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Retail

UKIE: Games piracy "4:1 against legitimate sales"

Tue 25 Jan 2011 7:47am GMT / 2:47am EST / 11:47pm PST
RetailPublishing

Publisher body's "conservative" estimate puts equivalent retail cost of 1.45bn; hopes to conduct "scientific" research into piracy

UKIE

The Trade association for UK Interactive Entertainment

ukie.info

Publisher body UK Interactive Entertainment estimates that for every one game sold at retail four games are pirated.

And in a bid to further understand the damage of piracy to legitimate game sales, director general Michael Rawlinson told GamesIndustry.biz that UKIE plans to commission thorough research into the problem.

"Based on information received from a number of publishers we have estimates of games piracy running at between 4:1 against legitimate sales," said Rawlinson.

Trying to clear up reports from BBC Newsbeat that High Street retail lost 1.45 billion in 2010 due to piracy, Rawlinson said UKIE took a conservative guess with that figure - the equivalent of console software sales in the UK last year.

However, Rawlinson did not clarify which console formats were included in the estimates, or whether it included PC games software, and made clear that the number was not necessarily a direct loss to the industry.

"We took a conservative position of saying if this is only 1:1 across all titles it would have a retail equivalent value of 1.45 billion. We did not say this was the loss to industry," offered Rawlinson.

"What is clear is people who 'share' games via P2P networks or buy illegal copies are not buying the real product, and this reduces retailer sales. It can provide the consumer with a sub-standard product and money paid to illegal traders does not flow back to the creative."

"In turn, investors see higher risks/lower returns, and this in turn will undermine confidence in the sector and lower the amount of money invested, reducing the developer's chance to create new products."

Rawlinson admitted that estimates of the real cost of piracy are difficult, but research it commissions will look at the issues in greater depth to calculate the damage.

"We intend to commission research that will endeavour to measure what is happening in the download/illegal sales arena in a more scientific way, but it will always be difficult to translate illegal sharing and downloads and pirate sales to a loss of legitimate sales and therefore the real effect on industry - how much would these people have bought and paid for."

"My position is clear, there can be no justification of unauthorised 'sharing' or pirate sales, and the industry should never support or condone this on the basis of any potential or perceived 'marketing' upside."

33 Comments

Alex Norris n/a

6 0 0.0
It's a shame piracy stats will continue to be absolutely meaningless as long as publishers and other industry bodies insist that every pirated copy is lost revenue equal to the price of a new copy.

Posted:3 years ago

#1

Tommy Thompson Studying Artificial Intelligence (PhD), University of Strathclyde

110 0 0.0
Maybe that statement should read:

"Publisher body UK Interactive Entertainment estimates that for every one game sold at retail, thirty second-hand copies are sold. Oh and four will be pirated." ;-)

The end of this article is encouraging, noting that they intend to conduct a more rigorous scientific study into game piracy. Since like Alex, I find any statistics generated by the publishers themselves to have next to zero credibility.

Posted:3 years ago

#2

Tom Keresztes Programmer

683 335 0.5
When GPG started banning Supreme Commander accounts, which where obviously using pirated copies, it turned out most of them were legitimate customers running a pirated copy, because it did not require the game disc in the drive. This also happened with Dawn of war until THQ released a patch which removed this limitation.
If we ignore the reasoning behind draconian DRMs, its easier to see the true issue - its bad for the legitimate customer (inconvenient, has problems) whom already choosen not to pirate, and its already ignored by those pirating. I am not saying that copyright protection is useless, but it might not be the best way to get more customers to force something on them. I haven't bought a retail PC game since 2007, because of the DRMS, and intentionally ignore digital products if they have it.
My point is : blaming pirates for everything wont solve the issue.

Posted:3 years ago

#3

Alasdair Gray Junior Account Planner, Five by Five

9 0 0.0
I wonder what he means by that last paragraph. Is his point that:

- games companies should not support the actual act of piracy
or
- they should not utilise torrent/file sharing sites to promote their games at all (e.g. uploading game demos and MMO game files)?

