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Rovio: Piracy can generate business

Tue 31 Jan 2012 9:44am GMT / 4:44am EST / 1:44am PST
MobilePublishing

CEO says creators must start treating their customers as "fans"

Rovio CEO Mikael Hed told attendees of the Midem Conference in Cannes that the "problem" of piracy is all a matter of perspective, The Guardian reports.

Hed explained that Rovio's apps and consumer products suffer from piracy, particularly in Asian markets. However, he believes it is "futile" to pursue the perpetrators through the courts unless their merchandise is damaging the brand.

"Piracy may not be a bad thing," he said. "It can get us more business at the end of the day."

This, Hed claimed, is the lesson that the global entertainment industry can learn from "the rather terrible ways" the music business attempted to combat piracy.

"We took something from the music industry, which was to stop treating the customers as users, and start treating them as fans. We do that today: we talk about how many fans we have."

"If we lose that fanbase, our business is done, but if we can grow that fanbase, our business will grow."

The discussion surrounding piracy in the games industry intensified around the now-shelved SOPA and PIPA legislation, yet while the scale of the problem is clear the best way to address the situation is still open to debate.

Rovio is not alone in identifying an opportunistic silver-lining in piracy. Speaking to GamesIndustry.biz at the Unite 2011 conference, Unity Technologies' John Goodale described how piracy of the company's engine helped seed its business in China - now one of its key territories.

Elsewhere in his presentation, Rovio's Hed also explained that the phenomenal popularity of Angry Birds has allowed the company to start regarding it as a "channel," with many users spending as much time in the app as they do watching popular TV shows.

"We have some discussions with [music] labels about what we could do together to give access," he said. "It is possible to promote music content through our apps as well... We are positively looking for new partnerships, and we have a rather big team working on partnerships, so it's just a case of getting in touch with us and we'll take it from there."

18 Comments

Bruce Everiss
Marketing Consultant

1,692 594 0.4
The best way to deal with theft of IP is to take the line of least resistance. Abandon platforms where theft has marginalised their viability. Instead allocate resources to platforms that are more theft proof.

The whole rationale for consoles is that they are anti piracy dongles. This is how and why they replaced the Amiga and ST.
PC gaming has moved to business models that create income. The stand alone boxed game is not a sensible concept now.
On mobile phones up front purchase of apps is rapidly disappearing in favour of freemium.
The handheld consoles that were widely stolen on were much ignored by many publishers despite their huge sales numbers.
etc etc.

The industry just votes in the way it allocates resources.

Posted:2 years ago

#1

gi biz
;,pgc.eu

341 51 0.1
@Bruce: isn't that right the opposite of what the article's stating? If I got it right, they basically say "ok, more pirates = more downloads", so even if they don't get money from direct sales, they take it back in royalties on stuffed puppets and gadgets, as physical toys can't be pirated yet.

Kind of smart, although I doubt it applies to any game - while an angry bird does a good gift for your girlfriend who's played for 15 minutes the pirated birds that yourself downloaded illegally and gave her, I think an infested Kerrigan's action figure is more aimed to a smaller niche.

Posted:2 years ago

#2

Tamir Ibrahim
Programmer

75 56 0.7
"as physical toys can't be pirated yet"

Actually they can and they are. If you read the article you would have noticed the "and consumer products" bit. They go into more detail in the linked article.

But the argument is that it's all raising awareness and advertising their product; allowing them to enter the market easily. At some point some of these people will pay for something, either the game, or the cartoon, or a book or whatever.

Posted:2 years ago

#3

Maarten De Jong
Marketing / Research partner

10 6 0.6
I reckon developers and publishers nowadays should always have alternative ways of making money than (the initial) direct sales. There should be flexibility in business models and maybe even in the actual design of the game to be able to switch to other earning methods. Whether it's moving from app purchases to in-app purchases or from digital to physical products. I think as long as you have the fans, you can make money out of them. Publishers and developers 'just' need to have the ability to move to these alternatives quickly.

