There are two main forms of game piracy and circumventing DRM (copy protection). There is piracy by the individual game player, these days usually over the Internet, but in the past often by copying using physical media, which is what this article is about. And there is commercial counterfeiting where a professional criminal mass manufactures the game, which is a different matter.

The profile of pirating for different platforms is always different because of the technology, the demographics of the users, the state of the market at a given time, relative costs and a number of other factors. What is for sure is that when piracy takes hold on a platform many hundreds of thousands (sometimes millions) of copies of a game are made. The huge scale of this theft deprives the publisher of vast amounts of legitimate income and quite obviously harms the game development industry. To think otherwise is to be in self denial.

Of course, it is very obvious that not every pirated game is a lost sale. This is because simple price elasticity of demand tells you that far more units will be consumed at a lower price than at a higher price. Yet apologists of piracy use this as an excuse for their behavior. They try and make out that piracy is a victimless crime. But obviously they are wrong because potential sales are being lost. And the lesson of history is that when piracy on a given platform gets out of hand, then it causes huge damage to the game market for that platform. This is common sense really.

Software Piracy in The Old Days

The first mass market game machine in the UK was the Sinclair Spectrum. Software was loaded via a tape interface so games were sold on audio compact cassettes. These were very, very easy to copy from a technical point of view, especially when dual cassette players proliferated and became cheaper. Schoolyard and club copying proliferated on a massive scale and badly hurt the game publishers. Look at a list of games and you can see the many publishers that went out of business or were forced into mergers. A whole range of technical anti-piracy solutions were introduced including, for instance, Lenslok. The publishers would not have gone to the huge trouble of these technical solutions if copying had not been a great threat to their businesses. Another solution was budget games, initially at £1.99, then at £2.99, prices at which they were not worth copying. That these budget games proliferated and came to dominate the market is yet another measure of just how bad the piracy was.

I was a director of the game publisher Imagine software, which went bankrupt in 1984, largely because sales came to an abrupt halt when piracy took off. (Imagine had other problems that made it especially vulnerable to a large and sudden drop in revenue.) Another publisher that was badly affected was Ultimate Play The Game (which later morphed into Rare), one of the most highly regarded publishers of games for the 8-bit home computers. Their initial response to the huge rise in piracy and drop-off in sales was to raise prices from £5.50 a game to £9.95. The idea being that if customers paid more for a game they would be less inclined to give away copies. However, this didn’t work and they labored on for just one more year after the demise of Imagine before switching their attention to the Nintendo Entertainment System, which did not suffer from piracy. The Spectrum and other 8-bit computer owners lost out heavily as publishers put less and less resources into developing for their machine or quit entirely, as Ultimate did.

Then came the Commodore Amiga and Atari ST. Once again, copying was technically easy so it was rife. Once again, it was up to the publishers to come up with technical solutions. So a technology war broke out between the software publishers and the pirates. Measures would include copying in random pieces of text from the manual. The led to a huge amount of photocopying by the pirates until the publishers started using photocopy-proof manuals. Obviously, all this piracy made revenue generation difficult, so the game publishing industry did not blossom in the way we see now. In fact, piracy has often been cited as part of the reason for the downfall of these machines.

Video Game Consoles Arrive

Then came the arrival of game consoles from Nintendo and Sega. These machines had their games held on chips inside cartridges so they were technically difficult and expensive to copy. So piracy didn’t happen at anywhere near the massive extent that it had on the Spectrum, Amiga and ST, and the games industry blossomed into what we know today. This was the time when many of the great key franchises of our industry were established.

Cartridges were expensive to make, so eventually the hardware manufacturers returned to recordable media. This way they could make vastly larger games with far lower production costs. The first to do this was the Sony PlayStation (PSX, later PS1) in 1995 in Europe and America, which used a CD-ROM to load games. Sony had a whole pile of technical anti piracy measures which protected it from piracy for several years. However, with the introduction of modchips and the development of PC CD-ROM burners that could burn data in the same modes that the PSX used, it was game over. Chipping was nearly universal and game sales collapsed. Pirates were selling their copied games door to door in housing estates, at places of work, in car boot sales and anywhere else they could find a customer. This caused huge problems for game publishers. I was working at Codemasters at the time and we were forced to lay off about 60 people. This was terrible as there were no other industry jobs for them to go to, as everyone was having the same trouble. The number of games published shrank dramatically. In 1999 there were 100, in 2000 there were 78 and in 2001 there were just 33. Yet the PSX remained in production till 2006, so software publishing for it collapsed just halfway through its sales life.

