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Valve's Gabe Newell On Piracy: It's Not a Pricing Problem 466

New submitter silentbrad writes with a followup to our discussion this morning about Ubisoft's claims of overwhelming game piracy. An article at IGN quotes a different point of view from Gabe Newell, CEO of Valve: "In general, we think there is a fundamental misconception about piracy. Piracy is almost always a service problem and not a pricing problem. For example, if a pirate offers a product anywhere in the world, 24 x 7, purchasable from the convenience of your personal computer, and the legal provider says the product is region-locked, will come to your country 3 months after the U.S. release, and can only be purchased at a brick and mortar store, then the pirate's service is more valuable. Most DRM solutions diminish the value of the product by either directly restricting a customers use or by creating uncertainty." The quote was taken from an interview at The Cambridge Student Online, in which Newell speaks to a few other subjects, such as creating games for multiple platforms and e-sports.
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Valve's Gabe Newell On Piracy: It's Not a Pricing Problem

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  • Hmmm (Score:5, Insightful)

    by hedwards ( 940851 ) on Friday November 25, 2011 @07:42PM (#38170786)

    And yet Steam has that USD=Euro conversion and region locked pricing.

    • Re:Hmmm (Score:5, Informative)

      by gman003 ( 1693318 ) on Friday November 25, 2011 @07:47PM (#38170818)

      It has the region locks only because certain publishers insist on it. Valve doesn't use it on any of their own games.

      The Euro issue I don't know about. Try emailing Gabe about it.

      • It persists in large part because Steam allows it to. Considering how dominant it is as a store, I have a hard time believing that they're being strong armed on the issue.

        • Re:Hmmm (Score:5, Insightful)

          by gman003 ( 1693318 ) on Friday November 25, 2011 @07:56PM (#38170902)

          If they tried to block "games aren't allowed to be unlocked at different times in different regions", all the publishers have to do is consider Steam the "last region" - not putting their games on Steam until it's made its worldwide launch. It's too simple to get around in a way that's bad for Steam.

          And Valve isn't responsible for enforcing their ethical practices on others. I'm sure they're happy to take a cut of anyone's money.

      • Re:Hmmm (Score:5, Informative)

        by The Analog Kid ( 565327 ) on Friday November 25, 2011 @10:03PM (#38171852)

        It has the region locks only because certain publishers insist on it. Valve doesn't use it on any of their own games.

        You mean like Valve did with The Orange Box? []

    • Re:Hmmm (Score:5, Insightful)

      by bignetbuy ( 1105123 ) <dirrtygsharp&outlook,com> on Friday November 25, 2011 @07:48PM (#38170822) Journal

      And they continue to screw the Aussies on game prices with most games costing TWICE as much as their U.S. versions.

      • AGAIN, valve don't have ANYTHING to say about the price publishers want to sell their games.

      • Re:Hmmm (Score:5, Interesting)

        by Dahamma ( 304068 ) on Friday November 25, 2011 @09:05PM (#38171440)

        The reason is that multinational retailers, etc set their prices based on an exchange rate at a specific date, and then don't tend to change it based on the fluctuation of currency exchange rates. This is even more obvious for books in North America - most publishers use the same print for US & Canada, and on paperbacks they list MSRP as something like "$9.95 US, $13.95 CA". That was true in about 1990, but it's $1 US : $0.95 CA today!

        In 2009, $1 AUS = $0.60 US Today it's almost 1:1. $80-90 AUS for a game that's $60 US wasn't too bad in 2009, but now it *seems* horrible in comparison.

        On the up side, the Australian dollar is kicking ass against most foreign currencies right now, so Australian travelers are getting great deals these days.
          It's not like there was 40% deflation in the Australian currency, though, so you no one is going to be too sympathetic. Software may be weirdly priced, but other physical imports should be cheaper. Probably not the best for the domestic tourism industry, though...

    • Re: (Score:3, Informative)

      by Anonymous Coward

      You can (mostly) blame the supply chain for that one. In order to preserve their business model, distributors and retailers (both online and brick-and-mortar) demand things like region-locking and region-specific pricing to make sure that digital copies or physical copies from other regions are no more appealing than the ones they are distributing. Physical distribution would likely need to be cut completely out of the content delivery model for anything to change, and the chances of that happening in the c

    • Region locked pricing is a good thing though. I have a copy of HL2 that I bought back when I was living in Thailand (right when it came out), and it cost me about 20€ for the full English version. Retail prices in the USA and Europe were, IIRC, closer to 70-100€/$... There was a Thai-Only version selling for about half that... if this hadn't been the case, no regular Thai would've been able to afford the game.

      The same thing applies in, well, pretty much all other third-world regions.

