158: Piracy and the Underground Economy

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Now if there were a cheap/legit "Philippians Version" for $5.00 that math gets shot to hell as some copies make their way back into our rich American hands who would rather pay $5.00 instead of $60.00.

This kind of math is the exact reason for which region encoding exists, to segment the market so distribution, licensing, content and pricing can be tailored to fit regional economic and social realities.

Most consumers would love to see region restriction gone forever, particularly most european gamers, but if it's to continue publishers may do well to take advantage of its existence, which they have not done to any positive effect.

EDIT:
Spoke to an economist and he says the kind of product differentiation suggested in the article already happens widely in things like school textbooks. A textbook that's $45 in the US costs $5 in the Philippines, but is printed on newspaper stock and comes without a cover.

There are of course additional subtleties involved when it comes to electronic media as opposed to physical product, but this is the sort of thing Region Codes are for and publishers should leverage that to move product rather than deny customers.

There was an interesting piece in Total PC gaming mag this month, and essentially he's saying, if you buy games regularly, go ahead pirate everything for 6 months, but put the money aside that you'd spend on games.

Then in 6 months, go spend all that saved up cash on the games you've enjoyed playing.

The games companies making good games don't lose a penny, you've tried before you've bought and then paid for the quality merchandise, and the companies knocking out shoddy stuff don't get rewarded.

I'm not condoning piracy, just saying it was an interesting viewpoint, and he also goes on to say that it doesnt help the industry's case when they say 'oh I see 5000 torrents being downloaded, multiply that by $60, we've lost $300,000 to piracy on one game.' Also that why should we go out and buy a game where we have to enter CD keys, install DRM, access a server and log in, etc, etc, if we can get a version that just installs and plays from a torrent site?

A genuine customer shouldn't get an inferior product to the pirated one, if you went back 10 years, that was the big advantage to an original movie/album/game, that you know you was getting a quality version, better than some copy. It just doesn't work and punishes legit customers.

For my money, Steam is my choice, I pay my money, I get full access with no cds or strings of numbers to keep safe, and say I am away, I can install on a friend's pc and play without any problems. I know steam isnt perfect, but its geting games out there, cheaply and easily, and in some cases, letting us get our hands on older games you won't find in a store.
(or on torrents, heh)

You know what truly amazes me? That I haven't seen a proper troll yet.

There were lots of great points mentioned by previous posters, but let me highlight the ones I found most interesting and respond to them.

Odius:
That's a very nice spin on the subject of piracy but when you boil it down it's still piracy. It's illegal and what they are doing is wrong regardless of why they are doing it.

Perhaps gamers in developing nations should spend some time getting an education and bettering themselves instead of playing video games. All the time wasted playing video games you could have probably learned something useful in the meantime and picked themselves up out of poverty.

I sort of resent the use of the word "spin" here. None of this was "spin" and was never meant to be. It's the reality that I have grown up in, and if you ever come by here I'll be glad to take you around and show it to you firsthand.

And that last stab at developing countries was really not classy. I'd make a crack about rednecks getting smarter if they didn't keep shagging their cousins, but I'll let that one slide. Oops.

Erin, thanks for sharing your thoughts as a developer. I'm a developer too, and frankly I'm also a little scared of the day our DS game is released and I see pirated copies all around me. However:

Comparing drugs to game piracy is a little unfair don't you think?

A market only exists when there are people willing to buy their goods. People are willing to buy their goods because they want to game and they can't afford original copies. Governments don't really want to clamp down on them because they need the tax revenue. These are the realities people need to consider. Saying "well that's just plain wrong" is all well and good, but doesn't lead to anything productive.

I have recently been very active in our local game industry, and I personally know and am good friends with game entrepreneurs whose dreams were shattered partly because of piracy. I understand that it's a sensitive issue, but I really believe that part of why companies in the South and Southeast Asian regions failed is because they wanted to make and sell their games according to western rules, and failed to take their own market into account. One of these days I hope to put up a studio myself with some friends, and put these ideas into practice. Then we'll see if I had it right all along or I was just a windbag who had no idea what he was getting into.

One last thing for everyone who argues that theft is theft and that piracy is just plain wrong and illegal. Laws are not immutable. They adapt and change and are molded to fit society as it changes through the ages. Every single day new laws are being proposed, debated, and enacted or vetoed according to what our government thinks is best for society at large. The Patriot Act being enacted post 9/11 to counter terrorist activities is an example of this. Do I think that there will be a similar "Piracy Act" to fix this problem of piracy? I can't answer that. All I can say is that laws can and will change to fit society.

