May 1, 2008

Making Assumptions Makes You an Ass

TG Daily has an article up detailing billions of dollars in lost revenue for Epic and Crytek due to the pirating of their games.
This statement confirms the attitude a lot of game developers discussed earlier this year at the 2008 Game Developers Conference in San Francisco, CA. We spoke with Mark Rein, VP of Epic Games, and learned that the Unreal Tournament 3 servers received over 40 million attempts at illegitimate access using pirate keys. That number is huge, and the real magnitude comes when you calculate the retail price of $49.99 (59.99 for Collector's Edition).

If those 40 million players actually paid the full price, it would have been nearly $2 billion more in Epic’s pocket book. That is more than the quarterly sales results from Nvidia or AMD. To add another perspective, the government lost out as well, because no sales tax is earned on pirated copies.
This is almost as fun as saying World of Warcraft has 10 million subscribers, so 10 million x $15 a month = $150,000,000 a month in revenue! It is just simply wrong, just like saying that 40 million attempts to join an Unreal Tournament III server with a pirated key is equal to $2 billion dollars in lost revenue. Yippee for broad assumptions!

The fact of the matter is, that it has NEVER and WILL NEVER be shown that people who steal a copy of a game (referred to as pirating in the article) are willing to pay for it in the first place.

Unfortunately, the truth for both Epic and Crytek, is that they built games far above the power curve. The paying consumer base voted with their wallets and told Epic and Crytek that no, we don't like paying $1,000 for PC upgrades just to play your games. Sadly, they then assumed everyone that stole a copy (not pirated) would of been glad to pony up $60 and now we're here.

What's truly sad is that both games, Crysis and UT3, actually did end up selling above average for each company after slow starts, but since they jumped on the OMGZ pirateZ train early, they can't simply jump off now without looking the part of an ass.

I can't wait for Epic and Crytek to become console exclusive and suddenly realize that when they make a shitty game, no one buys it and no one steals it, which means no one plays it, no one talks about it, and it becomes another $10 wonder in the bargain bin of GameStop.


Spidubic said...

"World of Warcraft has 10 million subscribers, so 10 million x $15 a month = $150,000,000 a month in revenue!"

They have 10 million subscribers so if every one of them is active and paying............$150,000,000 a month. If not all of them are active then how many are? 5 million? 2 million? They are still making a crapload of money regardless.

heartlessgamer said...

You fell right into the fallacy of the statement.

10 million subscribers, but how do all of them pay for access?

Chinese players pay per hour, Europeans pay in Euros, and the monthly cost changes based on how long a monthly plan they signed up for.

Yes, they are making a lot of money but it is not a simple match equation. Just like it is not a simple match equation to figure out the losses from people stealing a game.

heartlessgamer said...

match = math


Spidubic said...

Ok, I did not know the Chinese pay by hour. And yes the number changes depending on 1 month, 3 month, 6 month. Fact remains if Blizzard is making even $1 for every subscriber that is $10 million a month. No matter how you look at it WoW is a gold mine for Blizzard.

Joe said...

Perhaps it's easier for Crytek to point their fingers at the bad old pirates rather at themselves for creating a bug-plagued,poorly-running game?

Joe said...

Perhaps it's easier for Crytek to point their fingers at the bad old pirates rather at themselves for creating a bug-plagued,poorly-running game?

syncaine said...

First off, Crysis is an amazing game with very clear hardware requirements. UT3 is also far from a poor game. FPS that push the limits of hardware are also the main reason Nvidia released new cards as often as they do. Remove the big games that pushed hardware, and we might all still be using on-board graphics to power 2d sprites around.

The simple math the article used is indeed wrong, but it's also silly to say that NONE of those people who stole the game would have bought it. If anything, one would think they WOULD have, considering they went to the trouble of getting a hacked copy. However you slice the pie, its a fact piracy hurts the market, and in turn hurts anyone who legitimately pays for games.

That whole 'if its not free, i would not use it' line of thinking is just poor justification for stealing.

And the WoW math is fairly simple considering Bliz is now part of Activision, a public company. Just look at their latest earnings report to figure out how much of a killing they are making from WoW.

heartlessgamer said...

That whole 'if its not free, i would not use it' line of thinking is just poor justification for stealing.


It's a poor excuse, but its absolutely true. I know many people that have stolen a copy of a game online that they would never, in a million years, walk into a game store and buy. They are only downloading a copy because:

a) Its easy.
b) Its free.

I hate to be the guy to say that "pirates" aren't the problem, but I've gotta be, because just like the Music Industry, the Games Industry is quickly trying to turtle in yesterday's revenue streams. And we all know where the Music Industry stands now.

syncaine said...

iTunes has more to do with the state of the music industry than anything related to pirating. The culture simply changed, people don't go out and drop 12-15 on a cd anymore, and the accounting for the music industry was slow to adapt. The fact that people still love music has not changed, just the distribution of it (which is all a record label does).

And about stealing games, consider this. Unless your friends only downloaded games they hated and that sucked, they would likely have paid for some of them. Say you got WoW from a pirate site (bad example, but lets just go with it), and without stealing it you would never have tried it. But now that you have, you love it. If all of a sudden the pirate version stopped working, you are telling me you would not go out and drop $20 on a legal copy to keep playing?

Not to mention if you don't steal games, but still like playing them, you will eventually buy something just to entertain yourself. Those who constantly just steal games are never motivated to buy anything, good or bad. You get into the mind frame of 'everything is free' until you either get caught or grow out of it.

heartlessgamer said...

Syncaine, your bad example, is probably the worst example you could of come up with.

And the way you laid out your entire point, sounds like you are using WoW as a valid example.

If someone stealing a game, really ends up liking it, then yes I could see them going and buying a legit copy. However, I bet the game in question has online play associated with it (not subscription games) and the only way to play online is with a legitimate, unique CD key.

But my guess is that someone stealing a game would look for a modified, no cd-key server first before even thinking about walking into a store.

Spidubic said...

I can't count the number of games I have gotten burned by over the years. Demo plays good, reviews start out good. Game ends up sucking. So I started pirating the games first. Most were installed, played for maybe an hour, and uninstalled after thanking the stars I did not buy the game. Some like Need For Speed I simply buy because I know I will get my money out of it. Same with Half Life and TF2. With games costing $60 and up I am not going to lay out the cash on something that may suck.

sam said...

Having lived in West africa this is one of my pet peeves with all the entertainment companies and microsoft. It's become politically correct to go into the board room and whine that you are losing Billions because of Piracy. The simple fact as heartless pointed out is most pirates would never buy the copy anyway.

But it sounds really good when sales are flat to blame some generic faceless enemy for all your woes. Takes responsibility right off your back.

And bill go do some research. Wow generates a few dollars a month per subscriber in china. so 6.5 to 7 million of those subs are a few dollars a month and they get the boxes free. No 50 dollar per sub bump on an expac. Not saying blizzard doesn't make money but not nearly as much as most people think.

sam said...

Syncaine the music industry created thier own problem. Sony started selling Tape players that would record. The music industry screamed it was the end of them that no one would ever by a tape again. But they did.

Then they came out with CD's which stopped that temporarily. We were promised that music would be 5 dollars or less a CD once everything was in full swing because it would be so much cheaper to make. Hasn't happened yet.

now Sony completely forgetting its past is leading the charge to lock down everything and control the revenue stream. Didn't work for thier competitors in the 70's won't work for them now.

Funny thing is its the same thing over and over and nothing ever really changes.

Every time a new technology comes out that lets people share the entire industry mobilizes because the sky is falling.