Friday, September 12, 2008

Can DRM be a Good Thing? Can it save PC Gaming?

EA's use of the SecureROM DRM in spore is creating quite a ruckus

The more I think about the issue, the more I believe that game piracy is a red herring. If it isn't, it should be. If you're in the sales business focus on bringing in money it isn't worth the effort to try and get money out of people who refuse to pay.

I believe that the real purpose for implementing a strict 3 install limit on Spore has more to do with increasing purchases per customer than eliminating piracy. From a business perspective, it does make sense. Focus on the people who pay. Instead of providing outstanding value or service, it appears that EA is just trying to shamelessly milk their paying customers for all they are worth. If it helps the balance sheet it must be the right thing to do.

Before I go further let me say that I believe that the future of gaming and the future of intellectual property sales requires good DRM. DRM is only a tool, it is neither good nor bad. With good DRM that is implemented intelligently, the trade of intellectual property can transcend the traditional retail model.

The retail model isn't very good for selling intellectual property. Games, music, movies, books, etc really are intellectual property. If given a choice of listening to a CD and listening to an mp3 of the same music, most people wouldn't care or would prefer the mp3. There isn't much value added to having a CD. 

This is more so the case with PC games. PC games under the retail model require physical media. That physical media must be delivered from a factory, to a retailer, and then to the home of the consumer. The physical media that contains games is only good until the game is installed on the the PC. After that it's effectively worthless. There are some games that want the physical media to be in the system's drive to start, but that's a decision that is put in place as a security measure.

I really don't like physical media for intellectual property. Physical media is perishable and fragile. Optical media(CDs and DVDs) do not perform as well hard drives. 

On the PC platform, where games typically are stored on the hard drive of the PC, piracy is very easy. Some people claim that piracy is killing the PC gaming industry. I would argue that Piracy is killing the PC gaming industry because pirates have a much better distribution system than the traditional retail model based on physical media. 

For people who sell games the goal is simple. Make a product that many people want to buy. That is the most important thing.  

With a digital product, content providers worry, rightfully so, about piracy. Nobody wants to see their work that they made with the intent of making money go out to a bunch of people who didn't pay for it.  To combat this, content providers try to stop piracy by making piracy impossible or making piracy dangerous. Those are bad goals. They are expensive and they can hurt progress towards the ultimate goal. 

Making piracy dangerous, or scaring people into not pirating intellectual property, can be achieved by finding people who pirate software and using the legal system to punish those people. I think it's a loser's game. It's expensive to hire the people who can build a case against pirates. Also, threatening individuals with lawyers is a public relations nightmare. There's no way that taking people to court will recoup legal costs and damages, not to mention lost sales.

When calculating lost sales, don't just count the pirate's copy. There are people who are turned off by heavy handed legal tactics. The way that the RIAA shakes people down and threatens them with financial ruin makes me want to never support them, and there are others who feel the same way. Because of the RIAA's tactics many people do not support them by buying or using their products. I'm not much of a music listener anymore, so it doesn't bother me. 

Making piracy impossible is another bad idea. It's an arms race and it isn't cheap. Lately, it would seem that publishers are using DRM software to restrict usage of their products. Whether it is to prevent piracy or not, I can't say. Assuming it is, it's still a bad idea if the DRM reduces the quality of the product.

Ironically, by reducing the quality of a product many software publishers are putting their own products at a competitive disadvantage to the pirated version of their software. There are people who will buy a product and then get a pirated copy because it works better than their purchased copy. That's a pretty amazing thing.

People want to pay for the game, but they don't care for the publisher's distribution system and/or their restrictions.

I don't believe that it needs to be this way though. The solution to the problem, ironically, is what many of us consider to be the problem, DRM.

Digital Rights Management, or DRM, is a system that protects intellectual property. DRM has a bad reputation. I believe that most of this is due to the way that various DRM solutions are implemented. 

It is important to separate the concept of DRM with the implementations of DRM. Having software that is secretly installed on peoples' computers that causes the computer to malfunction when trying to copy intellectual property, is an implementation of DRM. I also believe it's not a very good or effective system of DRM.

DRM is conceptually only a tool. DRM is a switch that either allows the DRM protected content to be used or not at the content provider's discression. The controversy surrounding DRM is how it is used. I believe that DRM does not need to be bad though. It can actually be used for a lot of good.