Posted:3 years ago

#4

Anuj Malhotra Studying Business Management, Imperial College London

31 0 0.0
I agree with alex, these stats are meaningless. If the availability of a pirate copy of a game didn't exist there is no guarantee that any of the pirates would purchase a legitimate copy. The conversion rate would probably be quite low as most pirates are opportunists taking their pick of 'free' games, not customers waiting to happen.

Posted:3 years ago

#5

Peter Ohlmann Technical Director

22 6 0.3
Sales of CoD Black Ops : Xbox360 10 mio+, PS3 8 mio+ and .... PC less than 1 mio (!)

Don't blame their statistics, the only winner of PC Gaming are Rapidshare, Megaupload and other hoster. WoW shows how many PC Gamer would purchase games if they can't pirate copy them. So, there is a reason why F2P titles perform much better than full grown AAA+ titles on the PC.

Posted:3 years ago

#6

Klaus Preisinger Freelance Writing

1,135 1,171 1.0
The interesting question being how much a pirate spends on legitimate software as opposed to the honest customer. Factoring out any purchases of used games, as they do not end up in the publisher's pocket.

If we then still have an honest customer spending four times the amount of money over the pirate, then we have a real problem copy protection can solve.

If the pirate still spends the same money on games than the honest customer, then copy protections are a competitive tool among publishers, not a tool to prevent piracy in general.

If the pirate spends the same amount of money on gaming, but ends up buying more hardware, since games can be copied, then the manufacturers might even be tempted to look the other way in the interest of their hardware products competing with third party software products for the same pool of money.


It is easy to pull a few billions of damage out of your hat, if you make the wild of assumption of any game copied would otherwise have been a game sold. It is this "ALL" pirates would be customers if they were not pirate thesis, which goes against anything you learn to be logic. I certainly have my fair share of bargain bin purchases I have never played.

Posted:3 years ago

#7

Tom Keresztes Programmer

683 335 0.5
@Peter,

I have a PC, but i dont play games like CoD, because its just another FPS, and is actually sub-par compared to other PC games. Plus it does not support dedicated servers. HL2 sold quite bit more than that, but for a PC game one million is quite good.
Wow is not an average game, there are other successful subscription based games, which has a far lower installed user base. Eve online, for example.

Posted:3 years ago

#8

Alex Norris n/a

6 0 0.0
@Alasdair,

He does specify "unauthorised," so I'm guessing he's not ragging on legal torrents - although considering the legislators can't tell the difference, I doubt it makes much of a difference.

Posted:3 years ago

#9

Spungo McGee Reviewer

40 44 1.1
A helpful translation of some of the terms used in this piece:

"estimates" = "pulled randomly out of its arse"

"further understand the damage of" = "make up some more totally spurious bollocks to fool the government into passing more draconian legislation about"

"information" = "completely made-up lies"

"conservative guess" = "wild, groundless exaggeration"

"not necessarily" = "absolutely definitely not in a million years"

"clear" = "made-up"

"difficult" = "not necessary for our usual scaremongering bullshit"

"In turn, investors see higher risks/lower returns, and this in turn will undermine confidence in the sector and lower the amount of money invested, reducing the developer's chance to create new products." = "everything I say is basically a lie"

Pop those in and you'll find the article reads a lot more truthfully. Afterwards you might find this enlightening:

[link url=http://amitay.us/Blog/Entries/2011/1/17_piracy_doubled_my_app_sales.html
]http://amitay.us/Blog/Entries/2011/1/17_...[/link]

Posted:3 years ago

#10

Carlos Massiah Game Developer, UtilityFunction

5 0 0.0
This is pretty bad, assuming 1:1 download to purchase is ridiculous at best, also an assumed 1:1 download-to-user ratio is also a bad assumption. People download software multiple times and that includes legitimate users of software when they can't find their CD's but have legitimate game keys / online accounts.

Posted:3 years ago

#11

Matthew Harrington Programmer/ game designer

12 0 0.0
This is complete rubbish.

