like with and without piracy, consumers in the market with piracy pay a higher price for games, as the market has shrunk.

Sorry, looks like you failed Economics 101. Take a look again at the law of supply and demand. A bigger market means that companies can set a greater price for the product. The prices are set at exactly what the market can handle.

Consumers who buy pirate games get some benefit from doing this. This is obvious, as they pay a smaller price.

No disagreement.

Gamers in Brazil are people with above average income. Although piracy has spread out gaming into Brazil, the costs associated with buying a console or a PC are still high enough that I'd be willing to say that most of these consumers have above average income.

Above average income doesn't mean you have plenty of money to spend.

The goverment: only has costs, as it loses taxes revenues and has to use resources to combat piracy and effects associated from it (i.e., other crimes). These resources are taken from the society as a whole.

And in the other case they'd have money bleeding abroad. Claiming the other crime to be funded by piracy is... well, kind of silly. All of the criminal activities organized groups participate in are profitable. The crime would exist anyway.

Non-consumers of games/non-pirates: only has costs, as the goverment ends up increasing taxes on them, there is an increase in crime and, for some, there is a loss in potential employment that would come from having more publishers/developers, importers, retailers...

The money isn't going anywhere. Broken window fallacy. The government is losing money. How much money?
And how much would the market expand given the general state of economy and given their competition? (Hint: Not much.)

Pirates: have large benefits from pirating, with no associated costs.

Don't know about the "large", but no other contest.

Consumers of games that don't pirate: has the same costs as the 'Non-consumers of games', but with the added costs of having to pay higher prices for their games and not having translations into portuguese.

Higher prices because the market is willing to buy less and has more options?

Consumers of games that pirate: have some costs, due to an increase of crime and the lack of translations, but have very large benefits from paying much smaller prices.

Very large?

From this analyses, you can see why I believe that brazilian society as a whole has lost out from having piracy, right? Some parts, the pirates and consumers of pirate products, have large gains, but the rest of the society has even larger costs.

I can see why you believe it but to me it seems a rather subjective view. A whole lot of Brazilians have entertainment they wouldn't have otherwise; at the cost of some increased crime.

Why do I think that this experience with piracy would be closer to that which I believe would happen to other countries such as the US and Japan than the Finish experience? Well, that's a somewhat subjective point of view, but it comes mainly from the following: Other countries that have large populations and large amounts of piracy, such as Russia and China, seem to have an experience that very similar to that of Brazil. This is based on what I've read about these places in magazines and websites. You can also see that other people who've written here seem to share a similar experience.

Aaaand now you have to calculate in the factors that actually mean something. How much more expensive are the games compared to the general costs of living? How widespread is broadband, which pretty much cuts the profits (and thus, harmful crime) out of piracy? Look at Fennoscandia - Finland, Sweden, Norway. A whole lot of piracy. High-tech broadband. No associated side-effects that appear in Brazil and other locations with worse connectivity. Nobody on the streets selling pirated merchandise in Finland.

So, insanelich, I've presented things in a very clear manner. I kindly request that you point out where exactly you disagree with me and why. It's the least you can do after such an extensive post.

Requested and delivered.

EDIT:

And in short:

Piracy isn't going anywhere and legal games wouldn't be bought anyway if it was because games and consoles are simply too expensive for the market.

And the related criminals would not find the market profitable if Brazil had widespread broadband access, because piracy is easy to do at home with very cheap devices once you got actually acquiring the required software down. In US prices, usually outfitting console with a pirate device costs no more than a few hours, a little skill, the warranty and hardware worth roughly the price of one game. PC piracy costs even less.

And to your laughable conclusions? Casual games? Really now?

And MMORPGs can be pirated - Wikipedia [http://en.wikipedia.org/wiki/Server_emulator] provides more information about that.

