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Debate Time: Ubisoft Says DRM Is Needed, Valve Says No It Isn't.

from the <em>don't-hate-your-fans</em> dept

It’s not every day you get two diametrically opposed views on DRM from two high profile companies in the video game industry, yet that is what happened recently.

While both were speaking to different gaming news sites, their conversations have an almost debate-like feel. So I think we will let the two execs duke it out on the debate floor. In one corner we have Martin Edmonson of Ubisoft Reflections speaking to Eurogamer. In the other corner, we have Gabe Newell of Valve speaking to Kotaku (thanks to Matt for being the first of many to send this in).

We will let Martin have the opening statement:

You have to do something.

It’s just, simply, PC piracy is at the most incredible rates. This game cost a huge amount of money to develop, and it has to be, quite rightly – quite morally correctly – protected.

If there was very little trouble with piracy then we wouldn’t need it.

Gabe shoots back:

We’re a broken record on this. This belief that you increase your monetization by making your game worth less through aggressive digital rights management is totally backwards . It’s a service issue, not a technology issue. Piracy is just not an issue for us.

Martin responds:

DRM is not a decision taken by us as a developer at all. It’s a purely a publisher decision. The publisher has every right to protect their investment.

It’s difficult to get away from the fact that as a developer, as somebody who puts their blood, sweat and tears into this thing… And from the publisher’s point of view, which invests tens and tens and tens of millions into a product – by the time you’ve got marketing, a hundred million – that piracy on the PC is utterly unbelievable.

Gabe shares a story of how Valve protected their investment, in Russia no less:

When we entered Russia everyone said, ‘You can’t make money in there. Everyone pirates.’

When people decide where to buy their games they look and they say, ‘Jesus, the pirates provide a better service for us.’

The best way to fight piracy is to create a service that people need. I think (publishers with strict DRM) will sell less of their products and create more problems.

Ok, so it wasn’t a long debate, but I think the point is clear. Ubisoft and many other developers and publishers are under the impression that those who pirate games are doing so just to get free games. Yet, Valve has learned that piracy is a symptom of a greater problem: unmet customer needs. It learned that Russians pirated games to get a better quality localization than what the publishers provided. It didn’t respond by upping the DRM. It responded by providing high quality localization.

So rather than fight your fans and treat them like criminals, why not embrace them and provide them with the product they want? It’s amazing that anyone needs a debate to figure that out.

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Companies: ubisoft, valve

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Comments on “Debate Time: Ubisoft Says DRM Is Needed, Valve Says No It Isn't.”

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CommonSense (profile) says:

Re: Re:

“It needs protection, it needs protection!!”

Anyone with sense knows that if you protect something too much, it becomes dependent on that protection and can never fend for itself in the real world… If you stopped protecting your games, you’d be able to spend more developing them into something that actually has a chance to make it based on it’s own merits.

Jay (profile) says:

Valve Fanboy

TL;DR I’m going to gush about how Valve is such a good company that people should pay attention to. You’ve all been warned.

For a private company that runs a digital market place, Valve is a very, very VERY good company that understands its consumer base. The company ran the Potato Sack despite complaints that missed the point. The Potato Sack brought in a lot of interest and dollars to smaller developers that might otherwise go unnoticed. As Newell said, it was meant to be fun and make Valve less of a corporate culture than what is seen at EA or Ubisoft. It worked. Greatly. I had fun with the Potato Sack (even though I only got ONE potato. ๐Ÿ™ )

Just to strengthen the argument placed here, these are the issues that Valve looks at:

PC Gamer: Do you have a good sense of piracy rates with Steam games?

Gabe Newell: They?re low enough that we don?t really spend any time [on it]. When you look at the things we sit around and talk about, as big picture cross game issues, we?re way more concerned about the stability of DirectX drivers or, you know, the erroneous banning of people. That?s way more of an issue for us than piracy.

Read that again. There are other issues that are more important than piracy. Making a stable experience and one that doesn’t take away from the game as Ubisoft does should be applauded. Ensuring customer satisfaction instead of customer ire should be rewarded. And Steam is given that in spades.

Perhaps, it’s the way that the companies are set up:

So, essentally you’re saying that Valve needs autonomous developers.
GN: Yep. We don?t really have titles here; people decide for themselves what their role should be. People self-organise here.

People say they have to go work on this different problem now, because nobody else is and we need to get it done in order to get other things done. So they pack up their desks, and move to their relevant teams.

If you look at Ubisoft Montreal, or Ubisoft Toronto, these are 1,000 person-capacity studios that can knock out a game in twelve months.

GN: The only problem with that is that they?ll be able to knock out the same thing over and over again, not something that adapts to the changes in the industry.
And I haven?t seen any evidence that the rate of change in the industry is decreasing. I think it?s increasing. So what you?ll end up finding is those thousand people are the enemy of your next project. They may be able to bang out your current one, but they?ll get in the way of doing the next one.
But, seriously, if fifty awesome people knocked on the door, we?d hire them all.
We don?t hire to specific positions, we hire to standards.

This entire interview is worth reading. From the very way that Steam is structured to how it has made its own service without worrying about copyright enforcement, Valve has done an exceptional job at showing how to run a business. If I could find the article again that I submitted a while ago, I would show how Valve seems to have learned from the “Media Piracy” book and marked down the price in Russia so more people could afford the games. But since the article already does that, there’s no point in saying it again.

Again, good job Zach on showing how Ubisoft is losing ground by focusing on the wrong issues.

Jay (profile) says:

Re: Re: Valve Fanboy

Sorry DCL, don’t deal in hypotheticals.