ReverseEngineered:
Studios paint pirates as evil people who want the world for free. They love to harp on the fact that they are losing money, but that very argument always implies that the people getting games for free would have paid for them otherwise.

Some of them would.

This is rarely the case.

So that means that most pirates are people who obtain a sold product without providing the requested compensation from the producer. That sounds a lot like theft.

$60 is a lot of money for entertainment, and with some of the crap that's being developed, you really have to question how much entertainment you're getting for $60.

If only there were people who you could get the opinions of on given subjects? If only there were websites that would collect the aggregate scores of these "reviewers". Oh what a joyous day that would be!

Sure, sometimes you can rent them and see if you like them, but that's not often a choice with PCs, digital distribution, and subscriptions.

Would you like me to make my sarcastic "reviews" point again?

As always, the companies miss the big picture: lost sales can't always be made.

Would you like me to make my sarcastic "theft" point again?

Your example of a $60 game to a family with a $3400 annual income is perfect proof. It doesn't matter how good that game is, $60 is just not affordable. It's impractical. It's ludicrous, even.

You could always wait until the price drops, or even play mostly old games, like I do. I get just above minimum wage and I can still afford it.

The people the studios really need to hit are the ones who can and would pay for the game, but pirate anyway because it's easy enough and saves them $60.

Who's buying these thousand-dollar computers again? And when did video games become a necessity instead of a luxury?

There's no clear way to do that right now, especially because it only takes a crack from a single person to make a piratable by an entire population. This is the demographic the studios spend hundreds of thousands of dollars trying to thwart, and considering the numbers, it seems unlikely that that investement rarely pays off.

Like Tycho from PA said; you try telling stockholders that you basically can't stop people shrinking the value of their investment. Go on. Try.

Regarding price drops, it seems as if there's a bit of disparity between Western and Southeast Asian markets. From what I've heard, it looks like game prices drop considerably a few months after release. In the Philippines at least, until even a year after the PS3 was being sold, old PS2 games were being sold at full price.

Ryan Sumo:
Regarding price drops, it seems as if there's a bit of disparity between Western and Southeast Asian markets. From what I've heard, it looks like game prices drop considerably a few months after release. In the Philippines at least, until even a year after the PS3 was being sold, old PS2 games were being sold at full price.

That's part of the reality of the game retail industry in developing nations. Virtually no games are sold "officially", meaning via fully licensed distribution partners, in many of the countries where piracy is most rampant. The vast majority of users who buy legit buy from stores that import from the west or from richer nations of the same region (such as Singapore). Therefore, officially sold "Region 3" games are virtually worthless since they either come in Japanese, or very long after even a European release date.

To recoup the loss retail outlets must continue to sell legit games at full price since the import costs are so ruinous. Admittedly, this is partly due to piracy (who'd buy an old game at full price in a region unlikely to match their own imported/modded system when they could get it almost free, sooner, and in English?), but also because publishers are simply unwilling or unable to officially distribute there.

Notice the recent E3 announcement that Sony was (finally) going to distribute PS3s in Latin America. The first reaction from the average gamer is "Wait, what? Aren't there thousands of PS3s ALREADY in the richer households all over the continent?" The answer is yes. Possibly millions of latin americans have undoubtedly gotten a PS3 or Xbox 360 into their homes as soon or shortly after launch in the US or Japan.

That's part of the region issue. As most Europeans would know, it's usually cheaper, quicker, and easier (at times) to import everything because the bureaucracy of the region system is so thick that it's usually better not to bother. And it's thick because publishers haven't bothered (which hasn't helped spur attempts to streamline its operation). It becomes a vicious cycle that helps to kill off quick and cheap distribution of titles to places that aren't region 1 or 2 (USA or Japan).

You're saying that piracy is good because it supports the livelihoods of poor people in developing nations? Game developers are trying to make a profit - not to give people a 'job' (stealing their work)

I got the idea that you think that it's unfair for a game company to charge american prices to developing nations since the people cannot afford them. This is nonsense - these are DEVELOPING NATIONS! Developing nations don't HAVE as many luxuries - every country has gone through a phase where only the rich had any sort of luxuries whatsoever. That doesn't mean that the price was unfair, it only means that there was not enough disposable income for everyone to afford luxuries. It's a sad and unfair world, but to defend piracy by saying that it helps poor people in asia and brings games to those who wouldn't otherwise play them? That's just a weak rationalization for theft.