 

[Julians]

Nice article. I disagree with the author. I think he's drawing wrong conclusions when saying it's piracy that's hurting game sales. That might be true until you reach a certain price for a game, once games are priced higher than customers are willing or able to pay, even without piracy sales would stay the same. Pirated games seem to fill the niche that publishers/government decided to abandon by increasing the price. And saying that pirating games is morally wrong and hurting someone is fine if you're talking to somebody who can afford and find original game for a reasonable price. But I think it's a dick move to say the same thing to people who live in areas neglected by publisher.
And razing the price isn't always going to bring companies more profit, sometimes you need to lower it.

 

[jas11262009]

I personally feel that anyone who promotes or supports piracy should be disallowed to own any tech that involves their crimes. Pirates are simply justifying their actions with prices, trial and error claims, release dates or the economy. It's twisted and they should all be ashamed of themselves. These simpletons may laugh at the claim that the video game industry will never die out, but what you know-it-alls don't grasp is that with enough time, video games are going to cost upwards of 150-200 dollars just to compensate the constant rising cost and constant piracy. Video gaming will be a luxury that only the wealthy can afford. The idiots pirating are not only going to cause an enormous price hike but also stronger and more annoying protection methods. Doesn't anyone realize the damage they're causing? Or are they all still in their self righteous bubbles with claims of justice and fantasy. But honest, hardcore gamers like myself have to sit back and watch my hobby become something I or my children's children will most likely have to avoid. Thanks a ton... A video game is not a necessity. Trying to justify the theft is the most ridiculous thing I've ever heard.

Keep this in mind the next time you justify stealing anything. The theft may be something that satisfies you. But you steal the potential enjoyment of the art from future generations. In my eyes, that's simply a selfish and disgusting act.

 

[tk1989]

Good article. Reminds me slightly of when i went to cyprus years ago, where piracy is rife! No where near as bad as it sounds in the places mentioned in the article, but I remember not even being able to buy legal DVDs/games in any of the shops near my hotel (truth be told I was in the touristy part of the city, but nevertheless...). Every shop stocked hundreds of pirated DVDs/games, and I was amazed at how many tourists would snap them up. The problem in Cyprus is that they had anti-piracy laws, its just the police did not enforce them....

 

[kubinschu]

just an aside, in Australia where a new PS3 game cost $110, I can go to the Japanese food joint, get chicken curry on rice with a miso soup and a drink for $12, for $110 I can get food for 2 people for a week maybe even more... or massive dl allowance on broadband... for a game that is shorter, less imaginative, and more buggy than games 10 years older... I haven't bought a new game for a while, nor played any, can't even be bothered Pirating them...

 

[trakinas]

The main problem with games developed locally is more related with most brazilians having prejudice with things created here - comics, books, games. Some people have this thought that if it is brazilian, it might suck.

And the related criminals would not find the market profitable if Brazil had widespread broadband access, because piracy is easy to do at home with very cheap devices once you got actually acquiring the required software down. In US prices, usually outfitting console with a pirate device costs no more than a few hours, a little skill, the warranty and hardware worth roughly the price of one game. PC piracy costs even less.

The trouble is not with how widespread is the broadband, but its quality. Due to innumerous problems during the past 2 decades, the telephony got into a collapse - from organization to the infrastructure. That means you have poor quality physical facilities: old cables, poor distribition, noise, mixed new cables with old cables, digital with analog 'stations' (i forgot the more apropriate term) and etc. Add to that a huge price to a low quality service held by the Teles - high speeds cost a lot and you have a gap between cities there are really close of each other, i.e., her ethe maximum speed a person can have (a company i think can have some more) is 1MB. Yes ONE is the maximum! And it costs ? 55,53! In Belo Horizonte (Minas Gerais' state capital) the LOWEST speed is 1MB and it costs ?11,77 (the highest you can get is 8 MB and costs ?77,00. The prices for Rio De Janeiro are the same as for BH.

Then you ask them why this huge gap. And the say "We cannot deal with that many traffic.", of course, not with these words. And that IS true. They simply cannot handle too many people on high speeds.

