Gaming Company Sees Massive User & Revenue Growth Because Of Piracy
from the pirates-unite dept
There is a very strong divergence in the games industry. On one hand we have developers and publishers who look at piracy as a cancer that needs to be cut out and on the other we have those who look at it as an opportunity. We illustrated this point recently with a mock debate between Ubisoft and Valve. Edge brings news of yet another player in the games industry who has joined with Valve in treating pirates as underserved customers rather than thieves.John Goodale, Unity's general manager of Asia, told Edge that Unity has seen a 258.7% growth in revenue in Asia over the last year. He puts much of this growth down to piracy of the Unity3D development platform.
How can it possibly make money from people "stealing" its products? It does so by selling additional content to the users whether legit or not.
It's not talked about often, but we have a product called Asset Server that allows large teams to share assets more effectively, and according to the sales reports that I get we sell far more Asset Server in Asia than we do in the west.As far as I can tell, Unity is looking at those who pirate its software in much the same way it looks at those who download the free version of the software, as customers. Goodale explains the flexibility he has been given in reaching out to the Asian market is the primary driver of this success:
Throughout my 25 years of doing business in Asia, I've seen very few companies be so dedicated to that region, or give me the flexibility and tools that I need to be successful. And as a result, I am just having way too much fun!I really hope this line of thinking grows and penetrates the games industry even deeper. It is something I have argued and debated multiple times on games industry news sites and blogs. There are many people who feel the same way and many more who are dead set on treating piracy as a criminal offense. I don't blame them for the way the feel as it is their livelihood at stake. Yet, I can't understand their desire to hold onto an ideal that in the long run will fail -- especially when there are so many examples, like this one, of a company discovering it can make more money by adapting, rather than by trying to stop infringement.
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Filed Under: asia, copyright, embrace, infringement
Companies: unity
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"We don't condone it..." and NOT making money from piracy.
"In China, quite candidly, what is driving a lot of our growth, is piracy," he reveals. "Even through a pirated version of Unity, we can still make revenue from that customer, for example through the Asset Store.
"We don't condone it, but it's also something we don't super-aggressively persue." '
And if "Assets" could be pirated, they wpuldn't get any money from that, either. I bet they've got DRM out the wazoo on those.
Look, you aren't proving a point about "piracy" except as I've frequently stated: when a loss leader for advertising, sure, or part of "guilting" into paying, sure, so long as product cost is near zero, otherwise piracy is NO help, not even for "promotion".
I know of several restaurants around the world, along with airlines and taxis in between, who are "underserving" me. Oddly, they never try to give away free product, nor let me filch some, and more than "don't condone", seem to think it theft. It's the same principle, even if game sellers are not actually out anything: users still getting something for nothing...
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You'd be astonished about how much money ppl can throw towards stuff they like.
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Re: "We don't condone it..." and NOT making money from piracy.
Or more universal
Finite goods != infinite goods.
And I see plenty of restaurants giving away free finite goods all the time. Hell, I have a Sheetz card for that reason (I eat there all the time, may as well get free stuff).
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I understand.
They hold on to this idea because they still think they can/should beat it. In fact, they think they already have the solution. They claim that all PC games will just go to "free to play" MMO models and sell virtual items through micro transactions. Of course, this completely disregards the reality that it's just not practical to be online whenever you want to play a game. It detracts value for consumers that want the finely-crafted single player experience that MMO's just can't fulfill. It also makes it impossible to play games anywhere there is not connectivity. But they don't seem to care, they just want to be in control of the gate again.
Then there's services like OnLive that try to solve the "piracy" issue by not letting the consumer have access to a copy of the game at all and require them to play online by playing the game remotely and having the video and audio streamed live to your TV or computer. Again, connectivity will be an issue. But not only that, most connections are not capable of providing the fidelity of image through this service that a local machine built to spec will.
Some in the industry that I've debated with seem to think that anything other than the traditional publisher funded model is nothing but the "starving artist" model where they only make money through kind strangers.
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Re: "We don't condone it..." and NOT making money from piracy.
I know of several restaurants around the world, along with airlines and taxis in between, who are "underserving" me. Oddly, they never try to give away free product, nor let me filch some, and more than "don't condone", seem to think it theft. It's the same principle, even if game sellers are not actually out anything: users still getting something for nothing..."
did you really just say, "well sure it works for digital goods but not tangible ones"?