Don't get me wrong, i've pirated my fair share of video games (never for profit) as I'm a college student who can't afford all the luxuries he wants. This doesn't excuse my piracy, but at least i'm willing to admit that I'm stealing.

Another point of view I'd like to bring up is Open Source software. Why is there so much hate toward pirating when open source projects/programs/games "compete" just as much with the name-brand and are much more customizable? Open source is legal and is a very effective alternative to buying high dollar versions and/or pirating.

I do understand that many open source projects/programs/games may not be exact copies of the high dollar stuff, but I can often enjoy open source as much as I can enjoy high dollar.

Wouldn't they only employ in the family if given a choice?. so by multiplying 5 * 20 * 4 = 4000 * 5 = 20,000 * 10 = 200,000 seems wrong to me, shouldn't it be 5 * 20 * 10 * 6 (the 6 is for the owner workers and kids.

Mistah Kurtz:
You're saying that piracy is good because it supports the livelihoods of poor people in developing nations? Game developers are trying to make a profit - not to give people a 'job' (stealing their work)

I'm not exactly saying piracy is good. That's the argument of people who say that piracy forces game publishers to look at alternative means of distribution that will empower the consumer.

I'm saying that it exists and there are reasons for its existence and that the current method of fighting piracy is costly and ultimately benefits nobody. Lastly, I offered a third world perspective because these people depend on piracy to make a living. It's not about buying luxuries but about making ends meet through a practice that is illegal yet totally normal in the context of the place these people live in.

MosDes:
Another point of view I'd like to bring up is Open Source software. Why is there so much hate toward pirating when open source projects/programs/games "compete" just as much with the name-brand and are much more customizable? Open source is legal and is a very effective alternative to buying high dollar versions and/or pirating.

I do understand that many open source projects/programs/games may not be exact copies of the high dollar stuff, but I can often enjoy open source as much as I can enjoy high dollar.

Well, that's because (presumably) all open source software is created by the people who release it, so it's less catchy for industries to claim that they're losing ground to open source software. That would be tantamount to admitting they had an inferior product.

They can much more easily complain about piracy because it's their code, and their work that's being replicated and sold without their consent and without anyone making any profit.

Mistah Kurtz:
You're saying that piracy is good because it supports the livelihoods of poor people in developing nations? Game developers are trying to make a profit - not to give people a 'job' (stealing their work)

I got the idea that you think that it's unfair for a game company to charge american prices to developing nations since the people cannot afford them. This is nonsense - these are DEVELOPING NATIONS! Developing nations don't HAVE as many luxuries - every country has gone through a phase where only the rich had any sort of luxuries whatsoever. That doesn't mean that the price was unfair, it only means that there was not enough disposable income for everyone to afford luxuries. It's a sad and unfair world, but to defend piracy by saying that it helps poor people in asia and brings games to those who wouldn't otherwise play them? That's just a weak rationalization for theft.

Don't get me wrong, i've pirated my fair share of video games (never for profit) as I'm a college student who can't afford all the luxuries he wants. This doesn't excuse my piracy, but at least i'm willing to admit that I'm stealing.

The thought that this is some kind of a rationalization for theft, that developing nations should just up and "develop" themselves into a state where they can afford your luxuries is bigoted, narrow-minded, shortsighted and frankly quite offensive. I don't like to throw around the term "elitist" as it has its own positive connotations, but dammit, that's what this type of attitude is, essentially stating that if you can't afford it, you never deserved it in the first place. I'd hate to see what that same argument would imply if health insurance were considered a "luxury".

I don't mean to put words in Mr. Sumo's mouth, but as I understand it his article is merely a description of the realities on the ground. Rampant piracy has created a sort of underground economy that's become a matter of course for most gamers in developing countries, and for some, a matter of livelihood. Make of it what you will, but Mr. Sumo in no way attempts to excuse himself or his (and other poorer gamers') actions. It shows the fact that the issue of piracy, its impact, and solutions to it is more complex than many would like to paint it as.

Games are a commodity and a luxury, not a privilege or a right. Nobody, at any level of income or social status, "deserves" to own a video game or a video game system. All they can do is attempt to afford it. I think everyone here understands that fact. Piracy IS a problem and its pervasiveness in the developing world exacts its own costs on society, particularly in traditional game development and business models, as ErinHoffman put it.

The questions Mr. Sumo's article pose highlight the challenge publishers and developers have attempting to implement the exact same business model in "low" markets as they do in "high" ones, rather than attempt to excuse the act.

