In a limited sense I agree. The industry is still somewhat profitable despite piracy, spokesmen have made the issue out to be worse than it is while diluting their message with big sales numbers, and they've done such a clumsy job of combating piracy that they're alienating some of their honest customers.Skrapt said:The economic downturn is visible to the consumer, you have an immediate effect on your wallet and jobs are being lost daily. The movie industry then claims to lose $1,000,000,000+ to piracy, next in the news Hollywoods 100 million dollar movie has smashed records and made a gross of 150 million, their CEO is giving himself a $100,000 bonus this year and they've just signed deals to pay some actor $1,000,000 per week!
Piracy is a scapegoat, the movie/gaming industry isn't losing much if any money to it and they continue to release AAA titles and huge budget movies and continue to report even bigger profits. They make a big deal of piracy because no. of downloads x price is a big number but even if piracy was wiped out overnight, they wouldn't see a penny of that figure entering their figures.
However, it's the details where I disagree that change my point of view.
The industry is still profitable because it works on the "hit" model; one massive success brings in tons of sales, a few middling titles break even more-or-less, and a bunch of lesser titles crash-and-burn... but so long as the massive success is massive enough, the studio (or publisher) can still make money. Illustrative point to hand: Microsoft Game Studios sales figures for 2007 were skewed massively by the release of one title, Halo 3. The skew was big enough that game sales for 3rd quarter of 2008 appear to be down from last year for the console industry as a whole. As proud as that makes me as a Bungie fan, it's not a sign of a healthy industry when one title can so distort it.[sup]*[/sup]
Piracy won't kill the hits; they will indeed keep selling. Piracy also won't kill the duds because the duds are already dead. But piracy's effect on margins could tip the balance on a middling title from break-even to money-eater, and that's where it really hurts.
A variant of the "hit" model is Blizzard making money hand-over-fist because they have World of Warcraft; the secret to its profitability is their subscription model, wherein you have to pay not only the software cost (and upgrades) but also on a monthly basis to access the WoW servers. A steady income stream from loyal customers pays their bills, so they can take risks on other titles; and it's a revenue stream that pirates can't sap.[sup]**[/sup] No wonder Activision wanted to aquire/merge with them, and why other companies are trying to compete in the MMO sphere for some of that assured income.
The effect of piracy isn't to kill the industry, not overall. The effect is to change the industry by making it tougher for small studios to keep going, making it more attractive to big studios to focus on "blockbuster" games with the broadest possible appeal, and driving developers more and more to the "game as service" model reflected by browser games and MMOs.
If you want fewer people making big games, more generic big games, and more ad-supported or pay-to-play games, then by all means keep pirating.
-- Steve
[sup]*[/sup] As a side point to this, the public tends to fall for the lottery fallacy; people remember the big hits, and assume they're the norm because they forget about the failures. That's a problem in public perception, and it's exacerbated by studio and publisher PR campaigns that try to portray themselves in the best light by sweeping the failures under the rug.
[sup]**[/sup] Indeed, their problem is ruffians and scoundrels paying them money in order to sell virtual merchandise to those steady customers.