No shit smart guy
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Re: "We don't condone it..." and NOT making money from piracy.
Games are copied when you share. And there's no competition in the sense that you can't have the same game from a better company or for better prices. A genre yes but not a single title. And if a determined restaurant is bad enough I'm not paying. And I'm calling the FDA or similar depending on how bad it is. You can't call any1 if a game you buy is too bad. God knows I'd love to call the cops for a few games I've bought before fully embracing file sharing.
Rick might not prove a point but can you deny this point? No. IF they could pirate the assets they wouldn't buy. That's a huge IF.
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Re: "We don't condone it..." and NOT making money from piracy.
You should look it up, it will turn your life around.
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Re: "We don't condone it..." and NOT making money from piracy.
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Re: I understand.
i thought onlive was born of the idea that you can use a shitty computer, or a little dongle that hooks to your tv, to play brand new games that require a higher end system than you may have the knowledge or money to invest in. Its PC games for the console crowd(no drives, changing hardware, troubleshooting, codecs ect.) I don't think anyone was thinking about piracy or solving piracy when it was birthed. From the reviews I hear its realized its goal decently, and it will only improve as internet connections improve, if it can live that long.
"They claim that all PC games will just go to "free to play" MMO models and sell virtual items through micro transactions. Of course, this completely disregard...."
I say let those that don't get it keep trying to fix the problem by giving customers what they don't want. The game companies that want force the market to react and are only looking at their bottom line will flounder and die those that respond by filling the gap and actually gives the market what they want will flourish. If we lose an activision and/or ubisoft and gain another valve or CDP no one will cry.
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Yeah, this isn't a pro-piracy blog. Jesus, Pirate Mike, why must you lie?
And I know Pirate Mike didn't write this article. The point is that Pirate Mike is allowing yet another pro-piracy article to appear on Techdirt.
If "piracy is not OK," Pirate Mike, where's a single article that reflects negatively on piracy? Point me to even one. You can't.
Just admit it, Pirate Mike. You love PIRATES! Stop lying and manipulating your readers. Just admit what is painfully obvious to the world. C'mon, Pirate Mike. No weasel words. Be straight with us for once.
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Re: "We don't condone it..." and NOT making money from piracy.
Heh, heh. Well, I proved that you negative ninnies have nothing until I comment. What vacuous holes you are, just waiting to pounce. -- Denial is easy. You guys mostly never post anything even deniable, just idle remarks that you think witty.
None have addressed my substance. I've already "admitted" / mentioned that physical goods are not like digital.
BUT Mike consistently asserts that his notions of "free" apply to physical goods as well. -- He won't deny it. I refer you to a thread where he "dunno" if Intel and Apple give their products away:
http://www.techdirt.com/articles/20110621/16071614792/misconceptions-free-abound-why-do-brain s-stop-zero.shtml
Just search for "dunno", I'm too lazy to point to comment. Read all of mine: I rip his movie example to shreds, that's where he does the "sunk (or fixed) costs" don't matter trick -- directly comparing products of a car and a movie, by the way, so don't say Mike treats physcial goods different from digital.
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What's this have to do with your comment? Nothing. But, it is about as rational as your comment.
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Re: Re: "We don't condone it..." and NOT making money from piracy.
I mean, find the comment. Wait, that's practically the same thing!
This is the only comment from Mike on that subject containing the word "dunno":
http://www.techdirt.com/articles/20110621/16071614792/misconceptions-free-abound-why-do- brains-stop-zero.shtml#c660
As you can see, it has nothing to do with Sunk or fixed costs and merely points out your lunacy?
Okay, okay, maybe you're confused, where does Mike talk about either fixed or sunk costs?
http://www.techdirt.com/articles/20110621/16071614792/misconceptions-free-abound-why-do-br ains-stop-zero.shtml#c1169
He comes to the conclusion that: "The fixed costs DO NOT MATTER in pricing decisions."
Unless you'd like to dispute that fact . . .?
But wait, he still doesn't compare cars there!
Maybe you're talking about yet another post . . . this time one that doesn't make you look like an idiot!
Well, perhaps there is. But nowhere in the comments of the story you linked to!
(Hint: you can easily search for each of every post of his by searching for "Mike Masnick")
So, presuming he did make such a comment comparing cars & movies . . . may I guess the context?
