EA Layoffs – Piracy Is Not To Blame

Tobold has just posted a thought for today: That the EA Layoffs are due to the piracy of their games.

Now first of all, after re-reading, I’m not sure if he’s being serious or just being a tad sarcastic. For the purpose of this post, I’ll assume he’s being serious when he says: “What did people think would happen to a company making bad games and being constantly robbed, in the middle of an economic crisis? If you wanted to save an EA programmer’s job, all you had to do was buy some EA games legitimately” in response to the amount of ‘outrage’ today against EA for laying off 1500 employees.

Now me, I think that piracy-is-a-bad-thing, it is a violation of a long standing set of laws designed to protect those who create those things that we love against the unscrupulous. It’s not theft as such, technically anyway, since no-one is actually deprived of anything, but that can be a hard distinction to make. It seems like theft.

But that’s where I think Tobold is off base. There is no real evidence that the people who pirate software, music, or other media were actually going to buy those things in the first place. So a single act of piracy cannot be logically equated with a lost sale, or a lost amount of revenue or profit. I’m not sure if anyone even has any statistics on what the ratio of pirated goods to lost sales really is. Is it one in a hundred? Or would one pirate in a thousand have bought that copy if a legitimate sale was the only option.

Having said that, I do believe that piracy results in lost income, but I don’t think it is anywhere near as much as publishers are saying.

In fact, I’ve seen in print statements made by the RIAA and MPAA where the figures they are stating for lost revenue seem indicate that their ratio is more than a lost sale per act of piracy.  Does that seem a bit strange to you? How can you lose more than what was pirated?

Secondly, and as Tobold points out in his post, it is an economic crisis. People haven’t just lost jobs and have less disposable income to buy games, a lot of people — a huge number in fact — are turning away strongly from using debt to buy things. This I think is the first key to EA’s financial woes. Less disposable income plus a reluctance to use credit means people are buying less of everything.

Which leads to the second key to EA’s crisis. They do a lot, and I mean a huge amount, of sales of their sports franchise games. They’re the only game in town for the US football games, yet each year they produce what is basically the same game with a few enhancements and a set of roster changes. These games also appeal to the more casual gaming sports fan, a fairly giant demographic.

Less disposable income plus a reluctance to use credit plus casual gamers owning the five previous versions of the same game equals cutting out Madden from the discretionary spending.

The clincher for me is that up until this last year, the game industry reported strong growth year after year. I’m sure you read the reports that said that the computer game industry was going to overtake Hollywood in revenue in just a few short years. This strong growth was all happening at the same time as people were pirating games. Computer game piracy hasn’t jumped by 200 percent in 2009 has it? How much of an increase in piracy would it take to drop revenue by 20 percent, especially considering that those pirates must come from the buying customers. People who would normally buy a game, but have defected across to the pirates.

If nothing else has changed, then EA’s woes must surely be the result of something other than piracy.

Saving that programmers job would have been a little more tricky than buying that sixth version of Madden.

By the way, I agree with Tobold on this; Piracy is a crime. It’s a bad thing to do. If you want to play a game — buy it!

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  1. heartlessgamer

    Blaming piracy for anything business related is a bad move. Piracy has never been shown to cost companies money unless that company allows pirated copies to use their online systems and support channels. Which EA doesn’t do for the most part.

    What we’ve actually seen is that piracy can lead to more sales and word of mouth purchases of a game. Just not from the pirates themselves.

    Piracy is wrong, but its been the scape goat for failed games and floundering companies for far too long.

  2. xXJayeDuBXx

    Agree, piracy is wrong and it’s more of an excuse than it is a fact for loss of sales. Piracy on the Xbox 360 if far more rampant than it is on the PC, but that never seems to get mentioned.

    Can’t believe Tobold would say such a thing though, not like him to do that.

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