Study Claims $41.5 Billion In Portable Game Piracy Losses Over Five Years

Gamasutra reports that Japan's Computer Entertainment Suppliers Association conducted a study to estimate the total amount of money lost to piracy on portable game consoles. The figure they arrived at? $41.5 billion from 2004 to 2009. Quoting: "CESA checked the download counts for the top 20 Japanese games at what it considers the top 114 piracy sites, recording those figures from 2004 to 2009. After calculating the total for handheld piracy in Japan with that method, the groups multiplied that number by four to reach the worldwide amount, presuming that Japan makes up 25 percent of the world's software market. CESA and Baba Lab did not take into account other popular distribution methods for pirated games like peer-to-peer sharing, so the groups admit that the actual figures for DS and PSP software piracy could be much higher than the ¥3.816 trillion amount the study found."

Comments

$45 BILLION?!?

[IBBoard]

Yeah, that must be accurate, because I'm sure they factored in things like:

1) People downloading way more than they could ever afford to buy
2) Multiple downloads by one person
3) Downloads of games that were already legitimately purchased by the individual but unusable for some reason

Re:$45 BILLION?!?

[delinear]

Also, consider the third one from the opposite perspective - people who use downloads as a means of determining if the game is worth purchasing. Maybe neither of these are a significant contributing factor (I don't know enough about Japanese culture to definitively say), but considering their method of calculating the world total is to multipl the Japanese total by 4, I'd say there are some pretty big holes in their figures anyway, unless there are studies to show that piracy levels are the same worldwide.

Re:$45 BILLION?!?

[Moryath]

Considering that an original PSP gets a 33% battery life boost from running a game off of the SD card rather than the craptacular UMD drive? Or the fact that you can carry all 3 of the decent games for the console on one card, and never have to worry about swapping/scratching/losing the UMD's then?

I think you're underestimating #3.

Re:$45 BILLION?!?

[Technician]

These studies never count sales that never happened because casual gamers won't spend the money for a console (or portable) if the cost of games is prohibitive. I never bought any X Box or Playstation games simply because of the cost of the console and a dozen games.

Way back in DOS days I bought a PC because stuff could be copied and thus affordable to experiment with the large world of software. I had tons of shareware, etc. If all software was locked down at over $40/title, my PC purchase would have been delayed for years. There is only just not that much interest in playing with DOS for DOS sake.

Games are always priced for the maximum profit (free market) by artificial scaracity. Only the more hard core gamers buy them. Many potential game buyers play freecell and minesweeper along with free online services such as Farmville, neopets, etc., and are content. Seriousely, if Farmville required a pre-play purchase of $40, do you think it would have any traction? Many games that are pirated enjoy this same publicity that the game is good. Some games locked down, don't get much exposure because it is reviewed as broken, slow, hard to make work.

I doubt that game manufactures are interested in attracting the Farmville players to a play platform at prices they would buy a good game. Wii has done a fair job at attracting players that normally won't buy a console.

Why, oh why do they do these studies

[Engeekneer]

This is once again one of those numbers that will be thrown around by IP holders to get attention from the politicians. And yet the study does the same idiotic assumption as all the other ones.

Saying one download is one lost sale is idiotic. It has never been true and never will be. It's probably off by at least a factor of 10. And haven't many studies already shown (well, at least with music) that the people who pirate are also the people who buy the most?

Re:Why, oh why do they do these studies

[tsm_sf]

There's something about the whole concept of "damage" to theoretical profit that I find extremely disturbing. We're getting into some pretty shaky moral and logical ground here.

A pirated game is not always a lost sale.

[pecosdave]

I don't care what the publishers say, a pirated game is not necessarily a lost sale, quite the contrary, I've found most pirates to be lazy bastards who wont pay for anything if they can help it. When one of those types pirates it's just a copy in circulation that shouldn't exist.

On the other hand, there is a type of piracy that is a lost sale. I still love the Gameboy Advanced system, and of course they no longer make games for it, so I turn to eBay and the like. More than once I've gotten outright pirated cartridges off of eBay. I always make sure the sellers have some history to prevent that, but occasionally one slips through. Some of the pirated games I've gotten off of there were really high quality, I spotted the fakes, but I don't think most people would have. On more than one occasion the seller disappeared while my game was in transit, when they don't disappear I tattle to eBay. I then have a moral dillema of what to do with said pirated copy. I paid for it, I didn't know it was pirated until it got here, but it is pirated... Hurricane Ike settled that for me on my older cartridges, but I actually did get a pirate cart off of Amazon since then.

I'm of the opinion the MPAA and the RIAA need to police flea markets and sellers like the above, go after file sharers, but leave downloaders alone. The video game guys need to do the same thing. The big difference between the movie and music people and the video game people is when a new format comes out movies and music usually transition to it. Not until recently have classics been commonly re-released on newer systems and they still don't re-release all of them legally.

Re:A pirated game is not always a lost sale.

[Andorin]

On the other hand, there is a type of piracy that is a lost sale. I still love the Gameboy Advanced system, and of course they no longer make games for it, so I turn to eBay and the like. More than once I've gotten outright pirated cartridges off of eBay.

