I have been there twice when this has happened. The first time it bust the company I worked for, and it was not the only one. The companies that survived were considerably weakened. The second time the company I worked for had massive redundancies in order to survive whilst many around went bust. This danger is still costing the industry billions every year. Yet not much is done by the industry to protect itself.
Yes, I am talking about piracy. The first time, at Imagine, it was tape to tape copying in the 8 bit market that suddenly came from nowhere and totally cannibalised sales. The only, imperfect, answer that the industry could come up with was to lower price points till the games weren’t worth copying. Hence the era of budget games. The second time, at Codemasters, it was the sudden appearance of cheap CD burners for PCs racked up in criminal back rooms that destroyed the market for PS1 games. We lost about a quarter of the workforce and cut costs to the bone. It was only a global PC hit, Operation Flashpoint, that kept us going. Then the gradual increase in installed base of PS2 and Xbox allowed a return to normality.
And it could happen again. The current proliferation of platforms makes it a little more difficult, if one is destroyed by piracy you still have the others. However piracy is still here. Nintendo have just siezed 10,000 pirate devices in Hong Kong. And according to their own figures piracy is costing the companies that create, license, market and sell its products $762 million a year in sales. Extrapolate that across the platforms and the industry is losing billions.
My own experience in the industry is that nobody cares. Or they pay it lip service. It is always someone else’s problem. ELSPAÂ do a good job and their anti piracy unit does wonders on a shoestring. I worked with them lobbying our local MPs to get the UK IP law changed. But it is not enough, especially with peer to peer IP distribution so rampant.
So if you work in the industry piracy is costing you. What are you doing about it?
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To relate the issue over PC gaming and P2P/illegal copying to a similar industry that’s already been through the mill, it’s virtually over in music, and the industry is losing (and losing their artists). The argument there isn’t “how do we stop people?”, rather they’ve been forced into realising, because the tide has turned, and the bad press they’ve received on an almost daily basis, that the question is “how do we adapt?”.
For instance, Prince’s recent new album, free with the Mail on Sunday; Radiohead pricing their latest album at whatever the customer wants to pay – so you could download the album, completely legally, for £0.00 if you wanted to (one of the PR masterstrokes of the year IMO, raising well over $20 million on minimal costs); Madonna leaving record companies behind to release albums through her concert promoter; and the Charlatans giving away their next album free, via XFM radio.
Added to this is the rise in the use of Myspace and social networking sites to promote new bands, without the labels getting involved at any point – so the artist gains much more audience without losing money to the record company (especially in more lucrative live gigs/concerts).
While the four major record companies have tried enforcing DRM, sometimes in a hellishly draconian manner (reminds me of some anti-meaures our industry has tried!), the profits have continued to flow away (affecting the innate value of what music is “worth” as well, a double whammy). Hence EMI and Universal Vivendi have recently decided to trial DRM-free MP3s, and the other two biggies (Sony, Warners) will no doubt follow at some point – they’ll be forced to adapt.
In the next few years the games (and movie) companies will have to face a similar dilemma – we’re on the cusp of it now. Already we’ve had the initial furore over Galactic Civilizations 2, a copy protection-free game that Starforce lambasted (and subsequently faced a huge backlash for), something that promoted StarDock and the game to a degree far in excess than it would have garnered otherwise. There’s also been the Bioshock PC issues – with a lot of negative press based on the amount of times the game could be reinstalled.
Perhaps the next few years will be about finding truly new ways to gain revenue (as Radiohead seem to have done in the music sphere). The first major publisher to come out and say “this AAA game is copy protection free, if you want to copy you go ahead, however there’s proper versions available in stores or download it from us using an honesty jar if you’d like to pay” will gain an *immense* amount of free PR and positive word of mouth from websites, newspapers and TV stations the world over. And probably a similar amount of ire from the rest of the industry 😉
However, I feel this need to adapt *has* to happen in one form or another – that might mean the industry flees from PC video games, or more user generated content coming through and the PC video game arena becomes more about the “long tail”, or it might mean the industry simply adapts to a new revenue environment with something like using episodic content, or moving wholly to Steam/Metaboli/Gametap type services.
Apologies for the long essay of a reply – in summing up I think video gaming is still a young industry; I think we can change our focus to integrate new streams and overcome the P2P/illegal copying issues. It just takes some very tough choices, logical thinking and a not a little amount of balls if PC is to remain viable as a gaming platform.
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Hi Peer, interesting stuff, thanks for your input.
I think the great advantage that gaming has over other IPs is that it is connected. This allows us to produce server based games which are totally uncopyable. They don’t have to be totally server based, just one play critical feature and you have control.