Steam makes money based on figuring out the problems of the customer and alleviating them. I’ve explained in great detail how Valve isn’t like the corporate cultures of EA, Ubisoft or Activision. I could even go on about how Steam’s sales has saved smaller developers and how they keep a flexible share of the revenue stream if a developer falls on hard times. Unless Valve decides to do things similar to EA with Origins, they find ways to get my money through massive discounts, free upgrades of their servers, and less transactional costs on how I spend my money on Steam.

So unless they are failing spectacularly sometime soon, I’m still a fanboy with a great idea of what makes them a great company.

Rekrul says:

Re: Re: Re: Valve Fanboy

Sorry DCL, don’t deal in hypotheticals.

Here’s something that’s not hypothetical;

I have an older system that still has Windows 98SE on it. The official requirements for Half-Life II list 98 as the minimum required version of Windows. Of course HL2 won’t run on 98 anymore, because Steam, which is only required in the single-player game for DRM, no longer works on 98. They retroactively changed the system requirements. Yet, somehow I doubt that if I were to buy a sealed, boxed copy of the game based on those requirements, that Valve would send me a patch to make it work, or refund my money.

The same is true of any Steam-crippled game. I can install my copy of Jedi Knight on pretty much any system, even without a net connection, but the copy sold through Steam is saddled with Valve’s DRM, which requires you to authorize it, and which is subject to remote deactivation if Valve thinks you’ve violated their terms of service.

I can’t wait until they decide to change Steam’s minimum requirements to Windows 7, and all the remaining XP users wonder why all their Steam-crippled games no longer work.

Jay (profile) says:

Re: Re: Re:2 Valve Fanboy

“The official requirements for Half-Life II list 98 as the minimum required version of Windows. Of course HL2 won’t run on 98 anymore, because Steam, which is only required in the single-player game for DRM, no longer works on 98. They retroactively changed the system requirements. Yet, somehow I doubt that if I were to buy a sealed, boxed copy of the game based on those requirements, that Valve would send me a patch to make it work, or refund my money.

I personally think that’s more a community issue. Updating to Half Life Source isn’t expensive. Getting the DosBox and using it to emulate HL 98 doesn’t require much except a few pieces of technology knowhow on the newer systems. Then, there’s the mods of HL1 that may make the game even better than the Source version that Valve used. The more popular a game, the more likely there will be patches to fix it and upgrades.

“The same is true of any Steam-crippled game. I can install my copy of Jedi Knight on pretty much any system, even without a net connection, but the copy sold through Steam is saddled with Valve’s DRM, which requires you to authorize it, and which is subject to remote deactivation if Valve thinks you’ve violated their terms of service.”

Point taken. But how many people are playing some of the older games nowadays? And how likely are you to activate Valve’s remote deactivation if no one else is playing these older games?

“I can’t wait until they decide to change Steam’s minimum requirements to Windows 7, and all the remaining XP users wonder why all their Steam-crippled games no longer work.”

I’m not certain if that’s the way to look at it. Think about how long people have been playing Counter Strike 1.6 vs Counter Strike Source. People have JUST given in to Source as recently as last month. It’s a lot better than what EA is doing by forcing people to buy the newest games every year with no support for the older ones.

Karl (profile) says:

Re: Re: Re:2 Valve Fanboy

I have an older system that still has Windows 98SE on it. The official requirements for Half-Life II list 98 as the minimum required version of Windows. Of course HL2 won’t run on 98 anymore, because Steam, which is only required in the single-player game for DRM, no longer works on 98.

You only need to meet the system requirements if you want to run Steam. If you have an older version of the games, the games won’t stop working.

For example: I have a boxed copy (non-Steam) of Half-Life, and it runs just fine. Even the mods still work. Nothing about the system requirements is retroactive.

Now as far as Half-Life 2 goes: the current game engine uses Windows API’s that simply aren’t available for Windows ’98. This has nothing to do with DRM, only with advances in technology (which games depend upon more than other software). The same thing happens in Linux; try running Sauerbraten on Debian Woody, for example.

As an aside: If you’re still using Windows ’98, I’d advise you to upgrade to XP as soon as possible. This is coming from someone who doesn’t ever upgrade unless I have to. XP is simply a better OS (the best Windows ever did, including Windows 7). If you’re worried about programs not working, don’t be – I have a patch editor for the Nord Micromodular that was released around 2002, and it runs just fine in compatibility mode.

Karl (profile) says:

Re: Re: Re:3 Valve Fanboy

They retroactively changed the system requirements.

Despite my earlier comments, this does bring up one thing I absolutely HATE about Steam: the fact that it updates your games automatically, with no way to rollback the changes.

This wouldn’t be so horrible, except that it often results in broken functionality. For instance, one rather infamous update to the Half-Life 2 engine broke the majority of third-party mods, which add a huge amount of added value to the game. There are kludges and workarounds for it, but it was (and is) a royal PITA.

In fact, for a few weeks, the automatic updates meant that I couldn’t even run Episode Two for a while. When updates break your own games, something is very wrong.

Still, in general they’re a company that is doing more things right than wrong. They’re certainly miles ahead of Ubisoft.

Vulpis says:

Re: Re: Re:5 Valve Fanboy

*almost* Keep in mind that that setting just stops automatic updating when you run the Steam client. Karl’s still correct in that unless you’re trying to run in offline mode (and have kept it that way, since apparently running the client in online mode at all grabs the list of *available* updates so basically, ‘It Knows’ to put it in a kinda silly way), it will force the update when you run the game (which likely causes *more* of a startup delay if you haven’t patched it for a while). It’s a trade-off of when you end up spending the update time, not a prevention of the update altogether like you’re suggesting.

