DRM: Necessary evil or consumer insult?

What do you make of the current anti-piracy precautions that we’re seeing?

Defeating piracy is a fine balance. Publishers need to protect their investment in intellectual property without alienating their paying consumers. Disc-based DRM has had its problems and is always cracked, but its existence is, at best, a deterrent and, at worst, a clear reminder to pirates that they are stealing. Always-on requirements have tipped that balance against legitimate customers. There is now no doubt in my mind that pirates now have a better experience than legitimate consumers.

Are current publisher measures too draconian, or are gamers being too sensitive?

Not only are they too draconian, they are bizarre. Steam has shown how you can have a balance between regular authentication checks and the ability to play the game without a permanent internet connection. It seems crazy to me that Ubisoft didn’t emulate Steam, which by some estimates has more than half the market, and instead went for their own draconian system.

My belief is that Ubisoft are targeting the wrong metric. They are trying to reduce piracy. I think that they’ll succeed, but I also think that they’ll reduce their sales. That’s surely not the objective.

In Ubisoft’s position, and indeed EA’s, what else could they have done other than enforce an always-on internet connection on consumers to fight piracy?

Tim O’Reilly once said that the greatest issue facing any author is obscurity, not piracy. The same is true for games. Publishers spend a ton of money on promoting their games. For Modern Warfare 2, the marketing and distribution budget was four times the size of its development budget. So there are ways to see piracy as the start of a relationship with a future customer, not theft.

Project Ten Dollar, EA’s way of rewarding people who buy the original game at retail [this is EA’s marketing drive to include free DRM with store-bought games], is a good example of how to generate revenue from secondhand (and pirated) material. I think it’s a great use of a new business model to reward legitimate, paying, supportive customers, and not punish them.

Above: Assassin's Creed II - you starting to get the idea?

How else could they do it? Give the whole game away entirely for free, make it small, and charge for DLC. Investigate a virtual goods model (by most estimates, Zynga [creator of Mafia Wars and Farmville] is now more valuable than Ubisoft.) Slash the marketing budget and rely on pirated copies to spread the word about how good your game is, then charge for additional elements. In short, experiment to see how you can add value to your users, not to see what you can take away.

In what other directions is PC gaming evolving as a reaction to the rampant piracy that plagues it?

PC gaming is in rude health, yet selling boxed products at retail is in terminal decline. We are seeing games that charge subscriptions, and games that are monetised entirely through virtual goods. Always-on DRM is not wrong per se. It’s just a huge mistake to charge gamers a huge premium for their content and to limit their ability to play it in a way that pirates are not limited.

Is the change in PC gaming a good thing?

Unequivocally, yes. Publishers are obsolete. Their business model evolved when it was incredibly expensive to distribute a game. Publishers became the gatekeepers determining what got made and their focus was on reducing risk. But now we don’t need gatekeepers because distribution is so close to free as to make no odds. Sure, we need the skills of a publisher: marketing, finance, etc, but we don’t need their risk management any more. We’re in the very early days, but in the long term, the changing business model will be fabulous for PC gaming.

It’s my belief that Ubisoft is hastening this process, by making legitimate, boxed PC games sufficiently unattractive to consumers to drive them away to other forms of PC gaming entertainment. Sometimes, even as an analyst and a former investment banker, the foolishness of big companies makes my jaw drop.

The way ahead

PC gaming has always been about autonomy, the creation of your own network of favoured programs and hardware. And the imposition of a company to demand strict adherence from customers who have committed no crime is several steps too far.

Above: An online connection is required to play Settlers 7

What’s more, permanently online connections may be the norm in the USA, Canada and South Korea, but not globally. Just as we baulked at Steam, we coughed up bile at Ubisoft’s Uplay. The motives behind its online-only policy are understandable. But its execution is heavy-handed in the extreme.

Things aren’t all bad though. Piracy is taking PC gaming in new directions. Broadband brought torrents – an ease of piracy beyond having a friend with a CD burner – but it’s also brought ways in which gaming can adapt and evolve. Microtransactions, free games with paid-for content, subscriptions, in-game reward systems – for gamers, piracy might just be the thing that revitalises PC gaming, for both players and publishers, and makes it stand out from the console crowd.

In the immediate future, the reason that Assassin’s Creed II and Splinter Cell: Conviction’s demands have garnered a little more outcry than EA’s similar policies is because games like C&C4 have been built with an online element that infiltrates the single-player. To this end, in the short term increasingly large PC games will find themselves filled with online hooks: centralised on publisher servers (APB), peppered with online achievements and potential downloads (Dragon Age: Origins), and attempts to separate gamers from dedicated server gaming (Modern Warfare 2).

The prevalence of digital distribution platforms such as Steam (whose front-end is relatively easy for pirates to circumvent, even if Steamworks might change this) will also come into play. The fear of a Steam account being tarnished through playing a pirated game online is real, and will ultimately put off casual illegal downloaders.

Above: Even bloody submarine games are online-only

Although the mainstream media has been achingly slow to realise it, we now live in a download society: people are used to getting entertainment online just for the cost of a broadband link. Whether we’re talking downloaded episodes of Lost or free online content from newspapers and magazines, the public now expect information to be free, and it’s going to be very difficult for the entertainment and information industries to reverse this expectation.

Some are clever about it, like Comedy Central showing South Park knowing that a random Chinese website will do the honours. If publishers want to fight piracy, they’ve got to do it in partnership with the customers who want to enjoy their services and products. We are not the enemy. Above all publishers have to show that they understand how PC gaming works and why we love it so much.

May 18, 2010