With that on mind, people on lower connections like me (300KBps - that is how much I can afforde... it costs more or less ?20,00) think twice before buying a game based on online play. Specially with you have do deal with big amount of upload data simply because the upload rate is about 128KBps for any plan you might have... of course there are many people playing MMOs. Many friends of mine are on Blizzard's servers (StarCraft and WoW specially). Some play FPS. Bt everyone complains from time to time about their connection). Or buying games from Steam and services such like it. However, if we did have a better infrastructure I do believe more people would buy from them.

At last, but not least, some people would piracy whichever was the scenario, simply because they are the kind of people who dont spend money on entertainment.


Cheers!

 

[ReverseEngineered]

Interestingly enough, the scene you describe of street merchants packing up when the police drive by, only to set up shop again as soon as they leave, is the same thing you see in American ghettos with drug dealers on street corners. Likewise for the scenario where you pay one person and another gives you the goods -- it's a legal roadblock. That's not to say, of course, that selling bootlegged video games is the same thing as selling drugs, just that the sale of any illegal good follows a similar pattern.

 

[ReverseEngineered]

I personally feel that anyone who promotes or supports piracy should be disallowed to own any tech that involves their crimes. Pirates are simply justifying their actions with prices, trial and error claims, release dates or the economy. It's twisted and they should all be ashamed of themselves. These simpletons may laugh at the claim that the video game industry will never die out, but what you know-it-alls don't grasp is that with enough time, video games are going to cost upwards of 150-200 dollars just to compensate the constant rising cost and constant piracy. Video gaming will be a luxury that only the wealthy can afford. The idiots pirating are not only going to cause an enormous price hike but also stronger and more annoying protection methods. Doesn't anyone realize the damage they're causing? Or are they all still in their self righteous bubbles with claims of justice and fantasy. But honest, hardcore gamers like myself have to sit back and watch my hobby become something I or my children's children will most likely have to avoid. Thanks a ton... A video game is not a necessity. Trying to justify the theft is the most ridiculous thing I've ever heard.

Keep this in mind the next time you justify stealing anything. The theft may be something that satisfies you. But you steal the potential enjoyment of the art from future generations. In my eyes, that's simply a selfish and disgusting act.

While I enjoyed your soapboxing, perhaps it's pertinent to point out a flaw in your logic.

Firstly, piracy is nothing new. It has existed for as long as computers, and even older (duplication of books due to the printing press was what lead to the first copyright laws). As computers have become more powerful and distribution channels have increased in bandwidth, piracy may or may not have increased (as a proportion of total distribution), but the prices of games have not increased greatly. In fact, 10 years ago games were half the price that they are now, implying that prices have risen only at the rate of inflation. Therefore, there's no indication that piracy will cause video game prices to rise anymore than they already do.

Secondly, your assertion that games will eventually cost $150-200 will eventually be met by inflation, irrespective of your piracy argument. The implication that they will only be available to the wealthy (depending on your definition of wealthy) has already occurred: no poor person can afford $60 for a game and $300+ for a system to play it on.

Lastly, I would argue that copy protection schemes are not getting more powerful or more annoying. The first schemes, such as asking for various words from the manual, were both extremely annoying and quite effective (distributing the manual or wordlist was often more trouble than distributing the game itself). Systems that ensured you had the original media in the drive were also effective at the time and extremely annoying (especially since the media would soon be wrecked from constant use). Modern methods, such as authentication servers, are very effective against pirates and generally less hassle to the game player, who merely need login when he wants to play. The only major downside of them is the unwillingness of companies to support things such as resale of the game (games are tied to accounts with no method to transfer them) and the eventuality of these authentication servers being brought down (which companies could compensate for by "unlocking" the game permanently when this occurs).

All in all, it may seem as though piracy would lead to the end of the entertainment industry in general, but by looking at the past, it's clear that entertainment has lived gloriously despite constant piracy. There's no indication now that things are somehow different, beyond the cries of the industry themselves, but they have cried about piracy since the beginning of time.

I'm not justifying piracy, just showing that it won't be the end of the world as you have predicted.

