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Soapbox: Pirated P2P Games: Free Electronic Distribution for Independent Studios

October 5, 2005
 

Software piracy is a thorny issue, with guesstimates putting its total cost to the industry into the hundreds of millions, if not billions of dollars annually. Actual financial loss is almost impossible to gauge, and the subject provides fertile ground for debate on topics such as "Which came first - the scurrilous pirate or the overpriced product?" Whether you believe the actual loss is small or large, there is little doubt that having product available at no cost at all reduces earned revenue. This affects everyone: the retailers, the publishers, and - perhaps most important of all - the developers. Arguments that turn the rich corporate retail chains and huge publishers into an unpopular straw man tend to evaporate when turned upon impecunious studios.


Article illustration by Greg Brauch

In the midst of this, common knowledge asserts that one particular kind of developer is a special case: the independent studio. These developers do not exist in the lengthy chain of domain-experts, a chain driven by business and able to profit healthily despite dismal failures, a chain arguably uninterested in the aesthetic quality of the product. Generally fighting for their own survival against the specialist distributors and retailers, they don't have any choice but to price aggressively, to undercut the competition. They can't take blame for controlling pirate-encouraging monopolies, but their sales figures are orders of magnitude smaller than their rivals, so that each lost sale hurts them far more. Perhaps there is no-one that so loathes the software-pirate as much as the indie developer...

But what does it mean, exactly, to have your independent game be pirated? There are two main channels for the distribution of pirate games, and we'll look at each separately.

Retail

The one most feared by the EAs of this world is the one that shifts product fast, in bulk, and charges money along the way - these people are actually stealing paying customers for no more effort than the price of a blank CD. These are the market-stall pirates and the dodgy high-street retailers buying product that "fell off the back of a truck, no questions asked (...none answered)."

First question, the most important of all: what is the actual financial loss (AFL)? On a personal level, individuals will rightly get upset that people who they hoped would love their product are instead stealing it and depriving them of pay. However, the studio only counts money. If piracy cost the studios nothing, there would be no problem. Let's think about this for a second: "actual financial loss" is the difference in profit between two situations, all aspects taken into account. For instance, if a pirated game is bought for $1 by someone who would never have paid for it anyway (perhaps a child with very little pocket money), then there is no actual loss. Obviously, if we were to take everything into account, we'd have to factor in whether this would cause the child to be more inclined to piracy at a later age, when they were in fact able to afford not to.

So, what money could the indie have earned without the piracy, and how much does it end up earning? The biggest challenge facing the indie studio trying to sell their game is getting it in front of the buyer. Retailers block-order from large distributors, who are in exclusive partnership with large publishers. Indie studios that can only generate one game's worth of revenue simply aren't worth it for the other specialists to endanger their nice, fat, exclusive multi-title deals in order to work with. As a result, independent games do not make it onto shop shelves. They cannot get any in-store promotion, and usually can't even get into the on-order catalogues - partners may be interested, but they have their own backs to cover.

So, any game sold at retail is a game sold where the developer couldn't have been on sale anyway. They not only wouldn't have been in that shop, they wouldn't have been in any shop in the whole mall; they simply were not and could never have been in that "market". The AFL in this case may well be insignificant.

(But there's an upside - just because a dodgy shop is there doesn't mean everyone nearby buys from it - on the whole, customers know when the shop or stall is selling pirated games. Further, if the indie's dream of getting into retail is for exposure to a much larger volume of potential purchasers, and their networks of friends and families, a free sale with no revenue and no supply cost, no distribution cost, no partnership maintenance cost, etc is free advertising to precisely the audience they cannot reach to start with.)

Now, let's look at the audience gathered around the market-stall, wanting to buy the latest and best pirated games at knock-down prices. These are the cash-poor gamers, the students and part-time workers - the time-rich hardcore gamers with an insatiable appetite for ploughing through games fast, whose habit would cost them way beyond their means should they ever pay full price. In short, these are the Early Adopters - the people who, if they love your product, and know about it, will each generate 5, 10, or more sales. They are each the center of their own informal social network of advisees who know them as the go-to guys for expert opinion on which single game they should buy this month: "always ask the guy who buys 5 a week, he's the best placed to know". Giving freebies to early adopters is a tried and tested marketing tactic - this is what loss-leader campaigns are all about. So, again, is the AFL here large enough to be significant? Or... is the studio perhaps getting a net gain?

Supply-chains and Distribution Networks

The other main distribution channel is the Internet, originally from warez sites but increasingly via person-to-person now that so many people have broadband. But that's a gross simplification: the modern software pirate employs an advanced distribution network, using many of the best practices in modern logistics management, distribution systems, etc. Just as with legitimate software distribution, the pirate networks are dominated by distribution chains, where each group in the chain is a specialist and entirely reliant both upon the existence of other specialists, and upon maintaining solid partnerships with them. Arguably, the pirates are better at it than the mainstream groups: they do digital distribution faster, more efficiently, and with fewer mistakes than anyone.

