Global piracy plagues every area of the entertainment industry. Video games are no exception to that rule. In fact, 73% of global video game revenues are lost to piracy. Between 2004 and 2009 the industry lost $41.5 billion dollars to illegal downloading.
The majority of the lost revenue comes from overseas, although piracy within the United States is an issue too. Piracy is most popular in Japan where losses were estimated around $10.7 billion in 2010.
Why is piracy so prolific and how is it possible? The reason is the same around the world: the high cost of games and hardware and the spread of broadband Internet.
The cost of games and hardware varies from country to country. In the United States game consoles are $200 – $350 and new games cost around $60. With the high price of initial investment, gamers cannot always afford to buy all newest games they might want.
This predicament has lead to the creation of numerous videos and websites dedicated to helping consumers learn how to burn games and modify consoles to read those games. These website are allowed to exist because they have a disclaimer about “voiding the warranty of consoles” and instructions that these practices are only to be used to back up “personal game libraries.”
However, when a game’s copyright protection is overridden, the game can be copied and the files uploaded to peer-to-peer file sharing sites. Anyone can then download, burn, and play the game on their modified console. In the United States, “self-moding” consoles so they will read burned disks is the most popular form of piracy.
In other countries the cost of games and hardware is even more expensive than in the United States. Most big title games are imported by other countries and have taxes and tariffs on them that drive prices up.
An article from 2010 in The Velvet Light Trap explains that when you take into account the currency exchange rates, gamers in the United Kingdom will pay $30-$70 more than gamers in the United States. These extra costs can almost double the price of games. All countries buying games from the United States have this problem, not just the United Kingdom.
Given that games start out expensive, and are only more expensive outside the United States, is it any wonder piracy is so prevalent? The above article points out that “consumers are not choosing to purchase pirated or smuggled products over legal ones—they are often choosing to purchase a gray or black market product or nothing at all.”
Again, the Internet and its spread has been the key in facilitating piracy. With its spread through Europe and Asia, downloading and burning games has become the easiest way to illegally obtain games. Peer-to-peer file sharing makes it is hard for governments to accurately track and block illegal activity.
How are gaming distributors supposed to respond to these issues? It will take innovative copyright protection software or an entirely different strategy. One approach would be a firmer crackdown on peer-to-peer file sharing and the websites that distribute information on how to burn and mod games. Another approach would be to embrace digital downloading and lower the of cost of producing games.
The major problem with any crackdown on gaming piracy is the fact that this is a global issue. U.S. companies have chosen to avoid distributing or have limited distribution in some countries because of rampant piracy. The funny thing is, gamers still want the latest games and they will find a way to own them whether it is through legal methods or not. Perhaps combining lower prices and wider distribution is the key to limiting piracy losses.
– Amelia M. Torre