      Yes, piracy is

  • Too true (Score:5, Interesting)

    by Anonymous Coward on Friday November 25, 2011 @07:45PM (#38170804)

    I was about to buy a copy of GTA IV on Steam during the sale they've got going. With credit card in hand, I found out in some reviews that the PC version requires Games for Windows Live for saving and installs SecuROM. Dealbreaker right there and I never purchased.

    • Re:Too true (Score:5, Insightful)

      by sonicmerlin ( 1505111 ) on Friday November 25, 2011 @09:16PM (#38171534)

      This is why I think Good Old Games is the true hero in all of this. They have a no compromise policy- if you want to sell games on their site, you have to sell it 100% DRM free (Steam is DRM btw), with a lot of additional free content (like PDF manuals, soundtracks, codes, etc.). You can re download your game as many times as you want, copy it to wherever you want, give it to whomever you want. And with the success of the Witcher and its sequel, they're attracting interest and acquiring more publisher agreements. GoG is the real future, not Steam.

  • Sorry but the only instances of pirated games I have ever seen (and btw didn't download) were cracked versions of a game that could be downloaded for free. I haven't seen a site offering to sell me someone else's game for a fee. I agree its a matter of convenience in a lot of cases - when something cool is out people want access to it now - but I think it must be a much less common thing that people buy the game from a pirate. I have never associated piracy with a separate sale arrangement, just people who

    • by vAltyR ( 1783466 ) on Friday November 25, 2011 @08:23PM (#38171138)

      Sorry but the only instances of pirated games I have ever seen (and btw didn't download) were cracked versions of a game that could be downloaded for free. I haven't seen a site offering to sell me someone else's game for a fee. I agree its a matter of convenience in a lot of cases - when something cool is out people want access to it now - but I think it must be a much less common thing that people buy the game from a pirate. I have never associated piracy with a separate sale arrangement, just people who want something for free, or simply want it where its not available or (as noted by an Aussie above) its grossly overpriced and people feel ripped off.

      The pirates charge less than the game companies. The fact that the price is $0.00 doesn't really matter; you're still paying less than if you bought it legally. If I were to make a bunch of copies of a game disc, and go around handing it out to people and paying them $5 (note, *I'm* paying them to "buy" my product), then I'm selling the game at an even lower price than the pirates. Yes, it would be incredibly stupid to do that, but that's not the point; the point is, just because the customer isn't paying doesn't mean they're not sales. I think Gabe's got it spot-on. In economics terms, the pirates are competition; competition who is selling a better product, more widely available, and cheaper. You can't beat competition like that by crippling your product even further.

    • One can refer to piracy as a purchase, as a humorous euphemism. For example: "I just bought the new COD at the Pirate Bay."

  • by CmdrEdem ( 2229572 ) on Friday November 25, 2011 @07:54PM (#38170874) Homepage
    here prices are sky right and population's consumption power is not first world, mainly because of taxes that double the game's cost for the consumer. Prices here are not as bad as Australian's as far as I know, but it's the major player into piracy decision making, besides the growing culture of "only dumb people pay for what you can get for free".
    • by hjf ( 703092 )

      Same in Argentina. Why does a game have to cost $40 in USA and $120 in Argentina? (No, no country has 200% tax).

  • Multifaceted (Score:5, Insightful)

    by king neckbeard ( 1801738 ) on Friday November 25, 2011 @08:03PM (#38170992)
    Having a service problem doesn't mean there isn't a pircing problem as well. The three biggest issues IMO are pricing, service, and respect, although I'm sure other issues play a role as well. However, the respect problem isn't the 'pirates don't respect intellectual property' garbage, but rather, the lack of respect for customers from copyright holders. The FBI warnings on DVDs being a good example of disrespect that only affects those that actually BUY the product.
  • by Anonymous Coward on Friday November 25, 2011 @08:06PM (#38171016)

    When the pricing of a software package gets to be too outrageous (not in terms of value but simply compared to how much cash one has on hand), then pricing becomes a significant issue as well. For example, a graphical WYSIWYG HTML editor, a graphics editor, a text layout tool, a math package, etc. each for $400 makes it quite difficult to afford the software. Most people are willing to lay down some sizeable dough for one program but, when you need to lay out $400 for your office package and 10 others each of which will need upgrades for $200 in several years it gets to be an investment that is not very workable.

    OTOH, if the same software were available 24/7 for immediate download (with no support unless paid for) for a much reduced price -- say $50, the quantities sold will be much higher and the software company can reduce its costs by eliminating Best Buy and a host of other stores that take 50% off the top anyway. Additionally, there is no packaging, manuals, DVDs, etc. that need to be printed / burned nor shipping. The costs for the software company will go down and their sales will go up. I might be even tempted to try software that I wouldn't ordinarily buy simply because the software is not cost prohibitive.