Is it worth it for publishers to attempt to distribute a no-frills version of a game for less in an attempt to steer away demand for pirated copies, as they do with school textbooks even now? That's a question for accountants and cost-benefit analysts. Will it work? Publishers will have to try (or analyze) and see for themselves. If companies decide that it's in their interest to distribute games with price discrepancies based on regional trends, it's their decision to make, not gamers'. In my own opinion, doing so would benefit everyone as it would open markets to publishers that were never open to begin with, and allow gamers everywhere to enjoy content without violating copyright. But that's me.

This is strictly a question of business, not entitlement. Get off your high horse.

Even if developers sold their games for 1 lousy dollar to the pirates, in the end, the pirates would still just buy 1 game, and duplicate it illegally - because that $1 x 1000 games sold makes a huge impact on their income. You simply cannot win.

There is absolutely no excuse for piracy by any logic. If you cannot afford a game, you are not meant to play it. Just like if you cannot afford a BMW, then you are not meant to drive one.

If you cannot afford a game, you are not meant to play it. Just like if you cannot afford a BMW, then you are not meant to drive one.

Jump the horse before you hurt yourself. No one is "meant" to do anything, especially with regard to purchasing something, but maybe (just maybe!) publishers would consider charging less for the same game in a different market, more people would choose NOT to buy pirated copies! ZOUNDS! No one is demanding anything, no one is implying they are entitled to games, that publishers should bend over to satisfy potential consumers if it doesn't benefit them. All that's being said is that the economic realities of the situation suggest a different, regionally-oriented business model to allow game providers to, well, PROVIDE.

unangbangkay:

If you cannot afford a game, you are not meant to play it. Just like if you cannot afford a BMW, then you are not meant to drive one.

Jump the horse before you hurt yourself. No one is "meant" to do anything, especially with regard to purchasing something, but maybe (just maybe!) publishers would consider charging less for the same game in a different market, more people would choose NOT to buy pirated copies! ZOUNDS! No one is demanding anything, no one is implying they are entitled to games, that publishers should bend over to satisfy potential consumers if it doesn't benefit them. All that's being said is that the economic realities of the situation suggest a different, regionally-oriented business model to allow game providers to, well, PROVIDE.

No, I find this concept completely retarded. Why? Because how do you objectively judge one economy versus another to determine the price you sell to that market? Then multiply that by 150 economies. Then add the fact that economies are always going up and down. What a nightmare. This is absurd theory crafting, sorry to sound harsh but it's just not realistic in practise.

In addition, you would find game X being sold for $9 to country Y then all of a sudden 50 other countries gamer's are all hitting country Y for a bargain, presuming the game is not region locked - or are you suggesting we now have 150 region locks on games? It's a silly concept.

unangbangkay:
As Gabe Newell mentioned some time ago, the problem is less one of pirates "stealing" sales but of potential customers going unserved. Eliminating piracy entirely would only result in a token increase in sales for publishers, mainly because the vast majority of people who buy pirated couldn't buy "legit" in the first place. It's the same practically everywhere piracy is rampant.

Therefore, bringing equivalency to the market suddenly expands it exponentially. People who'd otherwise buy pirated would well chose to buy legit, mainly because they suddenly can afford the better option.

Quite fully agree. I live in Thailand, and I can tell you that most people here would simply drop playing games altogether if they have to pay full price. It simply doesn't make sense revenue-wise. That wouldn't kill anyone though.. a vast majority of people choose to play football (soccer) or drink in their leisure time anyway.

Personally, I like to play legit copies only. It gives me a sense of pride, a bit of ownership of the game I am playing. But I'm not the average player. Most people here buy games as social activities. It is not the act of playing, but the buying that is social. I know at least 10 Wii owner who never took the Wii out of the box. Most people don't even know what the hell they are doing in games. They just buy the strategy guide, and blast through the games as quick as possible.
Even if games take significant portion of my income, I wouldn't really care. I buy at most 2 games a year, and I barely have time to finish them. If they can afford the console, they can afford the game. Hell, they might even learn something about buying good games instead of trash too.

Because how do you objectively judge one economy versus another to determine the price you sell to that market? Then multiply that by 150 economies. Then add the fact that economies are always going up and down. What a nightmare. This is absurd theory crafting, sorry to sound harsh but it's just not realistic in practise.

Simple. ANALYZE. Cost-benefit analyzes are there for a reason, and they work. Why do you think a movie ticket is sold for $3 in Manila where it goes for $13.50 in San Francisco? Those movies are exactly the same, and often come out on the same day, sometimes in better theaters in the cheaper countries. An IMAX ticket in Manila costs $10. How much does it cost here?

