Valve: Pirates Are Underserved Customers

While the traditional video game industry view portrays game software pirates as criminals, Jason Holtman of Valve has a different view.

Speaking this week at the Game Business Law Summit at Southern Methodist University Law School, Holtman described pirates as potential customers.

GameDaily reports on Holtman’s remarks:

There’s a big business feeling that there’s piracy. [But the truth is] Pirates are underserved customers. .. When you think about it that way, you think, ‘Oh my gosh, I can do some interesting things and make some interesting money off of it.’

[At Valve] we take all of our games day-and-date to Russia. The reason people pirated things in Russia is because Russians are reading magazines and watching television — they say ‘Man, I want to play that game so bad,’ but the publishers respond ‘you can play that game in six months…maybe.’

We found that our piracy rates dropped off significantly [by releasing in Russia]… [There are] tons of undiscovered customers…

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  1. ZippyDSMlee says:

    It all comes down to them wanting to make money from nothing, if they keep up with stringent limited revenue streams they will fail to make as much money as they could opening the process up and allowing for more ways to let profit trickle in.


    They get stuck in that corporate mentality that says that if we change to a more open distrobutary system(open=holes) we lose money, the trouble is you are losing money anyway that is if you pine over every instance of illicit copying that no one can control.

    The more I think about it the more copy right needs to be changed to let corporate not worry about thigns they and the government cannot control IE focus on profit made from distribution and not the distribution itself.


    Gore,Violence,Sexauilty,Fear,Emotion these are but modes of transportation of story and thought, to take them from society you create a society of children and nannys, since adults are not required.

  2. Slipperman says:

    I hope Nintendo takes note of what Holtman and Valve just said here…Maybe if they released a version of their ‘Virtual Console’ for the PC (and release official ROMs for it that have some sort of DRM on them so they couldn’t be easily copied/distributed) they wouldn’t have to worry about people playing NES/SNES games "illegally" on computers using emulators…

    Tim (aka the Slipperman)

  3. ZippyDSMlee says:

    Above post is full of win and cookies!!


    Gore,Violence,Sexauilty,Fear,Emotion these are but modes of transportation of story and thought, to take them from society you create a society of children and nannys, since adults are not required.

  4. Papa Midnight says:

    While I agree, I’m more than willing to say that persons who choose not to buy video games and instead download them (note my specific avoidance of the word Pirate as that is not what they are. Those guys actively selling bootlegs on the corner with multiple duplicating machines in their homes, those are Pirates) are not only underserved customers… But scorned customers. Lets look at how PC games have essentially been pushed aside over the years much to the point that they have been made almost non-existent and that the knowledge of them is really nearly unknown to some. Lets also look at how these video games have been shot to hell after seeing blazing performance on hardware which is currently outdated by roughly 3-5 years, depending on which console you prefer to look at. Then said game comes to the PC (finally. Only took 4 years for Bully and over half a year for GTAIV, a series which happened to start on the PC) and performs like utter crap. DRM doesn’t help matters either.

    Bully: Scholarship Edition came to the PC after seeing nothing but praise for its original iteration on the PS2, while receiving somewhat dwindling performance on the release of it’s Wii and 360 iteration. 4 years later, PC gamers finally get a port to enjoy… Or so we thought. Instead, we got a game so badly ported that even Steam backed off of its hard stance against of no-refunds-period. Some said, "maybe Rockstar will patch it". Here we are, 3 months later, and no patch. Therefore, you have essentially have just aquainted customers with $19.99 (plus tax) coasters.

