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Game Piracy Results in Lower Prices?
meejahor writes "The BBC reports that Sony will soon launch the PlayStation 2 in China, following Nintendo's lead with the GameCube. Most interesting about the story is the news that, because of widespread piracy in China, PS2 games 'will cost far less than they do in the US or the UK, but still be slightly more than pirated discs.' We've always been told that pirate games push prices up, but doesn't this news suggest that piracy in China has in fact pushed prices down? The story also notes that 'only two or three games will be available at launch' which seems crazy considering the likelihood that people will pirate imported games instead of waiting for them to be released officially." While the Chinese launch of PS2 has been known for a while, the pricing of Chinese games is pretty interesting, given their long history of piracy. I imagine this sort of thing would be considered in the U.S. and other countries were pirated games as widespread as they are in China.
come from competition, not piracy.
When anger rises, think of the consequences.
Confucius (551 BC - 479 BC)
They are pusing down the price to combat the pirated games that's available cheaply, thus puttinng on the cost elsewhere ie. the western world, buy yourself some clue
and only capitalism details that IP and copyright are capital goods. Sure, they might make some concessions to attract investment but ultimately if it suits China they'll tear up any agreement to recognise Western-derived copyright. This is how it's always been.
Piracy effectively becomes "exercise of the People's right to pool and share resources".
"It's not your information. It's information about you" - John Ford, Vice President, Equifax
The publishers make good money if the game sells appropriately .. the content creators, true to western economy form, get fleeced.
.. thats right .. Copyright law! (Probably the best way to prove that copyright law has long stopped serving the people it was meant to benifit - the content authors.)
AS usual, control over the distribution channels is where the money's at. It's the 1600's in England all over again. Guess what law they created to break the monopoly that the distributors had over the profits from publishing
"Old man yells at systemd"
Shortly after capitalism was introduced in Poland, many software companies emerged, producing games for most common computers - primarily 8-bit Atari. I was a lucky owner of one at that time, and I recall that times with some nostalgy.
Multitude of games was written. Some of them really exceptional. Spy Master, platform game with built-in 'DOS' in which you could launch mini-games from floppies you found thorough the game. Viki, a game with over 1000 rooms (on 64K RAM!), Barahir, really exceptional graphics, 'Dwie Wieze', gfx imported from Amiga, many, many more.
And the companies were pretty successful, despite the fact piracy was widespread and legal. How?
The games always did have some copy-protection scheme, but not uncrackable one. More skilled pirates did circumvent it. BUT the games were released at prices very comparable to the pirates. Usually one game costed the same as one disk (with 5 or so games) from a pirate. And people were buying them, because they were very available at affordable prices, and every Atari user held it as a point of honour to support the authors... Well, with exception: games that sucked
Time passed, Atari died and even best Atari games couldn't compete with Amigas and PCs. No local 'scene' for games for such appeared - all was either import or pirates.
Once originals prices suddenly rose from like, 3 zl (our prices) to 100 zl (western prices), sales suddenly died. Despite introduced anti-piracy law, piracy was more widespread than ever before. It just wasn't legal, small firms that made profit on it, just mafia sindicates. Hardly anybody buys originals nowadays. "We suffer from low sales because of piracy" claim the releasers and increase the prices more to increase profit from the few games they sell even more. And users, just pissed off, "How DARE they to demand such money for that", just buy pirated games instead.
And almost nobody remembers that selling and buying original games in Poland at one time was not only very comon, but quite profitable - and the key was LOW PRICES.
45 5F E1 04 22 CA 29 C4 93 3F 95 05 2B 79 2A B2
High prices creat piracy. It can be plotted on a cartesian coord plane. The price on the y axis, and the number of people buying on the x axis. As the price goes down, more people will be able to afford and therefore, buy stuff. This is what the idea of a sale is; you normally sell your pants at $100, if you sell them for $90 demand will increase and if it's during a busy season, you'll move more merchandise and therefore, creat a higher profit than you could before.
When prices are high, piracy/theft/ect are going to be high aswell. When prices are low, the same things are going to be low. Why do you think the p2p networks are so huge? Because people's opinions differ from buisnesses and the goverments , just about every one of them infact.