Anonymous Coward says:

Two other companies that have it figured out:

GoG.com (good old games) and http://www.humblebundle.com (a very Humble Indie Bundle indeed)
And thats just the top of my head, I know literally hundreds if games that are FREE and make huge wads of cash.

So Ubisoft (the game maker, not the publishing part) has to decide fast: does it want to be a dinosaur, or a mammal.
Time is running out, the asteroid is on the way.

rubberpants says:

Aggravating DRM

I think that “aggravating” is the key word here. Steam itself is DRM, but it’s not aggravating. In fact, it’s great because it makes getting, updating, and playing the games LESS of a hassle. I love it. If a game isn’t on Steam I’m less likely to buy it. It’s adding value to the product.

On the other hand, I’ve decided not to buy games several times because of the DRM they come shackled with. They make getting, playing, and updating the game harder – and they don’t provide any value in return.

Gabe is spot on here. You can go around all day moralizing about piracy, but you’ll be more successful if you give customers what they want. Free games is not want most of them want. They just want a great experience. Most people will pay for a great experience. I do it all the time.

Anonymous Coward says:

Re: Aggravating DRM

Yeah, technically Steam is DRM. However, they went the completely opposite direction Ubisoft goes.

Steam has about the least intrusive DRM around. You never notice it at all. You create a steam account once, it always remembers, automatically logs in, runs fine if it can’t log in for extended periods, etc. The service is amazing and their prices are great.

The Buzz Saw (profile) says:

Re: Aggravating DRM

This comment here is key to the whole debate.

I vehemently oppose DRM. Steam is DRM, but Steam did what no other company does. In exchange for the occasional online verification, I receive an offline mode, the ability to download games anytime, recurring price drops, awesome targeted marketing, a buddy list to find friends gaming, etc. etc. etc.

Ubisoft (and others like it) do NOTHING to offset the presence of DRM (in addition to the DRM being infinitely more restrictive). I receive no tangible benefit. The pirated version is simply WAY BETTER. These publishers act like their games are God’s gift to gamers and that they are entitled to any means necessary to “protect their investment”. This does not even begin to address the issue second-hand sales, which are a problem resulting from prices that are too high.

Steam gets it. Ubisoft does not. Steam likes gamers. Ubisoft likes gamers’ money.

crade (profile) says:

It’s simpler than either of them put it.. Just make stuff that doesn’t suck. Song and dance notwithstanding, it really doesn’t matter if you call it “DRM” or not, if you add something that makes your game worse, you will get less sales than if you don’t. If you make it a lot worse, you get a lot less. A little worse, a little less. You are not going to force “pirates” buy it though, I think that should be accepted.

AJ says:

No Contest...

Warning, Steam love story below…

My steam game list is as long as your arm. I almost refuse to buy a game unless its released by steam. My games are cataloged, updated, and ready to go on whatever computer i want to use in my house. I am able to surf the newest games and deals, keep up with my friends, and drop in and out of whatever game i want all within the same screen.

Steam is like the I-Max theater of gaming and the games are the movies. Not all movies are going to be great, but the I-Max experience will always be awesome!

Rikuo (profile) says:

“If there was very little trouble with piracy then we wouldn’t need it.” Ubisoft, what about independent developers, such as the Minecraft guy, who PROMOTES unpaid downloads of his game? (I’m not gonna say piracy any more, I’m going to stick with the correct terms). He has worked unauthorized downloads into his business model and has made a few million; whereas at your head office, you’ve got hundreds of suits with business degrees who can’t figure that out.

“DRM is not a decision taken by us as a developer at all. It’s a purely a publisher decision.” Then what about all the quotes recently from UBISOFT saying how great DRM is? It was Ubisoft crowing about the always-connected DRM in Assassin’s Creed II just a few weeks ago.

“And from the publisher’s point of view, which invests tens and tens and tens of millions into a product – by the time you’ve got marketing, a hundred million” I don’t care if you put in the entire planet’s GDP into making your game. No one cares. Does marketing have to be tens of millions? First lesson of business management: cut costs. You don’t need advertising campaigns worth fifty million dollars, especially in the days of the internet, where word of mouth can do the job for you, for free!

As a closing here, a few weeks ago, I submitted an email to Ubisoft’s Head Office about the fact I wasn’t going to buy any of their DRM-laden games. I have yet to hear back from them.
Any time I shoot an email off to Steam though, I do hear back from them.

Anonymous Coward says:

Re: Re:

“e has worked unauthorized downloads into his business model and has made a few million; whereas at your head office, you’ve got hundreds of suits with business degrees who can’t figure that out.”

You have to understand, they learned from teacher at college who are from the old system. They just aren’t good at working things out for themselves

Jay (profile) says:

Re: Re: Re:4 Re:

It’s actually called the “Spike TV game awards” but they seriously try to be the big budget grammies for games. It’s disgusting.

But it’s just marketing for the AAA games that came out in a year. It’s uncannily amazing how many Gears of War/Halo/ Call of Duty/ Madden fanboys come out to vote for these damn things and screw over the entire industry.

If anything, I would love to see the developers come together for an awards show. It would probably be a lot better organized than having celebrities that aren’t gamers and paid advertisements.

Aliasundercover says:

All Worthless

It isn’t worth taking bullets in the crossfire between greedy publishers and greedy pirates. DRM makes the games worthless to me so I just don’t buy. I could, I have, I would, I have the money, I don’t mind spending it, I like games.

