Software Piracy Costs Nintendo 50% of European Sales Revenue
Nintendo has recently reported that games sales in Europe have fallen by c50% due to increased use of so called “Magicom” devices.
These devices are typically around the same size as a traditional games cartridge with a separate memory card to store downloaded software. The device allows users to download pirated software and use it on games consoles.
Usage of these devices is spreading rapidly. Units currently retail at around $80 USD for the device and a bundle of around 12 pirated games.
Whilst the devices originally worked to break the copy protection on hand held consoles like the Nintendo DS new versions are now becoming available that enable the use of pirated software for larger consoles like the Nintendo Wii and Sony PlayStation.
Interestingly. though use of these copy protection cracking devices started in Japan the drop in sales reported by Nintendo there has been only 7% compared to 11% in the US and around 50% in Europe.
According to reports on asahi.com Nintendo monitored downloads from 10 websites in June 2009 and found that pirated copies of their software had been downloaded 238 million times. Multiply this figure by the average cost of a legitimately purchased game and this equates of over $10 billion in lost sales.
Now we have previously discussed the problems with assuming that a pirated purchase equates to a lost legitimate sale, but by any measure this is a huge problem. For an industry where hardware development costs have always been heavily subsidized by software sales, software piracy on this scale is potentially devastating.
Nintendo says it is focusing its attention on developing consoles that will not play the pirated software and governments around the world are cracking down on the websites involved in selling the pirated software.
However whilst there is such a huge willingness amongst gamers to participate in this criminal activity it is likely that the software pirates will find a way to meet the market demand. It is probably only when gamers realize that they are cutting off the lifeblood of the industry that makes their hobby possible that we will see an improvement in the situation.
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As organized crime begins to enter the software piracy market, it will no longer be sufficient to argue that “it’s better customers use my software/games than my competitors”. Furthermore, crime syndicates used to violent crimes and other physical crimes, are hardly afraid of BSA fines.
It’s time for the game manufacturers to strengthen their compliance philosophy and their IP protection methods.