Edited 1 times. Last edit by Maarten De Jong on 31st January 2012 12:14pm

Posted:2 years ago

#4

Rick Lopez
Illustrator, Graphic Designer

1,269 941 0.7
Its easy when you practically give your game away for free. But when you spend millions to develope a triple AAA title, like uncharted, assasins creed or mass effect, believe me, piracy hurts. Besides Rovio practically only has Angry Birds to account for. The game already made its money back, now they are juicing the crap out of it through merchandising. However I wanna see them create another IP, invest heavily on it and have it given away for free.

Posted:2 years ago

#5

James Boulton
Tools & Tech Coder

131 168 1.3
Interestingly enough this is precisely what I said in one of the last articles about piracy. You need to find some way to take the extra unpaid players of your game and turn it to your advantage.

I'm sure there are a multitude of ways to actually benefit from this, you just have to think a bit creatively and stop trying to fight piracy in conventional DRM ways (as they don't work!).

Posted:2 years ago

#6

Sandy Lobban
Founder and Creative Director

314 206 0.7
not being bias, but the PS3 has done pretty well against piracy. Its been a pretty stable place to sell your games outside of second hand sales.

Posted:2 years ago

#7

Nick Burcombe
CEO & Co Founder

53 16 0.3
Hey sandy - agreed, the PS3 has done pretty well against piracy, but I think that's only a matter of bandwidth. Downloading a blu-ray iso is a non-trivial task for most people - Up to 50gb for a download? That's a lot of time waiting for it in most households. Would be more time-efficient to go to the second hand sales, buy it, play it through and flog it again. Effectively a rental.

Edited 1 times. Last edit by Nick Burcombe on 31st January 2012 4:17pm

Posted:2 years ago

#8

Alexander Bentchev
Senior Producer

3 2 0.7
Don't have the time to check the numbers on this now but it would be interesting to know the number of purchased games per user of xbox360 vs. PS3 in that regard.

IMO, a pirated game is not equal to a lost sale. People who choose to pirate a game, in most cases, probably wouldn't have bought it in the first place, for whatever reason but may still be positively surprised and open for other/future purchases or even follow up purchase of the initially pirated software.

Posted:2 years ago

#9

Josh Meier

40 15 0.4
@Nick - The vast majority of full games being sold on the PSN aren't that big. Yes, the games 'could' get that big, as that is what blu-ray supports, but take for instance Infamous. I got this as part of the welcome back program and it was about 7-8 GB.

I believe the biggest thing I've downloaded off of the PSN was DC Universe Online, which was a whopping 20GB or so.

Posted:2 years ago

#10

Nicholas Pantazis
Senior Editor

1,017 1,463 1.4
@ Sandy You're right, it has, but the PS3 is also proof that a general lack of piracy does not improve software sales, which further leads to the conclusion that the failure of, say, the PSP to sell solid software numbers isn't the result of piracy but poor consumer interest. I'm not saying the PS3 doesn't sell software well, as it does, but it doesn't sell as well as software on the Xbox 360 (most of the time), which has far more piracy. Depending on the game it's even outsold by the PC on occasion, and we all know how much piracy is on PC.

The point is, that in many ways, Rovio is right. Piracy is not a direct loss of profits. Rather, most pirates aren't likely to have purchased the game at any price, or at least only at very low prices. This is why the used market remains very popular on consoles and why services like Steam, with their outstanding sales, do a lot more to combat piracy.

So with this in mind, attacking piracy head-on gains you nothing but lost time and money, and in the case of companies like Ubisoft a lot of backlash and lost sales from the gaming community. One would think it's logical that if you treat all gamers like criminals that would come back to bite you in the ass, but most companies still don't get it, and many pirated versions of games still provide much better experiences than retail versions due to excessive and abusive DRM. In the case of console games I guarantee as things like "Project $10" gain more ground with publishers piracy will rise as well. This will be even more true in single player games where you're taking content out of the game for used purchasers.

