Communications of the ACM
What Happened to Video Game Piracy?
Credit: Discovery Communications
As has been widely documented, online file-sharing technologies generated considerable turmoil in the music industry over the past decade. The mainstream peer-to-peer network Napster introduced an era of noncommercial music copyright infringements. Music copyright violations reached unprecedented heights as consumers illegally downloaded music through a wide array of decentralized peer-to-peer (P2P) file-sharing platforms and torrent Web sites. Compelled by a marked decline in traditional record sales, major music record labels had to downsize and restructure their business models in order to tap into alternative sources of revenue, including proceeds from concerts, advertising income, and so forth.4
While all of this came to pass, the video game developers ... found out that everything would be all right. Judging from the overall expansion of the video game industry, it appears almost as if the industry skipped the "Napster moment" of the Internet piracy and illegal file sharing. In 2013, the video game industry was on track to generate $93 billion in revenue (up from $78 billion in 2012) and the introduction of new home consoles is expected to drive up revenues further (estimated at $111 billion in 2015).6 It is clear that Internet piracy has not prevented the video game industry from prospering.
Comments
Rikki Prince
For a start, due to technical limitations music was first down the well, and the games industry learned from that. In 1999, when Napster launched, home internet speeds made it barely feasible to pirate music, let alone a video game. This meant by the time home broadband was viable, the games industry could learn from the mistakes of the music industry.
The younger games industry also seemed more receptive to new business models. id had already demonstrated shareware still worked in the 90s with DOOM, following on from that distribution model being popular in home PC gaming in the 80s. The free and open source movement, the sharing of game code through magazines in the 80s and the culture of demos embedded in the industry the mindset that money could be made despite giving something away for free.
The music industry couldn't grasp this and rallied too hard. Although iTunes was released before Steam, it was under the restrictive control music companies demanded. It was not the product consumers wanted, at a price the market considered fair (non-physical MP3 albums costing more than the CD!!). Steam did the opposite: it offered gamers what they wanted, at a competitive price and the service continually improved (Steam sales, pre-order downloads, achievements).
This is not to say that piracy does not exist in the games industry. The market is split: consoles have little piracy, because modchips were made illegal and the industry clamped down on them; the PC market still has elements of piracy and this is unfortunately affecting companies that only release on PC. If the music industry had a continually improving technology, then perhaps most people would listen to music on their equivalent of a games console, and they could control piracy better. But it's not, it's a static technology. Playing of music has not significantly changed since the MP3 became popular over 15 years ago, and it is unclear whether the music industry (rather than the tech industry on its behalf) are investing anything to change this matter.
In effect, the answer isn't solely that there's consoles, a different market and some legislation. The industries themselves have taken different approaches to handling the problem. The games industry embraced downloading as a distribution method, rather than fear it, and gave gamers what they wanted sooner than the music industry did.
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