I want to get something for my money. With DRM I get nothing but hassles. Register an account, connect to the internet, this computer, not that one, can’t give it away when done, can’t lend it, can’t return to it years later for some memories. Add to that the crapware, phone home and general battle ground inside my computer and the net value of most paid software today is negative.

Sad thing is they have destroyed the market for developers and publishers who do not treat me this way. It is so much work to know and there are so few that don’t make a mess of my computer it isn’t worth the trouble to look.

Net result is they don’t get my money. Their products are worthless to me. I hope they all go bankrupt so someone honest can take their place.

Anonymous Coward says:

Sim 3

I decided to play some Sims 3 again (EA not Ubisoft, but still the same point), and then I remembered why I didn’t like playing it. Because I have to start the game 3 times at least to get the DRM to recognize the DVD. And it’s not like it happens right at the beginning. I have to sit through a long load screen for it to then tell my it can’t authenticate my DVD.

Anonymous Coward says:

First off, I think that it is truly sad that software makers are forced into such choices by so called fans, who seem more than willing to take whatever they can get for free and run.

It is incredibly sad that direct single player, non-networked games risk becoming a thing of the past, because the paying market for them is smaller and smaller all the time.

It is incredibly sad that the only way I can play games is by having online access. It is incredibly sad that this appears to be the only way software makers can actually sell their products in a controlled manner.

There isn’t much to debate, except to point out that the pirating masses have pretty much screwed it up for everyone else.

I wonder if they use Hotfile (hint hint Torrent Mike, wake up… you can’t ignore the elephant in the room forever!)

Anonymous Coward says:

Re: Re:

Right, it’s obviously the pirates fault that game developers and publishers are kicking the dog. But hey, they ‘have to’ take it out on somebody and we all know they can’t take it out on the pirates by doing shit to the versions of the games that the pirates aren’t even playing. So enter the actual customer, the person who literally pays to be Ubisoft’s whipping boy for piracy. Punishing actual customers for the actions of others is ‘quite morally correct’ in their eyes and apparently yours too. It’s incredibly sad that the only way you can see this is that your tormentor, the party actually saddling you with the things that makes you ‘incredibly sad,’ is someone you would defend.

AndyD273 (profile) says:

Re: Re: Re:

Isn’t this called Stockholm Syndrome?
Identifying with and then defending those that are hurting you?

The trick is to beat the subject pretty bad, then start showing mercy a little bit at a time. This will cause the subject to be super grateful when they aren’t being beaten.

Or possibly an abused spouse. “We’ll, yeah he hit me, but he could have hit me a lot more, and harder. He just has a good heart.”

MrWilson says:

Re: Re:

You’re missing the point and misplacing the blame. Yes, there are people out there who download games instead of purchasing them just because they don’t want to pay, but there’s such a variety of people and motives for the copyright violation that you can’t just attribute it to “freetard pirates” (unless you’re willfully being ignorant or at least disingenuous).

Some people pirate to see if they want to buy the game (what happened to the game demo?), some people pirate because buying a game with DRM is a pain, some people pirate because they can’t afford to buy all the games they want to play, some people pirate because the price is too high, some people pirate because the game is too short to be worth the price, some people pirate because the DRM restricts the second-hand market from which they might get back some of their money, some people pirate because the games aren’t available in their country, et cetera, et cetera…

People wanting something for free is the only thing a game publisher can’t control. All the other scenarios involving DRM, price, availability, convenience, etc. are the responsibility of the publisher. But of course, if you just want to view it as black and white and pretend every copyright violation is a lost sale due to “freetard pirates” so you can whine to congress to enact harsher laws to protect your unwillingness to actually give your fans and customers what they want, then you’re certainly free to close your eyes, plug your ears, and scream at the top of your lungs that it’s the pirates that are messing everything up.

PaulT (profile) says:

Re: Re:

“There isn’t much to debate, except to point out that the pirating masses have pretty much screwed it up for everyone else.”

No they haven’t. It’s the industry’s *reaction* to the piracy that’s screwed things up. I would have continued buying PC games if the DRM wasn’t so ridiculous. Now, I’m pretty much console-only, and the switch away from PC gaming allowed me to go completely Mac/Linux on my hom machines. The gaming industry’s response? More DRM…

Jay (profile) says:

Re: Is Ubisoft the puiblisher?

Uhm… Ubisoft IS the publisher. Ubisoft Reflections is the game developer inside of the studio Ubisoft.

The confusion here probably has to do with how IP rights are given to the publisher, creating a serfdom or indebtedness to the publishers. There’s quite a few problems that seem to stem from the same issues as major record or movie studios in entrapping smaller studios to push out a product and holding IP rights as a small carrot to convince studios to stay in one place. There’s quite a few ways that some up and coming publishers are figuring out how to take away these artificial barriers:

1. Transparency and communication.

You, the Extra Credits community, will know everything: when we fail, when we succeed. There will be no PR spin; you?ll be involved in everything we do.

2. IP ownership

We will never ask developers to give up their intellectual property. It?s their world: no one should keep them from building it.

3. Single Game Deals

If a developer works with us more than once it should be because they want to, not because they?re contractually obligated to.

4. Straight 50-50 split of profit

The fund is not about us and them, ?publisher? and ?developer?, we?re in this together, we?re partners. We?ll split the profits equally on any project we work on

Personally, I don’t know if this will succeed. The fact is, James Portnow, Allison Theus, and Daniel Floyd never imagined this success would occur and this thrusts them into a new limelight. I can only hope that their method of doing business gains attention and allows for much better games and more transparency to become par for the course instead of the secrecy and dagger deals of an outfit like Ubisoft or EA.