    8 months after its release, GTA IV came to the PC, loaded up with Games For Windows Live, and SecuROM DRM. So not only do with have to wait for Microsoft to give the "OK" on patches (which took almost 2 weeks for patch 1), we have to deal with SecuROMs crap as well. Hell, I love how I can’t even browse, let alone open, the SecuROM directory key in my registry. I remember when SecuROM used to actually be useful and served as nothing more than a non-intrusive copy protection program which I had no problems with… Haven’t seen that since Diablo II. But more on DRM later. To the point of GTA IV. As a comparison point, both the PS3 and 360 use hardware which is dated as far back as 2005 in the case of the 360 and 2006 in the case of the PS3. At the time, probably the best GPU you could get would be comparable to an NVIDIA 7600GT. Today, we have processors and GPUs which could outperform an Xbox 360 or PS3 with ease. Yet, for some reason, GTA IV players cannot utilize their SLI configurations. Those who meet the minimal requirements can’t even obtain smooth game play and garner between 10-22 fps. Those who meet above and beyond the recommended requirements are getting roughly 18-35 fps. This is no where near smooth gameplay. Rockstar North’s excuse for this? The game was designed for future computers. Bullshit.

    Of course, not to be topped, the other sandbox style game, Saints Row 2 was released for the PC finally. Holy shit. I thought GTAIV performed bad. Atleast GTA IV was playable. Loading up Saints Row 2 reminded me of attempting to play GTAIII on a PII and ATI Rage Pro. It wasn’t happening. Averaging 7-8 fps was ridiculous. I’ve already made my mention about outdated hardware so I won’t go there again. What I do know is that this game was promptly returned for a full refund.

    Ah, but what discussion into PC gamings woes does not include the absolute nightmare for Will Wright? Who’s absolute pet project Spore was met with absolute angst for its inclusion of DRM and somewhat lackluster game play over time. This game will go down in history, not as the game it could’ve been, but as the poster child for DRM hate.

    Back to PC ports, let us look at the non-existent port of Gears of War 2. When asked why there was no PC version, the response was it was because of fears piracy would slow down console sells. I guess buying a $300-$479 console just to have it sit in a dark corner untouched is what every console gamer with a PC did. I’m sure PC gamers will be more than happy now to buy products from the developer or publisher of Gears of War 2 after being scorned the way they were. On that note, let us not lie to ourselves by pretending console piracy doesn’t exist.

    Tom Clancy’s Endwar is no exemption either. But oh well. I personally preferred Tom Clancy’s Rainbow Six Vegas on the PC over the 360, both versions of which I have. Such is why I only have Vegas 2 on the PC. I was also happy because it is the ONLY game I have ever seen labeled as containing DRM. I have never seen another game do that. I was happy not because I was getting DRM, but because I was exactly what I was buying. I was buying a product either loaded with SafeDisc or SecuROM protection, but I had no problem with that because I knew exactly what I was getting.

    So yeah, the next time game sales are down, lets all blame the pirates. I’m sure Nintendo is cursing Pirates through their teeth. "If only those game sales could be a little higher. Damn pirates" is probably what Miyamoto says in his sleep…. right…. Perhaps if companies took a look at the response to the products they put out rather than just using an all inclusive fish net that all PC Gamers are bad, then maybe they might realize that some people pirate games because they don’t feel like taking a crap shot with the games performance. I know I’m borderline at that point. I used to be entirely for standing up for developers and buying games I know that would work great. I have yet to see the day I’ll be let down by Blizzard. Hopefully Starcraft II and Diablo III are not disapointments. I used to think the same of Rockstar… till Bully and GTAIV found their way onto my computer. Ubisoft is riding down a slippery slope. As for Epic, those guys are currently sitting on thin ice and probably 2 seconds from becomming Activsion version 2. Atleast Bethesda is still reliable…

    So who knows, maybe when we don’t have to play Russian Roulette with our wallets, PC game sales might actually reflect how people feel. Till then, just read above. Here’s to 2009 being better for PC. Atleast it started out pretty well with Mirror’s Edge.

    Papa Midnight

  5. Chamale says:

    Valve made Left 4 Dead, a quite awesome game. I got the demo, but didn’t get the full game because my hard drive couldn’t handle it. I was, to say the least, very pissed when they made the demo stop working on every computer that had it, so I wound up pirating the demo. Maybe if you kept the demo legitimately accessible, this wouldn’t happen, Valve.

    This is a signature virus. Please copy and paste into your signature to help it propagate.

