Monday 3 June 2013

Piracy is going to destroy the video game industry...

Torrenting games is theft. Up to one fifth of games played in the US and Canada are pirated. And piracy is going to ruin the industry.... Or, well, yea, maybe that's all bogus.

Video gaming blogs have recently been abuzz with discussions about a paper given by Drachen, Bauer, and Veitch at the 15th International Academic MindTrek Conference in 2011 titled Distribution of Digital Games via BitTorrent. The paper presents the findings of a three month study of BitTorrent traffic, and concludes that the amount of digital piracy is potentially much lower than the estimates provided by the ESA and other sources. I’m not going to discuss the specifics of the paper (if you are interested, a full copy of the research paper can be found here), but it has got me thinking about the issue of piracy. The following are my musings...

(This should go without saying, but everything here is from my own point of view living in New Zealand. Piracy is different in different countries.  This is a westerners perspective).


Response from the blogging community

Something that I perhaps found a little surprising about the gaming communities reaction to the above research is the completely lackluster response. For starters it took the professional gaming blogs a full 2 years to realise that this research even existed. Then once the first blogger posted about it they all did. But the blogs have all said the same bland stuff - usually just outlining the research and, well, not a whole lot else. 

You would think that this sort of study would have stimulated a whole lot of discussion. I mean what we have here is the very first instance of actual scientific research into the rate of video game piracy, using an empirical data set acquired through an open and peer reviewable scientific method, and they fell on the side of gamers! What could these findings mean for arguments against intrusive DRM? The future of always online content? Are game prices too high? Can that be helped? What are the limitations of these sorts of studies? Why do people pirate games, and can we change it? Should we change it? There is plenty of opportunity here for the professional bloggers to use this research to really tease out the pros and cons of the piracy debate - really open up the heart of the issue for discussion.

What does this lack of interest say about the gaming community and our relationship with developers and publishers? Gamers, both general users and professional bloggers, erupted to  rumours that the Xbox One  might, might, not let you play pre-owned games with furious vigour. Something that Microsoft has said was blown out of proportion by said bloggers, and which retailers have also scrambled to debunk. But video game piracy, something that actually does do damage to the industry, and is a major concern right now, goes by with hardly a discussion to be had. Are we as a community actually that shallow? Are we actually more concerned with being able to lend games to friends than the potential for piracy to wipe out entire development houses?

But then what do you expect from Kotaku or IGN anyway?

The amount of games piracy actually occurring

If anything the Drachen et al. study has finally provided numbers for something that I feel is fairly obvious. If we take the affects of piracy as presented by the various copyright agencies at face value then it looks like the industry is right on the knife edge of collapse. ACTA, estimated piracy rates provided by the ESA and ELSPA, the PIPA and SOPA bills, and closer home the New Zealand Copyright (Infringing File Sharing) Amendment Act 2011 - where a politician compared internet piracy to Skynet. Seriously. (The list goes on). All these point to a doom and gloom future for the industry whereby internet pirates will destroy any chance of economic success.

But here's the thing, even without the numbers provided by Drachen et al. (and in my completely uninformed opinion) I think it's fairly safe to assert that video game piracy rates have been in steady decline since the 1980s, and piracy is currently the most controlled that it has even been. Yes, individual occurrences of piracy are much higher than they were in the 80s, but this is due to there being a much larger number of gamers. I'm sure that if piracy data had been collected since the 80s it would show that the overall percentage of gamers which engage in piracy has dropped significantly in recent years. It just doesn't make sense that this wouldn't be the case.

Let me explain.

Video game piracy in the 80s and early 90s, particularly on home computers, was massive. Back when games were distributed on tapes and floppy disks copying was as easy as directly cloning the parent media to a blank tape/disk. And this was done at an absolutely gigantic scale. You could buy bootleg games in stores, complete with self printed text labels. Games were copied between friends without restriction, initially through copying of tapes, but after the advent of affordable IBM compatible PCs games could be directly installed to as many computers as you liked without restriction. Around 1994 my parents bought me a bootleg copy of X-Wing from a guy who was openly selling them through a local news paper - complete with labels written in red felt tip pen.

But piracy was not simply limited to end users copying installation media - developers would commonly rip off games from other development studios and sell them in stores as their own. I'm not talking about copying in the sense of genre building (e.g. 'doom clones'), but actual unlicensed ports of successful games to other systems. These would receive minor modifications to the colour pallets and graphics, enough to make them compatible with the target systems for which they were going to be released, but would otherwise be direct copies of the parent games including the artistic direction, level design, and gameplay mechanics. After a quickie name change these games would then be packaged and sold in stores as an original work. This was happening all the time to almost every successful title.