Buying (legit) GBA cartridges second-hand on eBay doesn't put any money into Nintendo's hands, so where does the "lost sale" argument come from? Yes, I understand that you would have otherwise gotten a legit copy, but the whole smarmy justification for attacking piracy is that the game companies and such lose money from it. If they wouldn't have gained a cent even if you'd bought a legit copy, the situation doesn't apply.

Of course, I also believe that if a copyrighted work is not being made commercially available, there should be no penalty for distributing it.

Re:A pirated game is not always a lost sale.

[delinear]

Agreed - the people selling copies of games are the real pirates who are stealing sales and money from the industry. Most serial downloaders are either people who are already spending a large portion of their income on games and couldn't afford to spend more, or their people who never had any intention of buying even if they couldn't get it for free. There's also a not-insignificant subset of those people who are just serial hoarders, I've known people who have literally thousands of downloaded games or music or movies and haven't "consumed" even 5% of them, they just like to be able to boast or take pride in the completeness of their collection. They'd have to take out a mortgage to afford to actually buy all those things, it's ridiculous to assume they're all lost sales, and these people must make up a hefty chunk of the "piracy" figures.

I've lost several trillion dollars due to greed!

[Arancaytar]

I wanted people to give me a trillion dollars last year, but they didn't. They're so greedy and unthoughtful!

Just for comparison

[phantomfive]

Just for comparison, Nintendo has been making around $2billion a year total profit over that period. So either these game companies would have been a lot richer, or these numbers are off.

Re:Losses?

[interkin3tic]

Indeed, I'd call it $41.5 billion in free advertising for your games.

It's a zero sum game.

[the_raptor]

No money is lost to the economy due to copyright infringement as some MAFIA groups try to argue. It is just not given to publishers for those movies/songs/games that are pirated. But it is spent on other products. This is the broken window fallacy, that a child who throws a rock through a window is stimulating the economy.

I download movies and tv shows because I don't like watching broadcast TV. Any that deserve a repeat viewing get bought on DVD (which is probably about 80%). If they shutdown illegal downloads they wouldn't get more money from me because I have little to spare, they are more likely to get less as I would just shift to other forms of entertainment or free to access media (I have started watching local legal tv streaming sites, which has dropped the amount I illegally download and later purchase).

This isn't the 1990's where the big publishers had little competition. There is so much free or cheap content out there that I don't buy before I try.

"Losses" by some definition...

[MadKeithV]

Considering the ESA claims the whole industry was worth $11.7 billion in 2008, and that was 22.9% growth form the year before, this does not seem to be a very plausible number, since it nearly amounts to the sum of the value of the whole industry over the five years of this "study".

Open bar

[An anonymous Frank]

Notice how *some* people will get utterly smashed when attending an event with an open bar? They're quite eager to consume far more than they might usually have...

I still don't see how that could possibly represent a tangible "market" with any credibility. However many servings were had (for free) has no relevance to sales you could've had on a normal night.

They might as well claim eleventy gazillion

[VShael]

It's just made up numbers and made up words, told by the princelings of lies and falsehoods.

Re:About studying losses...

[EdgeyEdgey]

I would have charged them $50bn, so by not employing me they have made a saving already!
But now I'm going to have to write off $50bn of losses :-(

Re:Losses?

[michaelhood]

According to Wikipedia there's 129M DS units sold, and 60M PSP units sold.. that's $220 worth of pirated games for every handheld in the world. Keeping in mind that a lot of people bought multiple revisions of the DS, replacement units, units that aren't in use, and so on, it's probably more like $300-400 per handheld owner.

Sorry, but that number is completely ridiculous and not credible in any way whatsoever to anyone owning a calculator.

Re:Why so much disagreement with the figure?

[serviscope_minor]

I think most slashdotters are in complete denial about how massive it is. ... or not. I don't pirate stuff, nor to I know anyone who does. I used to pirate stuff when I wass much younger, and I knew people who pirated stuff when they were students. Now I and the people I spend much of my time with are older none of us pirate any more.

In other news, Foxconn employees get 113e/month

[master_p]

I was shocked this morning to read that Foxconn employees are paid 113 euros per month.

It might seem irrelevant to this discussion, but it is not: the global elite is pushing for bigger profits, either through studies that claim loss from piracy or from other means.

I hope /. readers don't get the bait that the global elite ix losing any money. They don't; they are filthy rich as a result of exploiting people in 3rd world countries. Don't make them a favor and think that piracy hurts them; it does not. It simply doesn't make their wallets extra-ultra-humongously fat.

Well, I got it

[SmallFurryCreature]

Well, that is because they gave it me.

With kind regards,

The banking and automotive industry.

All the money in the world.

[IBitOBear]

Consider the fourth option where these numbers are just freaking made up by people who don't care to use statistics correctly.

If, for perspective of scale, you consider that this the entire national debit of the US went up from 9 to 12 trillion USD, or 3,000 billion USD, and this claim is covers 45 billion USD, that would mean that the loss claimed by this study is 1.5% of the increase of the US national debit. And this isn't for all "content", nor all software, nor all video games, but just the _portable_ video games. And not the hardware either. Just the software part. So if we say that for every person who just has to have a DS there are 10 who had to have a PS/3, and for every one who had a PS/3, there were 10 who wanted to watch movies or use software in general, then the entire unadjusted dollar increase in the US national debit would be overshadowed by "content".