  6. ZippyDSMlee says:

    Don’t forget ridiculous prices….under developed games….ect,ect,ect,ect

    *eats hat*
    Ok… whatever I said about value I take it back…uhg..I am getting more fiber these days…. *crawls off…*


    Gore,Violence,Sexauilty,Fear,Emotion these are but modes of transportation of story and thought, to take them from society you create a society of children and nannys, since adults are not required.

  7. Unruly says:

    They do offer that. Its called their Cyber Cafe Program. You can buy licenses for as many or as few computers as you want. From what I understand it can be pretty expensive, but you get access to all the Steam games on all of the systems that you buy licenses for.

  8. Austin_Lewis says:

    It’s also populated by one entire continent that sees very small game sales compared to, you know, any country that doesn’t spend 50% of its time trying to convince its citizens not to spread AIDS.

  9. halfcuban says:

    It’s true that such localization efforts, while expensive, are probably not prohibtive for developers that have a proven track record like Blizzard or Valve. Moreover, the sheer number of languages in a given region, and the unknown usefulness of translation, makes testing the waters in many of these regions fiscal suicide for smaller developers. Publishers, and to a certain extent console makers, need to assist financially in bringing games to these areas if they wish to see these markets expand and become something other than financial blackholes.

    I think for consoles, if they want to counter pirates, they need to offer full games via digital distributions for CURRENT games (beyond the Arcade or Classic designations in Xbox Live) in many of these countries that have non-existent retail environments. I think if offered in sucha  way, by sheer convenience alone, a certain portion of people purchasing cracked games would be siphoned off.

  10. shady8x says:

    Thank you Valve… I am going to go and buy another game from you just for that…


    There is also the fact that most games in Russia are released with starforce so pirates in Russia are not just underserved customers… they are pissed of customers with broken computers…

  11. Abnaxos says:

    Yes, and where exactly is the problem, if the USA (I suppose that’s what you mean by "we") has to wait as long for a game, as the rest of the world? Note: The rest of the world happens to be a tiny bit bigger than the USA. 😉 If the schedule sais december, a game being released in december isn’t out of schedule, BTW.

  12. Shadow D. Darkman says:

    Respect points for Mr. Holtman: OVER NINE THOUSAND!!!


    "Game on, brothers and sisters." -Leet Gamer Jargon

  13. Wolvenmoon says:

    And this is the reason I’ll tolerate steam as a content delivery service.

    Of course, their prices tend to be a little ridiculous, and I *REALLY* hate the one purchase, one computer enforcement. Basically they’re saying if my brother and I both want to play a new game, we have to drop 100 bucks on it.

    Or we could pirate and invite two more friends over, and spend only the money on nachos, which are an excellent distraction, btw.

    Hey valve, are you listening? How’s about not requiring a license to run a dedicated server, or doing some sort of license sharing between everyone connecting from a single IP address? I’d be more willing to buy off of steam and not just order a single copy off of amazon and crack it then.

  14. insanejedi says:

    This is a good breakthrough but it’s not practical for a lot of other developers and publishers, because no one is Blizzard or Valve taking a decade to make a game. And the delemia to this is, you either have games that are far out the release sceduale, or you have games and the rest of the world doesn’t have them. If everyone did this, your games would be released in december and not june because they want day and date scheduals.

  15. SeanB says:

    Leave it to valvle. If anybody knows something about underserved customers, it’s Valve.

    I still cant get portal to run right.

  16. Geoff says:

    I love Valve. 🙂


    Tea and cake or death! Tea and cake or death! Little Red Cook-book! Little Red Cook-book!

  17. Flamespeak says:

    When I was in the Philippines, a little city called Tacloban, I only found one place that sold legitimate video games. The store owner said that nobody ever really bought them because most people couldn’t afford them, which would explain why they were pretty old titles and were sunbleached to hell and back.

