Piracy, Secondary Sales and Account/Identity Theft

By Matt Ployhar
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DRM was a response to piracy, just like free-to-play was a response to piracy. I’d like to cover some of the leading causes and reasons I’ve heard over the years for why people pirate, or make copies of, a game:

1. They don’t want to pay for the game outright, or they feel it’s too expensive.
2. The game isn’t available in their region.
3. They want a digital copy of the game that they legitimately purchased.
4. DRM game performance was invasive and/or degraded.
5. They bought the game, then lost or scratched the disk and didn’t want to repurchase it.
6. There wasn’t a demo available.
7. To be malicious; they don’t like the publisher.
8. The mafia, gray and black markets.
9. They cracked the game because it was a challenge.

Now, here are some other anecdotal things I’ve heard over the years, firsthand, from the mouths of publishers:

1. Some piracy is expected and even acceptable. Publishers would rather have gamers running a pirated copy of their content than spending dollar- or mindshare with someone else.
2. Even pirated games can build brand loyalty and increase product awareness.
3. Publishers are able to write off some of their piracy losses.
4. Piracy allows publishers to claim a larger total available market.
5. Piracy forced publishers to make an MMO subscriptions-based game.
6. Piracy was so bad that the publisher changed its business model to free-to-play.
7. Because of piracy, the publisher decided to release its MMO or F2P bits up on BitTorrent. That allows free digital distribution.

So where do we go from here? What’s the real story? I believe piracy, DRM, secondary sales and account/identity theft are all creating a cause-and-effect that’s leading us towards an overall reduction in the rates of piracy. Here’s what I think:

Piracy spawned all sorts of things:

• DRM
• Authentication Activation Codes and Server Side Authentication (like Microsoft’s SSA)
• Consoles (emphasis on proprietary hardware and software solutions)
• Collector’s editions
• Code-tampering tech (such as Arxan)
• Subscriptions-based gaming (MMOs, premium gaming, etc.)
• Digital distribution (like Steam and BattleNet)
• Free-to-play and micro-transactions

Account and identity theft brought us:

• Authenticators (like my WoW keychain fob that randomly generates numbers
• Intel’s IPT (Identity Protection Technology)

Secondary sales spawned:

• Achievements and points-based gaming and tracking
• Digital distribution
• Collector’s editions (with unique digital goods tied to the user by a one-time activation)

Most of the above brought us:

• More legislation and invasive laws in order to help protect consumers/publishers/ISVs

I’m sure there are many more things I could include in the above lists, but what’s there leaves me with the following positions:

Free-to-play

You can’t technically pirate an F2P game.

• Micro-transactions are the path to monetization in F2P.
• Browser/Web gaming lend themselves well to the F2P model. HTML5 is able to provide some pretty compelling content.
• Scales best on the PC due to large install base -- the going micro-transaction attach is around 5 to 10 percent. PCs and smartphones for F2P make a ton of sense here.

Digital Distribution

• This is largely replacing brick-and-mortar stores.
• Practically every retailer and ISV, due to costs and merits of digital content, either has an online store or publishes on one.
• Digital goods go a long way in helping the ISV track where a sale occurred, where it was activated, and more. These metrics provide real-time tracking statistics that, in turn, help an ISV ship a better game in the future or respond to game issues quickly.

Buy Once -- Plays on Any Screen

• This is a longer-term prediction. This would let us get a lot closer to that buy-once-play-anywhere scheme that, frankly, just makes a lot of sense.

Persistent Worlds and MMOs

• These are more expensive to pirate and beyond most casual pirating abilities.

Social Integration

• These games allow for myriad ways to communicate or build social circles. Pirated copies of the games aren’t able to communicate broadly with legitimate servers.

Achievements/Points

• Can’t really pirate the bragging rights on these.
• While the system can be gamed from time to time due to implementation, it’s not typical.
• Users just like being able to track their stat

I could keep going, but those are my top reasons why I believe piracy is declining. If a games ISV adopts just one or even several of these solutions, and with all the shifts we’ve been seeing over the past few years, I don’t see how anyone could make the argument that piracy is on the rise. I’d say that, at worst, piracy is perhaps stalling out. At best, it’s going to slowly decline as a result of more ISVs adopting and migrating to not one, but several of these solutions in tandem over the next decade. The ISVs that I’ve talked to that have adopted the aforementioned solutions are, by and large, seeing varying degrees of good to great results.

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Matt Ployhar focuses on graphics, multimedia and gaming in Intel’s visual computing software division [disclosure: Intel is a sponsor of this article]. Prior to that, he worked at Microsoft for more than 12 years. His passions are graphics and gaming, and he also enjoys the great outdoors and reading. He is a frequent contributor to Digital Innovation Gazette [1].