Anonymous Coward says:

It’s difficult to get away from the fact that as a developer, as somebody who puts their blood, sweat and tears into this thing

I don’t understand why people make this argument. You’re a business. As a business, is your goal to fight for a highly debatable philosophical ideal or to make money? You won’t always be able to do both. Ubisoft reminds me of segregation-era shopkeepers who would refuse to serve Negroes. Those shopkeepers felt they were following their philosophical principles, to their ultimate economic detriment.

Not an Electronic Rodent says:

Ubisoft doesn't get it indeed...

… it’s absolutely not about “getting it for free” and very much about something that works.

Looking up at the shelf above my computer right now I can see 11 Ubisoft games, all purchased and most recieved as presents.

The last 2 were so annoyingly awkward to use and limited because of the ever increasing DRM that I won’t be buying or asking for another. Congratulations Ubisoft, your amazing grasp of your customers’ drivers has cost you another one. Keep it up.

Greevar (profile) says:

Who would have guessed?

If you treat your customers with respect and offer them what they want to buy, they buy it. That seems so obvious, yet so many publishers are ignorant of that. It’s like they’re suffering from a shared delusion, a belief that they create a product and by merit of its existence, are entitled to our money with whatever terms they wish to impose. They seem to be stuck in the past where they held all the cards and if you wanted what they could create, you had to accept their one-sided terms. They try so hard to bring back that abusive relationship and use moral appeals to try to demonize people who are just not happy with what they provide. They act like bullies who have found that their favorite method of abuse no longer gives them the power it once did. They try to complain that they can’t abuse their customers anymore and it’s somehow morally or legally wrong. They accuse their victims of being the bad guys, when it’s just the peasants revolting against tyranny.

Greevar (profile) says:

Here's a very good opinion piece about the subject.

This is an article from GameSetWatch that has some very good points and great insights into why DRM is wrong, and talks about doing the business the right way:

I came across this video from Extra Credits yesterday. It’s about piracy, and concludes that although DRM (digital rights management) never works, players should be good folks and pay for their games.

Their argument is witty, but it’s not new. It paints file sharing as stealing money from developers’ mouths, and so has an either/or perspective. Either we get paid or we go out of business. Either we see sales or we’re bust.

They’re seeing their business as a content business, where the content is the thing that has value. This is not the case.

The games industry, like all the arts, is about finding and interacting with fans, so that value comes from a relationship. As we slowly move into the post-platform, single-franchise future, understanding the difference between the two is crucial.

Thomas Paine

The pattern of sharing, copying and stealing as a way to generate sales is not new. The Internet may make it more apparent than ever before, but it’s at least as old as Thomas Paine’s Rights of Man.

When Paine wrote his seminal tract during 1791 and 1792, it caused a storm. Framing the ideas of the French and American Revolutions while dis-enfranchising the rights of kings, Paine’s book became a touchstone for a generation of intellectual thought. It also sold in excess of 250,000 copies (which is like selling 5m copies today) and made him a household name.

Paine’s book actually sold in two parts. The first was published as a typical high priced book in 1791, and the second in 1792 in a cheaper edition for wider circulation. It was the second part that drove sales and turned Paine into a storyteller. The question is why.

The curious aspect of this story is that many customers never owned the first part, and yet to understand the second part they would have required at least some familiarity with the first. The simple answer, of course, is that more people read, shared and passed on the ideas in the first part than physically bought it.

We see a similar pattern with many game franchises today, where the second or third edition of the game is the one that actually achieves the maximum potential sales. Even in games that have a story element, such as Halo, this is shown to be the case. Again, the only explanation is that more people must have played the first game than actually bought it.

Art seeds the idea in the audience that there will be more art. When Damien Hirst creates a newsworthy shark in a tank, it seeds the idea that there will be more work of similar bizarreness. He finds a following that want to view, buy and interact with his art for the long term. However in order for that to happen, it has to feature in a gallery. The gallery makes access to the art free, which exposes it to millions of viewers, and some of them go on to become customers and fans.

The One Shot Fallacy

Many developers and publishers never think in terms of sequel potential, or they only think in terms of sequels if the first game that they have made turns out to have been an explosive hit. Many of them also fail to maintain or continue the conversation with their customers between releases, and this means that they fail to maintain the connection that they were building.

They are thinking of their business in the terms of one-shot economics. One-shot economics views their game as a bullet in a gun, and they have only one shot to hit the target. The target is, of course, that the game has to make a lot of money. It can’t fail, and can’t only acquit itself. It must be a hit, or else the developer will be destroyed.

This quickly leads to ARPU (average-revenue-per-user) obsession. The focus is on distributing the game but making sure that every sale is achieving enough to meet revenue expectations. This places the publisher in a state of conflicted ambitions, because they also want to ensure that the game sells many copies.

That’s where advertising costs come into play. In order to make a high price game sell big, you better have the muscle to tell everyone on Earth that it exists. And to do so in as short a time as possible to avoid discounting and dropping popularity.

That’s how the games industry basically thinks. A lot of indies think the same way, for these reasons:

– That’s the advice that they read
– It’s the conventional wisdom
– Some of them come from the bigger industry and learned this there
– Several of the major sales channels are constructed to sell in this way
– It seems like common sense
– They’re afraid of customers

The only difference between indies who think this way and big publishers is just a lack of deep pockets. They can’t afford the big marketing spend, but still charge more than they should for copies of their games (I think the optimal price for indie games is $5, not $20) to get that ARPU.