    On the other hand, I could have watched pretty much any DVD or blu-ray movie of stuff that was still in theaters that I wanted for about $2 a piece and gotten a 4 GB stick slammed full of video games for my PSP for $10.  It was crazy, but when the bulk of the populace makes around $50-$100 a month, they are not going to buy a $60 game. 

    The Philippines is beautiful by the way.

  18. Austin_Lewis says:

    BUt there’s always Thailand’s Pantip Plaza, with decent sushi for 15 baht a piece and all the pirated games you could ever play. 

    Seriously,if you ever go to Thailand, just visit Pantip in Bangkok.  It’s this six story building, and it sells mostly pirated software, along with computer parts, other electronics, and bootleg guitars (cheap knock-off-esque derived from American brands).

  19. unangbangkay says:

    Exactly. A common misconception held by gamers in developed nations is that the act and business of software piracy occurs primarily through downloading, such as via bittorrent. The stereotype of software pirates simply being cheap thieves doing the virtual equivalent of pickpocketing is wrong.

    The vast majority of software piracy occurs in places wherein the software being pirated is never actually sold legitimately. It’s quite hard in southeast asia and china to obtain a legit boxed copy of a game. There are no Gamestops, Wal-Marts or Best Buys to act as the retail anchor of the gaming public. Most legitimate games that can be bought are usually bought via independent importers who buy their copies through the official American or European retail channels. That in mind, the sales publishers think they’re losing to piracy in the developing world are negligible, because the product being sold was never on the market to begin with.

    Even when local distributors are contacted for a game to be sold "officially" in a given country, the sales go mainly to the local distributor, not EA or Ubisoft or whomever. Furthermore, the "officially" sold games are usually unplayable by players in that market, either because they’re years out of date or because the sold games are sold in their respective regional coding (for console titles), which locks out prospective customers. Why? Because manufacturers don’t sell their products "officially" in that region!

    Did you know that the Playstation 2 was only "officially" launched in the Philippines in 2005? By that time millions upon millions of PS2s had been imported, their US or Japan region lockouts cracked via mod-chips that also enabled the playing of "backup" copies.

    The pirate is very much an underserved customer, and the onus is on publishers and manufacturers to meet their potential clients halfway.

  20. Krono says:

    More to the point in this case, if you make it quicker and easier for them to buy it, they’ll buy it.


  21. Anomalous says:

    Not really.

    You see, I was pirating games to Hell and back until a few years ago, one reason being I did not that much money, the other being original games were a lot more difficult to obtain compared to pirated games. Back then, everybody bought pirated. Paying more than 20 MYR (5++ USD) for a game was almost unheard of, save for the popular MMOs back then. (Ragnarok Online, anybody?)

    Now, I actually bought original ones. Yes, have the money now. And yes, I can find original games lot more easier compared to back then.

  22. Neeneko says:

    I would be curoius to see real numbers and percentages.

    Most pirates I’ve known fall into the catagory of ‘there is no way to legally buy what I want in my region so I will pirate it’.  Having to wait months or years on the whims of a marketing chain to decide if your region is ‘worth it’ pisses people off.

    Or even better.. ‘there is no way to legally buy this product anywhere anymore’.  Common for out of print stuff.

  23. gamegod25 says:

    Yes there are obviously some people who are just going to steal it. But if you’re respectful to your customers, then more people will do the right thing and buy it.

  24. Arell says:

    And many, many pirates steal games just because they can.  They don’t have any moral objections to DRM, or availablity problems with their region.  They just want something for free.  Those are not "potential customers."

  25. finaleve says:

    There is also the consideration of liscensing and all that jazz.  Most japanese games can’t reach the states because of that (Like Jump Ultimate Stars)

  26. SimonBob says:

    They must have an ace localization department to have so much confidence in consistent worldwide releases, then.  Reminds me how around this time last year, No More Heroes was delayed two weeks in Canada because Ubisoft forgot to print the French manuals.  I couldn’t start to imagine the headaches of trying to translate all the jokes from Portal into Russian, especially considering they’d probably have to do concurrent development so as not to incur massive waiting times.  (Then again, maybe it’s easier than I think, or they factor the time into the overall development and that’s why it took so long to get HL2 out the door, or something.)