Charge the price you think people are willing to pay, and hope they pay it. It's how international businesses work, and how product differentiation works. If they won't pay that price, charge less, make it cooler for the same price, or cut your losses and run. That "run" bit seems to be what game companies have done, with a big side helping of whine. Maybe that cost-benefit ratio just didn't work out. I don't know, I'm not Activision/Blizzard or EA's CFO. I'm just a guy that'd like to see more legit games sold in the country I moved out of 10 months ago, but doesn't believe charging $60 for a game where people make $300 a month (and that's a good rate for the entry level) is good business.

unangbangkay:
[quote]Simple. ANALYZE. Cost-benefit analyzes are there for a reason, and they work. Why do you think a movie ticket is sold for $3 in Manila where it goes for $13.50 in San Francisco? .

Because even if you sold a game for $1 in Manila - that is $1 more than $0 - hence if the culture is to pirate games, lowering the price will do sweet nothing, and you've just spent a ton of money 'ANALYZING' over 100 markets for nothing as well.

slyder35:

unangbangkay:
[quote]Simple. ANALYZE. Cost-benefit analyzes are there for a reason, and they work. Why do you think a movie ticket is sold for $3 in Manila where it goes for $13.50 in San Francisco?

Because even if you sold a game for $1 in Manila - that is $1 more than $0 - hence if the culture is to pirate games, lowering the price will do sweet nothing, and you've just spent a ton of money 'ANALYZING' over 100 markets for nothing as well.

Did you even read the article?! THE PIRATED GAMES ARE NOT FREE TO THE BUYER. Pirate culture in the developing world is not one of torrenting games for no cost over the internet, as it is in developed nations, because the internet is too slow for that sort of thing. Maybe it'll change to what you think it is when cheap, fast broadband is absolutely available to every single person who might want a game, but in a country where you make $300 bucks a month, that's not quite the reality yet.

In Manila, you go to a local mall and pay $4 dollars a disc for a game. That's paying money. The difference is that it's less money than paying $50 for a legit copy. If companies were to sell games at $1 dollar and still make money doing it, at the same level of availability, what version do you think people would buy? The illegal version with a buggy crack, ripped intro and a bunch of trojans on a badly-printed disc, or the legit copy that was the same price or cheaper?

For that matter, even piracy rings have to pay SOMETHING for their trouble. They're businesses in themselves, with distribution networks, mass burning machines. That's what Mr. Sumo means when he refers to the underground economy.

Read the article before you start emptying your liver over it.

When I read this article, for some subconscious reason I thought of Steam and Stardock: Do vendor "pirates" still incur any cost from downloading a game from a programmer "pirate"? Perhaps there is an opportunity there to provide a service, directly from the developers/publishers, so that things are in fact legit but in keeping with the reality of the market.

I can only speak for myself but I have accepted digital distribution more when I get it from a trusted source that doesn't give me viruses and what not with it. ;)

CanadianWolverine:
When I read this article, for some subconscious reason I thought of Steam and Stardock: Do vendor "pirates" still incur any cost from downloading a game from a programmer "pirate"? Perhaps there is an opportunity there to provide a service, directly from the developers/publishers, so that things are in fact legit but in keeping with the reality of the market.

I can only speak for myself but I have accepted digital distribution more when I get it from a trusted source that doesn't give me viruses and what not with it. ;)

Vendors incur some cost. They pay a piracy ring's agent to supply them regularly with copies of new games, and stock according to potential sales. You're less likely to find copies of Oneechambara than you are of MGS3, just like in a legitimate retail outlet. They sometimes send back copies that haven't sold well, but of course they usually take a loss when that happens, because they overstocked.

Most pirate rings aren't the groups that do the actual cracking. Cracker groups rarely see (much) profit from breaking games. The large piracy rings simply pick the best working torrent, pack in the crack or serial, then get to copying. So "programmer" pirates are simply enablers.

Steam games have been pirated but at more difficulty due to the front end client and the fact that DD enables many people who want and can afford the game to get it legit (again, unserved customers).

Of course, Stardock games inevitably find their way to pirate vendors because they have no protection at all, but as you may have heard they make it up in goodwill, volume, and the fact that they practically own the niches they work in. Their model, which requires a unique serial and registration to obtain patches and updates also helps out, much in a similar way to the way work programs like MS office keep out the pirates (though the pirates and crackers work damn hard with those because business progs are the real moneymakers).

The system works almost exactly like a typical retail environment, only it's based in piracy rather than legitimate publishing and licensing. Again, the underground economy.

