Piracy & DRM

Formally announced at this years Game Developers Conference, OnLive purports to be the first legitimate gaming-on-demand service. Games will be stored and run entirely on mega-powerful servers, and will deliver low latency, high definition video back to your television or PC. Major publishers including Electronic Arts, THQ, Take-Two Interactive, Atari, Epic Games and Ubisoft have agreed to deliver their games through the OnLive network.

We want to know what you think. Is this the future of games distribution, or does it sound too good to be true? Assuming the technology proves viable (and that's a BIG assumption) this could conceivably change the face of the industry, affecting brick-and-mortar stores, game prices, the used games and rental markets—everything.

Leave your thoughts and predictions here, and we'll discuss your comments on the next episode of the GameCritics.com Podcast.

Last year, hype over the impact of piracy and the supposedly shrinking PC games market reached a head when the NPD reported that Crysis, in its first two weeks of sales, moved only around 86,000 copies. Unreal Tournament 3 reportedly fared even worse, tallying just shy of 34,000 copies. Both of these games received enormous hype, and these seemed like pretty dismal numbers.

Then came the piracy talk. Developers including id, Epic, Crytek, Ubisoft, and Infinity Ward suggested that piracy was so rampant on the PC that it was fueling their decision to focus more centrally on console development. Was CryEngine2 the last great PC gaming engine? Would PC gamers become increasingly subject to "dumbed-down" multiplatform games and belated ports like Assassin's Creed and Mass Effect, while PC exclusives that didn't fall into strategy or MMORPG categories faded into obscurity?

I'm relatively new to the PC gaming landscape. I played some PC games here and there over the years and once lost a whole summer to Quake 3, but until a couple of years ago I had always been a console gamer. But I had always looked at the PC with envious eyes, and had always wanted a really nice, high-end gaming rig. Of course, I realized that an uber-rig was not necessary to enjoy PC gaming. But I figured that since I was going to get a new PC and I could afford to treat myself, why not get something really great? In early 2006 (back when AMD processors still ruled the performance charts) I built my first PC. My first game was F.E.A.R., which at the time was still a PC exclusive. I haven't looked back since. As both a gamer and a hardware enthusiast, I can honestly say that I enjoy PC gaming far more than I ever enjoyed console gaming. But to listen to some people, I got into the game at a pretty dismal time. However, I think that a closer look at the facts tells a different story.

Just a sampling of the news this month in PC gaming:

• Epic says that Gears of War 2 will not come to the PC, citing piracy as a primary reason.
• EndWar creative director Michael de Plater asserts that the PC port of the game (which, incidentally, has not been officially confirmed to be in development) is delayed because of piracy.
• Bionic Commando, the remake of the 80's hit, is coming to the PC a little later than the console version, again being delayed over piracy fears.
• Fallout 3 has gone gold, and the XBox 360 version has already been leaked on to torrents. How long before the PC version, too, is leaked?
• The Witcher developer CDProjekt is struggling to gain publusher support for its DRM-free classic-game service Good Old Games (gog.com).
• A class-action lawsuit has been filed against EA for its use of SecuROM protection in Spore.

There's little disputing that piracy is a serious problem on the PC. It's also a problem for consoles, but it's certainly more prevalent on the PC. Unfortunately though, there's no real solid data to give us a clear picture just how big of a financial impact piracy really has. A study in 2004 found that music piracy, long blamed by the music industry for a decline in CD sales, was mostly unrelated to the decline. It's difficult to say whether this holds true for the PC as well; most piracy happens in Asia and Eastern Europe, so it's unclear whether game makers are really losing customers to piracy en masse.

But whether or not piracy is actually harming companies' bottom lines, it's clearly having a strong effect on their perception of the viability of the PC market. It's not unlike a bear market, where anxiety over stock viability creates a buying freeze. In other words, developers like Epic, Ubisoft, Capcom and id may be creating a self-fulfilling prophecy by relegated the PC to a second-class market.

At the same time, whether data supports them or not, developers are quick to blame piracy for any perceived lost sales. Epic, for example, dropped the ball last year with the PC port of Gears of War. The game was released a year late at full price with sparse new content, was not available through any of the many popular digital distribution channels such as Steam and Direct2Drive, and received bad word of mouth due to numerous game-breaking bugs resulting from a sloppy implementation of Games for Windows Live which, to add insult to injury, required a paid subscription to access all the online features. And yet Epic seems all too willing to ignore these factors and just blame piracy. I'm not singling out Epic—similar comments have come from Crytek, Infinity Ward, and many others. While piracy may indeed be an issue, the perception of piracy is clearly just as serious a problem, one that may prevent developers and publishers from addressing more immediate problems in their business models.

The response from developers and publishers to this possibly real, but unquestionably perceived threat of piracy has been to lace their games with more and more stringent DRM restrictions. When I wrote a blog chiding gamers for blowing DRM out of proportion, I was heavily criticized for failing to recognize that DRM really does create problems for a lot of users and, so say many, it just makes piracy worse. In retrospect, I was wrong to understate the impact DRM has on users, as well as wrong to overstate its efficacy. Clearly no DRM scheme does much of anything to prevent piracy—even the most heavily protected games are leaked very quickly; and clearly many legitimate users are inconvenienced by increasingly draconian DRM schemes—I've been there myself recently.

And yet, it's not clear to what extent DRM is hurting PC game sales if at all, or whether it makes piracy worse as some suggest—though both are valid possibilities. Again looking at music sales, some data suggests that Apple's DRM-free iTunes Plus may spur greater sales, and Amazon.com has seen great success with their DRM-free music service.

I applaud CDProjekt for their ambitious DRM-free Good Old Games service, and I applaud Bethesda for sticking with a simple CD check for Fallout 3. Ultimately the success or failure of DRM-free software will determine whether frustrated developers will continue to get away with blaming piracy for their woes, and whether DRM use continues to be prevalent. Regardless, it's time developers and publishers take a more critical eye toward their perception of piracy's true impact on their business, and start treating their customers a little better. As long as developers treat PC gaming as a second-class market, that's exactly what it will be.

Crysis almost certainly did fall short of its sales potential, even if it sold over 1 million, and piracy may indeed have taken a significant toll. But it's not because the game is too system-intensive, or because the game wasn't any good; rather, it's because Crytek overlooked one of the key channels for modern PC gaming: digital distribution.

The response to my previous post has been remarkable; clearly, many gamers are passionate about DRM and its place (or lack thereof) in PC gaming. I've read through all the comments, and would like to take a moment to respond to them.

Bioware's highly acclaimed and formerly XBox 360 exclusive RPG Mass Effect is fast approaching its release on the PC. Most PC gamers were undoubtedly pleased to hear about enhanced graphics, faster load times, and a re-designed menu system; but it's likely that fewer were happy to hear about the evil digital rights management that will be unscrupulously bundled with the game.

This week, Crytek president Cevat Yerli, mastermind of the next-gen blockbuster Crysis, mentioned in an interview that his company will no longer produce PC-exclusive games, asserting that piracy has become so rampant on the PC that making exclusive games for the platform is too risky.