Posted:2 years ago

#11

Dave Vout
Director

5 3 0.6
Just checked our analytics for the new released International Snooker 2012 and apparently almost 300,000 people are playing it and of those 200,000 in Asia (mostly China), I can confirm we haven't sold anything like that in fact in China less than 2,000 copies...and we sell 1 or 2 in app purchases there a day...so unless we switch tact and start to sell advertising space in game we're just promoting the sport of snooker in Asia...maybe Barry Hearn will give us a % of WSC tv coverage!

Posted:2 years ago

#12

Dave Vout
Director

5 3 0.6
And...I got so fed up doing a google search for IS2012 and finding torrent sites top of the list that I tracked the owner of one down (site that links to torrents) and emailed him, he removed the game (it was back a day later) and claimed they take copyright protection very seriously and work hard to protect people's copyright...I pointed out that his site was nothing but pirated software, unless Konami are now giving Pro Evo away, and that what he means is if the owner spots their property he'll take it seriously...no reply...my final comment was he's basically holding the window open to let the thief climb in. It's really a serious issue for companies like us, it's all good and well Rovio spouting on as they always do, they are in the exception, the rest of us gamble our money away on developing and publishing a game in the hope we earn enough to make more games. Ok you can't fight it and we have to evolve but frankly after flirting with in game adverts, in-app purchases and the like it's still a massive gamble for us smaller studios...bottom line is if software thieves want to only have the choice of Fifa and COD for the rest of their days they're going the right way about it.

Posted:2 years ago

#13

Roberto Bruno
Curious Person

104 69 0.7
@Bruce Everiss: I couldn't disagree more.

@Sandy Lobban: And yet, the PS3 is ironically the first console by Sony unable to completely dominate its market.
Maybe fighting piracy wasn't exactly the most urgent objective to follow.

Also, PC piracy is getting easier and easier and yet the PC market is growing faster than ever; ironically (once again) doing particularly well in the digital sales, despise the fact that broadband-equipped users should be the ones with the easiest access to piracy.

Edited 1 times. Last edit by Roberto Bruno on 31st January 2012 7:38pm

Posted:2 years ago

#14
for the company producing the hardware piracy will help her to sell more. For developers piracy can help them if they manage to produce material which the user feels that it worth paying the 50 euro price tag. And the best way to tackle piracy is to provide a good multiplayer or co-op experience especially in console gaming. But i perfectly agree with this article if you manage to capture the attention of the gamer and give me something which he really likes and associate himself with it he will buy the game

Posted:2 years ago

#15

gi biz
;,pgc.eu

341 51 0.1
@Tamir: "consumer product" doesn't necessarily mean "gadget": might as well be an OST, a DLC, a theme/wallpaper set and so on.

Posted:2 years ago

#16

Peter Stirling
Software Engineer

25 7 0.3
Fighting piracy is a losing battle. They cannot be beaten, you just end up hurting everyone else be it DRM or SOPA. Rather than trying to shape the world to fit your busniess model, why not find a busniess model that actually works in the modern market. Many companies have been set up based ont he assumption that the market factors would stay the same and the market would scale linearly, it hasn't. They were wrong and the free market dictates that they can adapt or die.

Posted:2 years ago

#17

Andrzej Wroblewski
Localization Generalist

102 69 0.7
The only way piracy can be struck hard is to eliminate wholesale piracy business. Individuals downloading games for fun are potential customers, and with proper incentive they can produce unimaginable profits. Games are bound to move towards the business model as with Riot's League of Legends. It's the 21st Century, allright? We have a fully fledged information society. Why not benefit from it like others already do? Oh, wait... I forgot... The old-school marketing scourge with inclinations towards slavery...

Posted:2 years ago

#18

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