    The Mammon Industry

  27. insanejedi says:

    But if we are going to release the game everywhere in one day, are you willing to sacrifice the fact that the game will inherently come later, when it is in perfectly playable complete form just so it goes to the russians?

  28. Neeneko says:

    To a degree they do factor into the DRM debate quite a bit, but have a lower marquee value.

    One thing many companies care a great deal about is control over where and when they release thier IP and they want to stop people from obtaining their product in regions that they have not put marketing in place for (or they want to sit on something till demand reaches a certain spin-up cost).

    I would also that that this group is not the same that will pirate rather then pay 10$s.  Their frustration is usually more along the lines of not being able to obtain the item at all (or only through heavily marked up collector’s markets).

    When companies were looking at bringing back old games via downloadable content (like the Wii store) this issue came up since pirates that had helped themselves to old games (esp on emulators) decreased the pent-up demand for old stuff which lowered the impact of releasing them today.

  29. insanejedi says:

    But those pirating demographics are not the pirates that form the arguement for the usage of DRM. The "I pirated an 4 year old game" are so insignifigant in terms of sales since most games at that point cost $10 and those are the people who woulden’t have bought it anyways for $60. Proof? They didin’t pirate it when it was $60 and they sure didin’t buy it at $10.

    That being said, the pirates companies are complaining about most are the people who pirate it 1 week before or after release of a game, because that can be more easily corrilated to loss of sales. There are a lot of people I know that would pirate a game anyways regardless of avalibility or even price, but conversely there are a lot of people I also know who would buy the game if there was not a "one click" discount. And pirates will always make up some justification for their crime. It’s hard to say "I pirated a game because I can." as opposed to "I pirated a game because of (lazy ports, DRM, Region locked, inavalibility, take your pick)"

    The only way to really know the sales increase and decrease of piracy existing or not, is to actually force the customers into "Your either buying this, or your not paying for this." and compare that to another dimension which is today where the choice is "You can buy this or not, or you can steal it."

    My take on this is people will do whatever they think they can get away with. And it’s easy to say "well I woulden’t have bought it anyways." but you don’t know what you didin’t apreciate till it’s gone.

  30. halfcuban says:

    Except Japanese RPG’s require one to have, at the very least, a competent understanding of Japanese to play the game. There’s a reason why you don’t see, for instance, a huge trade in cracked Japanese titles. Hell, its one of the reasons why you don’t see a huge import market for RPG’s though there are enough to make it worth some companies wile to import them straight from Japan.

  31. reverandspaniel says:

    Pirates provide games quite often and quickly with games with DRM, like it’s a challenge to remove it. Then people see the DRM and the alleged damage it can do to your computer etc. and just download the pirated version…

    Other reasons why people pirate games is because developers take so long to sell it from one region to another. For example, the Japanese get a lot of RPG’s before the US or the EU. Lots couldn’t be bothered waiting 6 months – especially in today’s society of instant gratification.

  32. axiomatic says:

    I find that "blame marketing" does in fact work most of the time. Valve is the best, they "get it."

  33. Mirrikat says:

     I like steam. If there is a game I want from them I can just get it, and I dont have to worry about the disc being scratch or forever taking up space on my computer, and if i go on vacation i can play my games at a freinds computer. The nearest game store to me is over 50miles away, so this is very convient and quick.

  34. GoodRobotUs says:

    I don’t entirely agree with their system, and still have concerns that there are no rock-solid protections in place for customers if anything goes wrong with the company. I know the odds are extremely strong that they would offline-enable all the games, but even that limits their scope, and, as far as I know, there is nothing set in stone to defend customers in a worst-case scenario.

    That said, Valve is mostly right on this occasion, there will always be pirates who download stuff simply because they can, but I’d even go so far as to theorize that most pirates only actually keep the games installed on their system for a very short period of time, and if they don’t, because they enjoy the game, then they will end up buying the game legally anyway.

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