The Lawbringer: Positive value creation from the negatives in the games industry

Pop law abounds in The Lawbringer, your weekly dose of WoW, the law, video games and the MMO genre. Running parallel to the games we love and enjoy is a world full of rules, regulations, pitfalls and traps. How about you hang out with us as we discuss some of the more esoteric aspects of the games we love to play?

The no-win situation is, at its core, a sad state of affairs. Seriously, no one is winning in a no-win situation. In fact, everyone could be said to be losing.

Piracy has been long held to be the dire no-win situation in the video game industry because it represents a perfect culmination of utter loss -- an infinitely copyable product that took millions of dollars to produce being distributed for free. No profit means the studio gets its windows shuttered and no one goes home employed.

Last week, I read an article on PC Gamer that talks about Runic Games's Torchlight. The game is a fantastic spiritual successor to the Diablo series that the company's CEO, Max Schaefer, served as lead designer for. Runic Games was essentially bought by Perfect World, a Chinese MMO company that seeks to release an MMO version of the popular game.

Schaefer has some different views and conclusions about how piracy effects his game. In a nutshell, Schaefer sees no problem with the millions of illegally downloaded copies of Torchlight in Asian markets. When the MMO is released, the brand recognition and audience building that piracy affords will bring in new customers for the eventual MMO, where it is harder to pirate a service. With so many games going online these days with multiplayer components requiring authentication or even a license purchase (as with used versions of PS3 and XBox 360 games), is this the right attitude to have in world where a game's success is made or destroyed based on sales? Is this line of thought able to coexist with the fickle dev studio and publisher system in place now in the industry?

Ultimately, we can learn something from Schaefer's comments, especially about audience building. And, potentially, we can see the future of World of Warcraft's distribution as the game gets a bit heavy in terms of barrier to entry.

Torchlight turns piracy into "free" publicity

There are many factors to consider about Schaefer's piracy comments. The fact is that it's not a comment every studio or CEO gets to make. Using one fully featured and fully developed video game as advertisement for the eventual pay-for model is a risky and expensive endeavor for any studio and publisher. Schaefer cops to the inevitability of piracy and makes the honest realization that fighting piracy is an uphill battle because of the nature of the opposition.

A similar anecdote to Schaefer's comments comes from Gabe Newell and Valve's problems with piracy in Russia. Valve games were being pirated left and right in Russia, a notoriously difficult piracy market to crack. Rather than fight pirates with heavy DRM and "negative value," Valve instead decided to figure out why their games were being pirated rather than purchased. Pirates were doing a better job with the Russian translation of the game and were releasing them before Valve's Russian versions were to be shipped. So, Valve beefed up the localization team for Russia and started releasing games there day one with English and other European releases. Piracy plummeted, turning Russia into one of Valve's largest markets.

Much like Gabe Newell's issues with piracy in Russia, Schaefer makes the same general conclusions -- be nice to your customers, don't overburden them with DRM, and charge a fair price and you will succeed. Fighting piracy isn't about restricting players but adding good will, long-term player satisfaction, and positive player experience to the act of purchasing, or even pirating, a game.

Not for everyone

Here's the problem with the piracy-win stories -- they are fact and situation specific. Not every studio and publisher can still succeed based on the costs associated with piracy and games development. Torchlight was already a hit in the US and EU before this article on Chinese piracy. Their success was secure. The MMO was already in development, and it helped that Torchlight was actually a totally awesome game. Could every studio allow for millions of copies to be stolen and still turn a profit so early in the game's life?

I would wager no. Not every studio gets to snap their fingers and make better Russian localization happen. Not every developer gets to write off millions of illegally downloaded copies of their game as audience-building advertising. I do not want to seem like I am enforcing or supporting the incredibly poor amount of DRM currently polluting the games market and turning would-be purchasers into pirates, but the Torchlight mentality is the right one to take. It is a wonderful thing that successful developers are at the forefront of the piracy fight by extending the olive branch, so to speak, and turning pirates into purchasers not only for themselves, but creating a culture of purchasing games and building good will.

