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Valve Takes Optimistic View of Piracy
GameDaily recently spoke with Jason Holtman, director of business development and legal affairs for Valve, about online sales and piracy. Holtman took a surprising stance on the latter, effectively taking responsibility for at least a portion of pirated games. Quoting:
"'There's a big business feeling that there's piracy,' he says. But the truth is: 'Pirates are underserved customers. When you think about it that way, you think, "Oh my gosh, I can do some interesting things and make some interesting money off of it." We take all of our games day-and-date to Russia,' Holtman says of Valve. 'The reason people pirated things in Russia,' he explains, 'is because Russians are reading magazines and watching television — they say "Man, I want to play that game so bad," but the publishers respond "you can play that game in six months...maybe." We found that our piracy rates dropped off significantly,' Holtman says."
Attitudes like this seem to be prevalent at Valve; last month we talked about founder Gabe Newell's comments that "most DRM strategies are just dumb."
Finally some intelligent thought on this matter from game publishers. They should focus on benefits that will get pirates to switch over, rather than annoying DRM technologies which do nothing but hinder the use of the game by legitimate customers, while real pirates bypass them with ease.
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Common sense is a lot better than DRM. Glad to see that at least some companies are willing to spend a few hours to identify reasons why people pirate games and think of simple solutions.
I think part of the problem companies have is they try and group everyone who copies games or music or whatever in to one group. They talk about "pirates" as though it is one homogeneous group with one mindset. That's not the case. There are important sub groups, and the question needs to be what do you do about each? For example I'd say you can divide people who copy along these rough lines:
1) People who want stuff for free and wouldn't pay no matter what. You write these people off and just don't worry about them. They are the kind that even if you made it impossible to copy your stuff, they'd just do without. You aren't going to get their money so just don't bother. Let them do what they do.
2) People who are doing a "try before you buy." In music in particular I've known people like this. They want to download albums to see if they like them and want to buy them. For these people you needn't worry too much, they are likely to buy if they like your stuff. Only things to do is make sure you are offering quality stuff, and try to offer a superior experience if they pay. For example in the case of a game maybe a nice online community and auto updater, that requires a legit copy.
3) People who pay for some stuff, but don't have enough money for everything they want. They are somewhat similar to the first group, but they do buy things, just not everything they get. Something like university students with little disposable income. This is the only group that tighter DRM measures might help you get more money. However if everyone is tightening DRM, well you are back to where you started.
4) People who would like to pay you, if only you'd let them. These are the people who either live in a country where you refuse to release your product, or people who have been screwed over by your DRM. They'd like to buy your stuff, but you won't let them, or your protection technology means it won't work. Thus they turn to copying it. These people the answer is less, not more DRM to get more money. Give them the ability to pay legitimately, and they will.
Ok well when you start breaking it down, you see that really there are a number of groups that you just need to write off. You aren't getting any more money from them, so stop worrying. Don't screw over people who want to be customers just to try and screw over those who don't. It really needs to be looked at as a profit maximization thing. Implement DRM only to the point that it actually helps you make more money. Don't just try and "punish" people for copying your stuff. I mean really, who cares? You are in it to make money, not to be a justice crusader.
I also think firms fail to take in to account the cost of DRM. It's never free. Most of it is purchased from a third party and there's costs for that, Macrovision isn't a charity, and if you develop it in house you are paying the development cost. Either way you pay the support cost. So if you spend $100,000 buying a DRM package, but it only gets you $50,000 in additional sales, it was a lousy buy because you actually lost money. If it then also loses you $25,000 more sales from people who can't play, well then it was a REALLY lousy buy.
I think the best thing companies can do it make it easy for people to buy things legitimately, make the legitimate buying experience better than the illegal copying, and provide things that are a good value for the money. That will get the most sales. The copying figures don't matter, what matters is getting the most sales you can. If you do something that increases copying by ten times, but also sales by ten times, well then that's a win. Doesn't matter that copying went up, what matters is sales went up.