gamepolitics: Malaysian Game Pirates Ringing Up Profits

Game Politics (

gamepolitics) wrote,
@ 2006-04-27 06:04:00

Entry tags:

esa, malaysia, piracy

Malaysian Game Pirates Ringing Up Profits

Despite recent police crackdowns, game pirating remains a lucrative endeavor in Malaysia.

How lucrative? According to Gamasutra, 2005 saw 4.8 million pirated discs seized, mostly video games and movies, as well as nine machines for copying discs. The total seized this year so far in 2006 is 1.5 million discs, most destined for export, and 18 copy machines. The haul is estimated to be worth about $14 million.

Recent raids at Kuala Lumpur airport netted 8,000 discs destined for South Africa, 7,000 movies headed to Cambodia, and 36,000 video games going to Uruguay.

Police believe the increase in quantities seized, especially the vast increase in copy machines, indicates that efforts to curb the trade are less than effective. Legal production of discs in Malaysia is 9 million per year, with more than 90% of that number being exported.

Last year the ESA named Malaysia as the leading source of pirated software, with China running a close second. Yahoo reports that this year the Malaysian government is giving companies until April 30th to stop using pirated software, and will begin conducting raids to check compliance.

Although the recording industry has pressured the Malaysian government to do more, the BBC reported last year that pirated CD's may even have come from government-licensed factories.

-Reporting from the banks of the River Saskatchewan, home of the Last Saskatchewan Pirate, GP Correspondent Colin McInnes

(Post a new comment)

anticron
2006-04-27 01:18 pm UTC (link)

Isn't it strange what happens when an item is priced well over its market value?

For instance, in China, bootleg movies are sold for something like $1 a piece. To combat this, movie studios have re-priced their [higher quality] versions competatively, at around $1.50. End result? They still cut a profit, and they're winning market share back from the bootleggers. Why are the prices so low? People don't make much money, and a marketable consumable like movies simply cannot sustain themselves on rather ludicrous prices, comparatively speaking.

The simple solution is to price things according to their market, otherwise the black market is much more likely to win out.

(Reply to this) (Thread)

Counterpoint . . .

mjolnirjack
2006-04-27 01:53 pm UTC (link)

Many games don't make a profit after development costs, so game design is risky. A company may produce three games and may take a loss on one or two, it is the nature of the industry. Movies occasionally flop but they usually make thier money back in a typical theater run so comparing video game piracy to movie piracy is not very fair.

We have to remember things that hurt developers will hurt players eventually.

(Reply to this) (Parent)(Thread)

Re: Counterpoint . . .

anticron
2006-04-27 02:27 pm UTC (link)

Absolutely true, but the distributors, then, need to remember that if a nation's average yearly wage is less than $200 per citizen, chances are, they aren't going to be buying any XBox360 games legally, unless they are priced within the market itself.

This might be implausible, as that is selling at a loss on much of the typical sticker price's components.

This just brings up the old "would they have bought it in the first place, andif not, did they lose anything?" rhetoric for piracy.

(Reply to this) (Parent)

Re:CounterCounterpoint . . .

tollwutig
2006-04-27 02:38 pm UTC (link)

The thing is if an item is priced at its market value, it will gain more legitimate sales than an item priced well above its legitimate value.

Here's a question would you buy more video games if they were priced at say $10 instead of $50? Most people would say yes. Thus while each individual copy would make less money over all more copies would be sold, thus spreading the development costs across more copies.

Really we need a ballsy game developer to do this. Release games sequentially at a lower price until it takes in a profit through high sales instead of high margins per sales.

