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Opinion: Game Developers Should Love Their Pirates
Opinion: Game Developers Should Love Their Pirates
February 14, 2011 | By Tadhg Kelly

February 14, 2011 | By Tadhg Kelly
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[In this Gamasutra opinion piece, London-based lead designer and producer Tadhg Kelly tackles the issue of making money in the face of piracy, offering tips and examples to help developers earn what they deserve, without the need for restrictive DRM.]

I came across this video from Extra Credits yesterday. It's about piracy, and concludes that although DRM (digital rights management) never works, players should be good folks and pay for their games.

Their argument is witty, but it's not new. It paints file sharing as stealing money from developers' mouths, and so has an either/or perspective. Either we get paid or we go out of business. Either we see sales or we're bust.

They're seeing their business as a content business, where the content is the thing that has value. This is not the case.

The games industry, like all the arts, is about finding and interacting with fans, so that value comes from a relationship. As we slowly move into the post-platform, single-franchise future, understanding the difference between the two is crucial.

Thomas Paine

The pattern of sharing, copying and stealing as a way to generate sales is not new. The Internet may make it more apparent than ever before, but it's at least as old as Thomas Paine's Rights of Man.

When Paine wrote his seminal tract during 1791 and 1792, it caused a storm. Framing the ideas of the French and American Revolutions while dis-enfranchising the rights of kings, Paine's book became a touchstone for a generation of intellectual thought. It also sold in excess of 250,000 copies (which is like selling 5m copies today) and made him a household name.

Paine's book actually sold in two parts. The first was published as a typical high priced book in 1791, and the second in 1792 in a cheaper edition for wider circulation. It was the second part that drove sales and turned Paine into a storyteller. The question is why.

The curious aspect of this story is that many customers never owned the first part, and yet to understand the second part they would have required at least some familiarity with the first. The simple answer, of course, is that more people read, shared and passed on the ideas in the first part than physically bought it.

We see a similar pattern with many game franchises today, where the second or third edition of the game is the one that actually achieves the maximum potential sales. Even in games that have a story element, such as Halo, this is shown to be the case. Again, the only explanation is that more people must have played the first game than actually bought it.

Art seeds the idea in the audience that there will be more art. When Damien Hirst creates a newsworthy shark in a tank, it seeds the idea that there will be more work of similar bizarreness. He finds a following that want to view, buy and interact with his art for the long term. However in order for that to happen, it has to feature in a gallery. The gallery makes access to the art free, which exposes it to millions of viewers, and some of them go on to become customers and fans.

The One Shot Fallacy

Many developers and publishers never think in terms of sequel potential, or they only think in terms of sequels if the first game that they have made turns out to have been an explosive hit. Many of them also fail to maintain or continue the conversation with their customers between releases, and this means that they fail to maintain the connection that they were building.

They are thinking of their business in the terms of one-shot economics. One-shot economics views their game as a bullet in a gun, and they have only one shot to hit the target. The target is, of course, that the game has to make a lot of money. It can't fail, and can't only acquit itself. It must be a hit, or else the developer will be destroyed.

This quickly leads to ARPU (average-revenue-per-user) obsession. The focus is on distributing the game but making sure that every sale is achieving enough to meet revenue expectations. This places the publisher in a state of conflicted ambitions, because they also want to ensure that the game sells many copies.

That's where advertising costs come into play. In order to make a high price game sell big, you better have the muscle to tell everyone on Earth that it exists. And to do so in as short a time as possible to avoid discounting and dropping popularity.

That's how the games industry basically thinks. A lot of indies think the same way, for these reasons:

- That's the advice that they read
- It's the conventional wisdom
- Some of them come from the bigger industry and learned this there
- Several of the major sales channels are constructed to sell in this way
- It seems like common sense
- They're afraid of customers

The only difference between indies who think this way and big publishers is just a lack of deep pockets. They can't afford the big marketing spend, but still charge more than they should for copies of their games (I think the optimal price for indie games is $5, not $20) to get that ARPU.

This works to keep their game in a small niche and frustrated that their customers seem intent on ripping them off. Viewing customers in that manner will drain you of enthusiasm for making games because it feels like continuously fighting a hydra in order to get a shot at a golden fleece.

One-shot economics mostly don't work because the developer or publisher makes the mistake of thinking that all sharing is the enemy (torrenting, second hand sales, rentals, borrowing in the school playground etc) because these activities take away from the one shot of ARPU that they need. In so doing, they actively work against the most powerful potential weapon in their arsenal: Seeding.

Value

Realize that your game content is entirely valueless. You may have spent days, months or lifetimes working on it, but what you have created has no tangible value. At all.

However, before this makes you commit suicide, consider this: Google has no tangible value. Facebook has no tangible value. Twitter has no tangible value. And yet each of them is considered to be worth many billions by investors and stock markets, and each makes billions in revenue. Google is a $200 billion corporation that has made its fortune on a product that it gives away, completely free, to everyone. The same is true of the others.