As said by a few above, where would they get their stats.

Illegal downloads will never equate to an actual download loss.



You'll take the free one.... because it's free!

Edited 1 times. Last edit by Matthew Harrington on 25th January 2011 3:20pm

Posted:3 years ago

#12

Kevin Clark-Patterson Lecturer in Games Development, Lancaster and Morecambe College

294 27 0.1






The more this happens the quicker digital distribution will come around...

Edited 1 times. Last edit by Kevin Clark-Patterson on 25th January 2011 3:35pm

Posted:3 years ago

#13
I don't think anyone says that 1 pirated game is one lost sale however there's certainly a correlation. The same rubbish about there not being any correlation and that paracy could actually help was bandied about during the time of Napster regarding the music industry. Well look what happened there.

And unlike the music industry I don't think game developers can offset the loss with live tours and doing licensing to TV-shows or advertisements. And if we could is that a good thing?

But I think the bigger issue is the re-sale market. Piracy still requires a chipped box (i think) which still puts most kids off and outside universities I'm not sure how many people do that but re-sale is badly effecting the industry. My little brother in law is 16 and he has 35 PS3 games and only 3 he has bought at full-price and due to the fact he didn't much like them says he won't be doing that again. Surprise surprise it's also the BIG blockbusters like GTA and Final Fantasy that he bought at full-price (he wanted to play them first like his mates) so the industry has effectively created a situation where more and more only the biggest games succeed.

I personally care more about the industry (the games that get made) more than either the developer, publishers or consumers (finacial rights to what they buy) and this practice is doing a lot of long term damage.

Posted:3 years ago

#14

Vitalii Moskalets Game Designer, GameLoft

27 0 0.0
The problem is in game prices. If you want to play 10 games and their price is 60$, where can you find 600$ And of course you don't exactly know whether you like it or not. Maybe you even don't know about the game much, but want to try it, maybe it will be fun?

Reducing prices to 3-4$ maximum will fight the piracy much better than ANY software defense. But in any case the piracy will remain.

The problem is much higher. If we imagine ideal situation for publishers, where you can only buy games, the sales will be pretty much the same, people will just ignore games they think are not so good for them to pay.

So such stats about how pirated downloaded copies affect sales will NEVER show exact money value which is really lost for publishers.

Posted:3 years ago

#15

Graham Bromley Lead Level Designer, Codemasters

10 2 0.2
Piracy is Theft

Does it matter if it's 1.45 Billion, or 0.45 billion? Either way it's still more than enough to have prevented an awful lot of studios, and retailers, from closing in the last few years.

Posted:3 years ago

#16

Russell Day Student

1 0 0.0
@Vitalii, I agree completely, those whose primary recreation involves gaming find there may be an abundance of attractive games at any time. To purchase all of them at the [imo] outrageous prices is simply not feasible.

Fortunately for PC gamers there is one sure fire way of testing these games, especially in light of reduced demo numbers, this might explain the higher piracy rates on that platform and further explain piracy on consoles where game prices have lower elasticity in the first year of release.

Additionally when you look at piracy:sales rates we find higher piracy sometimes indicates higher sales, particularly in the case of the CoD titles;
[link url=http://www.joystiq.com/2009/12/29/report-modern-warfare-2-was-the-most-pirated-game-of-2009/
]http://www.joystiq.com/2009/12/29/report...[/link]
[link url=http://www.joystiq.com/2010/12/29/report-call-of-duty-black-ops-most-pirated-game-in-2010/
]http://www.joystiq.com/2010/12/29/report...[/link]



With regards to increasingly 'draconian' DRM systems I, as one of many legitimate customers, have found my paid-for experience inconvenienced regularly.

I personally believe the issue lies not with pirates themselves but the pricing levels of AAA games and by proxy the development costs in addition to the industry's inability to see fault in anyone but those that support it best.