As an example - Scramble was released by Konami in 1981 to arcades, Vic-20, C64, Tomy Tutor, and Vectrex. Scramble "inspired" Penetrator, released 1982 by Melbourne House to ZX Spectrum, C64, and TRS-80. Penetrator itself "inspired" Defence Penetrator, released in 1982 by Cosmic Software for TRS-80, Sega sc3000, and Dick SmithVZ200. Compare Pac-man (Namco, 1980) to Ghost Hunter on the VZ200 (c.1982). 

Left: Scramble (arcade). Centre: Penetrator (ZX Spectrum). Right: Defence Penetrator (VZ200).
Left: Pac-man (arcade). Right: Ghost Hunter (VZ200).

This simply wouldn't happen today. Imagine if a developer made an unlicensed port of Halo for the PS3, made some minor changes, then released it in stores as their own game. It would be law suits for years.

Kingsway Video Computer Console, New Zealand 1985
Consoles were not immune to piracy in the 80s. Unlicensed dummy carts containing dozens of pirated games were cheap and easily available. Even entire systems were commonly pirated. I have in my collection a Kingsway Video Computer Console. This is an unlicensed Atari 2600 clone. The chassis looks almost exactly like a 2600 jr, has 64 games built in - almost all unlicensed ports - as well as the ability to play original 2600 carts.

This level of piracy simply doesn't exist today, mostly because existing technology and legislation have been so effective against it. In the 80s and 90s copying games was easy, accessible, and everyone could do it. Now the barrier to entry automatically restricts the number of pirates in the community. Even your granddad knows how to dub cassette tapes or clone a floppy disk. But modding a console, downloading ISOs, patching PC games to run without Steam, flashing a PSP with a custom ROM, et cetera, require at least a basic to moderate technical knowledge of what you are doing, and knowledge of how to obtain necessary specialist equipment - flash carts, mod chips, etc. So while your computer illiterate mum could install a pirated copy of X-Wing back in 1994, now piracy is limited to a far more restricted portion of the gaming community. 

Unlicensed ports of games, and games which were "inspired" by popular titles, were essentially killed by Nintendo in the late 80s through effective use of existing copyright laws - for example The Great Giana Sisters. You simply don't see unlicensed ports of AAA titles today. Even games which borrow art assets from other franchises are quickly shut down. Try releasing a game featuring space ships ‘inspired’ by Star Trek without Paramount's involvement.

Left: Super Mario Brothers (NES). Right: The Great Giana Sisters (C64).
Recognise the star ship? (Star Blaster on VZ200).

Yes, piracy still exists in a big way. While the overall percentage of gamers who engage in piracy may be much lower, being limited to a relatively niche group, that group is still large in its own right because gaming itself is the most popular it's ever been. 

But in no way is piracy the worst it could be, or even the worst that it has been. People are far more aware of what piracy is, and how copyright law works. Everyday Joe Blogs is far less likely to buy a bootleg copy of a game off the street, and dev teams are far less likely to release unlicensed ports. Again: Existing copyright laws and technologies have already been extremely effective at reducing video game piracy.

Piracy is still a big problem. And in no way should we as a community be condoning it. But the industry appears more far interested in making excuses for declining sales and winning political arguments than actually identifying why people pirate games in the first place and moving towards viable solutions. Over inflating the numbers and exaggerating the impact of piracy muddies up the discussion. Everyone loses; gamers feel unfairly targeted, legitimate gamers have to put up with increasingly intrusive DRM systems, legislators and governments get bogged down in debating laws which may not actually be necessary, and open conversation about the issue is made difficult - reducing the chances that actual solutions can be identified.

But moving on...

The Role of the Games Industry in Piracy

Although piracy is not something that we as a community should be endorsing, the video game industry has not done much to help the situation. If the games industry wants to further combat video game piracy perhaps the best thing developers and publishers can do is increase people’s perception of the value of games.

Typically games release with two values. The first is the retail price – how much the publisher wants to the sell the game for. At the time of writing this is usually set at $100 - $120 for new titles in New Zealand (about $80 - $95 US). The other price is a conceptual value – how much people feel that the product is worth. This is a subconscious recognition of value.

The conceptual price often takes priority over the retail price subconsciously in people's minds. A game may be priced at $100 retail, but people may feel that it is only worth $80, or $60 – and won’t buy the game until it goes on sale for that price. Likewise it is also possible for a game of limited retail value to have very high conceptual value – take a look at the prices for Earthbound carts on eBay. 