Probably something to do with the Fixed cost and pricing.
IE: I invest 100 mil in a car factory, or 100 mil in a movie.
I can reproduce the movie for free, so I should 'sell' it for free, (You'd actually be selling things around the movie or using the movie).
I can reproduce the car for $10,000, so I should sell it for at least $10,000.
Thank you for playing, Mr. Ootb, remember to pick up your brains at the cloakroom on your way out.
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Been there, done that, got the T-Shirt...
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Once you accept that *some* piracy is the norm, you will be quick to realize how to work with it, than against it.
Fighting piracy is like fighting teenage sex. You're never going to win. Work with it, rather than against it. Have better communication, find out why they're doing it.
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All of these costs, of course, are accounted for, but they do not go against cost of goods sold, but against Marketing.
Even with our 'free' stuff paid for, we continue to do it, because it either drives traffic or margin (for these types of promotions it is mostly traffic).
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Re: Re: Re: "We don't condone it..." and NOT making money from piracy.
I too can attest to the fact that there are quite a few restaurants that give away free stuff. Locally, most of the ones I visit tend to give away free appetizers (any on the menu, or a combination thereof if they know you). A few will even give away free drinks.
All of this is factored in so they can keep customers returning. And recommend the places to other people they know, who'll come in and thus generate more business. Surprisingly, it works really well and most of the places I know who do this, I'm relatively friendly with the waitstaff and managers and they all say since they started doing so, business has gone up.
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Re: "We don't condone it..." and NOT making money from piracy.
Oh Zach, one other thing: A "mock debate" isn't exactly a great source for material, because they are almost always set up by supporters of one side or the other. The "other side" is typically set up to fail. Can you imagine the "mock debate" on Techdirt between copyright supporter and pirates? It would be a rather one sided Tardian dream fight.
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Double sweet
Things succeed in Asia but fail in the West why?
ps: The "assets" from the ex-game developer where seized by a bank after the original creators of the game went belly up.
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Re: Re:
http://www.techdirt.com/articles/20110929/21453616141/another-ninjavideo-admin-pleads-guilt y-expect-rest-to-do-so-too.shtml
Down towards the bottom, Karl replied twice with various examples.
He refuses to accept those as responses. Basically, he's trolling and trolling hard. In fact, he's either got a fellow troll doing the same, or he's doing it himself as multiple ACs. Either way, it's ridiculous and uncalled for. Especially considering his question has been answered by quite a few people in that one link above already.
Some people though. [shrugs]
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Re: Re: Re: "We don't condone it..." and NOT making money from piracy.
This is sort of where Mike falls down. In the classical supply and demand equation, The price is set entirely by those two figures. However, Mike often ignores that there is a minimum price at which the product can be sold, below which there is no longer a sustainable market for the producer(s) involved.
That floor price isn't just the marginal costs, but it is also the marginal costs plus whatever is needed to cover the sunk costs over the expected market sales. While this is not part of the marginal costs, it is part of parcel of any discussion of selling price, because without the ability to recoup that money that was invested up front, there is no way the company is in business to produce the product.
Now, in classic terms, the sunk costs were often low. X thousands of dollars to design a chair, and then $10 a chair in marginal costs to produce it, and so on.
In IP terms, this all falls down. Mike can see it, but he wants to ignore it. There are few (if any) actual marginal costs in reproducing software, music, or movies. At best, the costs involved the box, the "shiny plastic disc", and so on. If you sell it online, the marginal costs are effectively nil. By those standards alone, the price should be very low.
The problem faced with this new economic situation is that the sunk costs, the development costs, the costs to write the software, to make the movie, or produce the new album are all "before production". Further, when you reach the point of potential infinite production (they point where your marginal costs are so close to zero as to be negligible), the pricing model falls apart. It was not and can not produce functional results at the near infinite ends of it's scale.
The ability to reproduce something "for free" is no longer relevant for figuring out what you need to sell it for in order to make a profit. The whole discussion of marginal costs, of supply and demand all go out of the window because they no longer calculate a number, and no longer pay any attention to the high end costs of having made it to production in the first place.
