Editor's Choice

Editor's Choice
Piracy and the Underground Economy

Ryan Sumo | 15 Jul 2008 12:38
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In the Philippines, as in many other Asian countries, piracy isn't a matter of right or wrong; it's a matter of survival. To eradicate piracy means depriving people of jobs generated by this underground economy. It means eradicating the businesses that employ them and negating the taxes funneled to the Philippine government. Developers and publishers will claim a huge victory, but they'll soon notice that those billions of dollars in lost sales aren't exactly showing up on their bottom line. People still can't afford their games. Everyone loses.

Tapping the Pirate network and the $5 dollar game

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So how much would a game have to cost for the average Filipino to even consider purchasing it? First, let's calculate the ratio of a $60 current gen game to the U.S. per capita income, which was roughly $46,000 in 2007. When you divide 46000 by 60 you get the ratio of 766-to-1. That means the cost of a video game in the US is 1/766 of the average American's income. Let's apply that number to the per capita income of the average Filipino, which is roughly $3400. If you take 3400 and divide it by 766, you get the interesting amount of $4.44. Why is this interesting? Because the cost of a pirated Xbox 360 game is around 200 pesos, or roughly $4.39.

Now you've got a dollar figure to work with. At the $5 price point, games become accessible to most of the market. Of course, it costs much more for a publisher to develop, market, produce and release a game than it does for a pirate to rip a CD and burn it a hundred thousand times. So let's take our cue from the market and cut costs. For the past 10 years, Filipinos have consistently bought games with shoddy covers and no manuals, so they've proven they're not picky about the quality of the physical product; as long as it works when they stick it in the console, they're happy. Get rid of manuals, CD cases, and elaborate covers with marketing talk. Sell the discs in vinyl sleeves with a sticker cover of the game in front. Eliminate as much cost as possible in the production of the actual CD by having the pirates burn the CDs themselves, and simply supply them with the cover material. Then sell the games as usual. The public might not even have to know about it, and no fanfare means no marketing costs.

Extracting profit from a $5 game may not sound feasible, but you'd never lose a sale to piracy again, more people would be playing your games legally and nobody would have to lose his job. The Philippines is just one small representative of this equation. Many countries in Southeast Asia, not to mention the Middle East, have the same kinds of issues when it comes to videogame piracy. There's profit to be made in these markets, but on a much smaller scale than most publishers are willing to accept. Drastically cutting costs to reduce piracy may sound ludicrous, but the fact remains that despite the best efforts of corporations and governments, piracy still runs rampant in many regions. Maybe it's time we try something new.

Ryan Sumo is a starving pixel artist in Manila currently working on the next big thing to hit the DS. Or at least it will be once a publisher decides to pick it up.

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