The reason that they, and many games, have zero value but plenty of worth is that they are gateways to something else. Google makes money from advertising. Facebook makes money from advertising and sales of virtual goods. What these companies are doing is leveraging relationships (in search and social) on a vast scale in order to make a profit. The fact that the product is free is why it spreads so far, and the revenue comes later.

This does not mean that you have to run a hosted game that gives its content away for free all the time and charge for virtual goods. You can, but it's not the only way. What it means is that your game, and you as a developer, needs to be built with the idea of forming a connection with players, and to do so with as many players as possible. The relationship that you establish with those players is the true source of revenue and success. I call this single franchise publishing.

For example, suppose you made a cool strategy game and sold it for $10. You expect it to be pirated by various sites quickly. Your choices are to install some DRM to make sure that every copy sold is legitimate, and then have a running battle with pirates who crack that DRM.

Or alternatively you can let the pirating just happen and instead build social features into the game (which could be as simple as links to your company forum) and a requirement that people who need customer service buy a legitimate license. Then you participate in your forum all the time and start telling everyone about version 2 of the game, which will be out in 6 months and cost another $10.

If your model is based on one-shot economics, the risk is that you will not make your sales requirements first time. So the second option (let pirates be pirates) is directly eating away at your bottom line. On the other hand, if your model is based on valuing relationships then it doesn't matter.

A pirate will likely pirate anyway, but instead you are focused on converting them into a customer eventually. And when the second version comes out, the process is the same. More customers, more pirates, more participants in the community, and here comes version three.

What you are doing is seeding relationships, and then those relationships are yielding positive dividends from customers. Regardless of where the customers come from, legal or otherwise, they will eventually pay you money out of a sense of support, interest, convenience or any one of a dozen other purchase motivators as long as you don't let the relationship die.

Of course, you can apply the same thinking to online games, massive multiplayer games and social games. The main difference is simply the frequency of releases and the kind of financial model that those games can support. Each is making money from relationships in different ways, but relationships are at the heart of their businesses.

The ultimate goal in all this is to own a keyword. What that means is that your game franchise or company becomes a search term that Googlers use in their day-to-day searching. Establishing a popular keyword, or becoming the top search result for a keyword that already exists, creates a 'to the winner, the spoils' effect. And the best way to do that is through building relationships because that will result in links. Links are the currency of the keyword economy. The more you have, the better.

Minding the Gaps

The chief argument leveled against this kind of thinking (such as by IFPI in their latest report) is that sales gaps emerge. They note that in the last seven years, sales of physical music have dropped, and that digital sales have not covered the gap. The accusation is to say that all this talk of sharing and fan clubs may well add value, but it's about the bottom line. So let's get real here. We need to protect ourselves.

Indeed. Let's get real. The reality is one of two situations. Either:

1. The IFPI's measurements are incomplete because they do not take sufficient account of the increasing numbers of independent artists who simply don't bother selling through traditional channels.

2. The IFPI's measurements are correct, and the amount of sales revenue has in fact dropped.

Assuming the second version is more likely to be true (actually it's probably a combination), what layer of the distribution chain does it come out of? The answer is the publishing layer.

The scare story around piracy infers that in the future a developer will no longer be able to make a profitable living, but this is just not the case. The Internet automates sharing and connection between the artist and his fans. So in games what this means -- like in any industry -- is that the price of distribution drops to near zero. That also means that the amount of available competition increases, and so the sustainable price of the product also drops.

The missing revenue caused by the sales gap is not hurting creators. What it's doing is slowly putting a lot of people who work in the publishing factory out of jobs because what they do is simply less essential. Single franchise publishing probably implies that much of the one-shot economy will shrink down to a more manageable size. Right or wrong, there's not really much that can be done about that, however, as automation of the processes that publishing used to offer is here to stay.

The essential reason why you should love your pirates, sharers, borrowers, lenders, second hand retailers and so forth is that they become your new levers of publishing. Everyone that plays your game, legitimate or otherwise, is another node in your network that may spread the name of your game and its marketing story. Each is an opportunity to build a relationship, convert into a customer, become an influencer on your behalf, and so help your single franchise to spread.

The real gap that you must avoid is not a sales gap. It is a conversation gap. Not talking to your users, disappearing for years at a time to work on your next game, and otherwise simply vanishing off the radar resets all of your relationships back to zero. If you allow that gap to form then you've sacrificed the potential of everything that you've built for nothing, piracy or no.

[An Irish lead designer and producer living in London, Tadhg Kelly is the author of a challenging book about, as he describes it, "Reclaiming games as an art, craft and industry on its own terms", entitled What Games Are. The blog for the book is whatgamesare.com. You can also follow his tweets on Twitter (@tiedtiger).]


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Comments


jin choung
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awesome article.



i think scott mccloud argued in one of his "understanding comics" books that micropayments will not be a way for few people becoming spectacularly wealthy but it will instead allow a lot of people to make a living. and that seems to be the trend in a lot of "content" related issues as it pertains to digital distribution - whether it's comics or games.



publishers will no longer be foci that require vast sums of money to simply do business.



but this will probably necessarily mean that "business as usual" will have to change in terms of the kinds of product being made.



games used to be an endeavor that was run out of a bedroom or garage by one or two people and that might be the kind of thing that we'll go back to - with "AAA" (cue dripping sarcasm) titles becoming few and far between.



can't say that i'll feel sorry about that. games were fun and cool long before they became "respectable" and a "business". i'd rather deal with developers that care about games in earnest rather than people who are concerned about "bottom lines" and "share holder value". and i speak as someone who has worked in games.



besides, minecraft is awesome.



