Indie RPG Veteran: "Being Nice" Prevents Piracy Better Than Draconian DRM

[Longsight]

Everyone bringing up World of Goo and the first Humble Indie Bundle need to remember a couple of things: firstly, that the statistics you're quoting are merely percentages of the total, and say nothing about actual sales figures; and second, that a pirated copy does not directly equate to a lost sale. People pirate games for all sorts of reasons, but one of the big ones is just that they either do not have the money in the first place, or they are not willing to spend it on the game in question. These are not people that would have bought the game had piracy been impossible, and this is especially true of indie hits like World of Goo, which deviated sufficiently from mainstream gaming clichés to put a lot of people off if they had found they had to risk their cash on it before knowing if they were going to enjoy playing it or not.

The same goes for music, film and every other media that's suffering piracy troubles at the moment - I know plenty of people with music collections that would cost hundreds of thousands of pounds to build legitimately, but the music in question is not stolen for any sort of commercial profit; it's stolen for the love of the music itself, based on the simple fact that enjoying it legitimately is prohibitively expensive and the missed sales would never happen anyway. It's a balance every company has to try to strike on its own terms, but at the end of the day, commercial entities are not interested in piracy figures as a percentage of sales, they're just interested in sales. World of Goo sold well, but if it had been riddled with DRM it would in all likelihood have sold fewer copies than it did, because the pirates would have still cracked it, the people who wanted to steal it would have done so anyway, but the legitimate buyers would have been less enthused about it. Maybe piracy would have been lower, maybe it wouldn't, but based on the evidence of the last decade there's precious little reason for companies to keep making things tougher on the legit consumer. How many potentially great games have suffered commercially because they've been blasted by the gaming community for their obnoxious DRM? How many more sales would Assassin's Creed II have made if it hadn't had all the bad press it got pre-release? We can't know for sure, but we all know people who have refused to buy games based purely on their DRM. Those are the lost sales that the big developers should be chasing.

I'll never advocate piracy, for the simple reason that people deserve to be paid for their work - but at the same time, I reserve the right to choose only to play games from developers that treat their paying customers with a modicum of respect.

Now see, I've always loved destroying this argument. A pirated game is ALMOST ALWAYS a lost sale. Yes, I'm saying it directly. There are exceptions for when the game is pirated outside of its selling countries, when someone is pirating to replace scratched discs, and possibly a few other minor cases, but in the general scenario: All pirates WOULD pay something for that software.

The logic I'm going off is that there is SOME price, some value they would associate with that entertainment. Even if that value is "5 cents", it is value; it is an actual, monetary amount, hell, even if it's half a penny. If there were no value, they would not bother pirating it. I don't ever see people pirating "My Fifth-Grade Action Game in QBASIC". Why? Because that game is worthless to them - it has NO value. Even a really disliked game like Modern Warfare is pirated because pirates want it to some degree.

If that value is less than the associated price, that's a different issue; it simply means that the game's price is too high, not that there could never possibly be a sale. I think it obvious that if Modern Warfare were brought to a price point of $0.01, there would be plenty of sales, especially from people who normally couldn't afford it. Right? This very directly means that most (as I said, a few exceptions) downloads from any peer to peer network ARE lost sales.

Besides which, I'm tired of people pirating games for being low on cash. Do some searching, and I'm pretty dang sure you can find 5 months of continuous playtime from really good, entirely free games.

I see all your points, but you're destroying a different argument. I'm not saying that they're lost potential sales, under different circumstances; they're just lost sales in terms of the real-world price point, because it's not economically feasible for the major game companies to price their games at $0.01 in order to prevent piracy. Your solution is honourable but doesn't address the real-world problem, because companies price their products in order to turn a profit, and if you're selling at a loss you'd be better off not selling at all.

As you've pointed out, most pirates would pay something for a chosen piece of software, but the problem is that people are still picky with their money. I'm generally very choosy about the games I buy because my money is in fairly short supply, so I stick to cheap and/or free games and pick up the big titles when they become ridiculously cheap during the Steam sales. Those are games that I genuinely would not buy under any other circumstances, simply on a financial basis - and while I don't choose to address this issue by stealing them instead, plenty of people see the opportunity to get games for free that they can't justify spending good money on, and take it. The opportunity to legitimately pay a far smaller amount of money for the same game simply doesn't exist, so the pirates are unable to take it - no company sells the same product at two wildly divergent price points just to make more sales, especially if one is too low to turn a profit anyway. If the pirate in question is not willing to buy the game at a price that is economically sustainable to the developer, then it's a lost sale, because running your company into the ground to prevent people from stealing your stuff in the first place is not a brilliant long-term strategy.

