Games these days are expensive. Most console games start with a retail price of $60 and PC games at $50, and that isn't counting all the costs of add-ons and DLC.
With the barrage of games released every year, and the uncertainty as to whether gamers will actually enjoy a game enough to pay retail price, it is no wonder that people have resorted to pirating games.
I won't take the time to get into a huge debate about the legitimacy of piracy or whether piracy can be justified. Instead, I just want to make one basic point.
Within any industry, there needs to be revenue from which funds can be diverted to development. And game development is definitely not cheap.
I also won't take the time to go through all the costs of development, but let me assure you that it is a lot. From my experience working for a video game developer, I have come to understand that there are a lot of costs that people don't usually take into account - licensing music rights and rights to use other people's software, for example, are quite expensive. Game companies also usually hire outside studios to do testing or to host their online services. This is in addition to all the expenses necessary to actually develop and market the game.
How do companies afford all this? How are they able to make this amount of money? By selling their game and using the revenues from those games.
The developer does not get to retain all the revenue. The distributors of the games (i.e. GameStop, Target, etc.) get to keep a portion of the revenue. Then the publisher (i.e. Activision, MTV Networks, EA, etc.) also gets a portion. Licensing and various fees are subtracted. There are also overhead fixed costs, such as paying rent and utilities for the building. I'm sure there are other things that I forgot to mention, like marketing costs, but you get the point.
Only once all the fees and costs are paid off does the development company get whatever is left of the sales - in other words, the profit. Keep in mind that the longer the game is in the market, the more the retail price falls but the costs to make the game stay the same.
Whatever the development company gets is what the development company can use to fund the development of another game.
So where does piracy come into play? Well, every pirated game means a loss in sales, which means a loss in revenue which the game development company can pump back into the development of new games. Sure, one can argue that the pirating of a few games will not impact sales. But there are never only a few games that are pirated. We continually hear about the decline of the gaming industry because of the number of pirated games. Sure, there is a correlation, and while correlation does not equal causation (as I've adamantly stated before), I do think that piracy has played a large role.
Yes, I know that the economy has been doing poorly and there is less money to go around. But don't take it out on the developers - they are the ones who work long and laborious hours to make sure their games are shipped on time, bug-free and of excellent quality. Without the funds necessary to make good games, good games will not be made. And yes, I know it's their job to make games. But again, without the necessary funds, a lot of people wouldn't be able to keep their jobs and make these games.
I often hear the complaint that legitimate games have too many security precautions, while pirated games do not. We all heard about Ubisoft's Assassin's Creed DRM-fiasco, where gamers erupted in anger and bashed Ubisoft. But the whole reason Ubisoft had to implement DRM in the first place is because of piracy!
So people pirate games... then complain when companies take countermeasures?
By all means, keep on pirating games. But in the end, it will only hurt the gaming community. Developers will have less revenue to put into development, which could result in fewer titles that are of lower-quality. Companies have already started moving from the PC to consoles because of piracy, and more and more games are going to come with DRM-like protections, which doesn't bother those who pirate but definitely hurts legitimate customers.
If you're still interested, check out this well-written article about piracy and its implications.
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Well, every pirated game means a loss in sales, which means a loss in revenue which the game development company can pump back into the development of new games.
ReplyDeleteThis is a logical fallacy. Economically speaking, this isn't true. Realistically speaking, this /might/ be true.
Console gaming isn't much better for development studios, by the way. The used game market at Gamestop and other places, much like the used book market, considerably cuts into the profits of developers and publishers alike. Every used-game sale is actually taking away a new-game sale, as opposed to the hypothetical pirate taking away a new-game sale.
Only the retail outlets and/or used-game market gets profit from this secondary market, depriving publishers and developers of sales.
Not everyone who downloads a copy of a game is someone who would have bought it, had the copy not been available.
I agree with you that development studios are starving for cash, which is why only the major studios (BioWare, Blizzard, Valve, etc.) can afford to take initiative to create "new" games, like DA:O, Mass Effect, and Left 4 Dead. Most other studios are stuck making "safe" games, like the Madden franchise, or remakes of old classics. There isn't as much innovation coming out in terms of "new" worlds and new mythos. In today's gaming world, a game like Myst might never had existed, because very few places can afford to risk that much money on a game that /may/ be worthwhile.
So, nonetheless, I don't think DRMs are the answer. I don't particularly agree with DLCs either (mainly because I don't like the idea of paying for a game piecemeal), but at least that's optional (although it certainly feels required at times).
Another fallacy, I think, in your argument is your cost equation. Cost for older games goes down, sure, but it is a fixed cost to produce games and the marginal cost to produce another copy is negligible. With the advent of digital downloads, one would argue that the marginal cost of producing another copy is effectively zero. (Obviously, not zero because you have to pay for bandwidth, but still.)
There's a huge upfront cost, and a small continuing cost (in terms of patches and such), but I don't think this "Keep in mind that the longer the game is in the market, the more the retail price falls but the costs to make the game stay the same." is an accurate statement.