-------------------------------------



and yes, i've always thought that the sanctimonious berating of piracy and piraters was a dumb thing to do. you're not gonna win like that.



better to, as you have said, build a community around the game. make "owning the game" a point of pride and make "membership have its benefits". play up the benefits of ownership rather than brow beat the "offenders".



oh well, as you seem to indicate, i believe that 'what will be, will be". what's gonna happen is inevitable. the faster people realize the lay the of the land, the quicker they can shift to sensible business models and not nurse cataclysms that are all the larger because people insisted on holding out stubbornly to the bitter end.

Luke Quinn
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You mirror my views almost exactly; I can definitely see a turn towards indie developers on the cards as gamers grow increasingly weary of the likes of EA and their "Same Old Crap 2014" approach to an industry that is entirely based around ingenuity and experimentation.

I have trouble watching the antics of the big name companies of today without reminiscing about Atari circa 1982.



Piracy has become a simple fact of nature now-a-days, so copying the movie industry's 'If you pirate a movie we will hunt you down and stomp you' tactics is simply a waste of effort better spent elsewhere, instead a new approach is needed.

Dragos Inoan
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You know... piracy should simply be regarded as shareware. EA has been doing a smart thing lately by providing free DLC at launch and even large content chunks for legitimate users (as it was the case of Sims 3). It's much better than investing millions of dollars in consulting and DRM and see it flop and only anger the legitimate buyers.

Bostjan Troha
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Rarely one has a chance to encounter a more condescending opinion, backed by so many flawed arguments.

Kyle Orland
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Would you care to expand on that a bit, Bostjan?

Megan Fox
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Tahdg tends to support his arguments by quoting himself - it is not analysis then so much as an opinion piece (opinion wall? it's quite a few pieces), which he's been building up for quite a while now. In this case, it makes the opening of his piece a bit, well, as Bostjan said, but gets better once you get past that.



All that to the side, I don't disagree with Tahdg's basic point in this article - that you should try and use your pirates, rather than simply abusing and attacking them. Any significant time you spent trying to build DRM will be cracked in seconds, and could have been better invested in figuring out a way to squeeze some ad time out of your pirates, or some tiny monetization - think less in terms of how to stop piracy, and more in terms of how to use piracy to generate at least sufficient revenue to somewhat offset the effect of piracy. A very few pirates won't bite, but many are pirating simply because they can't afford your game (but could maybe afford a 99c wotsit embedded in the game, or help you market it because they do still care about the product, or whatever else).

Brett Williams
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Promoting a purchase was and still is the key goal. Most of the solutions simply lose sight of that. Shareware and DRM have existed for such a long time, from splash ads at the beginning and end of levels, to limited content, etc. While designed as anti-piracy they were more designed as marketing.



The problem has not really been the solutions themselves. At this time in their lifetime the cost of implementing those features is not very high. You will likely spend more on product packaging (the digital sense, installer development, patchers, etc.) then on adding simple casual piracy DRM. The issue is that the solutions are typically implemented poorly, many without even providing a purchase path.



You don't need to stop a user from using your software so much as you need to give them the option to give you money if they choose to do so. Making it inconvenient to pay you puts the burden on the consumer to put forth more effort than you are willing to put to reach out to them. If you aren't willing to put in the effort are they going to be?



If you know someone is going to pirate your game, the least you can do is provide a path for the customer to purchase the product in the event they do decide to do so. This has to be the single biggest miss I have seen in the last 5+ years.

Luke Quinn
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A very interesting article, and one that I will have to ponder over at length in the coming months.

You make a very strong argument for the 'build the community' approach and it's hard to disagree, but as with most other indies I will undoubtedly be apprehensive about underpricing my latest 'masterpiece' after putting so much hard work, long nights, and oodles of stress into it.



I think the community aspect is something I'd really like to build regardless of my final release strategy, so at the very least you have brought the importance of that into my mind.

Thank you very much for the mind fodder.

Dragos Inoan
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You know, Braid was severely screwed by MS because it costed 1200 points to purchase at launch, the same amount that Halo and Psychonauts costed iirc. Therefore most of the people who thought with the wallet compared it to full xbox games sold cheaply and decided not to buy.

Luke Quinn
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Yeah, I've released two games now at $3 and people seem to react with "What! $3? Why so damned expensive", so I can definitely see the advantage to cutting the profit margin a little to move some extra units, but you have to be pretty confident that you are going to sell extra well to make up the difference.



That said, perhaps people would be less reluctant to pay more for a sequel to a game they already enjoy, so moving the first game at a lower price point in order to whet their appetites seems logical.

Tadhg Kelly
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Thanks for the comments.