The Dreamcast from Sega came out in 1998 and used a special unique disc format called GD-ROM. Once this was circumvented with things like the Utopia bootdisk it was game over. Piracy became rampant and the Dreamcast died after just a couple of years with over 10 million sold. This piracy is sometimes credited with not only seeing off the Dreamcast, but also removing Sega from the console hardware market completely (as ever there were other factors that muddy the waters somewhat, what is for sure is that losing so much revenue did not help). It was a huge loss to the industry.

It could be argued that these games are actually a big part of what is wrong with the games industry:

• They use up a disproportionate amount of the available development talent and finance.
• They hold the focus of the media when, in fact, there is a lot more going on that doesn’t get the press attention that it deserves.
• They usually only appeal to a narrow demographic, thwarting the wider acceptance of gaming.
• They are usually difficult, inaccessible, for a non gamer to get into.
• Their genres and subject material are usually limited and intellectually and emotionally stunted. (Let’s make another alien shooting game.)
• They are far, far too expensive for customers to buy. This is a factor of their high development costs, their limited appeal, their high risk and the large slice the platform holders take out of each one. Most games would still be too expensive at half the price.
• They use the limited distribution model of cardboard and plastic.
• Usually they have no room for user generated and/or episodic content.

But now the winds of change are blowing through the industry, courtesy of Nintendo, casual gaming, free MMOs, handhelds, social networking. All of these and more are changing the way the public looks at games. And the industry, eventually, will have to follow the customer.

Quite simply, a publisher will find that they can get a better return with less risk by not doing traditional AAA blockbusters. They will see that they can use their finance and development resources in ways that are better for their business.

The film industry learned this a long, long time ago. If you are going to invest a lot of money in a film make sure it appeals to a very wide audience. Don’t spend the big money on art house movies. We will follow suit and the current generation of AAA titles will be looked back at as an anomalous growing pain of the video gaming industry.

And less aliens will be shot.

Editor’s Note: To read more articles by Bruce Everiss, click here. He can also be found at ArtForums.co.uk.

Thieves using bit torrents are indulging in the biggest orgy of theft in the history of humanity. When they can steal with no chance of getting caught then they will. How they justify this appalling lack of moral fibre to themselves is beyond me. I have heard a whole litany of empty excuses from the thieves to try and justify their actions, but the fact remains that they are benefiting from other people’s labor that they should have paid for but haven’t. So they are thieves.

And they are stupid because they damage that which they love. Activision are not about to go out of business because of this particular frenzy of stealing. But in the past plenty of other game companies have gone bust because of game theft. And many top creative game developers have left the industry forever. We have lost a huge number of potentially great games to piracy. The company doesn’t even need to go bust, they can just allocate their resources elsewhere. There are nearly as many Nintendo DS consoles in the world as Wiis, PS3s and Xbox 360s combined. So where are all the great DS games? That’s right, piracy stops them even being written.

The fact is that if you want people to work for you creating great games then you have to pay their wages, as they have to pay for their food and rent just like everyone else.