How about you read my comments properly before losing your kidney over it.

I am not talking about BUYERS here, I'm talking about lowering the cost from DEVELOPERS to SELLERS (sellers being the pirates) - doing absolutely jack shit. If the SELLER (pirate) has option 1 to legally buy the game from the developer for $1, and has option 2 to illegally burn the game for $.20 - they will take option 2 every time. You clearly do not understand their mindset.

Not if the publisher makes it worth their while. Illegally burning a game doesn't always work out the same way as buying a game legit for slightly more. A game that doesn't work or has a bad crack may not sell as well as a game that does work, needs no crack, and has multiplayer.

I know several vendors who switched suppliers (piracy rings) because the suppliers weren't providing good copies (bad CDs, broken cracks, etc). If a publisher can tap the network and offer a supplier a better option, a supplier may well take it.

Even pirate rings can make the better choice if it's worth it. As for judging whether it's worth it or not, I'm not a CFO.

Good article and thread. A lot of stuff it's good to hear being said lately. I'd also love to hear more from Erin about what the industry really thinks about it (the wider industry besides Stardock and the Darwinia guys who do actually talk about it). It's a fascinating subject if only because publishing and the software industry general don't want the public to hear anything that could, however vaguely, be construed as positive about piracy. It's "Piracy's Bad Mmmmkay", generally speaking (although, as mentioned, this line actually comes more from journalists, critics and PR than from the industry itself).
We must be fairly sure that, as intelligent people, they must consider it in realistic and practical terms and not the morally absolute ones we usually hear. But people can't hear about that practicality very often because some kid might get it into his head that piracy is ok.
Can it ever really be discussed without people insisting that economic relationships are universal and morally sacrosanct? Does discussing it in realistic terms invite permissiveness, as so many seem to think? I don't know either way meself, it's interesting though.

olicon:

Even if games take significant portion of my income, I wouldn't really care. I buy at most 2 games a year, and I barely have time to finish them. If they can afford the console, they can afford the game. Hell, they might even learn something about buying good games instead of trash too.

Haha, off topic but I remember only buying pirated copies for the PS1, and I ended up having TONS of games, both good and total shit, and I finished maybe 10 of them. 10 out of literally hundreds of games. I'd end up trying them for a few hours and then moing on the the next game right away beause I was spoiled for choice. These days I buy legit and spend more time trying to finish a game, and I also always take a look at the bargain bin to see if I can find any hidden gems that are worth a try.

Muzz:
Good article and thread. A lot of stuff it's good to hear being said lately. I'd also love to hear more from Erin about what the industry really thinks about it (the wider industry besides Stardock and the Darwinia guys who do actually talk about it). It's a fascinating subject if only because publishing and the software industry general don't want the public to hear anything that could, however vaguely, be construed as positive about piracy. It's "Piracy's Bad Mmmmkay", generally speaking (although, as mentioned, this line actually comes more from journalists, critics and PR than from the industry itself).
We must be fairly sure that, as intelligent people, they must consider it in realistic and practical terms and not the morally absolute ones we usually hear. But people can't hear about that practicality very often because some kid might get it into his head that piracy is ok.
Can it ever really be discussed without people insisting that economic relationships are universal and morally sacrosanct? Does discussing it in realistic terms invite permissiveness, as so many seem to think? I don't know either way meself, it's interesting though.

Thanks for validating the article muzz. That's all I want really, for a proper conversation to be had. Ultimately we all know that the big publishers and companies would never even consider this idea. However there exists a unique opportunity for local game developers working in these areas to try to tap this network and thereby make money locally instead of forcing themselves to compete with the big boys.

As a videogame magazine editor in a Southeast Asian country, I can absolutely relate to Ryan Sumo's article. I too also grew up in a similar environment (didn't know my games were pirated until much later), and thought that original games were way too expensive. Things are a little bit better here now as we have official distributors and some exceptions in legislation that allows PC games to be brought in without expensive taxes and import duties, but they're still pricey, especially for console games. There are 'budget' versions of PC Games, which allow us to get them legit, but they tend to be older or not very popular titles.

Taking a "Piracy is stealing according to the law and that's that" stance doesn't help to improve the situation of high game costs in developing nations. Laws are subject to revision, and it reminds me of a recent argument on the issue of copyright, and how one prominent law professor had used the analogy of the development airspace rights in traditional land law VS airplanes suit.