As a titles conceptual value decreases it becomes easier for people to pirate that title without breaking their usual moral compass towards piracy and theft. If subconsciously you view a particular game as having very little value then it is easy to convince yourself into thinking that you are doing no harm by taking it – ‘that games sucks anyway, what harm can I be doing by taking it?’.

But going further – it is possible to devalue the conceptual worth of a title to the point that it is considered essentially worthless. In this situation the publisher starts being viewed as money hungry and the enemy. People still want the gaming experience, but feel that the publisher is purposefully ripping them off with the asking price. In this situation not only it's it very easy for people to justify pirating the game, but in many cases they view themselves as doing a service to the community - sticking it to the man.

Unfortunately developers and publishers have been hugely effective in damaging the conceptual value of games. Intrusive DRM, games that cost full price but take only 6 hours to finish, increasing prices, sloppy production values on some titles, lack of demo's, sloppy PC ports, on disk DLC, micro transactions above the normal retail price, removal of modding tools, continuous sequels and HD remakes rather than new ideas, shipping broken games which require major patching to fix, the 'main streaming' of long running franchises and removing of fan favourite gameplay mechanics, region locking and staggered global release dates, and limited activations. 

All these things take away from the overall conceptual value of the product. How much are you willing to pay for a game that installs a root kit on your machine, potentially exposing you to viruses or collects personal information and send it to a stranger? 

A case study in how to promote game piracy.
(Aliens: Colonial Marines cover art).
Or consider Aliens: Colonial Marines. How much is a game worth that takes a popular movie franchise, is given the privilege of becoming part of the recognised canon of the films, but instead presents a buggy mess of a title with poor pacing, poor AI, poor gameplay, poor story, and shits all over established series canon. Is that game worth the full $100 retail price? Is it worth anything? Does it actually do a disservice to the franchise by reducing the conceptual value of the source material? And having paid full price for this title only to be presented with this mess, would you be likely to pay full price again for a similar title from the developer? As an Aliens fan would you feel that the developer actually owes you something as recompense? Would you start to view piracy as a better alternative – with none of the DRM headaches, and a price point more similar to what you think the title should be worth? Would you want to do financial damage to Gearbox Studios for ripping you off with this particular title?

In this environment who can blame the pirates?

Another example: I bought Grand Theft Auto IV when it came out for PC back in December 2008. The DRM on this title was insane; 

  - The disk had to be in the machine to play the game.
  - The installation required a CD key.
  - I had to allow the game to install Securom to my system. 

  - I had to create and be signed in to a Games for Windows Live account to play.
  - I also had to create and be signed into a Rockstar Social Club account to play. 

To top it off I couldn’t play the game straight away because the Rockstar Social Club was down and I couldn’t sign in.
Another case study in how to promote game piracy.
(GTA IV cover art).

And after all that DRM it turned out that GTA IV was a buggy mess of a console port which barely ran on my system – regardless of the fact that my system met the minimum requirements. I played the game for about two hours, and have not picked it up again.

GTA IV was in no way worth the $100 that I paid for it. To be honest I regret buying it. I’m a collector. I like the own physical copies of my games. I like to have a bookshelf to show off my collection. And I very seldomly pirate games. But with GTA IV I looked at the pirates with envious eyes. These guys play titles such as GTA without all the DRM bullshit. And they got to find out that the game was a buggy unplayable mess while keeping their overall costs minimal. Unlike myself, who paid full retail price to obtain a legal copy, only to get shafted.

Most people, even pirates, are happy to pay for games if they consider that what they are getting is good value for money. In fact many pirates actually pay for the tools to illegally download titles; increased broadband data caps, access to data lockers such as rapidshare, and networks such as Usenet. Even the time needed to find the games, download them, and crack them rather than just quickly buying them through legal channels has some value. To the pirates the games may not be worth the $100 - $120 that new titles release at in New Zealand ($80 - $95 US dollars at the time of publishing). But they are still worth something.

Sites like have been successful because they offer titles free from the usual headaches and at a competitive price. Steam has been successful for the same reason; offering games for very good prices with (mostly) hassle free DRM.

Perhaps the best way the industry can continue to combat piracy is by increasing the conceptual value of the product.. This doesn't necessarily mean reducing the price of games. But instead cutting the crap, and identifying what it is that makes people enjoy gaming and making a product that exemplifies those aspects. At the very least this means dropping back on DRM, and spending more development time focusing on story and gameplay. People have to want to pay for the product.

