On a more positive note, blatant piracy has made gaming much more prevalent in Brazil than it would be otherwise, simply because of cheaper prices. In 2006, around 24 percent of lower middle-class households - families with a combined income of around R$24,000 (or $12,000) a year - had a videogame console. And although piracy for society as a whole is obviously bad, individual consumers who opt to purchase pirated goods largely benefit in the short term.
But the negative consequences of piracy are tremendous. Pirate products are often smuggled and sold by what can only be called organized criminal gangs, with obvious implications. Equally obvious is that government loses out on a potential revenue source, as do legitimate retailers, importers, manufacturers and, of course, the game developers themselves.
Less obvious is the wasted potential a market such as Brazil has. Mexico, a country very similar to Brazil in this aspect, is now the fifth most important Xbox 360 market in the world. Likewise, the game development scene in Brazil is equally stunted; only in 2008 did a big name developer (Ubisoft) establish a development studio in São Paulo. So far, they're the only one.
Another, more subtle consequence lies in the Brazilian public's perception of games. There is a taint of illegality to gamer culture that is hard to dispel when so few gamers buy legal games. And, excepting the aforementioned Winning Eleven series, translations into Portuguese are incredibly rare, and buying merchandise without official support means that if your Xbox 360 goes into "red ring of death" mode, you're on your own.
Pirates in the making
What can we say will happen in other countries where piracy is becoming more prevalent? If big markets, such as the U.S. and Japan, become more afflicted by piracy, you can reasonably expect the industry will shrink and that hardcore gamers will probably be the most affected. After all, the people who are more inclined to pirate games are younger, more tech oriented and, above all, spend more of their time and income on games. Losing these players wouldn't be a death blow to the industry, but you could expect publishers and developers to compensate by trending toward casual games and MMOGs (one of the few types of PC games that is still hard to pirate).
If Brazil's example teaches us anything, it's that the games industry is more vulnerable to piracy than it may be willing to admit. After all, games in Brazil went from a legitimate marketplace to an underground economy in less than half a decade. It demonstrates that if the conditions are just right, it's not all that hard for piracy to become the norm.
Is this the inevitable future? I hope not. But the current economic crisis will make the lure of piracy stronger than ever. You can be certain that both gamers and the unscrupulous will act upon this temptation, creating a more extensive pirate infrastructure in the process and laying the seeds for a difficult future for the games industry.
Pedro Franco is finishing his master's thesis in economics and has played videogames since the age of 6. He hopes that Shogo: Mobile Armor Division will one day get a sequel.