Like it or not, the high fixed costs / sunk costs to get to production do represent a significant part of the pricing decisions on these products. It may not be part of the classical "supply and demand" calculation, because that really isn't relevant and no longer gives a functional response to the current situation. We aren't making widgets anymore. The production costs of widgets is nothing. The machine cost 100 million. So the minimum market price that is acceptable isn't based on marginal costs, it is based on the fixed costs.
It goes against "basic economics" as Mike would say. But he fails to address why a broken model should be applied to modern times. It's the buggy whip of price calculations, not longer relevant in this sort of situation.
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Re: "We don't condone it..." and NOT making money from piracy.
Also restaurants make you pay for souce? water? bathroom?
Do you pay the waitresses? the cook? the manager?
Those things are all free for you aren't?
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Re: Re: Re: Re: "We don't condone it..." and NOT making money from piracy.
I really do appreciate it.
However, I'd like to point out that Mike does address why the marginal cost should still set the price: Competition.
Whether you like it or not, it's free for other people, lawfully or not, to copy your work and distribute it.
If you want to sell your work, you have to compete with that price.
Make sense? Any questions?
(And a common theme here, is that making media at top-quality levels is becoming cheaper all the time, and easier all the time. As well as the whole idea that free can be a good part of a good business plan.
So, more draconian copyright, in addition to not working, is also (potentially) less profitable than an alternative. And is definitely less profitable to the populace as a whole.)
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Re: Re: "We don't condone it..." and NOT making money from piracy.
As for the "mock debate" It was constructed using comments made by two execs in the industry. I made no edits to their comments nor did I post them out of order. I merely posted different comments made by each individual in alternating order as if in a debate.
It was not my doing that both unrelated articles speaking to two individuals fit together so nicely.
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Re: Re: Re: Re: Re: "We don't condone it..." and NOT making money from piracy.
How many people are the source for a movie? ONE.
There is no competition, except in the vague notion of competition with other movies. Competition applies only when you have the same product made by multiple sources. We don't have competition in IP because each end product is unique. There is only one Avatar (thankfully!). There is only one source for Lady Gaga music. They are unique products who's price isn't directly determined by competition.
The prices for these things tend to be set more by the model of "what the market will bear". For the most part, movies and music are sold "in line" with other similar products. So all movies are (example) $10 at the theater, or $19.95 on DVD, or $4.99 on PPV. The only competition that might exist would be between formats, and that is addressed by windowing.
Just remember: While the "technical" costs of making top quality media is dropping, the technology, after being developed, is also not the big end of the cost structure. The cost of the "media hammer" may drop, but the cost of the "media carpenter" who swings it accurately does not. The costs of people, of time, of locations, of processing, of production in general just don't go away.
So we are left with the same problem: When the up front costs (fixed or sunk) make up the vast majority of the total cost of a product, the marginal costs are no longer the big driver in the game. So how do you price in that situation?
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Re: Re: Re: Re: "We don't condone it..." and NOT making money from piracy.
In the end they need to make their food costs make sense, and if they end up giving away too much, they will fail as a business. They will certainly be your favorite place until they run out of money and shut down.
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Re: Re: Re: Re: Re: Re: "We don't condone it..." and NOT making money from piracy.
. . . I think there's a lot of people out there disagreeing with you.
Let's count the people I can get a movie, (not any movie, a particular movie), from:
The guy who owns the movie theatre. The guy who owns the local video store. That internet streaming service that I pay for monthly. That cable service that I pay through the nose for monthly. The 180,000 people who put it up on the internet 3 days before the director sees the final cut himself.
I'm counting 180,004 people who are sources of a single movie to me, which is a far cry from 1.
The pricing goes a little like this: $12, $5, $8, $120, and $0, for 1 theatre ticket, 1 DVD rental, 1 month of streaming service that can cover a whole load of TV and movies as well as the one we're interested in, 1 month of over-priced cable, and the other 180,000 people.
I'm sorry to be a bit flippant, but until you recognize that piracy exists, I'm not going to be convinced by any of your arguments.
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This is not a pro-piracy article.
And, in fact, I'm at a loss as to why you would be anything but optimistic about it. Here is a company that is making lots more money; and people in China get to play games that they couldn't afford otherwise. Both parties win. Nobody loses.
Why on God's green Earth would any sane human be against this?
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And if you don't want to play anymore go home.
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If you really believe that anyone will respect your rights inside their own homes because you said so, you will be disappointed.