All in all, I like what you're saying, but it doesn't really figure in the real world. Recognising the value of something is not the same as being willing to pay money towards it.

 

[Katana314]

I see all your points, but you're destroying a different argument. I'm not saying that they're lost potential sales, under different circumstances; they're just lost sales in terms of the real-world price point, because it's not economically feasible for the major game companies to price their games at $0.01 in order to prevent piracy. Your solution is honourable but doesn't address the real-world problem, because companies price their products in order to turn a profit, and if you're selling at a loss you'd be better off not selling at all.

As you've pointed out, most pirates would pay something for a chosen piece of software, but the problem is that people are still picky with their money. I'm generally very choosy about the games I buy because my money is in fairly short supply, so I stick to cheap and/or free games and pick up the big titles when they become ridiculously cheap during the Steam sales. Those are games that I genuinely would not buy under any other circumstances, simply on a financial basis - and while I don't choose to address this issue by stealing them instead, plenty of people see the opportunity to get games for free that they can't justify spending good money on, and take it. The opportunity to legitimately pay a far smaller amount of money for the same game simply doesn't exist, so the pirates are unable to take it - no company sells the same product at two wildly divergent price points just to make more sales, especially if one is too low to turn a profit anyway. If the pirate in question is not willing to buy the game at a price that is economically sustainable to the developer, then it's a lost sale, because running your company into the ground to prevent people from stealing your stuff in the first place is not a brilliant long-term strategy.

All in all, I like what you're saying, but it doesn't really figure in the real world. Recognising the value of something is not the same as being willing to pay money towards it.

You're right, and wrong, in ways you wouldn't expect. The general model of games, you're right, is not realistic to sell for $0.01. I will, however, mention something I learned at PAX. There IS a type of game where it's still okay to price a game at LESS than a penny, where it's still economically viable. There, the company charges $50 for one owner, $20 for another, and $0 to another; Free-To-Play games. Essentially, the idea of those is that consumers pay whatever they're willing to for the best game experience, getting away from the drab default cosmetics of their character, skipping a few levels ahead, or even sometimes getting new areas unlocked. Say what you might about its feasibility, but it has actually worked VERY well for a lot of people so far, which is why you see it popping up everywhere now.

You also could be wrong about companies' willingness to sell games at lower prices - if consumers could demonstrate through real numbers that they WILL pay hard-earned money if games released just a bit cheaper, and that enough people will pay this amount that the game companies actually make MORE money...well, then the logic is obvious to them, and we'd see $30 games from then on out. Piracy, however, ensures that the minority of gamers, the legitimate ones, must foot the ridiculously large $50 bill for everyone.

 

[Longsight]

You're right, and wrong, in ways you wouldn't expect. The general model of games, you're right, is not realistic to sell for $0.01. I will, however, mention something I learned at PAX. There IS a type of game where it's still okay to price a game at LESS than a penny, where it's still economically viable. There, the company charges $50 for one owner, $20 for another, and $0 to another; Free-To-Play games. Essentially, the idea of those is that consumers pay whatever they're willing to for the best game experience, getting away from the drab default cosmetics of their character, skipping a few levels ahead, or even sometimes getting new areas unlocked. Say what you might about its feasibility, but it has actually worked VERY well for a lot of people so far, which is why you see it popping up everywhere now.

You also could be wrong about companies' willingness to sell games at lower prices - if consumers could demonstrate through real numbers that they WILL pay hard-earned money if games released just a bit cheaper, and that enough people will pay this amount that the game companies actually make MORE money...well, then the logic is obvious to them, and we'd see $30 games from then on out. Piracy, however, ensures that the minority of gamers, the legitimate ones, must foot the ridiculously large $50 bill for everyone.

Sure, but that still comes back to the point that your business model, whatever form it takes, has to remain profitable overall. Free-to-play games with optional premium extras work because enough people pay for the extras to cover overall development, on the basis that the extras themselves don't cost all that much to produce, and those individual extras themselves have fairly massive profit margins in order to cover the loss on the game itself. It's a totally understandable model and one I largely support as long as it doesn't go too far down the "destabilising the multi-player experience in favour of the rich" route, because it gives the developers alternative sources of income that are less affected by traditional methods of piracy.

