Nintendo Supports US's Anti-Piracy China Measure

Earlier today we discussed the China/US Piracy clash, and it's worth noting that yesterday Nintendo came out in strong support of the US's position. Gamasutra reports that an estimated 7.7 million counterfeit gaming products have been seized in the last four years of piracy raids. "According to Nintendo, China has continued to be the leading production site and exporter for counterfeit Nintendo products, and has the largest domestic consumption, and in 2006 alone the company estimates that the overall industry lost $762 million due to piracy. Commented Nintendo in a statement: 'Despite the millions of counterfeit Nintendo products seized from retailers and manufacturing plants in China through the years, there has only been one criminal prosecution. Numerous factories, where tens of thousands of counterfeit Nintendo products were seized, escaped with only trivial fines or no penalty at all.'"

Comments

Real use of piracy

[torqer]

If only the Chinese would pirate (clone) the Nintendo Wii hardware... so I could actually get one.

Re:Real use of piracy

[rts008]

Timely article....I was just asking myself where I wanted to go on vacation!

Chinese pirates RULE!

Hmm

[metamatic]

Given that Nintendo can't keep the genuine articles in stores, you'd think they'd be grateful to the Chinese for stepping up to meet demand. :-)

And no, I'm not just talking about the Wii. Nintendo has had terrible trouble getting hardware and software into the retail channel for years. As a GameCube owner, shopping for new games was always an exercise in frustration.

Re:Hmm

[xenocide2]

So what happens when customer number four arrives? Does he suddenly become the miserly "rent's due" consumer, or does he walk away with a 360 instead?

Re:Hmm

[Anonymous Coward]

Wow, the freaks come in all kinds today. I really do not buy this Nintendo manufacturing a shortage argument. If shortages really created this sort of buzz and sales, then Sony would have held back on PS3s as much as possible to keep demand low. You have to remember that unlike most console makers, Nintendo almost always shoots for as close to a world-wide launch as possible. There is not this 8-month gap between launch in the US and launch in Europe like other consoles do.

You have to remember Nintendo is trying to meet demand for all regions at once and not just one or two. You also should realize that the shortage is not unique to a single region and sales of the Wii are through the roof. I do not remember Nintendo having continual problems with keeping items in stock. The only other item I remember is the DS Lite, which is also quite popular for its own reasons.

Honestly, I tend to believe Nintendo when they say they are cranking out at max production. They have no real reason not to, since they are not meeting current demand. This buzz-factor is bull-shit. I have wanted a Wii since before launch and still have been unable to find one, and I know I am not alone in this regard. Nintendo's profits could only grow by increasing production, assuming they had the capacity to do so, buzz or not. They have no reason to "out buzz" the over-priced PS3 or the "old" Xbox 360.

Re:Hmm

[644bd346996]

Do you have any evdience? The world you describe sounds plausible, except that it assumes that Nintendo cares about media buzz more than profits. In the real world, it is Nintendo that cares about profits, and Microsoft and Sony that care about media buzz. Note that Nintendo is earning a profit and getting media buzz, but MS and Sony are only getting media buzz (and a lot of that buzz is negative, too). I don't think Nintendo needs to be playing with supply in order to boost their long-term profitability.

In fact, I don't see how an artificial shortage could help Nintendo at all at this point. They are already guarenteed at least some (positive) buzz from the geriatric market, so the Wii is not in danger of disappearing below the radar. Right now, the Wii needs to build up a large installed base so that third party developers will take it more seriously and actually make games that are well suited to the Wii.

Re:Hmm

[Anonymous Coward]

So, to make things clear, you DON'T have any evidence... you have a link to a book that describes events from over a decade ago.

Dude, lots of people on Slashdot were predicting Gamecube-level sales for the Wii before launch. If you can find me someone who seriously predicted sales of this magnitude, I'll accept your research skills, at least.

Re:Hmm

[Applekid]

If he's anything like me, he turns around and makes a mental note to try back some other day. It's not like money burning a hole in your pocket literally burns a hole in your pocket.

Re:Hmm

[The Ultimate Fartkno]

> Dude, lots of people on Slashdot were predicting Gamecube-level sales for the Wii before launch.

I think the key there is "people on Slashdot." People from Nintendo, who have a lot more experience selling game systems than people from Slashdot, were predicting a great launch.

> If you can find me someone who seriously predicted sales of this magnitude, I'll accept your research skills, at least.