    The Apple Appstore is really a good example of this. Yes, the software is underpriced compared to an office package on your office PC but it does drive home that you don't need to charge $40 for a game and you can do it for a $1.00 instead -- a 40 fold price reduction. Oh, yea, Angry Birds has about 500 Million downloads now .... If Photoshop were $10 - $20 and available for instant download, I suspect that Adobe could make a lot more than they do. Especially when they double charge you by printing the "manual" in book form and then your having to buy it from the Last Bookstore in America.....

  • Simple (Score:5, Insightful)

    by TheDarkMaster ( 1292526 ) on Friday November 25, 2011 @08:08PM (#38171034)
    Make a reasonable price, make easy to pay (paypal?), make easy to buy/download, do not annoy me with DRM or "you must be on to play" and I will buy the game. Is so difficult?
  • by Genda ( 560240 ) <> on Friday November 25, 2011 @08:11PM (#38171044) Journal

    Piracy is a natural response to people who want to "CONTROL". The issue is not about IP, its not about getting something for nothing. Time and time again research, the research generated by the very vendors of IP, says people are happy to pay for something of value. That they simply want what they want the way the want it. It is the unbridled need, addiction to, the control of something that has become the crux of the piracy debate.

    The irony is, that by punishing consumers for the fear of being robbed, precipitates the actual robbery. People just ask to get their music, movie or game, simply, easily, and accessibly from any technology they possess. It is the draconian measures which now threaten to destroy (SOPA) the very conduit our collective futures rely on (the Internet), that is a clear extension of the avarice and need to control. These people have enjoyed decades of complete control, allowing an infrastructure of suppliers and middlemen to rape artists at one end and consumers at the other. With the advent of growing technology, old paradigms fail. For these people, the answer is not to learn how to leverage the amazing power of the new technology, but strangle it so they can bring back the bad old days. We need to make it clear to our representatives in no uncertain terms, that the future demands that the internet be free, broad and democratic.

  • by blahplusplus ( 757119 ) on Friday November 25, 2011 @08:13PM (#38171052)

    ... sorry but pricing is a major issue. How this man cannot say that it is't when games go on sale for 75% off on his site frequently seems ludicrous. The big things effecting modern games are:

    1) Game quality
    2) DRM
    3) Buyers avoiding paying more then $15-20 for DRM laden crap they don't own.

    Lots of people avoid buying games entirely because of DRM and low game quality. There are those of us who buy games at extremely deep discounts (5-15$ at most) on steam because of DRM we refuse to pay full price for DRM infested games that we don't own but we do want to support PC developers and have few alternatives since many small developers release on steam.

    Gabe has done a lot of marketing to brainwash people and get people to thinking he's a good guy but he's not, if he was the good guy games would deprecate their DRM after a year and the exe's unhooked from steam. The purpose of steam is to datamine users for 'business reasons' and he's putting this massive spin his datamining operation. This means more metrics driven game development as if we didn't have this enough of this alread with the constant clones every year.

  • Yes, yessss (Score:5, Insightful)

    by harvey the nerd ( 582806 ) on Friday November 25, 2011 @08:17PM (#38171084)
    Newell said that the "service problems" are the primary problem. He's right.
    I will not buy region locked disks precisely because my family lives and works between 3 regions. Region locking is an absolute ripoff, at least for us.

    Anywhere in the world, 24 x 7, purchasable from the convenience of your personal computer
    Is anything less ever acceptable in this day and age?

    Most DRM solutions diminish the value of the product by either directly restricting a customers use or by creating uncertainty."
    He's being polite. DRM is mostly a form of defective products and sales fraud.

    Price *is* an issue, it needs to be reasonable. But I won't even think about that until *all of the above is out of the way* or your "product" simply doesn't exist to me.
  • I can attest to this (Score:5, Informative)

    by cowdung ( 702933 ) on Friday November 25, 2011 @08:25PM (#38171160)

    I live in Latin America and have the following options for movies/music/games:

    1. Get it on DVD from a pirate (approx cost $1) [ILLEGAL]
    2. Rent a pirate copy (approx cost $2) [still technically ILLEGAL]
    3. Buy it on iTunes (cost $1-$4).. but I can only do this because I've figure out how to get around regional limitations [psuedo-LEGAL]
    4. Buying on Netflix/Amazon is not an option [N/A]
    5. Going to threater (movies only).. sometimes, when/if it arrives at a timely basis (cost: $4-$5) [LEGAL]
    6. Buy the legal DVD (cost: $30-$100) [LEGAL]

    As you can see a great option is iTunes/Netflix/Amazon but the industry has systematically cut off those options from us. Also the legal DVDs are sold at much higher prices than in the US.

    So do you wonder why there is so much piracy around the world??

