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Comment by ghshephard | Hacker News Reader

The thinking goes - without DRM, some large number, X % of the games are just copied instead of purchased.

With DRM, close to 0% of the the games are copied, but some large number Y % of the games are no longer purchased because people either are (A) Philisophically opposed to DRM, (B) Want to be able to play the game offline, or now, (C) Can't play the game because the DRM breaks it.

The balancing act, here, is how many of those X% can be converted into purchases, and how many of those Y% valid purchases are lost.

EA may have tipped the balance here through poor execution and resulted in fewer games being sold, but, I don't work in the game industry - so I don't know how high X normally gets. (50%? 75%? 90%? 95%? I'm sure it's a pretty disheartening number)

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A lot of games are copied, but it's a fallacy to assume that pirating a game means you won't buy it, or that attempting to pirate a game and being prevented (by DRM or some other means) means you'll buy it instead.

In college I pirated games quite a bit. I never bought one, nor would I have.

Oh, I totally appreciate that - and, those people who would never have purchased the game in the first place, but copy it, provide some good word of mouth advertising for the game.

The thing is though, if the number gets high enough, let's say 95% of people just copy the game (not unlikely in the age of torrents) and only 5% purchase it - might not be enough to fund a AAA game, whose budgets now run in the 100s of millions of dollars, and, at $70/pop, need about 6-10 million purchases to make up for the flops that will also occur.

The real problem, is that if it's _really_ easy to copy, and the company puts in no attempts to prevent this, then a lot of the people who would have purchased the game, don't bother and just download off the torrents.

Tough balancing act. I don't know what the answer is.

I agree.

I do think the effect of piracy on a company's bottom line is overstated in just about every case. It's easy for us an the HN community (generally pretty intelligent and technically inclined) to forget that downloading a torrent isn't the simplest thing in the world, particularly the lengths you need to go to in order to get some pirated games to even function properly.

Torrents have gotten pretty amazingly simple and are now mainstream . My 65 year old mother figured out how to torrent a TV show (that wasn't available in Canada - she tried to buy it first, but they wouldn't sell it to her) in about 30 minutes, including the time required to download and install µTorrent. I would guess that 90%+ of the computer using population is now comfortable torrenting files.

Agreed with you on the hassle of running a pirated game, and, honestly - I'm unwilling to run some random .app/.exe on my system. Hell, I'm not even comfortable opening .pdfs anymore.

Guess that just goes to show you how long it's been since I've downloaded a torrent :)

Torrenting video games is still a bit more involved than torrenting a tv show.

You have zips, rars, 7zs, archives split into parts. Some need you to mount a iso file, some you need to mount multiple iso files. You may need to run a sketchy exe to patch the game, or copy files from an iso into the installation folder, run other patches in the correct order, etc. etc.

It's incredibly simple to download a torrent. My non-technical parents have done it in the past, without asking me how to.

In fact, from your desktop, it takes less than seven steps total to download and watch a Full HD movie of your choosing from the pirate bay.

Downloading and watching a TV show means installing and using 2 applications (utorrent and vlc for example). Downloading and playing a game from a torrent means installing and using 4-5 applications (utorrent, winrar, daemon tools, the crack, the game its self).

This is why steam and GoG wins. Before I look for my old CDs or search on p-bay for that old game which I wouldn't mind killing a few hours on, I check to see if it is ~$5 on steam or GoG. The process is so simple and next time I feel like a trip down memory lane I know it'll still be there in my steam/GoG library waiting for me.

The answer was discovered long ago: online play. Starcraft had this interesting concept: you could enter a key to play in single-player mode, and even have some fun playing against the AI, but to play on Battle.net you needed a unique key. Online play is a whole different level of exciting from offline play, and Battle.net makes Blizzard a ton of money. Likewise with XBox Live for Microsoft.

That EA failed to realize that they could monetize an online Simcity regardless of whether or not people pay to play offline demonstrates a serious lapse of judgment.

How does Blizzard make money from Battle.net?

Only indirectly. Under 20% of Starcraft's sales occurred within a year of release, so I think it's fairly safe to say that the vast majority would not have happened if bnet did not exist.

Well, I understand why they did what they did. It joins a category of games like Diablo 3, where the basic value proposition for the purchaser is fundamentally single player, but the value proposition for the developer follows all the network-effect-leveraging growth-dependent online product tropes. Diablo 3 is especially starkly obvious: the auction house is where Blizzard makes its money post-sale, so they want people playing online. They think it will be better for players in the long run if they are involved in the social and online elements, and they might even be right, but they correctly surmise that unless they force people to be online, people will choose the easy route and play single player.

I don't particularly think they are wrong. For example, after a while, the ridiculous ease of obtaining hacked items ruined single-player for me -- it would be more fun I'm sure to have to work for everything, but I don't have the willpower or incentive to do that unless it's forced on me.

Look at Minecraft. There are multi-hundred player online servers that do great business by providing a persistent world where people have to work for things, making their money by giving diamonds and perks to donors. Not many people play single-player religiously. It's fun for a while, but the main demographic that plays offline is almost certainly the hopeless creatives. (And there's a lot more people who are into competitive/cooperative rat races than are endowed with both a self-motivating sense of design and a bunch of free time.)

That's true, but it's not what he was talking about. He wasn't talking about "one download, one lost sale" mentalities. He was talking about revenue loss in general. And if it's possible to pirate a game, you will lose some revenue from that. It might not mean every act of piracy is a lost sale, and it might not mean the game has a net revenue loss due to piracy. But there will be some revenue loss somewhere.

Seems like Valve is spot-on with that X%, and maybe even lowers it a little by offering such a great service and caring about their customers. That sounded fanboy-ish, but it's the truth.

If it isn't on GoG or Steam (or Humble Bundle) I just don't buy it. I don't have that much time for games and will just go without. Steam is an amazing service, I am surprised that movies and music have not followed suit.

While I have a number of complaints about the Steam client, the service itself is fantastic.

Also a consideration: 866 reviews and a "1-Star" average.

See conversion rates from free vs paid. Lets use the average number of 3%. 100% is all users, which mean all who bought the game added with all who would have pirated the game, and 3% is the total amount of people who would potential spend money.

Out of those 3%, you need to remove A), people who do not pirate), people who do not compare stores and just buy from what is most convenient, and C), people who would buy if there was DRM preventing piracy.

We can now assign weight to those groups. Group B, is likely to be largest given human nature and sale numbers from places like steam. Group A would likely come second, and Group C would be smallest. Lets use the weights 3/6, 2/6, 1/6 proportions for each group. That makes Group C somewhere around 0.5% of the users which the DRM scheme might get to buy the game.

Is 0.5% additional conversion rate worth the costs of DRM scheme, additional support, and a tanked amazon review rating of 1 star?

For many of the X%, purchasing was not a consideration; what's more useful to consider is how many people that were paying customers in the past STOP paying, given that they've demonstrated their willingness to pay.

Your C point implies purchase.

It's safe to assume EA uses purchases as their success metric, as they are unlikely to complain you actually paid for the game.

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