This works to keep their game in a small niche and frustrated that their customers seem intent on ripping them off. Viewing customers in that manner will drain you of enthusiasm for making games because it feels like continuously fighting a hydra in order to get a shot at a golden fleece.

One-shot economics mostly don’t work because the developer or publisher makes the mistake of thinking that all sharing is the enemy (torrenting, second hand sales, rentals, borrowing in the school playground etc) because these activities take away from the one shot of ARPU that they need. In so doing, they actively work against the most powerful potential weapon in their arsenal: Seeding.


Realize that your game content is entirely valueless. You may have spent days, months or lifetimes working on it, but what you have created has no tangible value. At all.

However, before this makes you commit suicide, consider this: Google has no tangible value. Facebook has no tangible value. Twitter has no tangible value. And yet each of them is considered to be worth many billions by investors and stock markets, and each makes billions in revenue. Google is a $200 billion corporation that has made its fortune on a product that it gives away, completely free, to everyone. The same is true of the others.

The reason that they, and many games, have zero value but plenty of worth is that they are gateways to something else. Google makes money from advertising. Facebook makes money from advertising and sales of virtual goods. What these companies are doing is leveraging relationships (in search and social) on a vast scale in order to make a profit. The fact that the product is free is why it spreads so far, and the revenue comes later.

This does not mean that you have to run a hosted game that gives its content away for free all the time and charge for virtual goods. You can, but it’s not the only way. What it means is that your game, and you as a developer, needs to be built with the idea of forming a connection with players, and to do so with as many players as possible. The relationship that you establish with those players is the true source of revenue and success. I call this single franchise publishing.

For example, suppose you made a cool strategy game and sold it for $10. You expect it to be pirated by various sites quickly. Your choices are to install some DRM to make sure that every copy sold is legitimate, and then have a running battle with pirates who crack that DRM.

Or alternatively you can let the pirating just happen and instead build social features into the game (which could be as simple as links to your company forum) and a requirement that people who need customer service buy a legitimate license. Then you participate in your forum all the time and start telling everyone about version 2 of the game, which will be out in 6 months and cost another $10.

If your model is based on one-shot economics, the risk is that you will not make your sales requirements first time. So the second option (let pirates be pirates) is directly eating away at your bottom line. On the other hand, if your model is based on valuing relationships then it doesn’t matter.

A pirate will likely pirate anyway, but instead you are focused on converting them into a customer eventually. And when the second version comes out, the process is the same. More customers, more pirates, more participants in the community, and here comes version three.

What you are doing is seeding relationships, and then those relationships are yielding positive dividends from customers. Regardless of where the customers come from, legal or otherwise, they will eventually pay you money out of a sense of support, interest, convenience or any one of a dozen other purchase motivators as long as you don’t let the relationship die.

Of course, you can apply the same thinking to online games, massive multiplayer games and social games. The main difference is simply the frequency of releases and the kind of financial model that those games can support. Each is making money from relationships in different ways, but relationships are at the heart of their businesses.

The ultimate goal in all this is to own a keyword. What that means is that your game franchise or company becomes a search term that Googlers use in their day-to-day searching. Establishing a popular keyword, or becoming the top search result for a keyword that already exists, creates a ‘to the winner, the spoils’ effect. And the best way to do that is through building relationships because that will result in links. Links are the currency of the keyword economy. The more you have, the better.

Minding the Gaps

The chief argument leveled against this kind of thinking (such as by IFPI in their latest report) is that sales gaps emerge. They note that in the last seven years, sales of physical music have dropped, and that digital sales have not covered the gap. The accusation is to say that all this talk of sharing and fan clubs may well add value, but it’s about the bottom line. So let’s get real here. We need to protect ourselves.

Indeed. Let’s get real. The reality is one of two situations. Either:

1. The IFPI’s measurements are incomplete because they do not take sufficient account of the increasing numbers of independent artists who simply don’t bother selling through traditional channels.

2. The IFPI’s measurements are correct, and the amount of sales revenue has in fact dropped.

Assuming the second version is more likely to be true (actually it’s probably a combination), what layer of the distribution chain does it come out of? The answer is the publishing layer.

The scare story around piracy infers that in the future a developer will no longer be able to make a profitable living, but this is just not the case. The Internet automates sharing and connection between the artist and his fans. So in games what this means — like in any industry — is that the price of distribution drops to near zero. That also means that the amount of available competition increases, and so the sustainable price of the product also drops.

The missing revenue caused by the sales gap is not hurting creators. What it’s doing is slowly putting a lot of people who work in the publishing factory out of jobs because what they do is simply less essential. Single franchise publishing probably implies that much of the one-shot economy will shrink down to a more manageable size. Right or wrong, there’s not really much that can be done about that, however, as automation of the processes that publishing used to offer is here to stay.

The essential reason why you should love your pirates, sharers, borrowers, lenders, second hand retailers and so forth is that they become your new levers of publishing. Everyone that plays your game, legitimate or otherwise, is another node in your network that may spread the name of your game and its marketing story. Each is an opportunity to build a relationship, convert into a customer, become an influencer on your behalf, and so help your single franchise to spread.

The real gap that you must avoid is not a sales gap. It is a conversation gap. Not talking to your users, disappearing for years at a time to work on your next game, and otherwise simply vanishing off the radar resets all of your relationships back to zero. If you allow that gap to form then you’ve sacrificed the potential of everything that you’ve built for nothing, piracy or no.