I agree, the community aspect is the most important part. The issue of price is very sensitive, especially for indies, because it feels like a huge gamble. If your game is not as popular as it might have been, goes the fear, then selling at $5 is effectively just giving $15 away.



The tension there is that $5 is much more of a try-and-see price for most players. It's on the side that encourages having a go because it's less than the price of a cinema ticket. Yes, you need to sell 4x as many copies of the game to cover it, but that's easily done in a world where you have no physical reproduction costs.



However, regardless of price, it's all about the relationship. If you have the first version of the game ready to launch, then do you have the second version on the cards for 6 months later. A single franchise is not a single release, it's multiple ways for users to keep coming back to your game world.



I think many indies are uncomfortable with that because - creatively speaking - they don't want to get stuck making the same game again and again. A fair point, however you can have continuing franchises that act as the outward face for a number of different game concepts. That's what Games Workshop and Nintendo do, and as we can see it works really well. They keep the relationships going.

Luke Quinn
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That's very true; Perhaps the key is to make a smaller, cheaper teaser that acts as an introductory tool and then continue working on it with the aim to have a more fleshed out (and more expensive) sequel to carry on the momentum. (Effectively making the first game and it's sequel simultaneously)

Tadhg Kelly
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Sure, that's one way to look at it, but why stop at 2 releases?

Luke Quinn
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LOL - My mental health :D

I'm not sure if I could do anything along the lines of a teaser sized retail release for my current project, but I am now seriously considering making a free little demo to throw around prior to release and use it to start channeling people back into a forum in hopes of converting them to a sale once its done.

Do people still play demos now that they can just pirate full versions? :D

Tadhg Kelly
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In my opinion, demos often don't work.



They're the singles-and-albums business model, but the problem with many games is that it takes longer to get invested in a game and see whether you like it than most demos allow. Players have to learn how to play well, then play some more, before they really know whether they dig a game or not.



In another article on my blog ( http://bit.ly/dYu4C3 ) I wrote about connections, how games want to draw players in and so teaching them how to play and become a part of the game is also how players become engaged. Most demos mess this up because they make the mistake of thinking everything has to be about instant fun.

Luke Quinn
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I'll check out that link later on (during a break), sounds like it might be helpful in deciding exactly how to present the demo.

The whole reason I want to release a demo for this project is simply to teach the player how to play the game and allow them to see what the game is really about; This game would not do well with any kind of time limited demo or rushed tutorial, so hopefully allowing the player to get stuck in and do as they please for as long as they want within the bounds of whatever I allow for the demo will pique peoples interest enough to make them want to see what the full game has to offer once it is released.



My first game was released on the Xbox Indie channel and really suffered from the forced 8 minute demo period, so I am very very wary of that.

My current game will only make an appearance on the Xbox if it generates enough attention on the PC market to earn an arcade contract so that I can allow a self paced and easy going approach to deciding if you like the game enough to part with $10.



Maybe the pirates will prove a valuable distribution tool if I upload the demo to some torrent site and name it as if it's a stolen pre-release alpha :P

Tadhg Kelly
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Well you could do what iD did with Doom, which was to release a fully functional version of the game that contained the entire first third of the levels - including the boss fight at the end.



That overcomes the learning phase and lets the players really get into whether they like the game or not, and only then on to buy the rest. It worked out well for them :)

Tiago Raposo
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Great article. Read through and really gives us some new ideas to think about.



Regarding demos, I strongly believe good old Daggerfall had the best demo of it all. It had a huge island, many towns and dungeons, and no equipment or magic cap. Not even a level cap. One could play it for a long time and not get bored, but it always told you that the world is SO much larger than that. I was young at the time, but if it happened today I would have bought the game after playing such a wonderful demo.



On the other side of the scale, are games that mymic the movies model: play a little, see what it's all about and then buy the game to get the real experience. If you don't have the experience, you don't want to play it. Simple.





About piracy, I have pirated some games in the past. And, seriously, some of them gave me the impression that I didn't want to buy it. Recent example: Test Drive Unlimited 2. I've been waiting for that game since it was announced, tracked it on game review sites, etc. Then it launched, and then I looked for reviews to see how good it turned out (I was thinking of buying it, even though I didn't buy the original despite playing it a lot). Reviews told me the handling (the soul of a car game) was flawed, they broke what was working. Then I headed to the community, and people asked "but if there was a beta, why didn't testers told them the driving model wasn't good?". And the answer is the soul of this article: "I was a beta tester, and they didn't listen to us in this matter, despite general outcry from everyone." So, no money for them.

Luke Quinn
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Yeah, that's kind of what I'll be aiming for; Except instead of including the first few 'levels', I'll just make some custom 'demo' levels that allow the player to get used to the controls, figure out how to properly interact with the world, and get a feel for the style of game it is.

I'll allow quite a bit of play in the demo (not time restricted at all), but restrict the kinds of items the player will be given access to and have an up-sell section that talks about the additional features in the full game and how that would effect how the game plays.

I might even include the map generator/editor so people can toy around with that with a few of the options blacked out...

