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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)
i think that piracy will actually help to sell more. i prefer to have a original boxed game with manuals and stuff than a pirated cd... only if the price is too high.. i'll get the pirated version.
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
If the Chinese market makes enough money for selling there to be profitable, then you can be sure that the overall margins are being propped up by extremely high margin sales in richer countries.
Isn't this also the same rationale used for region coding with DVDs? They're sold in high piracy markets for much lower prices, which are still profitable for their makers, and the region coding protects their high margin markets from imports.
And the same is true for drugs and a host of other things sold overseas. Have the US/Japan/Europe make the real profit and subsidize low-margin (but not unprofitable) Third World markets. Use legislation to enforce this model. Profit!!
>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?
Ever hear of profiteering? It's easy to compete with pirates if your prices are bloated to begin with. In the bygone era, profiteering was a dirty, ugly word. Today it is heralded because it makes shareholders happy.
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
A pirate has come to mean something too cuddly and innocuous. In fact, the loose use of the term to describe otherwise ordinary people engaging in distribution of material copyrighted by others has done much to diminish the proud tradition of "pirate".
From now on, all official BSA pronouncements will obide by a new naming scheme. Opponents of BSA will be referred to as "digital terrorists", "hackers", and "pedophiles", preferably in the same sentence
It's only for products that are correctly priced that prices will rise, because costs will rise enough that the company can't afford not to raise prices. For products which have previously held monopoly-like protection, piracy essentially serves as market competition. I'd tend to think that video games are a competitive enough market that this doesn't apply here -- chances are it's just going to raise the price of games in Western markets, and the revenue from China will just be treated as found money -- but there certainly are cases where we've seen piracy lower prices.
This shows that they CAN afford to make game prices cheaper. I was led to believe that almost every last penny is going into developing and distributing the product where there is very little profit. This shows that they actually have the power to make games cheaper. So the question now is, 'Why don't they?'
And the most obvious answer is they're money grubbing bastards, which is why I'm happily pirating games. Prove me wrong and maybe I'll stop.
DUH!
What next, Sony reduces the price of PS2 games in Africa by a factor of 100 compared with US! If a the average household income of a country in Africa and China is say $1000. How the heck do you think they are going to buy a $50 game? Be realistic. People pay rent in those countries for say $10-$15 a month. What in the world will justify them to pay $40-$50 for a game? It is not fair to charge them $50 and deprive them, at the same time, yall will feel it is not fair to charge you $50 and charge them $5.
This is all about what the market can afford. Even if there was no piracy, the prices will be far more cheaper, else they will only be selling 100 games a month. China has population, imagine if they can get to sell to 250,000,000 people at only $2. That's some major money right there!
------ Curiosity killed the cat. {satisfaction brought it back | it didn't die ignorant | lack of it is killing mankind
pirated games (and other software) are widely spread here. even with punishments from fines to 5years of jail, pirates continue to support us in cheap copies. typical prices in poland:
:). dont judge people who live in much poorer parts of the world, ok? maybe at the end of century China will be richest part of the world, and we'll be pirating from them :).
1 cd (game, productivity, OS - no difference): 2-3 euro.
1 cd (movies, mp3) - 1 euro.
licensed copy of windows XP - 100 euro.
licensed, localised, new PC game from upper shelf - 30 euro.
licensed game from bottom shelf - 12-15 euro.
ticket to the new hollywood movie - 3 euro.
new SF book - 8 euro
cost of hiring a room for student - 60 euro.
most people earn here about 250 euro monthly. (like math teacher, policemen, nurse...); best untergraduates can get 80-100 euro.
I suppose reality in China is much closer to ours, than yours
[sorry for my bad english]
As for whether publishers and distributers take a bigger cut in the gaming business than the movie business, that's a toughie - I don't know enough to say for sure. But a successful movie might take in 50-100 million dollars so there is more to go around. However, retail chains get much more favorable terms for PC games than for DVD movies, simply because return rates and compatibility issues are massive. Publishers have to deal with support issues, which are also massive.
Try writing a 3D game, which has to run on EVERYBODY'S PC and compare to doing some animations in Maya, which just have to look good from one angle and get rendered once. Not dissing on the Matrix or other heavy-FX movies, but it's really a hell of a lot of work to support and distribute a modern 3D PC game.
This, of course, is why nobody really wants to develop for the flooded PC market and why the console market exists, if you are well capitalized and can afford to hire the right people, get all the SDKs and negotiate good terms.
Ever since growing up in the 1980s I have heard the game producers (then for the Amiga) claim that with less piracy they would sell more games and thus be able to sell them at a lower price.
For me this has always been a flawed argument. It is economical theory: If somebody sells more of a product they will just reap the profits, not lower the prices to fix their profits at a certain (low) point. It is not like a company will go: "Damm, we are really selling a lot, lets lower to price so we don't earn too much money".