Yea, that's a "straw man" if I were going to attack it, but lets just skip that. The above was for perspective on the magnitude of the bald-face claim.

Now, when you consider everything that people can and must spend money on, "entertainment" is nothing compared to food and shelter and food and medicine and food and education and food and insurance so on. (did I mention food?) In 2007 there were 116,011,000 "households" in the us. If the US were to shoulder the burden of paying for all these "lost sales" each household would have to pony up 50 thousand ($50,000) above whatever they already spent on, well everything, including "portable games" they actually bought. That's a full working adult making a very reasonable, or even "nice" living added to each household in the US _just_ to pay for the portable game software.

Heck, there are six billion people on the planet. To recover the sales these people "lost", e.g. 45 billion just in portable gaming software, and we spread that out to every single person uniformly, regardless of their ability to own or use a portable gaming device, everybody has to go by an $8 bargain-bin super mario cartridge.

And they each have to do it while still spending 100% of the money they are already spending to live and do something other than play dominoes with their cartridge (surely there are not 6 billion used DS units available so these people can actually run the content...).

Redirecting that kind of money into the phantom sales scenario needed to back up these numbers literally flies in the face of economic reason. Food would have to come free from space aliens every day for the rest of the economy to support this pipe dream "lost sales" figure.

That is, in the same sense that "if pigs could fly, bacon would be super expensive" it may well be true that if everything these people dream of happened, and each possible download represented a lost full price sale, well then sure, with those "ifs", these numbers work. But without those preposterous ifs, the results are ridiculous.

Insupportable, criminally ridiculous claims should be met with thrown stones and brandished pitchforks. Until that happy day when people really think about what these numbers would _require_ as a founding assumption, we will be sucking swill from the teat of political fantasy.

There exists no mathematical world where the portable gaming industry could have "lost $45 billion 2010-valued-USD to piracy".

Its like asking what would happen if _you_ had all the money in the world. (hint: whatever it was you had, it would be useless). You can model and dream about the scenario all you want, but it has no foundation in possible reality.

Re:All the money in the world.

[Myopic]

Redirecting that kind of money into the phantom sales scenario needed to back up these numbers literally flies in the face of economic reason.

Not literally.

Otherwise, great post.

I'm a pirate, here is why:

[Anonymous Coward]

I'm a poor university student.

DRM, DRM, DRM, DRM i will NEVER buy a DRM protected game. Will they work in 10 years? 20, 30, 40?
Constant internet connection is required to play Ubisoft games, c'mon... Will their servers be up and running forever?

Windows... Microsoft breaks your games every few years by releasing a new version of winbl0wz which does not include the library runtimes required to run old games.

Signup required to play the game.
I do have a few retail games.
Half-life 2 is an good example, i bougt the game when it came out a few years back, i'm unable to play it today... why? Because in order to play the game (in singleplayer) you must install STEAM and assign the game to your steam profile, right? Install steam, choose user\pass and check the remember me box. Now 6 years later I have a new email account and i forgot my steam user\pass. I contacted STEAM and they are unwilling to help me. THEY stole MY game.
I've also forgot my password for Red Alert 3, so i cannot play it online.
A few weeks ago when i wanted to play half-life 2 i had to DOWNLOAD A PIRATE COPY in order to workaround my forgotten user\pass problem.

It's more easy to install and play pirated games.

It's more easy to watch pirated movies, no IF YOU STEAL YOU GOTO JAIL warnings followed by 10 minutes of trailers.

Re:Losses?

[tbannist]

You've kind of missed the point entirely, most of the people who pirate games can't afford to buy all of the games they pirate, so they never would have bought all the games they pirated. However, if these pirates interact with people who are not pirates and talk about the games they pirated and liked, they are providing free advertising.

As the iPhone study showed about 10% of iPhone owners were responsible for over 90% piracy rates on games. That means the 10% of pirates go through games voraciously, at a rate far, far beyond what non-pirates do. This means any comparison between piracy rates and money lost is going be vastly overstated.

The true cost of piracy would probably be better estimated by figuring the average purchase rate for game players and then multiplying that by the percentage of people who pirate games. It gives much lower but more accurate and realistic numbers.

Gotta catch 'em all

[denis-The-menace]

RE: "They just want to pay a reasonable price for a game,..."

When I was a teenager I had friends that had hundreds of games for their Commodore 64.
I ask one of them if they had played all of them.
He told me he barely played any and that he spent most of his computer time copying the games themselves.
That's when I realized that for some, copying games is "The Game". Collecting them, sorting them in alphabetical order, showing them off to your friends, trading with your friends and strangers, talking about the difficulty of copying some games. Nobody would pay for any of this but just "having them" was the thrill. The fact that it was "bad to copy" just adds to it.

In the end it's like pokemon: Gotta catch 'em all.

The companies should worry more about the guys who only copy one or 2 games and play the FSCK out of them. THOSE are the REAL lost sales.