(Reply to this) (Parent)(Thread)

	Re: CounterCounterpoint . . . anticron 2006-04-27 02:50 pm UTC (link)
	Really we need a ballsy game developer to do this. It's happened a few times. For instance, Katamari Damacy MSRPed at $20, a bit over half the typical launch retail price, and it sold very well. Had it have been a higher price, the quirky game might not have gained so quickly a following. (Reply to this) (Parent)(Thread)

	Re: CounterCounterpoint . . . thefremen 2006-04-27 04:18 pm UTC (link)
	Speaking of Katamari, I missed the boat on that one, and now my gamestop isn't getting any more copies of katamari and we heart katamari. Why not make more? (Reply to this) (Parent)

Re: CounterCounterpoint . . .

mjolnirjack
2006-04-27 03:24 pm UTC (link)

"Release games sequentially at a lower price until it takes in a profit through high sales instead of high margins per sales."

Exelent idea, but now a company must sell 5x as many games to make the same profit. If the game has broad appeal (as many casual puzzle games do) this could work famously, but action, RPG, or sports games may falter.

It is a tough ballance, but I think we may see some companies take that risk when a system has a very wide consumer base. (so we can expect cheap PS2 games but don't hold your breath for cheap XBox 360 games)

(Reply to this) (Parent)

	Wow... startropics 2006-04-27 02:35 pm UTC (link)
	...they have video games in Uruguay? (Reply to this)

konstruct
2006-04-27 03:09 pm UTC (link)

There are also other questions to ask, such as the reason for price stabilization in a certain range while production costs are decreasing every year. Most game companies spend very little on booklets and packaging which is what the majority of the cost of product comes from. You buy a cool new sports drink in a cool bottle, 80% of the cost of that product is that bottle. You spent 2 bucks on 20 cents worth of beverage and 80 cents to a buck 20 on the bottle.

The cost to produce the CDs and boxes have dropped a whole lot especially when you buy in mass quantities. Have game developers been getting a huge increase in pay? Not likely, so the trick is to figure out where the need for the money is coming from.

Production cost - way down
Development wage - slight increase
Company - higher profits

These companies know what games people will spend 50 bucks on and what games people will only spend 20 bucks on. Simple as that. This is the reason why they flood the market with horrible games. These people make games for a living, they know what games are fun and playable and what games are complete filler. These games aren't an accident, there are countless meetings held to measure and guesstimate if the license of the title will yield some sort of profit.

So the loss of profit is a lot less than we are lead to believe. I am in no way condoning the act of piracy but I do believe companies shouldn't scream that they had their arm broken when all that occurred was a tap on the wrist.

(Reply to this)

	The Best Strategy to fight Piracy jaykaos 2006-04-27 03:23 pm UTC (link)
	Come up with a better name for it. You cannot call people pirates and expect them to take that as something negative. I mean COME ON. I've got pirate pajamas. Seriously, come up with some other name like 'movie rapists'. That would discourage it. But calling em pirates? Just a bad idea. (Reply to this) (Thread)

	Re: The Best Strategy to fight Piracy thefremen 2006-04-27 04:16 pm UTC (link)
	That's true, it reminds me of that episode of Seinfeld where Kramer wears an eye patch and Jerry tells him "You look like a pirate." and Kramer replies "I wanna be a pirate!" (Reply to this) (Parent)

	kurisu7885 2006-04-27 05:31 pm UTC (link)
	I still remember Cliff Blezinski from Epic games sayign he saw games eventually beign sold at 20 bucks or less, jsut my two cents to the price debate. (Reply to this)

	Hehe. kittenseffy 2006-04-27 06:42 pm UTC (link)
	Glad to know I'm not the lone Arrogant Worms fan in the world, Jabr. :D (Reply to this)

fatcatlim
2006-04-27 09:01 pm UTC (link)

Aye, piracy is indeed rife in Malaysia. Where I come from, it's so simple to just drop by a game shop and pick and choose the titles that you want. To prevent their stocks from being raided, local game and DVD pirates here keep their stocks elsewhere around the mall premise, only retrieving the game from their stock when you choose from their catalogue. Then there's also always paying 'duit kopi' (coffee money) to the local authorities to turn a blind eye to their activities.