If more people bought original games it would only mean that game companies would earn more money, not that the prices on games would change. It would probably have the side effect, though, of more games being produced as more companies would be willing to enter an industry where there is profit to be gained.
As a real-world example we can just look at some of the PC top-sellers, like for example Quake 3. This game was relatively cheap to develop and everybody knew that it was gonna sell a shitload of copies. Does that mean it was sold at a lower price? Of course not, it just means that ID Software would earn more money.
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.
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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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I live in China. If you go to the electronics market, people practically drag you into their stores to buy DVDs and VCDs. All software you can possibly imagine, and movies usually 3 days out of the theater. Average price: USD$1 for a movie, up to $10 for a really big software set. And the chinese only sell things when they make money on them, of course. Don't give me that "communist" nonsense. Sure, the substructure of the country is commie, but at the street level and more it's free-wheeling capitalism. The reason it's so cheap is they are paying production costs ONLY, obviously. That's what pirates do. And absolutely NO-ONE in China will buy legit games if they are not only marginally more expensive than copies (like 10-15%)
Not sure where I'm going with this, but thought it might be interesting.
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.
No electrons were harmed creating this post, though some may have been subjected to electrical and/or magnetic fields.
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
Generally I would agree with you on piracy of copies of software and media that is single-source and significantly more expensive than it should be. In a system without viable competition, piracy is a compelling form of competition as a market reality. It can be argued that it's piracy which keeps people from examining alternatives, thereby continuing the monopoly.
But I'd like to point out here that most gaming companies don't make money. Large publishers, who are in the best position to be raking it in, are merely scraping by. Nintendo and Microsoft lost money last quarter. Gaming companies are not greedy monopolists keeping prices high because they want to milk their position. Game companies keep prices high because they are afraid of losing money.
A few gaming realities. %50 or more of a game's total sales will happen during the first two months of a game's release. This demand is relatively inflexible, and will not generally go up if you decrease the price. As they age, price becomes more of an issue for impulse purchases, though not generally for the people who have mentally chosen the game. As impulse purchase games are likely to be the "greatest hits," unless your game has some serious name recognition, it is in your best interest to sell to the choir who will purchase it at full or near full price.
Assuming the retailer takes half, and half of what remains goes to paying the developer, for cheap 2.5 million dollar game to break even it needs to take in 10 million overall, or 5 million in the first two months. 5 million dollars is 100,000 copies during the first two months, assuming $50 per copy. Compared to movie tickets that's somewhat small, but for the pool of gaming that's pretty large.
A given metropolitan area will have one to three game-specific stores where the cash registers ring every few minutes. They will also have music and mega stores where one can purchase games, but sitting down and watching that section for a day is like watching paint dry. On the other hand, there are at least 7 theaters here in boston, and those ticket counters almost always have a line. If you talk to your co-workers, the launch of Return of the King has entered public consciousness, but Metroid Prime barely registeres.
We're in a small pool, in other words. To stay afloat, game companies need to keep prices high. I would like to believe that lower prices would increase demand, but I have seen companies attempt to go down that route with little success. The fact of the matter is that most people don't play games: they feel they are a "waste of time," and "for kids." One could argue the hipocracy of clinging to the puritanical belief in a lack of wasted effort in a society where the average person watches 4 hours of television per day, but it is (I fear) the latter perception is the more insidious and will only be overcome in a herse.
But gaming companies to listen to sales. A few years back the Playstation 1 had a rigid price structure where every game was $50. Crash Bandicoot 2 was just released at $50, and as such SCEA decided to lower the price of the original to $45 as an experiment. The original Crash sold as well as Crash 2 that year, showing that indeed, price was an issue. From that we have our multi-tiered pricing system of today. Just in case you forget that it has been tried, there was (and remains) a rung on the pricing ladder below "greatest hits." Ball Breakers, and many other games were released at the $10 mark for the original Playstation. Yes, some of them were terrible, but some were rather good. Sadly, the increased sales didn't offset the decreased cost, and that experiment was largely abandoned.
If you want to send a message to publishers, buy games on the cheap. They have no way of knowing that someone just pirated a copy of Max Payne 2 in protest, but they could see a thriving market in used games as a sign that they should lower prices. If there is a hot game coming out for $55 dollars, and an older one that you really
The ______ Agenda
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 a monopoly product, you price them to get the largest profit the market will let you, and differently in each market. Chinese buying power is not yet on parity with US ones (or even UK) so the prices must be lower.
Next you need to prevent grey market imports (region code etc) and then you finally have to find an excuse so that the other customers carry on buying the product and don't feel aggreived
Piracy is IMHO the excuse, nothing more, to explain to US and EU customers why they are paying vastly more for the same games. Just like Americans being ripped off with drug and school text book prices, and EU people with DVD pricing.