I know an old schoolmate who now runs a game shop in my hometown, and he sells pirated games. But he's not a bad person, nor is he some shady crook. He's just an ordinary, everyday guy, trying to make a living. Like he and many other people here in Malaysia, a high school education is all he has since a college or uni education is out of reach. So he turns to what he knows best, which is his decent knowledge of games. I don't know whether if he has a family to support, but selling pirated games is his main income. The same goes for other game dealers in the country.

Some local official distributors here have worked before with game stores that sell pirated games. In fact, it's not uncommon to find a shop selling both original and pirated games. Previously, some distributors even distributed game posters to such stores, so that if a gamer who goes to the store wants to buy the original copy, they can refer to the contact details on the poster to know where to buy the game.

I like the idea of game developers and publishers making use of the extensive distribution network of local game shop pirates, providing them with games with scaled down packaging and marketing. This in turn make the game shop vendors legitimate dealers, removing the fear of being constantly raided while not passing on the extra cost burden onto the consumer.

Trust me, I understand your point about the price of retail games - I live in Australia and our games are $100 and the weekly wage, whilst higher than the Philippines, doesn't go a long way after the price of food, rent and petrol.

But:

Ryan Sumo:
Comparing drugs to game piracy is a little unfair don't you think?

Not in the slightest.

A market only exists when there are people willing to buy their goods.

Sorry to say, but this sounds like the exact same thing people say about drugs.

Governments don't really want to clamp down on them because they need the tax revenue. These are the realities people need to consider.

That doesn't make sense. The government would get greater revenue from selling games legally, just like they get taxes from legal drugs.

If you're burning games you got off the internet, where does the government collect taxes from it?

Apart from charging you from setting up shop in a mall, which I doubt very much is controlled by the government - at least not on a federal level.

You claim that families benefit as if this is like a whole heap of backyard people working off their own backs, using their own entrepreneurial skills, but I think you're wearing rose coloured glasses.

It's more common that these people are involved in organised crime.

These pirates have networks to supply them with disks and files, sometimes before the disks are released legitimately. The people on the streets are given loans for equipment (computers, store space) and then charged huge interest on it, so the pirates have to keep working for the organised crime outfits. It's classic extortion, and it's the exact same way drug lords work in Columbia and Afghanistan.

The answer to the problem is the same as it is to drugs - legitimise it.

Instead of working for "Players", the people on the street should be hired by the Publishers, say EA, should offer to set up stores (they provide for free or very little money) and give the product at cost price or lower, that the "pirates" can sell to game buyers for low cost and small profit for both themselves and EA.

And this is indeed what some publishers are planning to do in Asian countries.

To me, stealing means that you no longer have something, because it was taken from you. But when it comes to piracy, the issue has always been about the possibility to make more money than it's already made. I define this as greed.

Personally, I think many games are overpriced, and that it would be quite fair and responsible for the industry to review what (and how) they sell, and to cut costs down. Furthermore, I think piracy helps distinguishing a good game from a bad one. Maybe if more good games would be released, piracy would become less of a problem, because even though the world is full of bad people, there would still be many willing to reward good work by buying a good game after having a great time with the pirated copy.

I think a large chunk of this overpriced $60 goes into marketing costs, and that marketing (hype) is too often untrue to their clients when presenting the offer. It would be great and easy to make tons of extra money by jailing the pirates and those who *steal* games, but it would be fair to make more money (maybe not as much) by developing better games and selling them at a fairer price. This would cut marketing costs down too (no more need of a big, costly hype), and build trust amongst clients.

Bottom line, I think this problem can be viewed from another angle: it's the industry that *steals* from clients through unfair hype and too big a prices, and by eliminating piracy they just want to *steal* more.

This was indeed a very good and fair article. Thank you!

I lived in Thailand for a year and a half recently and saw the same thing,same set up,
people simply can't afford the price tags put on games,so there is a thriving "black market" that is keeping thousands of people in jobs.
Although I was interested to also see that the legitimate games,from legitimate shops were ALSO half price in comparison to Ireland where I am from.

FunkyJ: What the article describes is legitimate business - retail outlets, just like we have here. They're taxed, etc just like the ones we have here (okay, this is probably a simplification, but bear with me). The only difference is the distribution channels through which the store owner receives their stock, and the physical form of the media which is sold to the end customer.

At some point further upstream in the process, the specific act of theft/copying occurs. But at the stall-in-the-mall level, it's exactly the same kind (and reputability) of business as your local Gamestop. To most people in these regions, it's not a criminal enterprise in any way; it's just how you buy games.