Original PS2 games here retail at about RM200+, which is NOT an insignificant amount to a Malaysian player. The basic starting salary for most people in Malaysia is RM1600, so asking the average Malaysian to spend more than 10% of your salary just for one game is just ludicrous when you can get the same game at RM4 (about USD1). Worse, the game shops here don't reduce the prices of their old PS2 games so even a classic game like Final Fantasy X still retails at the original launch price of RM220.

The problem with the console market here is that there aren't many local distributors here that are willing to take the plunge and order console games in bulk (hence allow them to sell console games at a reduced price) because of the rampant piracy in Malaysia. Yet bringing in limited quantities of games mean the prices of games still remain high and out of reach for many gamers, so they'll resort to pirated games. It's a chicken and egg scenario.

Portable games are much popular since they're usually cheaper but they're still relatively expensive. An original Nintendogs here costs about RM130-RM160 (depends on where you shop), while Brain Age costs about RM100 (I got mine for RM95). I know of one shop that are now selling pirated NDS games, but at the moment they're very expensive and only costs about RM30 - RM60 cheaper than the original carts.

The PC game market here isn't so bad since depending on the title, a PC game can go from up to RM80 to RM190. More recent quality PC titles are going for RM129.90, which IMO, is a decent price. Most local PC game distributors here depend on licensing the rights of a multiplayer/LAN game to cybercafes to survive. Even so, it's still quite expensive for most players though so they flock to pirated game CDs which sell at RM4 each as well.

(Reply to this) (Thread)

longtimelurker
2006-04-28 04:42 am UTC (link)

Here is the thing people. Pirates won't pay for any game no matter the price if they can pirate it.

You may want games to be lowered but there is a huge problem. Game development costs mean that out of each 49.99 game most games need over half a million copies for just one region to break even.

Lower it to twenty bucks and you need 20 times more games sold. A major game studio could afford to get less on that game sale however most studios cannot survive.

Add in tens of millions of dollars to game development to add in High Defination video and you will find most companies will break if their titles go less then 20 bucks.

Also companies add in price to make up for loss due to pirates. So pirates High Def, various countries treaties are responible for the price in games.

If people claim to support an artist or video game series etc they should buy it retail so the parties break even at least or get more so they can do much more.

(Reply to this) (Parent)(Thread)

anticron
2006-04-28 01:37 pm UTC (link)

Here is the thing people. Pirates won't pay for any game no matter the price if they can pirate it.

Incorrect.

While a certain portion of the "pirate" populace will always want that freebie, others simply cannot afford the MSRP on an item and would otherwise purchase it, should it be marked at a reasonable fee.

Nobody particularly wants a scan copy of a movie, for instance. The quality is terrible, the sound is terrible, and other assorted grievances bother people. The commerically released DVDs remedy those problems (and add features, which may or may not be useless), but in some countries where the base income would place a single USD DVD at 10% yearly income, it is simply unreasonable to expect them to purchase it.

For a more "close to home" comparison, look at college students. By all accounts, they're absolutely broke, but they want music (or games). Thus, they do what they can to obtain them, but usually not as many as they'd want. Some will resort to piracy to obtain most of waht they desire, and others will scrounge and forgo food (and donate plasma) to get a few nifty toys.

You know what happens when they get disposible income again, usually after graduation? They start buying things because they can afford them.

I'm not saying this is universal. I'm not saying this is justification for piracy. I am saying that reasonable prices for given markets will move products. Look at ITunes for a fantastic example of a reaction to a market demand that had been resisted via artificially higher prices than the general market wants.

People will generally want the lowest price for the best value, and if the two don't match well, then the black market wins. However, if the "Price is Right" (Come on down!), then people will part with their money much more readily for something they want to own.

Again, some people will never want this; however, to insist that all pirates will never pay for anything is patently absurd.

Regardless, if game companies are spending so much money on R&D for additives that a very small percentage of their target audience wants, their margins will be extraordinarily slim anyhow. I personally don't find any particular reason the sheer quantity of money needs be spent on current generation games just to squeeze out an additional FPS or to match a hyper-luxury niche, when the previous generations of games were almost certainly better without all that shininess and excessive expense.