I don't think anyone predicted sales at this level, not even at Nintendo. However, I stand by my original point which is that Nintendo has been using the same well-documented battle strategies since they got into the video game business and there's no reason to believe that the current "shortage" is anything other than a better-than-expected repeat of the same thing.

Re:Hmm

[MeanderingMind]

I don't think you understand the implications of that book.

Nintendo restricted the number of titles a developer could release in a single year to 5. That seems a rather large number now, but then developement cycles were much faster. The measure was taken to combat the "shovelware" which had been a major factor in the industry crash.

Not everything Nintendo did in those days was benevolent or good, but artificially creating shortages of systems was not one of their activities. They didn't produce as many copies of games as many developers wanted, but that isn't analogous to holding back on system production.

Citing that book as proof that Nintendo is underproducing Wiis on purpose is a bad argument. Even if the book was definitive proof of past artificial shortages (owning a copy myself I am certain it is not) that is all it proves. Just as proving that Joe Schmoe robbed a bank in the past doesn't prove that he robbed a bank recently.

I may be have forgotten an important passage in the book, so if there is something I missed please reference the chapter or page.

Re:Hmm

[Chris Burke]

The "buzz" surrounding the Wii has already peaked. By it's very nature, buzz is not something that is sustainable over long periods of time, because it all depends on peoples' emotions and emotions are fickle. It's already been over four months of being sold out. Kids who wanted one for Christmas are still holding the IOUs they got from Santa instead. It is perfectly clear to everybody that the Wii is extremely popular and an unexpected runaway hit. Everyone who could be driven to want one by hype has been. Another month of "Wii still sold out" isn't going to earn them one bit more of "buzz", but it is going to earn them a lot of "irritation" and "loss of interest" and "lost business to other consoles".

If the shortage was all a trick to build buzz, then the time to cash in on that buzz would have been in December or January, opening the flood gates so all the Christmas shoppers could buy it, while the desire, hype, and personal finances were all ideally aligned. Instead this is just opening up a window of opportunity for Microsoft to lower the price on the 360 (which the Elite was in part designed to make room for), and for Jimmy to decide that he'd rather exchange his IOU for an Xbox, rather than having to wait even longer with no game system at all. For people having trouble making rent, the shortage is a perfect reason to put off buying a Wii, or to blow off the purchase all together. In other words, we're talking about lost sales, and lost money. You think that's what Nintendo wants?

The game industry is all about momentum. You might possibly be able to argue it makes sense to limit supply in the short term at console launch to be able to get headlines about your console selling out. But to artificially limit your unit share for months, and stating that this is likely to continue for more months, would be extremely foolish.

"Wii sold out" is old news, the only people who care are the ones who want the Wii, and they're frustrated not "buzzed".

You want to know what would generate buzz? "Total Wii sold outnumbers Xbox 360". That's the headline Nintendo want's to see. Limiting supply only hurts that goal.

Seriously, there's only one word for the idea that Nintendo is intentionally limiting supply of Wii, and it's the same word that would apply to Nintendo were they to actually try that strategy, and it's retarded.

Lastly, I get your reference to SMB3, but so much is different between now and then that there's no way I'm going to list it all. But let me give you the most important: Nintendo is no longer a monopoly. You think they can still pull the same stunts they used to? Well look at all the other crap they used to do that has gone by the wayside. It isn't the 80s anymore. Nintendo knows it. You need to catch up.

Re:Hmm

[zippthorne]

If people from Nintendo thought there would be a lackluster launch, what do you think Nintendo's announced predictions would've been?

China does need to do more

[MikeRT]

Say what you will about the cost of the goods, but the fact is, if China never gets its act together on IP, it'll never be attractive for more than grunt work R&D. We're not talking about an economy like the US where there is an argument for liberalizing IP laws; we're talking about an economy where there seems to be no reliable enforcement of IP rights except when the Chinese government needs to make an example out of someone to appease foreign interests. This is not a fight over fair use rights, this is a fight over whether there should be any practical protection at all for people who make creative works and do intense research.

Re:China does need to do more

[djupedal]

but the fact is, if China never gets its act together on IP, it'll never be attractive for more than grunt work R&D
And if China only sold to China, there would still be a ton o' money to be made, so your particular diatribe not only years behind reality, it is DOA, sorry.

Want facts? No problem...

