Video Games and Movies without Copyright?

by on February 1, 2007 · 28 comments

My lefty alter ego Tom Lee comments on my post on video game piracy:

To some extent I think Tim is right: music is a unique case. But that’s mostly because the industry that arose to distribute music was so bloated, stupid and inefficient. Having claimed nearly all of the profit from retail music sales, the record companies are the part of the music industry that’ll withering first in the face of rampant piracy. That’s shielding the actual music creators from piracy’s effects–for now, anyway. Successful but non-superstar artists found different, largely concert- and merch-based means of earning a living a while ago.

But the lack of a large, parasitic & evil distribution mechanism (or at least one as evil) doesn’t mean that the videogame industry can be saved by copyright any more than the record companies can (the question of whether it should be saved strikes me as fairly irrelevant). The game companies’ business is vulnerable, too, and will ultimately have to transform itself. The wealth of DRM options available to game-makers and the console vendors’ closed systems give them a more luxurious position, but with the rise of networked consoles and the maturation of a market for pirate technologies like Alcohol 120% and console modchips, that era is coming to an end.

But that’s okay. The bloated budgets of the high-profile videogame franchises is a bug, not a feature. Look at the success of the videogames Burger King has been selling–they’re short and simple, but they only cost a few bucks and the restaurant has sold 3.2 million of them. I’m sure they were envisioned as a promotional tool more than anything else, but now BK is claiming they helped their bottom line. There’s clearly room for growth in this segment of the market. The idea that every videogame has to be a (shooter|RPG|platformer|sports game|GTA clone) and cost $60 is ridiculous.

I think there are actually two conceptually distinct questions here. One is the empirical question of whether rampant piracy will undermine the traditional business model for music, video games, etc. The other is a policy question about whether that process is something we ought to be cheering on, or if we should be looking for ways to reverse the process.


I don’t have any particular opinion on the first question. I think that the market will probably evolve in unpredictable ways, and that non-traditional revenue sources like advertising and merchandising will be more important in the future. But I’m not going to make any specific predictions about what effects piracy will have on the video game market.

On the policy question, however, I’m not as sanguine as Tom about the prospect of piracy undermining the market for bloated games. Here’s the thing: nobody is forcing people to shell out $60 for a $10 million video game. If the $10 Burger King games really are as good as the $60 EA games, you would expect EA to have an awfully hard time selling their more expensive versions. But EA is a very profitable company, and they continue to succeed with ever-more-expensive games.

So it’s not clear to me who would benefit from a policy change that made it impossible to turn a profit on big-budget video games. Consumers who want to pay $60 for a lavishly produced video game would no longer have that option. Consumers who weren’t willing to pay $60 for a video game weren’t doing so anyway. And of course, the companies that were making the games would be worse off.

Of course, it matters what the alternative policy is. If it turns out that the only way to save Madden 2009 is to outlaw general purpose computers and have the FBI shoot anyone caught downloading an illicit game, then we’ll probably have to learn to live with piracy. It may be that technological advances will simply make it impossible to enforce copyright law without turning the country into a police state. But even if that outcome were shown to be inevitable, that doesn’t mean it’s something to cheer about.

Tom goes on to argue that producing a professional-quality movie will continue to get cheaper until it’s within the reach of ordinary hobbyists. I think that the problem with this vision is that in addition to a lot of technology, producing a good movie requires a lot of manpower. And much of it is quite specialized and not terribly glamorous. You need maybe one extra guy running the sound board in order to produce a professional-quality album. With movies, on the other hand, there’s a significant difference in quality between a movie made by a dozen amateurs and a movie made by a hundred professionals. There are certain categories of movies–James Bond movies, for example–that it’s very hard to imagine ever being within the reach of amateurs. It requires too many extras, too much money spent on cars to crash and blow up, too much spent on either building sets or flying people to location, etc. Not to mention, as Tom acknowledges, things like makeup, sound, and lighting require specialized skills that you’re not necessarily going to get from volunteers.

So yes, the minimum cost of movies and video games will continue to get cheaper. But for the foreseeable future, high-quality movies and video games are going to be in the range of hundreds of thousands or millions of dollars, not the hundreds or thousands that it currently costs to record a decent album. And I do think there’s a big difference between the kind of movie or video game you can produce for $100 million rather than $10 million. If we can find reasonable policies that preserve a viable market for such products, I think we should do so.

  • Adam Thierer

    Excellent response Tim, especially you’re final point about there being “a big difference between the kind of movie or video game you can produce for $100 million rather than $10 million. If we can find reasonable policies that preserve a viable market for such products, I think we should do so.”

    Indeed, I don’t think this guy you’re debating here has any appreciation for what goes into modern video game development. There’s the concept pitch by the visionaries behind the game. Then storyboards are created, filled with renderings of game action sketched by artists. Someone has to write all the scripts for the game’s dialog. Then the coders come in and render it. CGI effects specialists add the whiz-bang graphics. Music and dialog is then added (indeed, an entire cottage industry of game music composers now exists, and professional actors are routinely fired to do voice-overs). And then the packaging, distribution and marketing begin. At every step of the process there are rights that must be cleared and people that must be paid. And if the games involve any depictions of other copyrighted / trademarked material (think movies and professional sports leagues), then there are countless more rights that have to be cleared. This is why the game developers take game piracy so seriously, but it’s why game lovers should take it seriously too.

    This guy is trying to tell us that a world full of $2 Burger King games (filled with tons of product placement to pay for game development) is just fine and dandy. Well, SCREW THAT. I want “Gears of War.” I want “Gran Turismo.” I want “Star Wars: Battlefront.” I want “Madden 2008.” Sophisticated games like these are only going to be developed if the creators have at least some basic level of certainty that they will be able to recoup the significant cost of game development. While not perfect, copyright law provides at least SOME of that certainty / security.