Why? Perhaps because they have no shareholders to answer to, and no profit to make - they can even do it at a loss. The only thing they care about is reputation and challenge, and the biggest challenge of all is to provide the best of the newest games faster than anyone else. This is especially true given that the source / supplier of product - development studios - aren't entering into any agreements with anyone, so the start of the chain is never blocked by exclusivity contracts; any decent cracker can start up any time they like. So, as a pirate, you have fewer legal blockades (you're ignoring all of them) to slow you down, and no reward at all unless you can be faster than anyone else. It's as if the publisher/distributor/retail chains were only being paid if they were the first chain to sell 100k units of the product - the pressure to perform would be much greater.

Independent game developers cannot sign up with big publishers - they are unproven teams producing low-budget games usually pitched at a new or niche market. All in all they represent - on paper, at least - a massive risk. Statistically speaking, the potential reward for a hit indie game, discounted for probability of occurrence, just isn't big enough to make the risk even close to worth it.

The nature of retailers is such that the only way to get into a large number of stores is through spending vast amounts of money, or by being a primary partner of the retail chain. Quality and efficiency of distributors varies wildly, and it's rarely worth their while to distribute small-selling games - the constant overhead is too great.

So, independent studios may have an excellent game, but realistically they are usually shut-out of the retail process. They can't get a distributor, they have no marketing, and no-one with the skills and experience to do this is likely to choose to work with them. Even online distribution is difficult and expensive: whereas 4Mbit home broadband is cheap, and can download many files quickly, this just makes the situation far more expensive for the distributor. In order to service thousands of customers, the distributor nowadays needs a multi-gigabit connection (all those home broadband accounts soak up your pipe rather quickly), and the hardware and software capable of maintaining such high sustained throughput.

This is where the pirate networks come in - each one is a multi-level distribution network where the costs are already paid for (legitimately or not), filled with domain specialists who don't even need to partner with you, who care more about being first than about how many units your game may or may not sell. A better game will, of course, always inspire more people to try cracking it, but in this widely varied and non-rationalized market there's room for many different motivations. There are plenty who will crack and distribute your game just "because it's there", and plenty more for whom the challenge of cracking hard copy protection is more of a motivator than the quality of the game itself. In the mainstream world of legitimate distribution, philanthropic distributors tend to be shut-out of the best chains for not being profitable enough for their chain partners.

And, where a publisher may well insist on particular corporate-approved commercial copy-protection systems, the pirate networks are likely to be more interested in the proprietary in-house system you came up with yourself.

0-day Warez

Pirate networks move very fast; the watchword is "0-day," referring to the time between release and the crack appearing. The people who go to warez sites are the impatient as much as they are poor, and know they can get the latest and greatest any time they want from these sources. Indeed, it is common for it to be faster to find a warez site and download a pirated copy than it is to wait for stock to arrive in the local shop and drive down to pick up a legitimate copy. There are even people who claim to do both - they are happy to pay for a copy, but aren't willing to wait, so will pirate it first, and in parallel order a copy from a retailer to "make me legal (as soon as it arrives in the post)."

How does all this benefit the indie studio? Two benefits are self-evident: simple visibility (being seen, gaining name-recognition, etc, but without spending money on a marketing campaign), and exposure to a wider market (through social networks demonstrating your game to peers). But we should really be looking at what it is pirate networks do best: distribution. Got a 2GB game to distribute? Use a pirate network to get it onto 10 times as many desktops as your own marketing and sales activities - including free downloadable demos - will ever manage to colonize. And ... practically for free. Just as studios making shareware games have found it is often easier to sell a game for $10 than for $2.50 for myriad psychological reasons, the perceived value of getting a $30 game for free is greater than of getting a limited, official demo from the developer.

Clearly, distribution is of no additional benefit beyond the two benefits already cited unless it can also increase sales in ways that the others do not. In this day and age it is common for a game to consist of two games using mainly a common ruleset and engine - a single-player mode and a multi-player online mode. It is impossible to make an offline game uncrackable, mainly because the customer has full control of the hardware it is running on. However, an online game can (and usually should) be run mostly on the server (to prevent multiplayer cheating), which fundamentally alters the possibility of cracking the copy protection. Even a game sold as purely online is entirely vulnerable in its offline components - it can be cracked so that whatever engine, assets, etc were on the DVD can be played locally - but the cracker will always remain locked out of the online play.

Shareware in the 21st Century

Make your game with strong single-player and multiplayer aspects. Do not skimp on either - make sure that someone who shells out the asking price only intending to play the single-player parts will feel they got a fair bang for their buck. Put on some good, strong, copy-protection. Then, go out and tempt the pirates - get your game onto their networks, making sure that someone with a cracked single-player version will keep getting in-game reminders, from the subtle to the overt, that however good this game is, it's even better when played online.

You could even tread in the footsteps of one of the greatest shareware successes of all time - Doom - and make overt references to the legality-or-otherwise of the copy being played:

"If you are having trouble going online to take this game to the next level of entertainment, it's probably because you stole the copy you're playing. That's OK - you know, now would be an excellent time to decide to buy a genuine copy. You got one over on us, took our hard work and got a free ride - looks like you're enjoying it so far; glad you like the game :) - but we really would appreciate it if you did us this little favor, and helped us pay our employees for all their hard work."

______________________________________________________

[Article illustration by Greg Brauch.]


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