PopeRatzo (profile) says:


I like how the guy from Ubisoft keeps pointing to the fact that “piracy is at unbelievable rates”. Now, he’s not saying that it has hurt profits, or that they aren’t making money because of piracy or that games can no longer be made profitably. It’s just that piracy is “at unbelievable rates”.

Unless he can show that his profits have been hurt by piracy, I don’t understand why he should be taken seriously at all.

It might just be that a lot of the games they have released are a sucky value for the consumer. That’s doing more damage to their business than piracy.

sniperdoc (profile) says:

Re: misdirection

The fact of the matter is that Ubisoft like so many Publishers out there ram timelines down developers throats, which causes the developers of the game to, often enough, release a game that is not ready for release. This creates hate and discontent towards the developer, ultimately the publisher, and creates distrust between the consumer and that particular publisher.

How many games have people bought only to be amazed at the status of the game’s quality? Often times games are being released in what seems a beta state. Good examples of this are Creative Assembly’s (Sega) Empire: Total War or UbiSoft’s Silent Hunter V, that game was broken on release and support has been dropped entirely pretty much right as it came off the production line. How is a consumer supposed to trust a developer or a publisher and want to pay money for a product.

Now, we get other requirements like “always-on-internet” in order to play a game. This hardly creates value to a player that is always on the road. My father loved Diablo and Diablo II, but with Diablo III’s always-on requirement he will not be able to take the game on the road (as my parents love to do RV trips all the time). He will not purchase the game because of that requirement.

The answer to all this:
Develop a solid WORKING title.
Create something innovative.
Maintain a relationship with the consumer.
Do not make your product a hassle.

Pretty much all of those tenants are being blatantly overlooked by Ubishaft and Sega. EA has been working harder at providing value-added to their products and I believe they are to be commended. It seems none of the developers/publishers, aside from Stardock and Valve, understand this.

Andrew (profile) says:

They never learn...

Piracy will always be around no matter what you do. It won’t be stopped easily and if you have a suggestion then fire away. But what should a developer do? Give up and say well I can’t make games cause pirates will steal it. That is an idiotic mindset to have and adopt. Developers and companies need to focus on what is important, the gamers you are designing/programming the game for. I see stories from Ubisoft/EA all the time about DRM this and DRM that but never about what they are providing for gamers to entice and give them a reason to buy. Ubisoft games in the past (Splinter Cell for example) were awesome. I actually bought and played those games. I have yet to buy Assassins creed 2 cause I just don’t want to deal with the hassle of DRM. So in essence I am a lost customer and a lost sale so to speak.

Steam is a fantastic example of how people have allowed people to still buy games and actually want to buy them and use it. It is a great example how they bring a great service and they do not focus on how much people Pirate games. Until Ubisoft realizes this and to be frank the only reason they haven’t failed yet is there games are still pretty good. Eventually that will degrade and gamers will move elsewhere. Maybe then they will get it through their heads.

Anonymous Coward says:

Ubisoft and EA rank right in there for producing some of the most obnoxious DRM, spyware, hateware, there is. Most of the time when you read about such, those two are in it up to their eyeballs. They make it really drastic and when enough of their users and internet forum commenters raise enough cain, they back off just a little on the severity but it still remains above and beyond the necessary.

I’ve learned long ago how to pirate, how to configure, how to setup, etc. I refuse to buy a game untried. I’ve been burned too many times in the past with uncomplete games or games that needed patched even before they hit the market on release day. Sometimes those gaming companies make the fix, sometimes they don’t. You never get your money back for an incomplete product.

I do buy games only after I’ve tried them to find those that are worth while. Just bought one last week on that basis. Even though I had already played it, it was worth the money and I supported the makers…it wasn’t Ubisoft nor EA whom I will not buy products from because of their business methods and intrusive DRM in their ‘legal’ products that are missing in the pirated version.

Even so, games are played on my gaming computer (which incidentally is another new purchase and good hardware rigs aren’t cheap). That computer never sees the internet. It’s not going to phone home, it’s not going to report it’s spyware findings, it’s not going to allow a constant connection to the net. It’s a choice that will remain that way.

The gaming developers can make it hard enough I don’t pirate. But if I can’t try them before I buy them to judge it is worth the money, then I won’t spend the money at all on games. Live with it or do without. I’ve spent far too much money on the turkeys learning that lesson.

Jeffrey Nonken (profile) says:

Russian localization?


I don’t understand a word of Russian (…OK, maybe three words… five tops) but I’ll occasionally watch one of these just for the heck of it. What impresses me most is that these videos are properly lip-synched in both versions.

That means they didn’t just take the English version and slap Russian dialog over it, they fixed the animation as well. Since I don’t understand Russian I don’t know how natural the dialog is but I’d bet the adjusted whatever timing they needed to make it work.

One of these days I’ll play the English and Russian versions of one of these side-by-side to see what kinds of timing differences there are. But not today, I have some Steam games to play. ๐Ÿ™‚

Anonymous Coward says:

Reasons not to buy games

It’s really sad that most game publishers give me more reasons not to buy a game than to buy:
– You need to be online to make the DRM happy.
– If DRM servers fail or are shut down the game will be worthless.
– Why pay money for an online game when the publisher may shutdown the server anytime?
– Why do I need to hope that the vendor of the DRM offers patches to be able to run a not so old game on a new OS version?
– Giving away or selling the game to someone else doesn’t work anymore.

That causes more trouble than fun. With that bad user experience publishers can’t expect to get any money from me.

That Anonymous Coward (profile) says:

As the DRM gets more out of whack, the number of people “pirating” increases.

