Valve: Pirates are "Underserved Customers"

[zodiacfml]

yep, pirates will always be there but there are a lot of possible opportunities with them, like as beta testers for the newest games or other ways some have pointed above.
also, there's a lot of games now compared to a decade ago. gamers unconsciously has an alloted budget for gaming. gaming beyond that budget is pirating.

 

[duzcizgi]

Well, I downloaded a couple of films from the torrent sites, and I think I will continue to do so, until the studios learn to release the DVDs without region locks and release them in the world all at once and not with some stupid price tag.

@azxcvbnm321
I'm not really shocked to learn the CD music industry is dying. You can rent a professional recording studio for about $1000/hr. Recording all album doesn't take longer than 10 hours total. So, $10.000 to record it. Having it mastered, let's say cost another $10.000. OK, total material cost is now $20K. Don't forget to pay the composer/singer/group etc, their share in advance; about $1.000.000, for example. (I'm sure most of the musicians don't get this much, but let's say they got it) Spend another $1.000.000 for marketing and PR. Total cost is now $2.020.000 before production.

Any mass printing company would give you a price of less than $ 0.50 per disc. So, if you had 1 million of them printed, you'll have to pay $500K more.
All costs are $2.520.000 Now, sell each disc for 19.95 bulk to retailers: $19.950.000 sales figure. Deduct the costs: $17.430.000 for the record company. Not a bad figure.
Even after the taxes you have some money left.
This is for a small scale production. Not even world scale. Where is the drop? Or, is that drop really a drop in net revenue or gross revenue? I'm sure that net revenue of the CD business is much higher than let's say, 10 years ago, when producing CDs were really high.

 

[gamerk316]

The record/CD industry doesn't get that we don't want to pay $19.99 for a album when we want one song off of it. Thats why Itunes has become so successful...

 

[trinix]

Recently there was a investigation into the music industry (a bit related to game industry as they both follow the same flawed business model safe a few smarter companies).

The looked at the music as wealth, increased the culture of the people. They looked at the number of people who download music and how many cd's they buy, they looked at the non-downloading group and how many cd's they buy. It's almost the same.

The biggest problem is the other group. You have the group that downloads and buys, you have the group that doesn't download and buy, but the last group is the problem. Mostly driven by the fact they can't buy the music (not available, no money etc). The group that only downloads.

This group wouldn't buy cd's. So it's not a loss to the industry. But they love to focus on that group. The group that would never buy, but does download. It's not true that every downloaded album would have been one cd. A lot of people would just get back to the radio or record direct from radio to a tape.

This whole idea that every pirate is money lost is only true in a perfect world. The same is true for games. You don't lose customers because they download, you lose customers because you DRM your software and make games that are worthless to play to begin with. How many games have bugs nowadays that are so bad it makes games unplayable. The gamers are moving to the console for a good reason. Publishers can't force them to patch the console, but they can push games out sooner and make a patch to fix it for PC-games.

Pirating software isn't good, but it's not as bad as some people want to point it out. Most of the pirated software that is not bought would never have been bought, do you really need to buy the newest fifa soccer 2009, just because they added the name of .... to the team?

 

[chris312]

For discussion's sake, what if only one out of every 100 pirates is "money lost?" That is to say, without downloadable free copies, one of every 100 downloaders would go out and buy the game?

What about 2 out of every 100? etc.

From a revenue/PR perspective, obviously there must be some point where piracy actually has net a positive impact. But what about a moral standpoint? If there's even one person that decides not to purchase the game because he can download it for free instead (out of the rest of the folks who download it but wouldn't buy it even if it was the only way to get the game) then there is technically something being taken from the publishing company and/or devs. Just a thought I had; don't take it personally.

Giant eternal argument aside, I believe Valve has absolutely the right approach. It's pretty clear that no DRM will ever solve piracy, whether piracy is good or bad for PC games. It's up to devs and publishers to come up with new methods and strategies for delivering content in order to better serve every customer.

 

[Phosters]

I agree with Valve, and I know that I have utilized steam and D2D more than store bought games in the last year. I know it is a pipe dream, but I do hope the movie companies can get on board some day. It would be nice to be able to watch a new release in the comfort of my own home for a price rather than a crowded theater. Cheers.

 

[grieve]

I don’t understand why this is even a debate….