In any case the industry needs to reflect on itself and how it interacts with gamers, rather than publishing inflated piracy estimates and calling for draconian law reforms.

The Concept of Digital Value

While the above discussion tries to paint piracy as at least partially the fault of developers and publishers, the problem goes far deeper than that. Often people illegally downloading games are unaware that they are breaking the law, or don’t see their actions as having any negative consequences. This is something that the industry is going to need to address moving forward.

In general the public tends to apply copyright to items of physical value, things that you can touch, while non tangible items are given very little value and are seen as freely copyable. Your dad may see copying a physical DVD as totally illegal, but sees no problem with his decades old VHS collection of Dr. Who episodes that he recorded from TV in the 80s. Bloggers will casually copy photographs from the internet to illustrate their own work with someone else's photographs, even going as far as to remove watermarks, and then be surprised when a DMCA take down request is filed by the owner of those pictures, and a lawsuit follows.

This also extends into the gaming culture. Any gaming blog discussing piracy will usually have the same arguments in the comments section (see here for example) - 'it's not theft because nothing is actually taken', or 'to steal someone has to actually lose something, digital downloads don't take the physical disk and therefore no one has actually lost anything'. Copyright law is fairly explicit on the matter - but many gamers simply view digital downloads as having little, if any, conceptual value. Something that can be freely taken without any negative consequence to the developer or publisher.

Although concerned with the illegal file sharing of music, the case of the first person charged under the recent New Zealand Copyright (Infringing File Sharing) Amendment Act 2011, RAINZ v Telecom 2013, highlights this issue to a certain extent. In this case a female internet user was caught downloading two music tracks and subsequently uploading one of the tracks she downloaded. In the statement provided by the defendant she states;

The first song I downloaded was a song called man down by rihanna [sic]. I accept repsoncibility for this. I downloaded this song unaware that in doing so from this site was illegal. When this song was downloaded to my computer, a whole utorrent program downloaded onto my computer … [W]hen I turned my computer on it said that the song was still downloading and maybe that caused the song to register twice as it being downloaded? I’m unsure if this is possible of not but I don’t know why it shows that I would try to download the same song twice.

She goes on to state;

I would never intentionally do anything illegal and you can see this from my criminal record as it is clean. I didn’t realise that it was illegal and I apologise sincerely for this mistake and have removed it from my computer.

A partial transcript of the defendant’s statement is available in the court documents concerning the case here.

In this case the person doing the downloading was completely unaware that her actions would be breaking the law. She simply didn’t see an online file as being something with value. Something that could be stolen. But furthermore, she did not even understand the process by which she was downloading and transmitting the file. She wasn’t even aware of what utorrent is or how it works. Clearly this theft wasn’t the work of a master criminal, or even a dedicated pirate. 

And this is a fundamental problem for publishers wanting to further combat piracy.

The thing is, while the human brain is incredibly powerful, it is also very object orientated. The brain works very well with physical objects, it understands physical objects. But people have difficulty applying value to intangible items which don't physically exist. It's the same reason why credit card debt it's so easy to get into - if you don't see the physical money changing hands it's difficult for your brain to conceptualize that you spent anything. This is simply millennia of evolution at work. The brain is wired to quickly identify the physical characteristics of objects. Is it edible? Is it a threat? Is it hot? Is it valuable? How can I use it? What does it mean? The idea of items that don't actually exist is something new that our primate brains aren't fully equipped to understand.

The people illegally downloading games aren't necessary doing so with malice. In many cases items which are available online are subconsciously interpreted by the brain to be without value, or are not immediately identified as being 'owned' or ‘ownable’ People simply do not acknowledge that downloading files available online may illegal, or that their actions may negatively impact someone else. It's part of the human condition.

When combined with the factors that currently limited the conceptual value of game discussed above (DRM, poor gameplay, etc...) you get a very compelling reasoning for why games are pirated.

Do these observations excuse people from piracy? No, not at all. Ultimately people need to become informed users, and ignorance of the law is not an excuse. But to an extent these things are part of being human, and no amount of legislation or lawsuits is going to change that. 

If the industry wants to further reduce piracy the best thing it can do is recognise these issues, and move to find ways to mitigate them. This should include education. People need to be made aware of what online piracy is, that it is illegal, and how it hurts developers. But at the same time developers and publishers need to bring up the conceptual value of games so that people want to buy the titles.

Anywho, there is far more that I could say on piracy, but this post is getting massive. I encourage anyone who is interested to take a look at the Drachen et al. paper. And feel free to drop a comment down below! 

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