• Intel just broke ground on the newest fab center in seven years, worldwide. Location: China.
• IBM just moved their world headquarters for one specific division...from: USA - to: China The largest domestic Chinese telecom saw stock prices rise 13% yesterday. 15 R&D centers inside China and another 10 outside...o u t s i d e - with more on the way.
• The 'grunt' work is already being moved offshore, to Vietnam, as one example...soon to North Korea. Foreign companies that want to put up major factories must also build hefty R & D centers, just in case the factory folds. The R & D centers will stay around and work as a foundation to keep the domestic infrastructure intact for the long term. So, every time you hear about some American or European company opening another factory in China, remember that such news also means another research center that isn't being built in the US or EU, UK, etc.

Only when China gets bitten in a fair play on problems with domestic IP will things MAYBE turn around. I suspect they will never return to days of yore, actually, and we can all look forward to new business models, new definitions of IP, etc. that simply don't exist now. Your comments represent the type of staid, off-the-shelf thinking that is not related to what is really going on, sorry. It will take some time before new thinking replaces old and by then, the Chinese will have become comfortable in their new role on the world stage.

A slightly funny situation is currently taking place over the 2008 Olympics and the Chinese govt. finding themselves being tagged by fake products such as keyrings, stuffed toys of the 'official' mascots, etc. Only authorized retail outlets are allowed to pedal these products, but of course, you can buy fakes on any street corner...

Homebrew?

[Guspaz]

Many products used in homebrew on the DS are manufactured in China, even when designed by western teams. I wonder, does Nintendo consider such flash carts and loaders to be "counterfeit" products?

Re:Homebrew?

[ProppaT]

I think a large part of what Nintendo is talking about are bootleg games. I buy a lot of second hand games from flea markets and when I'm looking at GBA and DS games, I always look carefully at the label on the game. A lot of the games at the flea market are clearly counterfeit. I've also seen a resurgence of retro controllers (SNES in particular) that are "new in the box" pop up at a lot of flea markets and small game stores. I'm fairly sure that these are knock offs as well. I doubt they've been sitting in a warehouse for 10 years. I know when I was looking for new controllers years ago, they were no where to be found.

Hmmm....

[MarcoG42]

Perhaps I'm just daydreaming, but it seems to me that if the market wants what these 'pirates' are producing, wouldn't the companies being infringed upon be better off just buying them up? They could sell more, at a cheaper price and still make a huge profit. I'm not saying I'm for making the big, mean corporations bigger and meaner, but if they can't keep up with demand or sell for what people are willing to pay, then nuts to them. The products can't cost all that much to create or the 'pirates' wouldn't bother making it and selling it for 1/4 or less of it's value, unless there was a nice fat profit involved. Now, I know there's a lot of way underpaid labor, harsh working conditions, etc. I don't agree with that either, but a person has to be realistic about such things. With as many homeless or poverty stricken people in the US, the land of the fat and docile, do you expect China to be able to supply all of it's 1+ billion people with jobs that pay our equivalent to minimum wage, or jobs at all?

Re:Hmmm....

[InsaneGeek]

The cost to make isn't in the physical media. If I measured cost to make the linux kernel only with physical CD media, I would then say that the kernel is worth less than a a single US dollar. All the thousands and thousands of man hours worked to get the kernel to it's kernel state are completely ignored under your model, because you assume that the cost to deliver the physical media is where the value is, when that actually is the least costly and least profitable part of the business.

It's the equivalent of saying we'll spend 40 million dollars (going rate for a new game) in paying coders to create a new game. And we'll make a huge profit by selling CD's of it for $1.00, when it only cost us $.10 to make the CD by using cheap laber China labor. If we sell a million copies we'll have a profit of $900,000 we'll be rolling in the cash!!! (do you see something missing here... something like you are still down $39,100,000). The reason the game costs $40,50,60 is because you have to recoup the costs you paid upfront to create the game to begin with.

Re:Hmmm....

[Tofystedeth]

The products can't cost all that much to create or the 'pirates' wouldn't bother making it and selling it for 1/4 or less of it's value, unless there was a nice fat profit involved.

Of course there's plenty of profit involved. They don't have to have to pay for big teams of marketing/executives/legal staff. Not to mention programmers/engineers/artists. All they need is 1 or 2 clever guys who can reverse engineer a cart, or crack a little code. Then its just the cost of pressing/burning CDs, or packaging up some cheap chips. They make money because all they do is copy or repackage an end product. They don't create it.

Re:Hmmm....

[vux984]

Daydreaming is exactly what you are doing. Think it through.