Vendor A has merchandise which you can obtain for X $. Instead of paying Vendor A, you steal the merchandise.

This is cut and dry… open your eyes.

Piracy is stealing, there is no justification, azxcvbnm321 is absolutely correct. To be perfectly frank I am disgusted that everyone doesn’t agree with azxcvbnm321…. Look what our world has become.

 

[chrisv815]

Piracy is stealing, yes plain and simple. But Valves system sucks and thats why I refuse to buy any more of their games.
Example, both my wife and I played half life and counter strike and paid the full retail price for our games. We stopped playing and went to EQ then WOW. My son asked to play one of the games we still had the disks for. Now this is years later and with the reliability of windows (LOL) we both and reinstalled our OS's several times. So we try to install the game on my sons computer with the CD and Key we bought. We can't because neither of us remember our password. All Valve will do is email the password to the original email address we signed up with. which by now we don't use those email's. We are told we are out of luck. What we legally paid for is now useless. Nor can we get the games to play when the internet is down.
Fool me once shame on you. not again. I will never by their products.
They assume everyone is stealing their products and treat us all like criminals.
This is akin to going to the grocery store and having a cop follow everyone around while they shop. Like they are saying someone has stolen from us so we will assume everyone is a thief. Good ridance. I'd rather pay blizzard my $60 a month for 4 accounts.

 

[undead]

DRMs and high prices are wrong and stealing is wrong. But I don't know which is more wrong. So, I switched to consoles. Now, I have PS3 and Wii. What's the lesson here? One less PC gamer in the world and one lost customer for the PC gaming industry; thanks to their questionable conduct. And I am sure I am not the only one doing this.

 

[gm0n3y]

@chrisv815, I don't know what you expect them to do if they don't have any other way to verify who you are.

Don't you think that it would be much more likely that somebody would scratch their disc or lose their CD key than change their email AND forget their password? One of the main reasons that I like Steam is because I don't have to have a hard copy of the game. Years from now, I can download the game onto any machine I want without having to dig up some CD, which hopefully isn't scratched and hopefully I still have the key.

 

[azxcvbnm321]

Trinix, you make a strawman argument of people who download music but would never buy music. There are people who don't listen to much music, those people aren't that interested in it and also don't download. The people who download a lot of music but don't pay are very interested in music, and the fact that they are very interested means that they would pay, if they couldn't steal the music that is. And don't give me the too poor argument, we have priorities and before pirating became easy, even the poorest who were interested in music bought CDs. Most of the poor have cars and cable TV, if they can afford cable and a car, they can afford to buy one CD a month.

The person who loves music, downloads a lot, and would never pay is so rare as to be mythical. Yes there are people who don't care about music and download a few songs to try them out, but those people download so little that they're a very tiny part of the overall volume of downloads. The people who download the most are the ones who care about music and definitely would buy a CD if they couldn't steal.

Again, every argument for pirating has been smashed, there is absolutely no intellectual, reasonable, or moral argument that pirates and their supporters can make. As for gmon3y, revenues are down for the record companies thanks to fewer sales, I'll direct you to the stats but you should be able to find them easily and it's common sense that if sales were still healthy, the industry wouldn't be in trouble.

 

[grimreality]

First off, all stealing is wrong... with the only exceptions being a starving person stealing a loaf of bread to live... short of similar situations, don't be a child and try to justify your actions with silly and petty excuses. If you do not own something it is NOT your decision whether you use it or not, regardless of your future intentions. Once you do own it, do as you will...within reason.

For the subject of comparing gaming to music, I don't think this is exactly accurate, or at least there are some things that need to be pointed out. Music artists/performers make their money off of live performances and promotions/endorsements, not so much from record sales. The record labels are the ones making the real dough off of record sales. Whether that is fair or not is a whole other conversation. Games on the other hand, while a lot of the money does go to the publishers (which you could compare to record labels), the rest goes to the developers (which you could compare to the music artists), and unlike the music industry there's no way for the artists to make money elsewhere...game sales are their only paychecks!

So to make this more clear... When you pirate music, you're mainly just stealing from the white-collar corporate workers who have cushy jobs with benefits who try to market and distribute the stuff you love to you. When you pirate games, you steal as much from the corporate side as you do from the blue-collar artists and programmers that work long hours with little benefits to bring you something they love. I'm not saying stealing from one or the other is better or worse, I'm just trying to put faces on them and make sure you have a better perspective on your actions.