Brand recognition is key

The biggest take-away from Schaefer's comments is that brand recognition and advertising is a huge part of why he is fine with the piracy in China. Eventually Torchlight will MMO-o-tron itself into a pay-for-premium-content-based free-to-play. That is where the real money lies. With so many people accustomed to the Torchlight brand and happy with the game they stole for free, some of those players might be totally willing to pick up a free client and put their money on the table for the Torchlight service. It is this lesson that I think World of Warcraft needs to learn in the next year.

Positive value and dealing with WoW's barrier to entry

Many players have an odd problem with World of Warcraft right now -- it is hard to get into the game. Much like Everquest showed us way back in the olden days of MMOs, barrier to entry is a problem. Once a game like WoW grows to an insurmountable scale, the cost associated with getting the game up to date grows at a rapid pace. Using the Amazon US store, I quickly checked to see how much World of Warcraft currently costs: WoW Battlechest (includes Classic and Burning Crusade) was $20, Wrath of the Lich King was $38.99, and Cataclysm was discounted to $26.99. That's almost $86.00 to get current with WoW. That's a lot cheaper than it was last year, but it's still a hefty price.

Now, I don't want to sound like a hypocrite. I spend (happily, might I add) upwards of that for each collector's edition associated with WoW. A new player, the lifeblood of growing subscription numbers, sees this as a detriment. Too many expansions without a new battlechest-like box has created the type of negative value associated with the stories above. WoW is too expensive to completely play. To grow subscription numbers, Blizzard is going to have to get more WoW in more people's hands at a cheaper price.

Vanilla WoW is practically free now. The are free trials, Recruit-A-Friend bonuses, and more to get people into Azeroth. But even practically free is not enough, it seems. WoW lost subscribers over the course of Cataclysm's life after hitting a huge peak with the expansion's release. To get players back, we need to add positive value back into the purchase of WoW. Maybe WoW has to, quite literally, be free?

Piracy is less of an issue and shelf space is still a thing

Piracy, admittedly, is less of an issue with MMOs and service-oriented games. Schaefer and Runic are so confident in the piracy-lite MMO model that they are willing to let millions of copies of the game proliferate in China. WoW's problems are less with pirates and more from hackers, as we have detailed in the past.

Adding positive value to the WoW retail box is a problem because the boxes are still selling, with prominent retail displays advertising WoW's MMO dominance. Despite the fact that the PC game shelves at Gamestop and Best Buy have been second-class citizens for years now, WoW dominates that retail space. We aren't in a 100% download world yet, boxes still sell, and I never want to give up my collector's editions. What we need is a new WoW boxed (and downloadable) copy.

But what does this new box look like? Tom Chilton alluded to the potential for WoW to turn into one game with Cataclysm, but the idea never made it to light. Will Blizzard bundle WoW, BC, and Wrath into one $30 box? The newest expansion stays at the $30-40 price and then gets bundled down into the box each time a new expansion is released? Will Cataclysm just be re-branded as "World of Warcraft?" Blizzard could discount down the game to $5 each like they have done at Christmas and is currently doing in the EU for digital purchases. The easiest way to inject new blood into the game and refresh the subscription numbers is to practically give WoW away.

Maybe Schaefer's piracy comments and audience building will be what launches Torchlight's MMO into the stratosphere of success. I think it will. Creating positive value from the inevitable pricing and piracy issues is a challenge for any developer, to be sure, but it's a move that needs to be made. Blizzard can echo this sentiment by changing the WoW retail pricing structure to more easily accomodate players to their subscription service.

New WoW box by the end of the (fiscal) year? I'm willing to bet on it.

This column is for entertainment only; if you need legal advice, contact a lawyer. For comments or general questions about law or for The Lawbringer, contact Mat at mat@wowinsider.com.