Those crazy rights invade peoples home, take away peoples rights and you want people to respect that?
That may be a good folktale to tell to children and the perils of being a fool in the pursuit of profits.
We should put a wolf in the story so it gets interesting LoL
http://en.wikipedia.org/wiki/Little_Red_Riding_Hood
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And, in fact, I'm at a loss as to why you would be anything but optimistic about it. Here is a company that is making lots more money; and people in China get to play games that they couldn't afford otherwise. Both parties win. Nobody loses.
Why on God's green Earth would any sane human be against this?
Yeah. I don't get that guy. He's so infatuated with throwing a temper tantrum and falsely claiming I support piracy, that he actually seems to think that a story like this one is somehow against content creators interests.
People like him are amazing to me. Even when the evidence shows that people make more money, they're against it... out of some weird hatred. It's pretty sad.
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But there is! They are competing for my attention and money. And if I deem those more valuable than enjoying their products, I'll spent it elsewhere. So the competition with other media isn't vague at all.
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Right, cause we need a dumb shill like you to tell us what's what. Riight!
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About Time
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Re: Re: Re: Re: Re: Re: Re: "We don't condone it..." and NOT making money from piracy.
There is only one maker of the movie. The theater, the DVD store, the PPV... those are all just outlets for a single product. There are not 4 Avatar movies competing in the marketplace, there is one. They are careful to window releases so as to avoid any competition from one market to the next.
If there are 180,000 pirates, well, that is a different issue. But business models cannot be built or set on the basis of illegal activity. If you "work with it", you are just working yourself out of business.
If people are willing to pirate, they need to understand that they are outside of the business model, and at some point, that business model will not longer be able to support the freeloaders, and the source of the material will go away.
I recognize that piracy exists, but I am also smart enough to understand the effects of piracy on the bottom line. When too much of the market is made up of freeloaders, there is a point where it is no longer a valid business to be in.
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Re: Re: Re: "We don't condone it..." and NOT making money from piracy.
I mock your mock debate, for it adds nothing but BS to the discussion.
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A: its part of human nature to copy
B: its basic functionality of the technology we use today (copy and reproduction of information)
C: It wasn't even illegal until not so long ago.
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Distribution is now a near zero cost act that can be performed by almost anyone. Creation is a scarcity that is still valuable and can be sold.
I'm not sure where your sly implication of the "tragedy of the commons" comes into this when the commons can't be depleted by file sharing.
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A wild gamer apears
a good 8 out of 10 movies I watch online I wouldn't pay for even if I had the money, many of them dont even get fully watched.
The same for games, I dont want to blow $40-$90 on a game I'm going to run once and uninstall.
However, when a "Harry Potter" or "Battlefield 3" comes along I go to the cinema, I get it pre-ordered with all the bonus features. These are worth my money.
Here is my point, I've ended up purchasing MORE games that I would had due to piracy. Either buying a game to get offical servers for multiplayer/co-op play or sequals to titles I've enjoyed illeagly.
Piracy helped to maintain my gaming intrests during periods of time which I would normally be unable to aford games (e.g college, university, redudency) and spend MORE now I'm able to do so.
EvE Online needs to be mentioned here also. Its a subscription based MMORPG set in space. They have a system where by you can pay your monthly subscription via traditional methods OR with ingame currency. Other players could purchase somthing called PLEX which is essentially a 30 day time card what they can then sell on the ingame markets or on the games forums.
EvE Online found a way for players to pay for the play time of others and at the same time allow people to play essentially for free entirely without restrictions or unfair advantages off balancing the game.
To conclude, I would a single online title with monthly subs and maybe purchase 1 or 2 games a year prior to pirating. These days, I rarely pirate unless its to trial somthing I'm really unsure of, However I now purchase 3-5 games a month.
Piracy is not the enermy, the gaming industry needs to start listning to their consumers again and realize the money is no longer in just copy sales but services. Steam and OnLive are two services that have the right idea.
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Re: Re: Re: Re: "We don't condone it..." and NOT making money from piracy.
Sooner or later, the content people will realize there isn't a viable business in selling copies of content, which is what they've always done and are still doing. They will then shift their business models (as others already have) to something that makes use of infinite goods, rather than trying to create artificial scarcity.
In the meantime, unfortunately, we get stuff like DMCA and ACTA.
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