 

[gm0n3y]

As for gmon3y, revenues are down for the record companies thanks to fewer sales, I'll direct you to the stats but you should be able to find them easily and it's common sense that if sales were still healthy, the industry wouldn't be in trouble.

Yes, I did mention that I think that revenues are down for MAJOR LABELS, where the complaints are coming from. I don't think this is true when looking at the total amount of money spent on music products by consumers.

As for demonhorde,

MONEY FIGURES ARE NOT THE ISSUE !!!!!!! this is about MORALS

I seriously doubt that the RIAA and the major labels would agree with you on this point. If piracy increase their profits, I'm sure that we wouldn't even be discussing this right now.

 

[duzcizgi]

The independent musicians and programmers have started to get some money, though... I've been seeing more and more of semi-amateurs publishing their content on internet for free download/view/review/listen first are starting to get some of the light they deserve and earn some of the money they deserve.

Sorry, selling me something which actually costs (all costs put in) about $2 for $49.95, I also call it theft. And, if you can't find an alternative for it, this is called monopoly. (Can you buy Metallica's albums from different producers? No you can't. So no competition, just monopoly, which is also crime as theft is.)

Two mistakes don't add up to one correct deed, but, as consumers, we paid for a *very* long time what they wanted. They just wanted to continue this for ever. I'm sorry, I don't want to be screwed anymore. In capitalism, there should be competition, demand and supply balanced. RIAA and Co. doesn't want competition. So, pirating filled the vacuum of competition. At one side extremely overpriced goods sold, next is the same goods for free. I think it's fair enough.

 

[gm0n3y]

Sorry, selling me something which actually costs (all costs put in) about $2 for $49.95, I also call it theft.

While I'm on your side, I just have to point out that manufacturing, shipping, etc costs are only a small part of the overall cost of buying a game. The vast majority is spent on actually developing the game. So if a blockbuster game that sells for $50 only sells say 100,000 copies, there is a good chance that the game will lose money. I think that $40 or so is a fair price for a top notch and expensive to develop game.

The music industry I do think charges too much for a CD. I think that $10 is a fair price. It is definitely about greed here.

 

[azxcvbnm321]

Yet it's not greed to take something for nothing. That's great logic here and once again the self-justification trademark of the thief. I have every right to be "greedy" and charge what I can get.

Do you people have jobs? How greedy are you to charge money for your services that cost very little (food and shelter to keep you alive)? How much profit are you making from your labor? Now that's the ultimate greed.

And if you think something isn't worth the cost, then don't buy it, just like I won't hire you if you demand more than I think you're worth. Pretty simple huh?

 

[gm0n3y]

Ah, you speak the words of a true unabashed capitalist. Fortunately the world does not work according to the over-simplified ideals preached by ignorant capitalists. Even Adam Smith (the "founder" of western capitalism) recognized that businesses can not over charge their consumers for their products without the negative consequences of a black market popping up. There are laws against war profiteering and utilities are not allowed to just set their own prices. The music industry needs to realize that when their product value is vastly less than the prices they are charging for it, then people will not buy it. Without the monopoly control exercised by the record labels, prices would be lower. Unfortunately, it is extremely difficult to prosecute oligarchic price fixing actions.

 

[chris312]

Well, forgive azxcvbnm321 for taking the capitalist stand in a nation whose economy is largely capitalistic!!

How do you think the price of goods should be determined?

 

[duzcizgi]

@azxcvbnm321:
That's what exactly is happening. Their products are overpriced, so people get it for free from black market.

@gm0n3y:
Game development isn't as high as you think. You can hire best programmers for 100K/year. You can get the game engines for about 500K, but you don't use these resources only for a single game. Most of the game companies release a couple of games a year based on the same engine. So, the net cost of making a game is comparable to producing music CD, if not cheaper.

 

[duzcizgi]

Piracy is the "Boston Tea Party" of RIAA.