I've bought a few games that I wouldn't have otherwise due to spending a massive amount of time just stuffing around in the demo (Fight Night 3, Amped 3)

R G
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40k :)



Games Workshop is a good example because although they don't employ very many games, they have built upon those and develop rich histories for each.

Martain Chandler
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In 1990 I worked for a gentleman who wrote Mac software. He obsessively uploaded his products to pirate boards (special ones you could only access if you had a 14.4 modem!). I was floored. He told me, "they may pirate this version, but if they really like it, they'll buy the next version." Considering the small market size, he did very well for himself.

R G
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Exactly. What many people fail to realize is that most (at least console developers, I'm not sure about PC exclusive ones, haven't spoken to any) devs don't necessarily care that you pirate the game for yourself, as long as you play it. The publishers are the ones who always complain about it. Bungie, Bethesda, and Epic (spoke to them more recently) etc. are not going to bleed out because of piracy. As you said, if they like it they will often buy the next product.



I've heard the argument "Oh, well you're the exception, and they've already been successful". No, as an indie you need to account for piracy and act accordingly. Even if you're a small team (my case three people), offer something you can't get pirating.



Minecraft for example has the Alpha and Beta versions. You can play the Alpha version free and never touch the Beta...but you'd be missing out on certain things. If you're game is of high quality, you shouldn't have to worry about it.



I'm not saying piracy isn't harmful, but then again it is still blown up out of proportion. There will always be piracy. Trying to fight it head on like Ubisoft obviously didn't work, whereas a model like EA's "buy new get free DLC" seems to work pretty well. In other words, don't punish the players and users, but reward them for buying it. The others will jump on board if you're offering something that requires the full version.

Luke Quinn
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I think you raised and important point about how piracy really isn't going anywhere; It has been around since the early cassette tape duplications and I don't see any magic bullets in the near future, so unless you intend to release your game on the Master System using those silly little game cards as the sole media it is wise to remember the pirates whilst planning your release strategy.

Maurice Tan
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Interesting read indeed. Pirates are a very diverse breed, and they tend to be grouped together as some existing uniform collective consciousness. Some pirating kids indeed end up pirating for years to come, regardless of whether they have income or not. Others end up become high-end consumers who will buy 30+ games a year. Not to forget those in developing countries who can choose between a $2 copy or a $120+ copy for a "new" game.



While a segment of your target audience may not pay for your game now, whether they are highschool kids or college students who prefer to spend their money on booze, you can still create a long-term relationship with them, and yield you a strong brand awareness. Sure, it might take 10 years before they get a job and by then they could stop gaming, or become heavy consumers of legit software. And no, that argument probably doesn't hold true for the millions who have flashkarts for their DS.



But you can bet that those who pirated Deus Ex or Half Life 1 back in the day will likely become paid customers for the future iterations, when they ever come out. On the one hand, that doesn't help you as a studio when your name is Bullfrog, and everyone who pirated Syndicate can't really support your closed studio by the time they "grow up and get a job." On the other hand, pirates who pirate great games also provide a lot of word-of-mouth to their network peers, of whom some may buy the game. And they might become your most loyal fans on the long term, if you can survive that long.

Daniel Saner
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Add to that the fact that even if you were able to implement a DRM that actually worked and prevented the pirates from copying your game, which you're not, it is highly questionable how many among those who could theoretically afford the game would actually go buy it. The main allure of piracy is that the games are free. So it is probably much more likely that the impeded pirates are much rather going to pass up on your game altogether, and pirate a different one that they can.

Prash Nelson-Smythe
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Great article. Thanks. I never would have paid for it. But thanks to your quality free content I'm now aware of your company's products...



Regarding the "One Shot Fallacy" section, I think a lot of developers make the mistake of not being persistent enough. If you can keep refining and improving your half-decent original idea you have a good change of pulling in more customers. This can be done either as updates, add-ons or sequels. I suspect developers frequently want to move on to something else for their own interest and enjoyment. This separates out developers who work to please other gamers versus those who work to please themselves. It takes consistent hard work to produce something great and this means frequently doing things you don't feel like doing. Success comes from focusing on the customer, not yourself.



Developers must look at the barriers to entry to their game (there are always plenty) and try to minimise them. Piracy removes the barrier for those who are time-rich and cash limited. If you can effectively legitimise it or provide a low-cost option, you get to utilise powerful network effects. It might also help to charge different people different amounts depending on the point of sale context. Weekend deals are a great example. Why not create a generously time-limited demo too? The more options there are, the more likely a person will find the one minimises the barriers enough for them to take the plunge.



PS: I wonder how much more money Angry Birds on android would make if it simply offered a paid version in addition to the ad-supported free version.

Neil Young
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"We see a similar pattern with many game franchises today, where the second or third edition of the game is the one that actually achieves the maximum potential sales. Even in games that have a story element, such as Halo, this is shown to be the case. Again, the only explanation is that more people must have played the first game than actually bought it."



The *only* explanation? How about people buying halo2 because it looked like a game they wanted, even though they'd never played halo1? The assumption that people will *only* buy a sequel if they've played the first game doesn't wash, sorry :/

Arnaud Clermonté
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Exactly.

