1. Piracy of Video Games By Scott Cowan

2. What Piracy Is Piracy is when a copy of a digital file is used by someone who did not purchase, and does not own the rights to that file. Piracy is practiced all over the world. The most common method of pirating is by using bit torrents. Piracy is more prevalent in developing countries, however most money lost to piracy is in developed countries. The video game industry loses an average of $3 billion a year to piracy. Source: Seventh Annual BSA/IDC Global Software Piracy Study, May 2010

3. Legality The U.S. Constitution says “The Congress shall have Power To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries” “Limited times” was first defined as fourteen years in the Copyright Act of 1790. As of 1998, this has been redefined to seventy years after the creator of something dies. This includes video games and all other software.

4. Emulators vs. Piracy of Modern Games Emulators are programs that emulate older consoles, such as Gameboys and NESs. Under the ruling of Lewis Galoob Toys, Inc. v. Nintendo of America, Inc., emulators are considered fair use, as long as the person at one point purchased the console and game. In practice, this rule is not enforced. Emulators are generally more acceptable to use than pirated copies of modern games, because these games are past their time of making high profits, and are much more difficult to find.

5. Effect on the Game Industry Piracy affects the PC game industry far more than the console game industry. It is becoming increasingly more common for game companies to not want to release PC versions of their games. “The PC right now is a fair amount different to what it was back in the day, with all the badly integrated video chips. Here's the problem right now; the person who is savvy enough to want to have a good PC to upgrade their video card, is a person who is savvy enough to know bit torrent to know all the elements so they can pirate software. Therefore, high-end videogames are suffering very much on the PC.”--Cliff Bleszinski, design director of Epic Games

6. Effect on the Game Industry (cont.) High piracy rates discourage the development of new games, particularly on the PC. Game developers typically get around 13% of the profits made off of a game sold at retail price. A low budget modern game costs at least $500,000, and typically requires the work of 30-100 people.

7. Morality of Piracy Many piracy advocates argue that piracy is fair use, as long as the original creator is acknowledged, and the work is not sold for a profit. However, one of The Copyright Act of 1976's guidelines for determining fair use is: “the effect of the use upon the market (or potential market) for the original work.” Another common argument among piracy advocates is that since no tangible object is being stolen, piracy is not “stealing,” therefore should be legal.

8. Implications of Piracy If piracy continues at similar rates, it is possible that the market for computer games will be highly damaged within the next decade. Most developers will likely choose the much safer console route. Many already have begun to. The exception is MMORPG games, which have enjoyed much success over recent years. It is plausible that within ten years, the only games that will do well on the computer will be MMORPGs.