Reasons people “pirate” games –
1 – I don’t wanna drop $60 on something unfinished. I want to try it first.
2 – I liked the game, but this is the only way to get it DRM free.
3 – I’m sticking it to the man.

They no longer offer demos of games, just highly polished videos that bear little relation to the actual experience the end user will get.
They crank up the DRM to “protect” the game, and at the same time drive customers who want to pay them to still get a pirated copy to go with their retail copy to avoid the DRM.
They will never get people who are “sticking it to the man”, no amount of DRM will stop them.
Rather than make your game less attractive to the people who want to pay you, why not stop looking at the “piracy” numbers and look at sales and think of ways to make sure the paying customer is happy rather than focusing on how you can keep 1 more person from trying the game without paying you first.

sniperdoc (profile) says:

Re: I vote with my dollars

Everyone should follow this credo. But, most people don’t and then they also pirate the games, which causes companies like Ubishaft to go to extremes and alienate more people.

I haven’t bought a single Ubisoft title ever since their rediculous OSP(?) DRM. This included Assassin’s Creed 2 and Silent Hunter V. Luckily, I also heard that SHV was released in an abysmal state and that they dropped support on the product pretty much right off the bat.

But, I’ve made it a point not to buy any of Ubishaft’s products until they:

1. Release products DRM free
2. Release solid and WORKING products

I really don’t understand why people have such a problem with EA? EA has tried to make it a point in the recent past to listen to the consumer and provide:

1. More original products
2. Value added items to their products
3. Be more involved with the community (and I think BF3 is a great example)

But, the OP is right. Put your money where your mouth is.

Daniel (profile) says:

“Hey I’ll just put my money where my mouth is, I won’t buy a single Ubisoft game from now on. If they wanna treat me like a criminal – why should I reward them for it?”

Exactly. Although aside from Blizzard I wont buy any games period. I tried about 16 months ago and bought 2 games for PC. The second my internet even hiccuped I got kicked out of the game, no saving, nothing. It was pathetic, and they wonder why PC game sales are so bad… Needless to say, I won’t be buying any more PC games. Ever. Unless its Blizzard.

That Anonymous Coward (profile) says:

Something I was pondering is the push between DRM and the phone home methods used in some of them.

As we recently saw EA used DRM and then gave themselves the right to see everything else on your comptuer and then sell that data.
Only after someone read the EULA, that the end consumer never gets to see until the game is paid for, unwrapped, and nonreturnable – Did EA say oh well we won’t share that, but we still get the right to collect it.
Is there someone at EA who thinks that doing this was an awesome idea? Fire that person.
Doing craptastic things like this encourages people to just get the “pirate” version of the game, simply because it removes that awesome value added feature of EA checking out whats on your computer.
Honestly if your so wrapped up in how much your loosing, and how to replace that “revenue” by spying on your paying customers your shooting yourself in the foot again.

Revelati says:

Pirating a game is cheap(free), easy, and instantaneous. The only thing you need to worry about is spyware/virus, but if you read the damn comments even that risk is small.

Buying a game is expensive, frustrating(from DRM), and you usually need to go somewhere to get it. It will also come loaded with company spyware(also from DRM).

Valve at least makes buying a game as convenient as pirating it, and for such things as support and multiplayer it is almost always worth buying a game over pirating it.

Its the same as what ITunes/grooveshark did to music, and what netflix is doing to movies.

Welcome to the future of digital media distribution! Making your media harder to acquire and use IS GOING TO MAKE LESS PEOPLE ACQUIRE AND USE IT!(unless pirated of course) And if you make it so inaccessible that pirates can’t use it than neither will the general public…

How this isn’t glaringly obvious to anyone in the distribution industry is really beyond me. It feels like execs are so obsessed with their antiquated business model that they are willing to sink themselves defending it.

Here is a thought, make software that is easy to acquire ( downloadable at bit-torrent speeds) make that software clean (no clunky corporate spyware/virus) at most an activation serial number, and… (Here is the one the suits don’t like) MAKE IT A GOOD VALUE! Provide decent support and benefits for buying a legit product.

People don’t pay for music because paying 20 dollars for a CD is NOT A GOOD VALUE. ITunes is…

People don’t pay for movies because paying 20/25/30 dollars for a ticket/DVD/BD is NOT A GOOD VALUE. Netflix is…

People don’t pay for games because paying 50-70 dollars for a DVD of a game from a company that assumes you are already a criminal is NOT A GOOD VALUE. Steam is…

Invisible_Jester89 says:


Problem is, both sides have good points. Valve is correct about the need to not alienate consumers with draconian DRM methods and the need to fix unmet needs to combat piracy, but Ubisoft is just as correct in stating that intellectual property deserves some protection.

Can’t we just put a CD verification code on the inside of the box like we do and have done in the past for every other piece of software?

gbilios says:


the reason for piracy is to get the games and play them for free..there is no other reason because no matter what you do – people will still pirate games..why you think people upload music videos on youtube? all you have to do is enter a url and download it for nothing!! you got it without paying!! localization or not!! my uplay acocunt got hacked and now the games i own belong to someone else now..absolute rubbish!! i have to throw the games i purchased in the bin because ubisoft’s poorly coded DRM allowed someone to hack my account and steal my games..where is the common sense?

luci says:


I admit that I have not bought games and I pirated them, but for me and my parents $60 is a lot (I live in romania) to give you an idea, both parents earn $ 500 together,but I would have bought many of the ones played if I had the money.now i work and earn enough to actually buy.for example I have “stolen” company of heroes and loved it and now that I have money I’ll buy COH2 when it releases.under certain conditions you can go from pirate to customer

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