The really sad part about this is that if the trend continues with people thinking that piracy is ok, xyz gaming corp will creat an awesome game and nobody will buy it, and they'll go out of buisness instead of making new games. After the RIAA and MPAA are deceased, cd's are cheaply baught at $2 and $3 a cd with extra's and a movie is around $5 opening night. Will piracy decrease or will it continue to rise?
As for software, I'll agree as much with the next guy that when I go into a store and buy a software package and it sucks, I'm pissed and can't return it. As for games, there's a lot of cookie-cutting going on as there always has been in the computer industry. Doom came out, and then you got blake stone, duke nukem, etc. BF1942 came out, and now we've got mohaa and it's expansions, ET, call of duty. All of them are based off of the same engine (afaik) and all of them have similar gameplay.
My worries aren't the monumental failures when corperations spend millions building a cookie cutter game and loose millions. My worries are when xyz corp creats the super ultra neato game and puts it out and the overall reputation and respect for gaming softare is so low that nobody will buy it for fear that, even though there's hype in the magazines, hype in the stores, hype in the forums and hype in the news and even a good playable demo (which everyone knows is bribed because they'v been burned before) will xyz corp be able to make any money for making a truely excellent game? Will xyz corp go out of buisness?
Cartels like the riaa make a bad name for companies like xyz corp. The major reason people go out and buy anything is because they think it is good, well, if they're a thinking consumer.
Candy-Coated Knowledge
The game Sony is probably releasing over there are really old games. Games where the developer has already made back their development costs and profited. Games where the publisher has already made back their marketing cost and profited. The only costs of selling these old hits will be manufacturing and distribution. All revenue greater than that cost will be pure profit because the US, Japan and Europe have already paid for all of those other 1 time costs. Because of this they can afford to drop the prices like a rock.
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Game Manufacturers don't seem to be following a business model for Mass Marketing... They seem to prefer to use a model where they are priced as high as possible to maximize profit per copy rather than a model where profit comes from mass copies.
Its this business model that fuels the majority of piracy in North America.. If a game were 25$ and I could walk and pick it up in 15 mins at the game store near by.. Or spend 1-2 days downloading it... I would rather pay the 25$ if the company/game had a good rep for playability.
Its hard to shell out 40-80$ for a game that may only have 2-3 days of playibility to it. That also fuels piracy... So they have a few obstices to overcome in that reguard.
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So Sony is raising the price of PlayStation 2 in China and lowering the price of the games.
I'll restate this for the reasoning impaired: They're taking their money upfront on the console, rather than later on the games.
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Okay, doesn't look like this is being applied to the right entertainment market. I don't have a problem with game prices at all. There is generally a lot of creativity and work that goes into them, and the prices do fall after the item has been on the market for a while, even if it's still popular. That doesn't seem to happen with music or movies (or Microsoft software).
Still, it's backwards. High prices encourage "piracy". And lowering the prices enough will make casual users of illegally copied material say, "hey, it's more convenient to just buy it." Of course, there still has to be some enforcement of copyright for this to work. I see hints of this happening in the music biz, but I've yet to see real price competition between labels. Thank heavens we are seeing a real-world example of this, and hopefully it will give the anti-entertainment-cartel crowd some ammunition.
Fred
"A fool and his freedom are soon parted"
-RMS
This would make sense if China were poor, but it's not. It's poorer than Japan, the US, or Western Europe, but it's not a particularly poor country. There is an enormous middle class with as much disposible income as your average middle-class American (as measured by the exchange rate, not compared to the cost of living). The absolute salary of a middle-class wage earner in China is lower, but the cost of living is incredibly low, so there's a lot left over. China is the second largest economy in the world, with a GDP of $5.7 trillion. A lot of that is due to the enormous population, true, but compare with India, which has nearly as many people, but a GDP of only $2.66 trillion. Africa and China are not even remotely comparable. You are correct that a US-like price will lead to few sales, but incorrect about the cause. It's not because nobody can afford it, plenty of Chinese people can. But buying a shiny round piece of plastic for $50 is looked on as total insanity. You can buy a nice DVD for $1 on the street, and games are priced similarly. Nobody will buy real games with pirated versions available at those prices, no matter how rich they are.