Boston Tea Party from Wikipedia:

As Europeans developed a taste for tea in the 17th century, rival companies were formed to import the product from the East Indies.[1] When tea became popular in the British colonies in North America, Parliament sought to eliminate foreign competition by passing an act in 1721 that required colonists to import their tea only from Great Britain and the East India Company.[2] Because Parliament heavily taxed this tea and charged the East India company tarrifs, both Britons and British Americans found that it was much cheaper to buy smuggled tea, which usually came from Dutch sources—tea imported into Holland was not taxed by the Dutch government.[3] The biggest market for smuggled tea was England, but illicit tea was also smuggled into the colonies to a lesser extent.[4]

Tensions between Great Britain and the American colonies arose in the 1760s when Parliament sought, for the first time, to directly tax the colonies for the purpose of raising revenue. Colonists argued that, according to the British Constitution, British subjects could be taxed only by their own representatives; because the colonies were not represented in Parliament, they could not be taxed by that body. Colonists organized economic boycotts against the Stamp Act of 1765 and the Townshend Acts of 1767. By 1773, the British East India Company was in financial distress due in part to the colonial boycotts.

For more information:
http://en.wikipedia.org/wiki/Boston_tea_party

 

[gm0n3y]

@duzcizgi,

You also have to have management, a graphics team (larger than the programming team), story / game designers, testers, etc. Then add up new hardware every year for each employee, servers to run the games (most games have an online component, usually free), and rent on their building. Then add the marketing cost, which for blockbuster games can be huge.

Game companies (despite the dubious quality of some games) can spend huge sums of money just to test a single game. Many great games that aren't just rehashes of old games (read: EA bullshit) can take a year or longer to develop.

Wikipedia states that a typical game costs "$1,000,000 to over $20,000,000 to develop", though the cited source is from 2005, so I'd expect the amount today to be even higher.

 

[duzcizgi]

@gm0n3y,
I'm also working in the same business: Programming. And I know how to inflate costs on paper. Believe me. Most of those costs are on paper costs. The most expensive of all is management. The graphics team is cheap. You never keep a pool of graphic designers all the time. When you have a new project, you just recruit enough of them, or, better yet, just go to a graphics design office. They'll do all the graphics of the game for $100K. HW for programmers again don't cost much, generally they are given free by CPU/MoBo/GPU manufacturers. Rarely, if it's a startup, they have to pay for HW really. For the online support and the servers are also one-time investment. Today's mainstream computers are perfectly capable of serving thousands of people in online gaming. (My friend's running a Travian server which is serving ~2000 users online all the time. It's a Celeron 1.5 or 1.6 I'm not sure.

If you repeat the one time costs or common costs for each title, you can add up to couple of million dollars per game. But in reality it's only a fraction.

Facilities, well, always, but always, IT companies keep their operations where land is cheapest. i.e. 1 Microsoft Way, Redmond WA.

Bottom line, writing a decent game doesn't really cost that much.

If I'll tell you how much S.T.A.L.K.E.R. cost, (Programmers are my friends. We all live in Kiev, Ukraine) you'd run to the nearest torrent and start downloading.

I appreciate the argument of pirating is stealing; but as with the Boston Tea Party; vastly overpricing is also stealing.

 

[gm0n3y]

Everything I've been able to find online about the cost of a blockbuster game says that they cost AT LEAST in the low millions and the development time taking > a year for most large games.

Which travian server does your buddy run? I'm playing on s3.travian.com.

 

[duzcizgi]

It must be s7.travian.org.ua if I recall correctly.

The costs of blockbuster games are around $2-5 M, you're correct. But as they are blockbuster, they sell much more copies than other games. This is totally what I'm trying to say: Selling 1M copies of something printed on disc, returns about $19M. So, For that return, its cost should be minimum $10M, to justify the price. But when you feel that you're cheated, you don't feel to be honest anymore.

 

[falconqc]

First, let me make something clear. Piracy is stealing.

That being said, I would rather pirate a game than pay my hard earned money for a piece of filth that doesn't even have a place in a bargain bin at the local gas station.

That being said, I'm glad to say Valve has it right! The Internet bargain bin for good and bad games alike.

When Steam came out, I dismissed it as a fad. Who would want to buy a game and risk not being able to use it later should their service go down? Who would think that Steam would prove to be such an amazing system. Great selection of games, and more often than not, great deals to be had on even blockbuster hits! 5$ for Bioshock anyone?

I buy most of my PC games through steam. Downloads at 1.2Mb/sec (faster than any torrent), less expensive than in store purchases, great deals, combo packages, and no scratched CD or DVDs to worry about.