Posted:3 years ago

#17

Nick McCrea Gentleman, Pocket Starship

191 298 1.6
To some earlier commenters - UKIE made an explicit point about not correlating every pirated copy with a lost sale. No one makes that argument seriously, it's a straw man.

I don't agree with the arguments attributing the pricing structure of AAA games to piracy. If it really was as simple as pricing lower and shifting more units, don't you think publishers just might have cottoned on to this? I know publishers aren't exactly filled with Nobel-grade economists, but <a href ="http://en.wikipedia.org/wiki/Profit_maximization">profit maximisation</a> is not complex. Games are priced at the level that maximises profit, as determined by demand. Of course, any industry can increase demand for its products by cutting prices, but it is only rational to seek to maximise profit, which, as members of the industry, you'd think we'd be all for.

People pirate because they like things for free, it's not seen as a crime, and you have very little chance of being caught or suffering any consequences. Finally, and in my view most crucially, it's actually often significantly more convenient to pirate than to purchase, an argument against intrusive DRM in my opinion, especially on PC. In contrast, it's significantly more inconvenient to pirate for consoles than behave legitimately, which is why the DRM strategies employed by the platform owners can be considered successful, despite being compromised to one degree or another.

Posted:3 years ago

#18

Jeffrey Kesselman CTO, Nphos

112 0 0.0
Piracy has been with us since the dawn of software and always will be. Copy protection does nothing but enrich the copy protection companies as well as annoy legitimate customers and force them to allay with the pirates to get full value from their software purchases.

What is unclear, and very hard to measure, is how many pirates would have actually bought the game had they not pirated it. Estimates range everywhere from 100% (on the publisher's side) to 0% (from the mouths of free software advocates.) Its also a virtually impossible thing to measure.

But, whether piracy is a real problem or not, disc lock copy protection is DEFINITELY a real problem that drives your customers away.

Posted:3 years ago

#19
Maybe the industry needs to stop ripping people off. I think gamers are very cautious of buying games in today's market because they spend 60 bucks on a 10 hour experience. Modern games waste way to much time on looking pretty and not nearly enough time on making a product that will keep the buyer occupied. Games today are either extremely pretty but 10 hours long or are so easy that a 60 hour game takes 10 hours to complete. The industry wastes so much money on graphics that gameplay suffers. In the 90s we didn't have this problem. Games, PC games in particular, were something that would last you a long time.. Now it takes less than a week for the most part to finish these over easy or short games. If you want people to pay for a 10 hour experience then charge 10$. If you want people to purchase a game for 60$ it better be damn good.

PS. Back in the day DLC was FREE and beta testing was a paid position.

Edited 1 times. Last edit by Hunter Talbot on 25th January 2011 9:18pm

Posted:3 years ago

#20

Jeffrey Kesselman CTO, Nphos

112 0 0.0
Actually, "back in the day" internet-play used to cost you $20.00 a month.

And before that, online play used to be billed by the minute. AOL's serious Neverwinter Nights players could easily run up monthly bills between $200 and $500 a month.

So be careful making general comparisons.

Edited 2 times. Last edit by Jeffrey Kesselman on 25th January 2011 9:35pm

Posted:3 years ago

#21

Spungo McGee Reviewer

40 44 1.1
"The same rubbish about there not being any correlation and that paracy could actually help was bandied about during the time of Napster regarding the music industry. Well look what happened there."

What, three consecutive years of record-breaking sales of singles (2008, 2009 and 2010)? OH NOES!

Posted:3 years ago

#22

Spungo McGee Reviewer

40 44 1.1
"If it really was as simple as pricing lower and shifting more units, don't you think publishers just might have cottoned on to this? I know publishers aren't exactly filled with Nobel-grade economists, but profit maximisation is not complex."

[link url=http://wosblog.podgamer.com/2010/08/28/to-proponents-of-premium-prices/
]http://wosblog.podgamer.com/2010/08/28/t...[/link]

Never, ever underestimate the stupidity of publishers.