    There's no viable affordable legal option.

    • Also the legal DVDs are sold at much higher prices than in the US.

      That might not be the fault of the studios as much as of national governments. Brazil and several other Latin American countries have prohibitive import duties for home entertainment products. Vote in a government that gets its revenue from things other than imports.

      • Yeah, the import duties are there to protect their home grown movie/software industries from masses of Euro and American high quality media/games.

  • by billcopc ( 196330 ) <> on Friday November 25, 2011 @08:52PM (#38171332) Homepage

    One of the main reasons I'll download a cracked game is to try it out. Nobody releases demos anymore, and you can't trust reviews with all the goddamned shills out there. I did it for SC2, because I didn't know if it would be my thing. Well, sure enough I liked it, and bought it online the next day.

    Case in point: Need For Speed - The Run. I knew it was coming from EA Black Box, responsible for all the "wigger" installments of the NFS franchise. Installed, played for about 10 minutes, deleted. Had I paid $70 for it, I would have put it in a box, shit on it, and Fedexed it to Trip Hawkins' home address with the note "Fixed it for you".

    So, yes, Gabe is right, 'service" aka availability is a primary issue, and while price itself is not the most important factor, VALUE is. A staggering majority of major-brand games today lack value. They cost more than they're worth. In that sense, NFS The Run held very little value for me, because it's a shit game produced by a cut-rate studio and certainly does not belong in the same price bracket as, say, Skyrim, Arkham City or even F1 2011.

  • My pirate years (Score:4, Interesting)

    by allcoolnameswheretak ( 1102727 ) on Friday November 25, 2011 @09:16PM (#38171528)

    From my personal experience, I'd say piracy is a pricing AND a service problem. During my student years, I pirated almost every game except a select few I absolutely wanted to have. 50€ was alot of money for me, and downloading something from the internet was more comfortable than getting a copy from a store and sticking the CD in every time I wanted to play. I didn't have Steam back then.

    Now I'm using Steam and have a job. I've probably spent around 200-300€ on games this year, taking up many of the special discount offers on Steam, even buying games "legit" that I have pirated CDs lying around. Steam makes it easy, and now that I have the money, I don't think twice about spending 20€ on a game every month or so. From this experience I'd say that piracy has nothing todo with greed, bad intent or trickery. It's just plain lazyness and circumstance. And DRM is a waste of time that only makes things worse for paying customers.

    • Pricing is part of the service. And pirates have advantage over price, but if they also have advantages over everything else, then they really have everything going for them.

      The only downside is guilt of not paying and fear of getting caught. Guilt will make a lot of people with the money to pay as long as they get what they want. Fear will make cowards and the paranoids pay, but then again, no one is really scared of getting caught downloading a game.

      • I don't pay due to guilt (or fear).. I'm not sure where you got that idea that. The fact is that pirates don't have advantages over everything else. They have the advantage on price, and (in some cases, but not all) on distribution.

        The advantages I get from official suppliers of my software produce are generally, in no particular order -

        - A far greater likliehood that my software will be free of malware. Sure, it has happened *occasionally* in commercial software, usually due to bad production, but it's far

        • Erh... no.

          A far greater likliehood that my software will be free of malware. ...for diverging definitions of malware. I define malware as software that gets installed on my computer without benefit to me and with potentially harmful effects on my machine's integrity, confidentiality or availability. Which is the case for pretty much any form of DRM and hence pretty much the case with every legally bought software.
          I would also like to see your source for illegally copied software being a noticeable (I won't

  • he gets it (Score:4, Insightful)

    by Tom ( 822 ) on Friday November 25, 2011 @10:45PM (#38172088) Homepage Journal

    Absolutely agree.

    There is one more aspect he forgets to mention:

    Dear publishers, if you put out all this DRM and copy-protection and basically treat me like a criminal, then who am I to argue with you? I'll use The Pirate Bay, because apparently that's what you expect me to do.

    If you treat me like a valued customer, then I will be one. There's a shelf full of boxes right next to me proving that I'm quite willing to spend money on games. But I don't enter into business relationships with people who disrespect me. I'd rather respond by disrespecting them as well.

  • by LibRT ( 1966204 ) on Friday November 25, 2011 @11:10PM (#38172228)
    This guy has identified exactly the issue, which seems to elude almost every software company, and music and video publishers too (and an astonishing amount of executives in other fields too): it is all about putting the customer first. When companies put DRM on their product, and other impediments to product satisfaction, they are putting their customer last. The problem is fundamentally one of mistaken priorities at an executive level: sometimes that manifests itself as DRM, sometimes it manifests itself as not putting a superior product out for fear of "cannibalizing" an existing product, sometimes it shows itself in hidden fees and misleading terms. These are all symptoms of the same mistaken priorities.