 

[Vert]

dandrea: That's a good example of the price differences between legal games in Brazil and the US, as your trying to take into account the relative incomes of both countries. If my article had been longer, I would have mentioned specific prices. I agree with you that part of the solution is to reduce prices, but that's only possible if the market is large enough to accomadate the smaller prices, which is only possible without piracy, which is only possible with smaller prices... not to mention the problem of people re-selling the games to richer countries. If the Escapist makes a new series about piracy, I could write about the potential solutions and the challenges to solving this problem.

Pepiz: I imagine that it might be the case that Venezuela has an even larger piracy problem, but do you have any statistics? That'd be interesting to see. As for a solution, well, as you can see, there's a lot of debate going on as to what could solve this issue.

Unicamper: thanks for clearing that up! The 45% I read in EGM probably reffered to the total composition, not the tax rate.

trakinas: Yes. I think I choose the wrong word in my article. Instead of "overwhelming legal", I should have used "largely legal", as overwhelming is just too strong.

 

[Vert]

insanelich: Wow, thanks for taking the time to reply to each individual point. I take back my previous post where I said you weren't helping the discussion, as this post took a lot of effort and helps make things very clear.
I'd love to reply to your post immediatly, explaining where I disagree with you, including the whole issue of a "the size of a market vs prices", but I've taken too much time in the past days writing here and I have other, important responsabilities (my thesis) that I have to attend to, so I can't answer it yet. But, I'm pretty confident that during the weekend (maybe even tomorrow) I'll have enough time to go over every single point.
So forgive me for delaying the reply, but I will answer it as soon as I can.

 

[retro himself]

A fascinating read, and I get the notion that most of the eastern European countries have the same situation concerning gaming.

Yeah. Most of the Balkan is like that. I know when I was little, I used to shop in the large "malls" in Bosnia and I bought a game I didn't even know was pirated. It was just a disc case with a picture. And it just seems the default way of buying games. And it well, is. I don't think however that that kind of piracy harms the developers, because if it weren't for piracy like that I think people there wouldn't even play games, much less buy them legally for 10x the price they're paying now. I mean, parents there freak out if they spend more than $5 for a game. Insane, right?

 

[Unicamper]

Sorry, to say but if its to damn expensive for you, well, you shouldn't have it. I know this sounds elitist, and well, I guess it is, but I think I would enjoy very much private jet planes, but I can't afford one. Doesn't mean I should go and rob one.
Just because its easy to do it (pirate games), doesn't mean it isn't any less of a crime.
Again, I do pirate games, and will continue to do so. But I do it acknowledging its consequences and without shallow excuses.

 

[dandan2]

The 45% tax composition you guys are talking about is waaaaayyyyy below the actual value. It is actually around 257% over the free on board price !!!! (as this great article points out http://jogos.uol.com.br/reportagens/ultnot/ult2240u116.jhtm ). The reason is that there are several taxes which are applied not to the original price, but as in a cascade (Original Price = 50$, 1st tax = 50%, Price after tax 75$, 2nd tax 25% applied over 75$ etc). To give you an example, the industrialized products tax alone is about 50%. That's just one of many taxes which are applied to the basic product cost. Now, this is a completely illogical situation, since the government sees almost no money from this, as the market is mostly illegal anyways. To top it off and make things even more ludicrous, there is a growing increase in funding for campaigns and raids on pirated products, wasting money in an impossible enterprise.

As Dandrea pointed out, the incentives for piracy are tremendous. Do as Mexico did, lower these insane taxes and you'll see a thriving market in no time.

It is pointless to analize the the problem from a moral perspective. As a time honed principle, if you want people to behave a certain way, put financial incentives for them to do so. Repression only serves the interests of mentally challenged politicians. Didn't we learn anything from the Drug War?

Now, the politicians in Brazil are so inept and incompetent that I know the above solution will never happen. So what will be the solution that game companies will use to save a lost market? Downloading. This generation is already lost, for sure, and internet speeds are not up to speed to handle downloadings of 10gb games, but in a few years time, with the consoles of the next generation and internet velocity being much higher, that's probably what's going to happen. Sony has already speculated that the next playstation might not bring a optical drive and the Xbox live is so successful and practical in might just as well carry all games in the near future.