Posted:3 years ago

#23

Jamie Watson Studying Bachelor of Games & Interactive Entertainment, Queensland University of Technology

179 0 0.0
a simple way to fight piracy: MAKE BETTER GAMES! and make them cheaper!

because of the lack of demos peopole have no idea if a game they see in a store is good or bad,you wouldnt buy a game only to find out you didnt like it did you?

publishers ARE controlled by shareholders so that is why they keep creating these usless facts about piracy,it exist and wont die so just get over it and find a away which doesnt invole putting stupid DRM in place.

Posted:3 years ago

#24

Tameem Antoniades Creative Director & Co-founder, Ninja Theory Ltd

196 164 0.8
"Insanity: doing the same thing over and over again and expecting different results." - Albert Einstein

I'd say rental and second hand is a as serious if not a more serious problem to the "creatives". Ultimately, the retail model fucks the developers from three sides and merely asking people to stop buying games for free (which is what's been going on for 20 years) is not going to do anything now is it?

Only solution is for publishers to make a united stand against the retail model which is fucking them as much as it is us developers. Do this by making online games cheaper than retail and embracing online episodic, free-to-play, subscription etc models.

Posted:3 years ago

#25

Bob Chambers Studying Computer Games Technology, University of the West of Scotland

6 0 0.0


Until this information is published alongside theoretical losses, I can't take these reports seriously.

Posted:3 years ago

#26

Vitalii Moskalets Game Designer, GameLoft

27 0 0.0
@Jamie Watson
I agree, that making better games will also help to fight the piracy. The most simple example is with COD4. When it came out I didn't know whether I will like switch from WWII setting to modern combat setting, and I tried pirated copy with one of my friends, and after 5 minutes of multiplayer game I was sure I will go and buy it CERTAINLY! I buy it and playing and enjoying it for all these years. Then came out Modern Warfare 2 and I buy it also because I was sure it will be at least as good as COD4 was. And what I receive??? I didn't even see at any trailer or ad, that it will REQUIRE Steam to play, then I was angry when saw that no profile system is present, today you need to sell games for family, maybe someone has a brother, maybe father and son will want to play separately, why profiles need to be droped out??? And mess with multiplayer where I even can't choose the map I want to play. After I played 15 minutes I was feel myself like I was cheated by publisher. So will I buy next COD? Certainly no, until I will 300% it is good game for me

And how much really good games are out per year? 5-7 max. And of course not all of them are worth 60$


@Tameem Antoniades
Do this by making online games cheaper than retail and embracing online episodic, free-to-play, subscription etc models.

I heard very good argument about why online sales aren't cheaper than retail now :) It is simply because who then will go at retail and buy boxes, if you will able to receive the same game cheaper online??? The retail sales will be damaged. And publishers will never do this, until online sales will significantly higher than retail with same prices.
And for episodic model, you then will need to make updates fast with same quality. And it is harder I think, publishers always will want easy and faster way to make money.

Posted:3 years ago

#27

Vitalii Moskalets Game Designer, GameLoft

27 0 0.0
@Bob Chambers
Also good point. Cost of living and income will influence the spending abilities of the individual
The main point in all this thing about piracy theme is that it is the same as healing cough without paying attention to virus which is the main reason for illness.

The current economy models in the world which are affect game development cycles is the main problem. It is a very hard to fix and requires a lot of work to be done not only by pulishers and developers.
Here are main points which we must work on:
- reducing production costs. find better ways to make quality games at lower cost
- change salary policy. especially for management. If manager is working good and organize the team in a way that team can produce quality product which is sell well, then his salary could increase and of course must depend on salary of all his team members. In that way manager will ALWAYS will make his team to work better and better.
- change royalties and bank credits. Why devs and publishers must pay 15$ to Sony or Microsoft to make game available on their consoles? Why not 3 or 5$. This also a question. Maybe they should share only profit from sold games? Then Sony, Microsoft, any developer or publisher will work together to make profit from the game. If no profit, then no paying to console manufacturers.
And bank credits. This is where the most hard part is. When you receive credit for business, you need to pay back anyway, even if no result is succeed. Receive 1000$ and you will need to give back 1300$. Why?
The bank needs to give credit at lower than 1% stake, preferably with 0%. And then, if game sucessful, the profit will be shared with bank. That way the bank will also be interested in the game to be sucessful and will work with devs and publishers.

