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Pirate’s Booty

As a faithful nerd, I made haste to get home quickly today to install and play my piping-hot, release-day copy of Blizzard’s new RPG, Diablo 3. Unfortunately, millions of other PC and Mac gamers had the same intentions I did, and the game’s servers were down for maintenance, due to unexpected heavy loads.

While Diablo 3 features a robust single-player game in addition to its multiplayer universe, it does require a constant internet connection to play, even in single-player mode. This helps support battle.net’s drop-in, drop-out co/op mode, and also serves as a convenient form of DRM (Digital Rights Management). DRM is a controversial tool in publisher’s ever-increasing fight against piracy.

Sadly, the combination of the requirement of the game to be in connection with Activision/Blizzard’s servers in order to even play a single-player game left me enjoying the music of Diablo’s title screen, instead of slashing my way through dungeons in search of treasure.

Surely, there must be a better way!

The argument against DRM is that it merely delays piracy instead of preventing it. Pirates will eventually figure out a way around the game’s copy protection, and the legal users, who shelled out hard-earned bucks for gaming’s equivalent of a Box-Office MegaHit!!! are the ones who end up screwed in the end. But PC publishers have seen their market share, shelf space, and revenues drop dramatically with the advent of widespread broadband connections offering quick downloads, and torrent sites cropping up everyday, which let the average Joe illegally download today’s hottest game in hours, just as easily as browsing cat videos on YouTube. Is this the death of PC gaming?

Publishers and Developers aren’t stupid! We don’t like spending thousands of hours of hard work on a product just to give it away. It’s not fair to us, and it’s not fair to the countless players out there who feel there is value in the entertainment games bring. (Thank you!) So what do you see? A massive drop-off in the amount of AAA titles that make it to the PC – once the leader in the entire video games industry! Publishers of the bigger titles have moved almost completely to the console – it’s much harder to pirate there, due to the proprietary media formats and focused OS of the current generation of consoles. Piracy on console DOES exist, of course, especially for the portable devices (Nintendo DS, Sony PSP), but it is far less widespread than piracy on the PC.

Smaller publishers, and even the big boys, have also jumped into the new frontier of Mobile and Social gaming, and its groundbreaking “freemium” model. With “freemium” titles, the game itself is free-to-play. Users spend money on in-game items, such as virtual currency, weapons, outfits, levels, and other game-enhancing devices. Facebook games, led by Zynga, and their proliferation of “-Ville” games, make the majority of their money on IAP (In-App Purchases). Zynga has turned into a powerhouse publisher, with not a single paid title to their name, and little to no piracy woes.

Console games have begun to tap into this growing market as well – Call of Duty has their “Elite” service which offers hardcore gamers enhanced stats, strategies, and content, and EA Sports has done great business with their collectible card in-game purchases. Not only games can be freemium – Microsoft’s Skype, a free chat client, is one of the biggest programs in the world. It offers free users basic voice, video, and text chat, and offers premium users group video, screen-sharing, and other “Pro” features. It’s the “Premium” in “Freemium”.

Back to the PC, Valve Software’s Team Fortress 2, a quite-heralded multiplayer shooter, went free-to-play after several years of being a paid title. The game was supported by a rich library of purchasable hats, weapons, and trinkets, that the majority of players did not purchase. These items were available in-game as random drops, but could be purchased for real money. Only a small percent of players in Free-to-Play games actually purchase items – less than 5%, but with a big enough user base, that translates into some serious revenue for the publisher and developer!

How much revenue? 12 times! TWELVE TIMES! 12x! That’s 6×2! 3×4! 4×3! That’s after making the game itself completely free. Making the game free-to-play ensures that the pirates and legal consumers are on the same page – NOBODY pays for the game, to play at least.

Oh, and that thing about PC gaming dying due to piracy and a shift to consoles? Not anytime soon. PC Games currently make up nearly 50% of the TOTAL video game market share, based on revenue. A big reason for that? A little company called Zynga, and those cute little Facebook games! Zynga alone makes up nearly 5% of the PC market, the majority of which from IAPs!

Does free-to-play solve all of the piracy fears the gaming industry faces? No. There are some games that simply don’t have monetization methods in place for free titles – the traditional single-player RPG, strategy games, and platformers, specifically, rely on a “closed” experience – the user progresses through a full, linear game, which typically comes with beautiful graphics, an immersive score, and the big budget which comes with beautiful graphics and an immersive score. These titles benefit from a full retail package, at a full price – which is why they have moved completely to console, and haven’t dominated mobile, social, or PC gaming recently. (There are exceptions to this, of course, such as the Elder Scrolls and Fallout series on PC, and the glut of strategy-lite games on mobile).

The real solution to piracy is for humans to never pirate. No stealing, ever. But we know that with a minimization of risk (anonymous clicks vs. holding up a store with a handgun), supreme availability (torrentzarefree, lolz!), and a wide selection of media, software piracy is probably here to stay. The free-to-play solution offers a great benefit for almost every platform and genre. It allows publishers of all sizes to make money, kicks pirates down a notch, and will be here to stay as well!

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