Company A R&Ds a product through conception, marketing, design, and release. Suppose the unit cost to manufacture and distribute is $14/unit. Now if R&D etc costs 1,000,000 and you want to pay that back in two years, and you project sales at 50,000 per year. Then you'll need to charge $20 to cover that cost, plus a modest profit margin of say 15%. Your price would then be $39.99.

Company B, buys the product and replicates it, skipping all the r&d, marketing, paying only manufacturing and distribution. They can charge $21.00 per unit and make 50% profit margins. (And that's before they cut corners on quality or materials.)

So they make a bunch of money undercutting you.

Then your solution is for Company A to buy Company B, thereby enriching they guys behind it even more, and increasing your costs, which will have to be reflected in your product price.

At which point they'll just start up another factory undercutting you.

Re:Hmmm....

[DrSkwid]

> I would then say that the kernel is worth less than a single US dollar.

that's overpriced

Anyone remember this?

[Mechsae]

A few years back there was a plug and play thing with NES games (mario, contra, duck hunt to name a few) in a cheap looking packaging without any nintendo branding being sold on boardwalks and mall Kiosks in the states. That has to be the most blatant infringment I've ever seen.

Re:Anyone remember this?

[Noishe]

yes

Mainland Europe release requires translation

[tepples]

it does NOT cost twice as much to ship a game made in CHINA to Europe as opposed to USA Can you cite a source for this assertion? A shipment from China to North America has to cross the Pacific Ocean. A shipment from China to the British Isles has to cross both the Pacific Ocean and the Atlantic Ocean.

Stop releasing games in USA months before they come out here A game sold in the United States is acceptable if it supports only the English language. That won't fly in mainland Europe. Translation to five languages of the mainland costs money and takes time. No, I don't know why they have to release the game simultaneously in the UK+Ireland and in continental Europe.

Re:Mainland Europe release requires translation

[Littleman_TAMU]

Can you cite a source for this assertion? A shipment from China to North America has to cross the Pacific Ocean. A shipment from China to the British Isles has to cross both the Pacific Ocean and the Atlantic Ocean. You do realize you don't have to travel east all the time? You could, maybe, I dunno, go west. Anyways, GP was just rationalizing his piracy because he's impatient.

Yoda-tized

[Mr. Capris]

So...when I saw that Nintendo quote, the wording ("Commented Nintendo in a statement") really reminded me of Yoda. So I took the entire quote and put it through a Text-to-Yoda website, and got this...

Of counterfeit Nintendo products seized from retailers and manufacturing plants in China through the years despite the millions, only been one criminal prosecution, there has. Numerous factories, seized, where tens of thousands of counterfeit Nintendo products were, with only trivial fines or no penalty at all escaped. Hmmmmmm.

There is a limit to human patience

[tepples]

You do realize you don't have to travel east all the time? So is shipping from China to the British Isles across through the Indian Ocean and through Suez that much cheaper?

Anyways, GP was just rationalizing his piracy because he's impatient. Impatient? When is the North American release date for the Game Boy Advance game Kuru Kuru Kururin? Beyond the human life span?

Re:There is a limit to human patience

[amuro98]

You can always import - that wouldn't be illegal (at least, not technically)

With import stores dotting the internet, there's no excuse to outright pirate anything - not even games that aren't available in your region.

Re:Asking china to stop piracy is impossible...

[amuro98]

Yeah, the money saved buying pirated goods gets spent on....more pirated goods.

How the heck this got marked as "insightful" is beyond me...

Question: if you didn't have the money to buy the legitmate product in the first place, what "savings" are we talking about here? If I can't afford a $50 item, so I steal it, I haven't "saved" anything.

"I'm sorry mr. store owner, but I can't afford to buy anything, so I'll just steal it - but don't worry - I'll spend savings elsewhere, so I'm still doing good for the economy!"

When copyright law bans parallel import

[tepples]

You can always import - that wouldn't be illegal (at least, not technically) In some countries, the exhaustion of exclusive distribution rights under copyright after the first sale applies only to distribution within a country. For example, Title 17, United States Code, section 602 appears to prohibit importing more than one copy of a given work. Tough cookies if the game is for Game Boy, Game Boy Color, Game Boy Advance, or Nintendo DS, and you want to play multiplayer mode.

With import stores dotting the internet, there's no excuse to outright pirate anything - not even games that aren't available in your region. You need to mod your console to play imports, or you need to buy three consoles. Which are you suggesting?