And of course, all this depends from each other, salaries from production costs, from income, prices from prod. costs, everything is depend from bank credits for business. And it can't be change in 1 day. It is hard work, all professionals involved must understand that and think about larger picture.

Edited 1 times. Last edit by Vitalii Moskalets on 26th January 2011 10:38am

Posted:3 years ago

#28

Kevin Clark-Patterson Lecturer in Games Development, Lancaster and Morecambe College

294 27 0.1
Haters be hating.

Pirates be pirating.



No matter the cost, those unwilling to pay anything above the price of a blank DVD, will NOT buy a full price retail game. EVER!

Do some proper research and find out the real reasons why pirates pirate.

DRM FTL BTW!

Posted:3 years ago

#29

Stephen Woollard Online Infrastructure Specialist, Electronic Arts

146 71 0.5
For those asking where the figures come from, for the most part it's pretty simple - if your game has an online component (as most do these days) and you sell 10k copies but 100k are hitting the leaderboards...

As for why people pirate? Simply because they can. Sure there might be a few who are "sticking it to Da Man" or using it as a try before you buy or whatever but for most it's a case of why buy something when you can get it for free?

I know people whose first stop online is piratebay to see what the latest torrents are. It's a place where they can get all their music, films, games etc in one place and for free.

The only way piracy will stop (or at least be much more confined) is when all games require a constant connection online to play, the same as MMOs do but many publishers won't do that because they'll alienate the folks out there who don't have interwebz. Also it's a pain when your net connection goes and you can't play any of your games and believe me I speak from bitter experience here.

Posted:3 years ago

#30

Jeffrey Kesselman CTO, Nphos

112 0 0.0
Interestingly enough.... the same was claimed about the CD industry-- that piracy was customers who *would* pay if they had no other choice. But what data there is doesn't seem to bear that out.

It turns out that, despite what many of us cynics might believe, most people want to think of themselves as honest. A lot of people really DO go out and buy the CDs for bands they downloaded or got from a friend to try. The tipping point seems to be when they feel the price is either unreasonably high or is beyond their means. In either case they were unlikely to be customers.

Its is also clear that intrusive copy protection schemes destroy customer satisfaction and relationship, something that has a real value in dollars and cents.

Online connectivity makes sense for games that require online to play by their nature, but requiring that of ALL games would significantly reduce the total market size and annoy users as much as disc locks do.

A good compromise I think is a system I saw awhile back that uses code removal/replacement and requires periodic touch-back to a server. But, before we start trying to solve the problem in complex technical ways, we should recheck our assumptions about what the problem really is.

Posted:3 years ago

#31

Andrew Ihegbu Studying Bsc Commercial Music, University of Westminster

461 172 0.4
@Jeffery

we have to remind ourselves that we are still not in a world where all gamers have permanent access to the internet on their machines. A protection scheme that used code removal and forced you to connect to the internet as you played a game would have end users begging for game cracks just to be able to play the product in the event they bought it and dint have a permanent connection.

The the general subject at hand 4:1 is impossibly high odds. Maybe in the PC game market, which is 10 times easier to pirate, but in the console market, which requires extensive modification to your console, this sounds stupid.

I fix to piracy is efficiency, you spend less on development and anti piracy technology, end users feel more confident with their software. Activation has always narked me and entering a key is annoying. Games like sin of a solar empire sold shedloads without any protection, so why do you think adding protection does anything but make legit owners hunt for cracks.

I have a collection of old games (Black and White, Populous, Mafia, MoH:PA) that I am forced to crack because I found the game disc down the back of the sofa or under the bedframe and I don't have the manual. Imagine how bad it would be if cracks didn't exist.

Posted:3 years ago

#32

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