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You can divide the costs of a game into two pieces; one-time costs and per-unit costs. One-time costs include things like paying your programmers to code, electricity for the building they work in, marketing, etc. Per-unit costs are things like printing the manuals/booklets, making the cases, stamping the CDs. A pirate doesn't really have any one-time costs, he only has to pay per-unit costs.
The problem comes in when you see how the costs are divided. A modern game will cost millions of dollars in one-time costs, but it costs maybe fifty cents per unit to actually duplicate the disc and produce the packaging. This means that, unless the game is popular beyond all belief, the one-time costs dominate, and so the game's price has to be set much higher than the per-unit cost in order to make money overall.
The thing is, once your one-time costs are paid for, they're done. No more worries. Introducing games into, say, China, comes with nearly no one-time costs. They have a bit of marketing to do, and they'll probably want to do a translation, but these are very cheap compared to the original production costs of the game. Since those have already been paid for by customers in Japan, the US, and Europe, you can sell the game at a much lower price, the per-unit cost plus a markup.
Pricing is a fundamental difficulty in industries like this, including software, music, film, and drugs, because in all of these industries the one-time costs are way higher than the per-unit costs. But the market doesn't like paying a large markup. People know that the $12 CD they just bought only cost 25 cents to make, and they don't like that.
All of these industries see pricing structures like this. You spend a lot of money to create a product, then sell it at a very large markup in your primary market, which consists of people used to paying higher prices. Once your one-time costs are paid off, you can sell the same product for a much lower price in your secondary markets, and continue to make a profit. This happens with software, drugs, and media.
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The best way to make money has always been to make a whole lot of something. The somethings get cheaper over time, if for no reasons other than that technology marches along, and that the research costs will eventually taper off to virtual nothingness alongside the cost (and benefit) of production. Only a few people will save up their pennies and buy one thing that will last them a long time. They're distracted by loud noises and flashing lights, and they'll buy the cheap crap. Besides, if you're poor you probably live somewhere where nice shit is in serious danger of being jacked when you're gone for the weekend. I don't even have anything particularly nice (Just a bunch of medium-nice things) and a whole bunch of not worth stealing items that a junkie would probably run off with anyway, and I'm concerned about my belongings. Don't give me that look when I say Junkie, this is a town that both makes and takes an awful lot of speed.
Oh and stop bringing up Hitler. No one's getting out the Zyklon B. Commercial copyright violation surely deprives people of money and devalues their product, but the only reason they're upset about the latter is that it typically has little intrinsic value to begin with. They simply hype it up until it has spin value. Then they spin up the next thing and send it our way. They're treating us like pigs out for slop, and that's what we get, because we'll eat it... certainly this relationship works both ways.
There are basically two ways you can go to fight them. You can go both ways at once, too. One way is to produce or promote (either with effort or money) independent media. You can buy shareware games, you can buy indie CDs, etc etc. And you can be a "pirate". One way is legal, one way isn't. One way is clearly moral, one way is murkier, but there's really no proof that anyone's getting hurt. It seems to usually be a good thing for artists; there are exceptions I'm sure but they seem to be in the minority.
I think we can all agree that the saying about how people wouldn't buy the software anyway is about fifty percent bullshit. It's just easier to download music and not pay for it than it is to go to the store and find out your chosen music is out of fashion this week and they'd have to order it for you. The music industry has been promising us custom CDs for ages but they never have been able to agree on how to cooperate. Piracy has simply forced them to start selling music online, or be left behind. In this case it has driven progress; the technology has been there for some time, in fact it's a cheaper way to distribute music than making CDs in some central location and shipping them.
Assorted businesses are now having to come up with new things to charge for, new items to market. Technology does that. People want information to be free, and conciously or subconsciously, they work toward that end. There are notable exceptions who have discovered ways to make money off making it not free.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
games are not a monopoly product. for a product to be a monopoly there must be 1 dominant software producer ie microsft which creates all games. This is not the case. there are westwood, blizzard, microsoft etc.......