On piracy and profit
Posted: 27 May 2007, 21:25
This "piracy eats our sales" thing is nothing but fluff. The people who download stuff illegally wouldn't have bought it anyway if it wasn't available illegally. Think about it, it's logical. If you don't have the money to spend on games/software in the first place, that's just the end of it. You don't buy it. If you download it, you get it for free, but you wouldn't have, and likely couldn't have bought it in the first place.
Same deal for music. At a bare minimum, 75% of music on CDs is crap. I'm not paying for the crap I'll never listen to, but I'd gladly pay $1 a song for good music (I'd happily pay $5 a song even) through whatever service, since that amounts to about $3 where I'd have to pay $20 if I bought it on a CD in a store and I get the same amount of listenable music. However, if music wasn't available online, I would just have to listen to the radio - there is no way anyone can convince me I'm going to buy a CD full of crap, especially considering that the artist never sees more than 1% of the revenue. The only way artists can make a profit is by touring - CDs are basically just a promotional thing now.
Publishers have way too much power. Music labels get virtually all of the money, and the situation's not much better for games, where the developer usually sees about 5% of the total revenue on average. That means if a game sells 100,000 copies at $50 each, the publisher (who does little more than advertising and distribution, and often screws those up somehow anyway) gets $4,750,000. The developer gets $250,000 to spread out over how many employees? This is why digital distribution has started to come into the mainstream. Assuming a developer keeps 100% of the profit (unrealistic, I know, since there's advertising, etc), they would have to sell only 5,000 copies to get the same amount of money as they'd get if they went through a major publisher and sold 100,000 copies! Insanity, just insanity. If AA wasn't free, selling at even $9.99 a copy, I'd have collected over $160,000 by now if I was using digital distribution. No advertising, no nothing, just word of mouth, and I'd have made about two thirds of what GPG as a whole made on SupCom. I-N-S-A-N-I-T-Y.
This is why Valve, for instance, can afford to be such a massive company and yet only put out products rarely - they publish their own stuff and actually get money out of the deal.
To go off on a bit of a tangent, this is why the Playstation 3 is doomed. To design a game that takes advantage of all its features, you must design it exclusively for the PS3, and you need a massive team of designers, artists, modelers, etc. This means that your entire market is now the size of the PS3 install base, which is very small, relatively speaking. So you need to literally sell a copy of your game to EVERY PS3 owner just to turn a profit! PS3 games costing $10 more won't even put a dent in that.
For the record, I own SupCom. Pre-ordered it months in advance. Money well spent. I wish my many other game purchases had been so fortunate, but the only way to actually know if a game is good or not is somehow illegal. Games should just have trial periods, like other software.
Same deal for music. At a bare minimum, 75% of music on CDs is crap. I'm not paying for the crap I'll never listen to, but I'd gladly pay $1 a song for good music (I'd happily pay $5 a song even) through whatever service, since that amounts to about $3 where I'd have to pay $20 if I bought it on a CD in a store and I get the same amount of listenable music. However, if music wasn't available online, I would just have to listen to the radio - there is no way anyone can convince me I'm going to buy a CD full of crap, especially considering that the artist never sees more than 1% of the revenue. The only way artists can make a profit is by touring - CDs are basically just a promotional thing now.
Publishers have way too much power. Music labels get virtually all of the money, and the situation's not much better for games, where the developer usually sees about 5% of the total revenue on average. That means if a game sells 100,000 copies at $50 each, the publisher (who does little more than advertising and distribution, and often screws those up somehow anyway) gets $4,750,000. The developer gets $250,000 to spread out over how many employees? This is why digital distribution has started to come into the mainstream. Assuming a developer keeps 100% of the profit (unrealistic, I know, since there's advertising, etc), they would have to sell only 5,000 copies to get the same amount of money as they'd get if they went through a major publisher and sold 100,000 copies! Insanity, just insanity. If AA wasn't free, selling at even $9.99 a copy, I'd have collected over $160,000 by now if I was using digital distribution. No advertising, no nothing, just word of mouth, and I'd have made about two thirds of what GPG as a whole made on SupCom. I-N-S-A-N-I-T-Y.
This is why Valve, for instance, can afford to be such a massive company and yet only put out products rarely - they publish their own stuff and actually get money out of the deal.
To go off on a bit of a tangent, this is why the Playstation 3 is doomed. To design a game that takes advantage of all its features, you must design it exclusively for the PS3, and you need a massive team of designers, artists, modelers, etc. This means that your entire market is now the size of the PS3 install base, which is very small, relatively speaking. So you need to literally sell a copy of your game to EVERY PS3 owner just to turn a profit! PS3 games costing $10 more won't even put a dent in that.
For the record, I own SupCom. Pre-ordered it months in advance. Money well spent. I wish my many other game purchases had been so fortunate, but the only way to actually know if a game is good or not is somehow illegal. Games should just have trial periods, like other software.
