I will admit to starting off this article with a link to a topic that I’ve probably covered sufficiently already: an RPS article reminding everyone that Ubisoft continues its ridiculous always-on DRM scheme with new PC games.  I know, I know, nothing new under the sun.  (Although the article does make one interesting point: this sort of DRM scheme prevents people in the armed forces from playing the game as well, as most deployments don’t exactly come with reliable internet access.  In fact, I think that could be the jumping-off point for a good PR campaign against this nonsense – the message “Ubisoft won’t let our troops play their games” getting a lot of press would put a significant amount of pressure on them.)

However, I’ve already argued more than enough about this specific point.  It did get me thinking, though.  After all, games are not the only industry out there, and there are plenty of other companies that sell things to customers.  Most specifically, companies that do direct sales to people, such as retail stores.

For one thing, retail stores have a similar problem that games companies do – sometimes, people take their stuff without paying.  However, if you think about it, most retailers have a bit more of a pragmatic view of things.  For starters, they assume that, just by being in business, they are going to have some losses through theft.  If you look at the financial statements for a big retailer, you’ll notice that there’s a line item somewhere about loss from theft – it’s a known, expected expense that’s estimated and written down each quarter.  Of course, retailers want this amount to be as small as possible, so they take reasonable security measures to protect against what they can, but they also realize that they won’t catch everyone and take this into account.  That’s because they know that they’re not the only retailer on the market, and while they need to protect their merchandise, they need to respect their customers as well.  If they use overly paranoid security to prevent their customers from stealing anything, but also makes them feel suspected and hurts their shopping experience, they’ll simply take their money elsewhere – something that will usually cost retailers far more than the cost of what thefts do occur.

Games companies, on the other hand, don’t seem to have learned this concept yet, and some still treat their customers essentially like they’re thieves, putting in security schemes that make their games harder to access and assume that consumers are guilty until proven innocent.  True, their problems are a bit more complex, as while someone can steal a bag of chips from a store, they can’t then infinitely replicate that bag of chips and flood the market, reducing overall demand for future sales.  However, the reality, in any market, is that there will be theft or infringement, and it is something that needs to be factored into the cost of doing business.  Games companies, though, it seems would rather scream piracy and use it as a club to beat on their legitimate customers.  (Of course, they’re not entirely alone in this: movie and music companies have also gone ballistic over this, although notably most of them have seen the light and release content in formats that are either unencumbered or with DRM that has long been fairly easily cracked).

Ultimately, I think the important concept to grasp is this: in the long run, it’s almost entirely certain that a company will lose more money by driving away customers that want to give them money rather than limit the amount of customers who don’t want to pay but find a way to get it for free anyway.  Retailers understand that people generally come into their stores because they have money and want to exchange it for goods, and they want to make that process as easy, pleasant, and convenient for their customers in order to bring in the most profits.  Retailers that get this right can do quite well, and retailers that get this wrong end up pilloried across the internet (just search for walmart receipt checking for a good earful). Of course, the same can be said for games publishers as well, but they seem to care far more about smacking around pirates than how their actions may actually be costing them real sales from paying customers.

In summary, if you’re a big game publisher, consider that there’s only one type of customer you’re ever going to get money from – the one that intends to pay you in the first place.  This is where all your revenue comes from.  Touting your progress in preventing an illusory “loss” from people who most likely weren’t going to pay anyway won’t improve your net income.  Again, think about it from a retail perspective – if that clamshell packaging keeps someone from stealing a product, or someone gets caught shoplifting, it still doesn’t make the company any more money.  Yes, it might save on expenses, but the overall revenue doesn’t increase, as those people weren’t ever going to buy in the first place.  DRM doesn’t convince people who want it for free to buy it – if anything, it gives them just one more reason to walk away (or pirate it, for that matter, as every one of these DRM schemes, including the always-on DRM, have been cracked and widely distributed).  If a company wants to create revenue, it means bringing in more money, which means keeping the customer base that it has while bringing in new customers when it can.  If your games are so cumbersome to play that you’re driving away people who used to reliably buy your games, that’s a real hit to your revenue, and one that preventing people playing pirated copies is not going to offset.

Finally, a note for consumers: if a game has bad DRM and treats legitimate paying customers like criminals, just don’t buy it.  Don’t pirate it – just walk away and don’t reward a company for treating you badly.  In fact, let that company know why you’re not buying something you normally would.  Tell your friends.  Tell it to anyone you know or whoever will listen on the internet.

Eventually, if people respond to these crazy DRM schemes by simply not buying, companies will eventually have to treat customers with more respect, or eventually have significant problems of their own – and they can only scream piracy for so long before their shareholders start to recognize the truth behind their self-damaging business model.  That’s what I’m doing here – there are plenty of games out there, and plenty that I’d rather support.  Yes, Ubisoft, despite being somewhat interested in Driver:SF, I’m not going to buy it.  Nor am I going to buy any of your other games, even though I’m quite interested in some of them.  Maybe that’s not going to impact your bottom line much, but head over to any gaming site on the net and look at what people are saying – I’m hardly the only one taking this stance.  If you keep doing this, and more and more people just walk away from your games…  eventually, it’s going to hurt, and despite your piracy rhetoric, you’ll really have no one to blame but yourselves.