You'd think that someone who writes an article in Gamasutra would be able to find the other obvious possible explanations, such as:

the bigger xbox install base (duh), the bigger fanboy buzz and the "halo" brand gaining some notoriety and being heard by people who didn't play it.

Guido Franco
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Excellent article.

I'm happy to see someone else sharing with me a similar view on piracy and I'm impressed how even in this age saying that piracy is not one of the biggest problems publishers face is like saying in the middle ages that the earth moves around the sun.



One of the biggest problems people have in understanding piracy is that there are many kinds and reasons for it. It's not hard to see that the person who downloads a videogame he/she wasn't even going to buy in the first place belongs to a completely different world that someone who actually *buys* a bootleg copy of a game in the black market for the equivalent of 2 USD (which is a very common practice in Latin America and many countries in Asia).



A simple example to consider: if in USA people have not been selling and sharing bootleg Beta and VHS tapes of Ghost in the Shell and Akira in the 90's things like the Matrix and many other sci fi Hollywood movies wouldn't even exist, and the market for japanese animation DVD's in America would have been much smaller.



As for video games I can think of many examples of excellent games that are practically unknown to the general public and the only possible way many people have had to know and play these games is though illegal file sharing on the internet (Beyond Good & Evil, Psychonauts, Fahrenheit). Fortunately some smart people noticed this and now it is possible for gamers to legally buy these games throug Steam, GoG and other DD platforms.

Jacob Pederson
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This is so true. It's a huge chunk of Notch's success (I mean beside writing the greatest game ever). He's out there on his blog, telling you whats up with development every week or so. We love Notch not only because we love Minecraft, but because we have a personal interest in seeing him succeed. He feels not like a game developer, but like a friend of ours.



A LOT of building this relationship involves one simple rule. ACT LIKE A PERSON. Do not under any circumstances wax into market drone eloquence. If you fell asleep on your buddies couch, and didn't get the server updated last night, post this on your blog! If your lighting engine is bugged and you had to throw it out and start over, post that! That's what your community is interested in, human stories. The same thing you tell your buddies when unwinding. Notch is a genius at this. Tycho is a genius at this. And guess what, they both have legions of devoted fans :)

agostino priarolo
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I don't see the point in giving this article a bad critique.



It's already happening with multiplayer games: even if they can pirate the single player version, they cannot duplicate your multiplayer online content. Your servers and/or your online competitions/interactions are not duplicable. So pirating the single player will lead people to buy the full multiplayer version just because it's there were the real fun starts. It's free advertising, you are seeding the market with your product, and you are going to be paid for it. Lol it is so clear, really not difficult to understand.

Benjamin Marchand
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With all my respects for this article, I'm sorry, but it is just too much assumption-filled to make any conclusion about piracy being good for devs.



The biggest one is that you're assuming the pirate's social circle is full of potential buyers. It is wrong, we all know it as we all have "that friend who gave that pirated game to that other friend". Piracy spreads itself in the form of piracy, not in the form of potential sellings.



Plus, even if some devs can find good sides to piracy, never should one be promoting it. It's just counter-ethical, and you know how much those kids would take it for granted as "it comes from the dev".



I'm shocked to see such a title on a supposed-to-be professional site.

"Treachery is good", basically.

Tadhg Kelly
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...The biggest one is that you're assuming the pirate's social circle is full of potential

buyers...



I'm amazed that this isn't accepted as a conventional understanding yet, given that there are so many examples of it.

Arnaud Clermonté
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"so many examples of it"

... was that supposed to be convincing?



You give no proof whatsoever and you're "amazed" that people don't just accept your assumptions? You're not in church here..

Ben Shutt
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Eric Geer
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Pirating games is just too much of a headache...for the ease of playing I would rather just buy the game.



And like many have noted...Pirates generally wouldn't have bought the game anyway...they shouldn't even be included in your projected sales--or "lost" sales either. The only thing you are losing when pirates can no longer pirate is a group of people that will advertise and promote your game if it is good.



From my knowledge...the pirates that I do know...they generally pirate a game to see what the game is like--if its good... they buy...if it sucks..they won't...basically just pirate to demo.

Eric Geer
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And others just pirate to pirate....as bragging rights.



They may download 100s of games..but never really play any of them. They pirate to say look how many I got for free. But maybe only play like an hour on each one.



I know plenty of people that have done this with music---they brag..."look how many songs I have"...then you ask " how many have you listened to?"



Answer: "Um..not many."

David Hughes
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I can definitely second you on the music part. While I refuse to ever pirate a game anymore, because that sale is the ONLY revenue the dev sees (unlike music), I have a music collection far bigger than I ever really listen to.



Also, the handful of times I ever did try to pirate a game, it's worth my time to pay the full $60 to not have to crack it or attempt to get it working.

Eric Ries
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"The reason that they, and many games, have zero value but plenty of worth is that they are gateways to something else. Google makes money from advertising. Facebook makes money from advertising and sales of virtual goods. What these companies are doing is leveraging relationships (in search and social) on a vast scale in order to make a profit. The fact that the product is free is why it spreads so far, and the revenue comes later."