The current market in Beijing

[ihatewinXP]

Lemme see if I can remember all this correctly -

First off they have Wii's here freely available, no shortages as much as I think just a lack of customers. That is two fold: Nintendo obviosuly isnt advertising in China and the local shops arent advertising that they arebreaking a number of laws. Hell, it should be Microsoft complaining - the xbox 360 was hacked within weeks out here and a number of my friends now own one - and at $1.25 a game its not a bad deal at all.

I just got paid and was planning on picking up this "bundle" from a local shop we frequent: Nintendo Wii + mod chip + extra controller + 2-3 pirated games for 2500 RMB ($323.00). When I say a local shop that is a place I actually trust and can return things to - but haggling at some of the biggest shops in Beijing (The Silk Street if youve ever heard of it) that are total tourist traps still have Wii's +mod chips and the lot as well. And they will come down to that price if you can bargain them down, but dont expect to ever find them again if it doesnt work.

My only problem is I dont think ill ever get anything productive done again If I pick one up.

Re:The current market in Beijing

[superpulpsicle]

Well this is interesting. Last I remembered US was offending Japan for "reselling" used games, there was a slashdot article on this awhile back. I think Japan is too aggressive to begin with. I also heard once that their "greatest hits" aren't really that much cheaper than the original price.

Annoyed

[jrieth50]

I'm just annoyed that everyone quoting piracy never says how many items they estimate on the black market, but always say - we lose $XXX BILLION DOLLARS every year,' etc... That is a red herring. You are first assuming that legitimate paying customers are reaching the market and choosing the cheap 3rd party knock off over the official product. People who pirate to pirate generally do not intend to buy - therefore reducing that figure by 1/2 to 3/4 as I think its safe to say half or more would not buy the official product if piracy was not an option. I agree that the piracy has to stop, but to pretend as though the RIAA or Nintendo would be the recipient of billions of dollars in added revenue if piracy stopped tomorrow is ludicrous.

Re:why i pirate...

[Guppy06]

"I just installed my WiiKey (Wii Modchip) 2 hours ago..why?.. cos I wanna buy cheap crap from china? HELL NO.. but cos I live in EUROPE and as most europeeans I am megaSICK of always getting hardware.. AND software.. last.. if not at all.."

You got a mod chip for the only one of the three consoles that was released in Europe at the same time as North America and Japan because you don't like having to wait behind other markets?

"They stop charging twice the price for a game over here as opposed to USA.. it does NOT cost twice as much to ship a game made in CHINA to Europe as opposed to USA"

1. My copy of Twilight Princess says "Made in Japan."
2. VAT's a bitch
3. Localization's a bitch
4. Distance isn't the only factor in calculating shipping cost. Are you sure the game you're playing went through the Suez Canal and not the Panama Canal?
5. 
   
   "Stop releasing games in USA months before they come out here...... have SIMOULTANEOUS RELEASES"
   
   If the game is made in the US (e. g. Electronic Arts) by an English-speaking crew with English dialog, etc, why should we have to wait until it's been translated into French/German/Italian before we get to play it? We want to buy it, they want to sell it, the fact that others will have to wait longer is no reason to interrupt that transaction.
   
   "and I see the Europeean release date is.. NOVEMBER!!!!..and I can install a tiny chip.. download an iso.. burn it and play it WHILE I HAVE FRIENDS ONLINE WHO ALSO PLAY IT.."
   
   Or you could buy and import a legitimate copy, and then marvel how the price goes up when you have to pay customs and VAT upon delivery (teaching you just how much more it does cost to ship to Europe).
   
   "as opposed to playing it after they are sick of it and have moved on.. ofcourse I will..!.."
   
   Do you really want to buy a game that all your North American friends are sick of in less than seven months? Or are you less concerned about the game and more about the bandwagon?
   
   "the splitting of the world might have worked back when the occasional long distance phonecall every 3 months was all the communication we had but these days that does not cut it."
   
   Because all the world speaks English?

Re:why i pirate...

[MemoryDragon]

Actually if you do a DS module import from the USA to Europe, you usually get the thing cheaper than over here in the store, also half a year til two years earlier.

Europe is just getting Metroid Prime Pinpall, which has been released in the USA in 2005, and there still is no release date for super paper Mario for now, while we get a drought of interesting games over here until summer (No Mario Strikers is not interesting at all, the only interesting game is Impossible Mission and that is a retro game with new graphics!)

I am considering a mod chip for the wii as well for the exactly same reasons, with about three new games the costs are basically zero, and the releases are half a year til a year earlier!

And no localisation is no excuse, those wo want the game in non english can get it once it is localized the others still would be able to buy from england!