The big problem with the second part of your post is that it's only feasible if game companies are willing, in large numbers, to take the risk, which is a tough call in a fickle market in the middle of an economic slump. The likes of Activision aren't too interested in halving prices to see if fewer people pirate their games, because they're making a substantial profit as it is and don't really want to risk massive financial ruin by releasing games for tiny margins if there's any sort of risk that it won't pay off. The major companies are genuinely not interested in those sorts of risks right now. They're more interested in trying to forcibly stamp out piracy to a hypothetical and frankly impossible point where it would be safe to release games for any amount of money because anyone who wants to play them has to pay you that amount. That's the low-risk strategy, and it's the one they're all playing to, to the detriment of their actual customer base.

The problem is hardly one of reduced uptake - the games industry can't stop booming in terms of actual people buying actual hardware and playing actual games, and yet all the time we're seeing prices go up, not down. The people have shown willingness to pay for games whatever they cost, the industry's contribution to world economy is growing faster than any other media, yet the companies at the heart of it are showing no interest in reducing prices. As can be predicted by any pop economist, if the market grows unstoppably regardless of external forces, prices will keep going up, not down - why charge $30 when you can charge $60 and know it'll be paid anyway?

That is, until the market crashes. And it will, but nobody quite knows when.

 

[Katana314]

You're right, and wrong, in ways you wouldn't expect. The general model of games, you're right, is not realistic to sell for $0.01. I will, however, mention something I learned at PAX. There IS a type of game where it's still okay to price a game at LESS than a penny, where it's still economically viable. There, the company charges $50 for one owner, $20 for another, and $0 to another; Free-To-Play games. Essentially, the idea of those is that consumers pay whatever they're willing to for the best game experience, getting away from the drab default cosmetics of their character, skipping a few levels ahead, or even sometimes getting new areas unlocked. Say what you might about its feasibility, but it has actually worked VERY well for a lot of people so far, which is why you see it popping up everywhere now.

You also could be wrong about companies' willingness to sell games at lower prices - if consumers could demonstrate through real numbers that they WILL pay hard-earned money if games released just a bit cheaper, and that enough people will pay this amount that the game companies actually make MORE money...well, then the logic is obvious to them, and we'd see $30 games from then on out. Piracy, however, ensures that the minority of gamers, the legitimate ones, must foot the ridiculously large $50 bill for everyone.

Sure, but that still comes back to the point that your business model, whatever form it takes, has to remain profitable overall. Free-to-play games with optional premium extras work because enough people pay for the extras to cover overall development, on the basis that the extras themselves don't cost all that much to produce, and those individual extras themselves have fairly massive profit margins in order to cover the loss on the game itself. It's a totally understandable model and one I largely support as long as it doesn't go too far down the "destabilising the multi-player experience in favour of the rich" route, because it gives the developers alternative sources of income that are less affected by traditional methods of piracy.

The big problem with the second part of your post is that it's only feasible if game companies are willing, in large numbers, to take the risk, which is a tough call in a fickle market in the middle of an economic slump. The likes of Activision aren't too interested in halving prices to see if fewer people pirate their games, because they're making a substantial profit as it is and don't really want to risk massive financial ruin by releasing games for tiny margins if there's any sort of risk that it won't pay off. The major companies are genuinely not interested in those sorts of risks right now. They're more interested in trying to forcibly stamp out piracy to a hypothetical and frankly impossible point where it would be safe to release games for any amount of money because anyone who wants to play them has to pay you that amount. That's the low-risk strategy, and it's the one they're all playing to, to the detriment of their actual customer base.

The problem is hardly one of reduced uptake - the games industry can't stop booming in terms of actual people buying actual hardware and playing actual games, and yet all the time we're seeing prices go up, not down. The people have shown willingness to pay for games whatever they cost, the industry's contribution to world economy is growing faster than any other media, yet the companies at the heart of it are showing no interest in reducing prices. As can be predicted by any pop economist, if the market grows unstoppably regardless of external forces, prices will keep going up, not down - why charge $30 when you can charge $60 and know it'll be paid anyway?

That is, until the market crashes. And it will, but nobody quite knows when.

I think it's at-first logical to be afraid of the theory of "companies in control dictating the prices". However, it just doesn't make sense as long as you assume just a bit of consumer willingness to shop around. A number of really enjoyable games I've played recently have been entirely free, and with the increasing number of free toolkits and resources to indie developers (UDK, CryEngine 3, Unity, Steam, etc etc) it may be harder and harder for AAA games to justify their much larger price over time.