The Steam content delivery platform is the best platform I've seen for content. The things I like about Steam are as follows:
  1. Steam ties their games to an account that works on any computer. If I have five computers and one Steam account I can download all of the games I purchased through Steam any time on all of those computers. I may, however, only use Steam on only one of those computers at any given time, i.e., I can't run a Steam game on one computer and have my wife run another Steam game on another computer at the same time.
  2. Steam distributes their software via a download. It's a lot faster than going to a retail store or having a traditional game mailed to my house. I also don't have a box filled with ads to throw out or a DVD to keep track of.
  3. Steam displays a metacritic review score of their products. Customers have the tools available to make an informed purchasing decision.
  4. Steam has its own social networking features that span beyond single games. I can meet up in Team Fortress 2 with the friends I made playing Day Of Defeat Source.
  5. Steam offers their products at a reasonable price. 
  6. Steam has the ability to offer free demos for a limited period of time, say a weekend. This is a very savvy way to increase sales.
  7. Along that line, with Steam's DRM they have the ability to give invitations to their customers for demos. I was able to send a friend of mine a guest pass for Team Fortress 2. From a marketing perspective think how powerful this tool is, the content provider is giving their customers a tool to provide word of mouth advertising for their products.
Steam can provide these features because of DRM. The DRM enables Steam to control whether their content runs or not. Steam uses this power benevolently.

By using DRM as a tool to provide better service to their customers, they are able to compete with piracy head on. Games delivered through Steam can easily offer a superior product to a pirated version that can be delivered just as quickly as a torrent.

If game publishers want to maximize their sales they need to stop thinking about their products as retail goods. They are intellectual properties. If the games are distributed as intellectual property, it can be performed without the costs and difficulties that come with retail goods. By exclusively distributing games online the manufacturing stage of development is eliminated. Logistics and shipping aren't a consideration either. Digital distribution is a more efficient vehicle to deliver content.

Steam's model can be improved though. The biggest criticism of purely DRM managed and digitally distributed software over traditional media distributed software is resaleability. With a traditionally purchased game that is distributed via DVD the purchaser of the game can sell it.

Game publishers are reluctant to make resale of their games easy. I'm sure they see every resale as a sale they didn't get. If a system like Steam were set up with a resale market place that is safe and easy there would be no reason to stay with the traditional system.

Instead of seeing resale as a threat I believe that game publishers would be better served looking at it as a feature and competitive advantage. Their customers will appreciate it and I believe they will prefer to pay money to legitimately purchase their games instead of downloading a pirated copy.

With good DRM a new paradigm of game sales and marketing is possible. I wish that more publishers would get on board with adopting this model in a way that enhances the video game buying experience. 

4 comments:

GTez said...

You're totally correct about the idea of DRM being a tool with a purpose. However, implementation differences between SecureROM and Steam as examples are flawed. Steam neither does a better or worse job. Further, steam is just as aggressive if not worse then SecureROM in many respects, you are absolutely required to have it running and able to connect at least once every 3 days. SecureROM even allows for an offline mode after you've authenticated. Steam does not. SecureROM is also fully anonymous Steam is not. Trust me when I tell you that EA doesn't care who is pirating the game instead they would prefer if you simply purchased it.

Digital distribution is a huge aspect of it and I'm not sure (as an insider anyway) if the general population is ready for Digital methods over retail. I believe it to be the future as we've seen with the success of iTunes Store. But being ready for prime time is another issue.

There is one other issue that you didn't touch on - General populous vs you me and the rest of the Kotaku reading people. The number of people who actually care about DRM in a serious way are not necessarily the same people who bought the main stay of Spore. I'm absolutely not saying it's good for EA's PR image, but at the same time the need for DRM due to legal reasons alone (outside of consumer piracy) far out weigh the cost that a couple hundred angry forum readers cost.

Finally - I think the whole DRM thing is blown so far out of proportion it's incredible. I only wish that people would turn this energy towards something that is really right violating like maybe the multiple wars we are fighting right now?

Thanks for the write up.

Paul Wiedel said...

Thank you for the thoughtful feedback.

GTez said...

My pleasure - It's good to see some thoughtful posts out there!

Divide by zero said...

I'm pretty sure that I can run Steam in offline mode. And I don't reconnect every 3 days. One of my boxes only gets running time a couple of times a month and there's never any problems.

Anyways, great post!