P.S.: Speaking of Gamestop and business practices, try to imagine the reaction you'd get if you went into the nearest store and tried telling the kids picking through the used-game bin that if they don't buy every game factory-new, with shrink-wrap and foil seal intact, at two or three or four times the price, they're stealing from the game companies. You'd probably get stares of blank incomprehension or angry arguments, and you might even get asked to leave by the guy at the counter.

This piece seems to be somewhat niave about the negative effects of piracy. The black market is mostly self governed, often through violence, exploitation and corruption. Yes, numerous people who live around the poverty line rely on it because they have little or no social welfare. However, the existence of this underground market means that we have forced and child labour working to sell pirated games and that is not acceptable.

Furthermore, a lot of the income in the black market goes into funding more organised crime; guns, drugs, people traffiking etc. Guns that end up on our own streets. Drugs that plague society and fund militia wars in South America. People trafficking that leads to forced prostitution and labour. Of course this is not always the case, I'm no expert on intercontinental organised crime but next time you want to buy a hard copy pirated game remember all the stuff that goes with the black market.

Of course the publishers are not helping anyone, including themselves. If the publishers were to offer lower region specific prices as suggested there would be a whole new wave of legitmate employment and income for the locals not to mention a whole new market and set of revenue for the publishers. I think copyright holders and authorities need to think about new ways to deal with piracy that can benefit all rather than punish the poor.

i've read the article and i thought it was great. the issue i don't think most westerners don't understand is that most companies and industries do adjust prices to fit other markets. it's nice they want to make the most from these markets but the reality of it is they will have to cut their prices if they want to compete.

if you asked those who live in Asia how much stuff like a coke or mcdonalds and such were, you'd find they are a lot cheaper then they are in the "western" world

I like how he equates piracy with survival. You don't need video games to survive. You can't eat a video game and a video game wont keep the rain off your head or feed your babies.

You steal because you are too cheap or lazy to accumulate the money needed. Period. End of story.

Wow, lively thread. That'll show me to log off and do work. ;)

Ryan, re comparing video games to drugs, the comparison I made was specifically to illustrate that the argument that because a market supports a series of livelihoods it is valid and positive (which is your overall thesis from the article, right? the thing that you'd like us to consider as the foundation for piracy having a positive impact on Asia?) doesn't by default validate that market force. There are many *differences* between the drug trade and piracy, obviously, but one thing they have in common that impacts the people making a living on them is that they are illegal, and that illegality represents a danger to them. For one thing, because it's illegal, if they're discovered they can have their livelihood ripped away at any given moment, so it is fundamentally unstable. And because they cannot turn to the law for recourse, they are subject to other illegal activity (violence, extortion, theft) as part of the black market. If we're going to look at piracy as a black market and argue in its favor on the basis of economic positive impact on the beneficiaries, we must also consider the humanitarian damage done to those same people through their participation in an illegal trade. When you jump outside the law, there are significant consequences.

Muzz, as mentioned, I can't speak for the development community, only from personal experience. My general anecdotal experience from developers is that they don't want to see a bunch of people rounded up and thrown in jail for piracy (most of them), but they are also worried whenever it impacts their games specifically. Sales made on individual units of games have a more dramatic impact on developers than sales of movies or music have on their artists, or at least that tends to be our perception. Most game studios operate much closer to the redline than music or movie production companies, so piracy has a more direct impact when the royalties mean more.

At the same time, my sense is also that game developers have a much more realistic view on piracy insfoar as not expecting that the piracy market significantly subtracts from the mainstream market. However, this balance can easily tip out of control -- when Playstation game piracy became mainstream, it definitely had a significant effect on sales, and I strongly suspect that the same is now occurring with DS games. Piracy as an overall issue seems to be re-emerging after a quiet period following the release of the current three major consoles, but any console that has a long enough lifespan is eventually going to produce a pirate community, and the larger that community grows, the easier it is to access, the more of a danger it becomes to the industry's financial function. Because we HAVE seen what it's done in Asia, letting it run wild seems like a greater danger -- though to be fair there are all kinds of market forces (RMT, item based economies, downloads) in Asia that don't have the same force in the west, which should also be considered. But the bottom line from that fear is that piracy absolutely has had a significant effect in shaping the entire landscape of game development in Asia, opening some doors and closing a lot of others.

But developers are people, and their perspectives on this are wide, from a flat "piracy is stealing" to "piracy should be combated using software methods" (see the Spyro article I linked) to "piracy is a market force that should be harnessed". And this doesn't necessarily mean that any one of us, myself included, knows what the heck they're talking about. ;) It's a complex issue. I think it's safe to say it's a concern to most developers, though, to varying degrees at any given time depending on the market.

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