-- So true. Look at the iTunes App store. Plenty of "Top Grossing" games are Free games. Some that sit very near Angry Birds. It seems that the free to play model is a good way of not only making money, but also bringing in a TON of users!

Luis Guimaraes
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And there's another side often overlooked, one which rolls lots of money every year:



http://www.gamasutra.com/blogs/LuisGuimares/20090910/2974/Tricky_
Revenues_on_Secondary_Markets_Questions.php

Scott Jonsson
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Yea, all you have to do is make games that have online aspects so the pirates can pirate the single player game, but not the multiplayer one. That fixes all of it! But what if pirates can get through the multiplayer too? And no one has to buy the game to get all the features and all the community? Pshaw, that's just cheating, they'd never do that to us. No, I'm sure we'll be fine if we just accept that what we make has no value, and that we should simply rely on our customers charity to make a living. I'm sure if we just talk to them and blog to them enough, they'll start feeling sorry enough for us to donate 5 bucks to our paypal. Our coder will be so happy to hear that cause now he can buy his children some taco bell!

Daniel Saner
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You're assuming that no person would ever pay for your game if they could get the pirated copy for free. All that this means is that you have failed at providing potential customers with something, material or immaterial, that they feel is worth owning the game for. If you failed at that, your game is not going to sell no matter whether it is going to be pirated or not. You fail at providing an incentive to buy. A basic principle that many big-time publishers seem to be forgetting about. As the economics of non-sparse goods teaches us: "If you can't compete with free, you can't compete at all." (Google it).

Scott Jonsson
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I haven't failed to give them an incentive to buy because I've clearly given them an incentive to use. What has happened, is that my customer's incentive to buy has been taken away by criminals. The only reasons they have left to buy are: ease of acquisition, morality, and charity. Ease of acquisition is already questionable, but I guess some people don't have fast internet connections.



In a world where an entire game can be easily pirated, multiplayer and all, console and PC, do really think the games industry could survive? Could recording artists survive without live shows? I feel that your answer is probably that it doesn't deserve to survive.

Tadhg Kelly
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You're missing one incentive, the most important.



Fandom.



Fandom is not charity. Fandom is excessively spending on the stuff that the artists that you love produce just because it means something to you. Fandom is what building a relationship is all about (and I don't mean cynically), it scales to millions of users, and it's built many a million-selling developer.



Piracy does not destroy fandom. It is simply a way for non-fans to discover you. Your job is to then turn them into fans.

Logan Thomas
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Thank you for that quote, the google results were illuminating.

Ben Shutt
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One basic concept of economics is that a product is only worth what customer is willing to pay.



The fact that you spent a chunk of your life making a game may make it worth a lot to you, but does not automatically mean that the customer will find value in it.



If someone thinks that a game is worth buying, then they will buy it, otherwise they will not buy it.

Rob Hughes
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Tadhg, as a player and not a developer, I completely agree with the relationship statement. My buying habits have all revolved around either franchises I have a 'relationship' with, or from playing demos. I don't trust games that don't let me have a decent peak at it first through either play time or forum conversations.



Not everygame is to my taste, but I often aquire that taste through friends lending me a game or through a demo.



Neil: In my case I bought Halo 2 purely based on my experiences from Halo 1. If I hadn't have played that through people spreading the word from their experiences too, I'm sure I would have missed what were the best FPS days I have ever had. It's hard to tell how fun FPS gameplay is from a trailer, compared to playing.



Edit: Plus the value I see in the game is the world it has created. I tend to spend money on the books, t-shirts, dlc, etc. because I like the idea the developer has come up with (Bioware/Blizzard case in point).

Pietro Polsinelli
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First of all, thank you for the interesting post. I would like to focus not on the piracy issue, but on the concept you (nicely) summarized in the end with “The real gap that you must avoid is not a sales gap. It is a conversation gap.” This is obviously influenced by Godin’s writings.



This thesis could be supported with the successful examples (outside the gaming industry) of 37Signals’ Signal vs. Noise and their series of online products, or of Atwood’s Coding Horror and Joel Spolski’s On Software and their subsequent creation of Stackoverflow. In both cases, the conversation actually started before the service did.



I agree with you that this is a possible approach, and actually one I would like to pursue also in the gaming field. Now what are in your (and also the other reader’s) opinion examples of a successful conversation of a game producer with the fans, passionate users, expert players and so on? I also mean the kind of technological support provided (a Q&A forum? A blog? A comic series? A Facebook page with comments?) to support and interact.



An example that comes to my mind is what Chris Hecker is doing for http://spyparty.com/ . Other examples, ideas? Welcome also to tell me through tweets at http://twitter.com/#!/ppolsinelli

Thanks and keep writing.

Gregory Kinneman
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As usual Tadhg, I feel that we are on different sides of the fence in terms of our attitudes. But I think what you said about the Doom release makes a lot of sense. I've often felt that a demo that is too short actually dissuades one from buying the game. I bought (for $15 each) every Commander Keen game that Id ever released. Why? Because they gave me the 1st and 4th episode for free. What was the last game I purchased? Dawn of War 2. The demo for that was seven missions long. That may be only about 20-25% of the storyline game, but it was enough to get me to buy the game. If I had only gotten 2 missions out of the demo, I probably would never have invested in the other 30+. I was never a big RTS fan, but when I got a Starcraft 2 beta key I played that game to death and then some, and picked up my full copy on opening day.