There are a number of possible solutions to this massive stealing problem:

• Educate the thieves. Explain their low morality to them and the harm they do to the development of games. I think this has no chance of succeeding, as they have proven, on a massive scale, that they are perfectly happy to steal.
• Technical protection. This is the best solution. A game console’s main purpose in life is to serve as an anti-piracy dongle. All three current generation home consoles succeed at this, the PS3 works best, followed by the Wii with the Xbox 360 putting up a distinctly average performance. But open, multi-purpose platforms like the PC and the iPhone lack this technical protection and so piracy is rife.
• Alternative business models. Monthly subscriptions and in-game items are increasingly popular alternatives to up-front game purchases. Many people are perfectly happy to spend thousands of dollars on a simple browser game instead.
• Using the ISPs to stop peer-to-peer distribution of stolen IP. This is probably the main viable route. Already implemented in France and proposed for the UK and most other civilized countries. The scale of thieving is so enormous that the thieves are not directly punished, instead they get a warning letter. If they continue to steal they get another warning letter. Then if they ignore both these warnings they are disconnected from the Internet. A very mild course of action against thieves, many of whom have stolen thousands of dollars worth of stuff they should have paid for.
• Publisher activism. Game publishers can go after the thieves that are stealing from them directly. However the thieves don’t like this and indulge in massive online activism to stop it. So the publishers, even though they are morally right to protect their property, are loath to take this sort of action for fear of Streisand effect.
• Government action. There are millions of thieves out there that the government is turning a blind eye to. In fact, government authority is being totally usurped. If I fancied a new Ferrari and went and stole it the police would show a great interest. However, if someone steals a game that I publish, using torrents, they aren’t interested. Yet the Ferrari and the game are both the result of people’s labor.

Eventually something will be done, as stealing on this scale is unsustainable whatever way you look at it. In the meantime ,game development suffers and the thieves are too stupid to realize it.

Editor’s Note: To read more articles by Bruce Everiss, click here. He can also be found at ArtForums.co.uk.

Compare and contrast GoldenEye with Avatar from Ubisoft. This has turned out to be a very damp squib which is very rare from Ubisoft, who are perhaps the best performing publisher in this generation of game consoles. Yet it is based on what is already one of the highest grossing films of all time. And the publisher did everything right. But still they would have done better commercially if they had used their resources to produce a game from one of their existing properties.

So why do games made from films do so badly?

• Films, like the books they are so often derived from, are sequential media. One frame follows the next in an unbroken sequence from beginning to end. This sequence is used to tell a story, usually in the time-proven three act structure. Games, however, are non-sequential and often don’t tell a story. Instead the best games allow the player enormous latitude to do what they want, when they want. The most nonlinear games are called sandbox games, Elite being one of the all-time classics and Grand Theft Auto being a massively successful current franchise.
• The film industry sees video games purely as just another form of merchandise for the film and another income stream. Their priority is getting people into movie theaters and getting them to buy DVDs. They may pay lip service to video games but the reality is that their concern is secondary at best. In fact, the film company should be paying the game publisher to make the game, not vice versa as it is now. The game is valuable marketing for the film.
• Films are not interactive, you sit down and get comfortable and then the film is imposed on you, you have no influence whatsoever over events. Video games are the exact opposite, they are very highly interactive, the player directly influences events on screen. So one is a passive media, the other is an active media. Also films are totally lacking of the fundamental mechanism of games where the player is rewarded for their success.
• Perceptions. Because of its history, star structure and ubiquitous marketing, the film industry is perceived as being bigger and more important than the video game industry. It isn’t. The biggest grossing first week of an entertainment property was a game, Modern Warfare 2, and the second biggest was also a game, Grand Theft Auto IV. The biggest games now do half a billion dollars in their first week. And Modern Warfare 2 has already gone on to gross over a billion dollars, something that only five films have ever managed to do. World of Warcraft has outgrossed every film in history.
• Huge differences in development timetables and philosophy. A film spends a long time in pre- and post-production. Actually shooting the footage is immensely expensive for every day, so is compressed into as short a timeframe as possible. Mainstream console games contain vastly more human labor than films do. A large and highly skilled team will spend two years or more working long hours to generate the content. There is (wrongly) very little pre- or post-production. So when a film and a game work together for a simultaneous release there are massive problems. Tellingly the GoldenEye game was released two years after the film.

So there we have it, games and films need completely different creativity and content, they are like oil and water. And it works both ways. Films made from games are pretty rubbish too.

Editor’s Note: To read more articles by Bruce Everiss, click here. He can also be found at ArtForums.co.uk.