I get what you're saying about risk, but there's two issues. A. There are already many companies taking big risks with the F2P model, and it's already paying off for them. What they should be learning about consumer spending is obvious. B. You're right that as a CEO, I would absolutely never even consider a risk like reducing game prices without any evidence that it would sell better. The operative term here being "without any evidence", and the most direct evidence we ever see in the industry is sales. Sales are the obvious indication that GreyNBlack ShootEmUp 15 is 500x better than Grim Fandango.

It's well within the consumer's ability to demonstrate to companies that "I am willing to pay $30 for a game. I am not willing to pay $50 for a game." through the standard wallet-vote. You said that game companies can price a game at $60 and anyone will pay it, but that's slowly becoming less and less true with market saturation; I know I'm not willing to pay it. If we take the standard 90% piracy rate, I can bet a lot of those people definitely would pay for the game if it were a bit cheaper. It is of course not realistic for us to ask companies to try lowering their prices on release day, so instead we as consumers can do our duty in letting game companies know what price we're willing to pay. We're partway there with the advent of F2P, and I've already seen some companies release their games for less than what they might normally be to a lot of success.

Most importantly, you need to keep a positive focus towards the industry; think about what positive things could happen and how it could happen, rather than worrying about the unchangable trends; even the biggest industries change their tactics when the wind blows. Don't keep pirating games to dissuade developers from making them; buy games at a price you can afford to show developers what you like and how much you're willing to pay for it.

 

[Longsight]

I think it's at-first logical to be afraid of the theory of "companies in control dictating the prices". However, it just doesn't make sense as long as you assume just a bit of consumer willingness to shop around. A number of really enjoyable games I've played recently have been entirely free, and with the increasing number of free toolkits and resources to indie developers (UDK, CryEngine 3, Unity, Steam, etc etc) it may be harder and harder for AAA games to justify their much larger price over time.

I get what you're saying about risk, but there's two issues. A. There are already many companies taking big risks with the F2P model, and it's already paying off for them. What they should be learning about consumer spending is obvious. B. You're right that as a CEO, I would absolutely never even consider a risk like reducing game prices without any evidence that it would sell better. The operative term here being "without any evidence", and the most direct evidence we ever see in the industry is sales. Sales are the obvious indication that GreyNBlack ShootEmUp 15 is 500x better than Grim Fandango.

It's well within the consumer's ability to demonstrate to companies that "I am willing to pay $30 for a game. I am not willing to pay $50 for a game." through the standard wallet-vote. You said that game companies can price a game at $60 and anyone will pay it, but that's slowly becoming less and less true with market saturation; I know I'm not willing to pay it. If we take the standard 90% piracy rate, I can bet a lot of those people definitely would pay for the game if it were a bit cheaper. It is of course not realistic for us to ask companies to try lowering their prices on release day, so instead we as consumers can do our duty in letting game companies know what price we're willing to pay. We're partway there with the advent of F2P, and I've already seen some companies release their games for less than what they might normally be to a lot of success.

Most importantly, you need to keep a positive focus towards the industry; think about what positive things could happen and how it could happen, rather than worrying about the unchangable trends; even the biggest industries change their tactics when the wind blows. Don't keep pirating games to dissuade developers from making them; buy games at a price you can afford to show developers what you like and how much you're willing to pay for it.

I largely agree with you, and salute the smaller companies that are taking alternative routes towards producing content and charging for it. And, for the mostpart, I agree that people are going to prove less and less willing to charge through the nose in order to prop up companies that are scared of piracy - hence predicting a coming crash in that market.

 

[kingmob]

One that was pirated without DRM and one without that was not...? I don't even understand what you're saying in this sentence. Seriously, please proofread it...

And if companies aren't going to believe numbers, what can they believe? They prefer facts and data, not opinions of the vocal forum-goers.

It is kind of simple. You conclude that the person selling more without DRM is wrong, because there is also a person that claims they sold less by selling without DRM. It makes no sense at all. The whole 'world of goo' argument is silly, not only because the numbers have been pulled out of someone's ass, even if they are true, the last thing it proofs is the validity of DRM. But somehow, people are still claiming it here as if it is self evident that it is.
The first thing that you have to doubt is the numbers actually as a company. If you start trusting numbers on the basis that you like their outcome (I.E. DRM = good), get ready for bankruptcy.

And sorry if you didn't get it, not everyone is a native speaker.

 

[Cid Silverwing]

Third's a charm.

Keep this up! If we're lucky, DRM will be abolished!