The game companies are pricing themselves out of their target market.

(Reply to this) (Parent)(Thread)

the1jeffy
2006-04-28 03:00 pm UTC (link)

You know what happens when they get disposible income again, usually after graduation? They start buying things because they can afford them.

So fucking true. I pirated all sorts of games and music during college. Emulators, napster (the original), scour enchange, you name it. Now, I have money, and I find that it's not worth the hassle of fighting to get the emulation software to run smoothly and trying to program my USB control pad to match a consle. So, I buy games now. Even ones I'm less sure of enjoying. The only difference is music. I still pirate music out of spite. I hate major record companies and their attacks of poor college students. I buy my CDs direct from the bands, or smaller labels, or I don't buy it. If Now, I admit to listening to non-mainstream music, so free distribution for small bands isn't such a big deal. The guys from "Growing Ears on Mice," "The Deuces," or "Bigwig," really don't care if you download their stuff, as long as you come to their shows, or buy merch, or even just spread the word. (Two of thos bands are personal friends, so I could just get the CDs for free). I support small guys with my money, but Metallica can fuck off.

(Reply to this) (Parent)

fatcatlim
2006-04-28 02:58 pm UTC (link)

anticron already said it best, but I'll probably reiterate my point here for clarification.

It's not that we don't want to support the artist or video game series. Given the chance, I'd gladly buy original games to support the people who made it. But when a game costs a significant amount of my paycheck, I've to seriously start weighing the options of getting an original console game that costs RM220. The same amount of money can get me a nice new shirt (RM50), a cheap pair of pants (RM100), an original music CD/DVD (RM50), AND maybe even a decent meal for two (RM20). Which option offers me more value for money?

I can also buy 4 imported original music CDs at RM220, which is more worth it in terms of longevity compared to a single original video game at the same price. RM220 can also feed up to 10 people if they were to order a single meal at an upper-class restaurant. So when I can get an exact copy of the same game sans the manual at only RM4 each, there's almost no argument as to which game I'd get. That way I can use the savings for other necessities and/or luxuries.

When I studied in Australia, I didn't mind waiting for the prices of games to drop since original games were abundant and a year later, I knew they would be cheaper by at least 30-50%. Here in Malaysia, the prices for console games has HARDLY ever dropped, despite many years have passed. Final Fantasy X has already reached Platinum/Bestseller status, meaning it should be 50% cheaper. But many game shops here in Malaysia that carry FFX game will still sell it at its original retail price of RM220, even if it's the Platinum edition.

The only original games that I can afford at the moment is NDS games, since they usually range from RM100 - RM160. Even then, I can only afford one game a month since to me, spending a huge chunk of my paycheck on a single luxury item is crazy when I can better utilise my money for other necessities and luxuries, which costs far less than a single game which may only see a single playthrough from me.

(Reply to this) (Parent)

goten_909
2006-09-02 03:43 am UTC (link)

I understand what fatcatlim is saying, but there is a whole market that everyone passed up. I live here in the united states and i personally know people in Malaysia. There are quite a few number of people that sell serial numbers from those games to people in USA and all over the world. Any person even claiming to be a pirate or anything can find a .iso of a game and all there missing is a serial number or valves steam activation number. They don't even bother to send the cd's. There is a vast market for serial numbers ESPECIALLY in Electronic Art's Battlefield 2 game. anyone who has ever played a online FPS (First Person Shooter) knows about the script kiddies (A.K.A. Hackers). Well those script kiddies always get banned (multiple times) and who wants to buy a new game when you been GUID banned (serial number becomes inactive in online play) so they buy pirated serial #'s from malaysia.

(Reply to this)

Username:		Create an Account Forgot your login or password? Login w/ OpenID
Password:
	Remember Me
	English • Español • Deutsch • Русский…

About

Help

Get Involved

Legal

Store

LJ Labs