But I still feel that piracy is something that can be very negative. For example, I know that World of Goo was very, very heavily pirated despite costing almost nothing and having an extensive demo. The piracy was actually (from what I can tell, given a gs article about it) higher than many games which cost more. How can a small developer that doesn't have the money to make a second game without a successful first hit handle this situation? If DRM can't even protect the big games, is there a way that one can protect the little guy?

Sting Newman
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"For example, I know that World of Goo was very, very heavily pirated despite costing almost nothing and having an extensive demo."



You assume that piracy = people who pirated world of goo would have bought it anyway. People who pirate a game are not interested in buying the game they pirated, especially when it comes to casual games like World of goo.

James Hofmann
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This piece is based on the idea that you can easily maintain a franchise through many iterations. The game industry is built largely on novelty, and while it's usually possible to make improved sequels, genre exhaustion tends to set in after a few years. Tadhg has conveniently ignored that it's a challenge to continue innovating indefinitely.



He's also ignored the problem that actually faces most game developers with their first release - which isn't really one of upholding their reputation so much as it is one of getting any recognition at all. No traction = no conversation. And while it might be OK to say, "let's release one to pirate, and one to sell," why not just make the first one free, then?



You have to face the marketplace honestly at some point and say "This game has to sell on its own merits," and it's best to do it quickly so that you can cut your losses. Doing otherwise is an indulgence.

David Hughes
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But you do see developers that attracts fanbases that span multiple I.P. Bungie, BioWare, Blizzard, etc. . .

jin choung
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ehhhhh... might wanna tell ubisoft some of that stuff. they seem to have missed this particular memo.

R G
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I can tell you this much, with honesty: If I've bought the game and lost a copy (I'm talking older games, not newer releases), I will download it no hesitation.



An example would be the Age of Empires games, in particular AoE2. I played that game to death, and lost the copy in a move. Couldn't find a copy in my store so I got the zip file of it.



And my two friends at (now defunct unfortunately) Ensemble Studios? They didn't care.

R. Hunter Gough
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*Again, the only explanation is that more people must have played the first game than actually bought it.*



Wait, what? I played HL2 long before I played HL1. I've played tons of TF2 and never touched TF1. I played Fallout 3, and never played the first two. I played System Shock 2 and not System Shock 1. I played Final Fantasy 4, 6, 7, and 10, but never played 1,2,3,5,8, or 9. Unlike movies, video game sequels are typically better than their prequels, and unlike books you usually don't have to have any experience with the prequels to enjoy the sequels. Your conjecture that "more people played Fallout 3 than Fallout 1, therefore those people must've all pirated Fallout 1" is ludicrous, unless I'm totally misunderstanding your premise.



Also, your whole message of "the future belongs to the people who spend more time pimping and schmoozing their games than actually making games" just makes me really really sad.

Douglas Gregory
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I've been following Tadhg Kelly's blog whatgamesare.com since his articles on social games were posted here late last year; I'm consistently impressed with the clarity of his writing and incisiveness of his arguments. Even when I don't agree with all of Mr. Kelly's conclusions, I find that his articles give me the tools and vocabulary to better reason about games and reach my own conclusions.



This article, once again, addresses a topic from an unexpected direction, and gives me a lot to think about. It also leaves me with a lot of optimism for where games go from here. An enjoyable and illuminating read, as always!

Banksy One
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I whirl and spin my head in a daze, after being bombarded by the latest gaming craze. Red Dead is My Redemption they broadly exclaimed, a month later those claims quietly reclaimed. Then it was Fifa, number 11 and all, while Enslaved fell by the wayside, to never stand tall.



Its all within Reach, thats the impression i get... At $90 a pop, ill be placing a huge bet. Games here are a rip, its no mystery, so i started a store to relieve our misery. Used or rental, we gave them a choice, a fraction of the price compared to those chain store boys. The option to play was also made available, for those without consoles (usually from homes that are financially unstable).



In the meantime i played. As i played, my knowledge grew, Clash at Demonhead, a Suda51 brew! Seeing the history, its no longer a mystery, good games are timeless, while clones are a travesty. Dante's inferno wasn't the same, even though it borrowed from another game, although Fifa 11 was a lesser clone, making it something i wouldn't want to own.



Now i will advertise, and make myself heard, but my audience is small, let them spread the word. Good thinking right, organic publicity, but oh wait whats that, a torrent of apathy! Noone cares for legal streams, when torrents are there for consumer dreams. They follow the biggest and brightest of stars, ignoring the rest like Biker Mice From Mars. A racing game with a leveling up system, and weapons too. But who gives a shit, its like from 1992.



Go to Console Classix, home of the brave, & play some of the games that no publisher saw fit to save.

Josh Foreman
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Interesting thoughts as usual, Tadhg


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