Despite Whining About Piracy, Secondhand Sales, Video Game Sales At All Time Highs

from the well,-look-at-that... dept

We've been noting how both the movie industry and the music industry had terrific years in 2008, despite the public perception being passed around by certain legacy companies in both industries that they were being decimated by "pirates." Apparently the same is true in the video game industry as well. Dan writes in to let us know that, at least in the UK, video games sales were at a record high, despite all hand wringing about the need for DRM and how piracy and secondhand sales have been destroying the industry. Once again, it seems like if you just put out a good product and give people a reason to buy, they're more than willing to do so. Still, how long will it be until we hear UK cultural secretary Andy Burnham declaring that the video game industry needs special protection against the scourge of piracy?

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Video Game Developer Talks To Pirates: Realizes He Can Compete With Free

from the shocking dept

Slashdot points us to an interesting story of a video game developer in the UK, Positech Games, who put up a blog post recently, asking people who "pirated" the company's software to explain why they did it. They did... in droves. Now there's a new post up discussing both the results and how the company is responding. While the guy sounds surprised about the results, they don't really seem all that shocking: people hate, hate, hate DRM of any kind (which should serve as a counter to the guy who showed up here last week insisting that DRM is here to stay). That was the thing they were most vehement about. After that, they were upset about the high price of games and the short demos that were offered that weren't representative of the game.

The good news is that the company is responding. It's swearing off DRM completely, reducing prices on some games and promising better demos. It's also exploring ways to make it more convenient to buy to avoid any "hassles" that users have in buying. It's nice to see someone realize that, rather than freaking out and trying to sue everyone, the proper response to "piracy" is to figure out how to better compete with it by decreasing inconveniences and giving people a reason to buy rather than pirate. So far, it appears that Positech is focusing mostly on that first issue (decreasing the annoyances). Hopefully it takes the second step also, giving people additional reasons to buy rather than pirate.

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Content Industry Could Learn From eBay Seller Turning A Profit With Public Domain Content

from the competing-with-free dept

Last year, Mike made the point that saying you can't compete with free is saying you can't compete, period. Every business makes a profit by adding value so that customers will be willing to pay above marginal cost for its products. The fact that the marginal cost of content (once it's been created) is zero doesn't change that principle. You can add value to free content just like you can add value to any other product. The New York Times Bits blog nicely illustrates this with a post about the market for public domain content on eBay. Apparently, there are a number of people who make a living by finding obscure, copyright-free content on the Internet, burning it on a DVD or other convenient format, and selling it on eBay. Despite the fact that every one of those customers could have tracked down the video for themselves and watched it on their computers, a lot of people are apparently willing to pay for a DVD version.

This business model actually illustrates two good ways to add value to free content. First is convenience. A lot of people don't have a high-speed Internet connection, don't like watching videos on their computer monitors, or want to be able to take their content with them in a compact format. For those users, a DVD is a much nicer format than a file on their computer's hard drive. DVDs are also a much more convenient format for giving gifts: you can wrap a DVD and put it under the Christmas tree, something that's harder to do with a video on YouTube. Second is filtering and organization. There's way more content out there than any one person could possibly watch. So there's a lot of value in helping people separate the wheat from the chaff. That's a big part of the value we provide here at Techdirt: a lot of the information you'll find on our blog comes from other sites, but we try to highlight only the best and most relevant information, helping our readers to keep up with news in the technology world more easily. By the same token, people who sell public domain content on the Internet create value by filtering and organizing the information so it's easier for others to quickly and easily find what they're looking for.

I won't belabor the implications for traditional content industries. Like it or not, their content is available for free on peer-to-peer sites, and if they want to make a profit they're going to have to find ways to make their content more valuable than what you can get with BitTorrent. Two important principles for doing that are: use formats that convenient and versatile and make sure content is organized in a way that makes it easy for users to find what they're looking for. That means, for example, that you probably shouldn't cripple your products with DRM or sue companies that help people find your content.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

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Leopard Illustrates Another Way To Compete With Free

from the reliability-is-valuable dept

You often hear people in copyright debates claim that you "can't compete with free." We've tried to explain why that's wrong: In fact companies find ways to compete with free all the time. The latest example comes via Wired's David Kravets, who points out that Apple's latest OS is all over BitTorrent. People who want to avoid giving Apple its $129 can visit their favorite BitTorrent search engine and download the new operating system free of charge. Yet apparently, some of the same people who were downloading bootleg copies of the OS earlier this week will head to their local Apple Store tonight to pick up a legitimate copy. "If you're going to use a system to run your life, you're less likely to take chances with an illegitimate copy," says BigChampagne's Eric Garland. Being sure your computer isn't running a defective or compromised version of Mac OS X is worth $129 to a lot of people. Of course, that's not a new insight. One of Red Hat's most lucrative products is its software subscription service, which allows companies to pay money in order to guarantee the software they get will be stable, secure, and will work well together. Red Hat's customers could download the software themselves and roll their own version of Red Hat, but for many companies it's just not the risk that they'd miss a critical bugfix or security patch.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

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