    And this guy talks about “the slickness of fan productions like Star Wars: Revelations” and pretends that peer production is somehow an adequate substitute for what we have access to today. PUH-LEASE! Two notes about “Star Wars: Revelations.” First, it’s based on a very successful and impressive media property that benefited from copyright protection. Second, while I too was impressed with the storyline in this “Star Wars: Revelations” amateur effort, it was decidedly amateurish in other important ways, too. Namely, have you ever tried to scale up the video to a big screen TV? Well, I have. It looks like shit. Moreover, it sounds like shit. In sum, when it comes to the quality of the final product, it really is amateur hour.

    There’s no appreciation among the anti-copyright crowd for the issue of quality control. What the hell use is a $3000 new 50″ plasma HDTV and a 7.1 surround sound audio set-up if all I have to play on it is grainy YouTube videos and stupid Burger King games? Again, screw that.

  • Adam Thierer

    Excellent response Tim, especially you’re final point about there being “a big difference between the kind of movie or video game you can produce for $100 million rather than $10 million. If we can find reasonable policies that preserve a viable market for such products, I think we should do so.”

    Indeed, I don’t think this guy you’re debating here has any appreciation for what goes into modern video game development. There’s the concept pitch by the visionaries behind the game. Then storyboards are created, filled with renderings of game action sketched by artists. Someone has to write all the scripts for the game’s dialog. Then the coders come in and render it. CGI effects specialists add the whiz-bang graphics. Music and dialog is then added (indeed, an entire cottage industry of game music composers now exists, and professional actors are routinely fired to do voice-overs). And then the packaging, distribution and marketing begin. At every step of the process there are rights that must be cleared and people that must be paid. And if the games involve any depictions of other copyrighted / trademarked material (think movies and professional sports leagues), then there are countless more rights that have to be cleared. This is why the game developers take game piracy so seriously, but it’s why game lovers should take it seriously too.

    This guy is trying to tell us that a world full of $2 Burger King games (filled with tons of product placement to pay for game development) is just fine and dandy. Well, SCREW THAT. I want “Gears of War.” I want “Gran Turismo.” I want “Star Wars: Battlefront.” I want “Madden 2008.” Sophisticated games like these are only going to be developed if the creators have at least some basic level of certainty that they will be able to recoup the significant cost of game development. While not perfect, copyright law provides at least SOME of that certainty / security.

    And this guy talks about “the slickness of fan productions like Star Wars: Revelations” and pretends that peer production is somehow an adequate substitute for what we have access to today. PUH-LEASE! Two notes about “Star Wars: Revelations.” First, it’s based on a very successful and impressive media property that benefited from copyright protection. Second, while I too was impressed with the storyline in this “Star Wars: Revelations” amateur effort, it was decidedly amateurish in other important ways, too. Namely, have you ever tried to scale up the video to a big screen TV? Well, I have. It looks like shit. Moreover, it sounds like shit. In sum, when it comes to the quality of the final product, it really is amateur hour.

    There’s no appreciation among the anti-copyright crowd for the issue of quality control. What the hell use is a $3000 new 50″ plasma HDTV and a 7.1 surround sound audio set-up if all I have to play on it is grainy YouTube videos and stupid Burger King games? Again, screw that.

  • http://www.manifestdensity.net tom

    Tim & Adam:

    I think you’re taking me to have a stronger opposition to copyright than I actually have. Yes, I’m very optimistic about technology lowering barriers to entry in various creative fields. But I still believe in the need for copyright. I think that we need to reform it to shorten its term, deal with orphan works and expand fair use, but none of those changes really apply to this argument.

    My point was that even under the current copyright regime, piracy is going to exert a transformative effect on these industries — but that this doesn’t mean we’re not going to be able to watch movies or play games. Here’s the paragraph that followed the ones Tim quoted:

    Piracy’s going to continue to be effective. It’s also going to become much more accessible to people without soldering irons and Linux servers. The industry will respond by chasing ad revenue; by adjusting the cost:benefit ratio for piracy by making smaller, cheaper games; and by continuing to move toward service-based offerings (e.g. subscription fees in MMORPGs). For Madden devotees, this is bad news. For those of us bored by the industry’s addiction to big titles and consequent inability to innovate, it’s not a bad thing at all.

    Adam, I assure you that I do understand what goes into game development. And I expect many big franchises like Madden to continue to thrive. But piracy and increased ease of distribution will change the sorts of games that are most profitable, and that’ll change what sorts of games are made — in the same way that Hollywood stopped making sprawling historical epics and extravagant musicals (although digital effects have made the former cheap enough to produce once again). You can already see this happening in the runaway success of many smaller games on Xbox Live Arcade.

    If you’re dead-set on the enormous franchises Adam cites, then yeah, I think you’ll be disappointed to find that you have a smaller selection of them in the future (relative to the overall size of the market, anyway). But there’s no reason to think that the current trend in game budgets is sustainable as the predominant model for the industry — people like John Carmack and J Allard have acknowledged as much. So have the folks at Nintendo, whose latest console represents a conscious retreat from the graphics arms race. I’m looking forward to an era of smaller, cheaper, riskier games; I can understand that others might not. But I think it’s going to happen either way.

  • http://www.manifestdensity.net tom

    Tim & Adam:

    I think you’re taking me to have a stronger opposition to copyright than I actually have. Yes, I’m very optimistic about technology lowering barriers to entry in various creative fields. But I still believe in the need for copyright. I think that we need to reform it to shorten its term, deal with orphan works and expand fair use, but none of those changes really apply to this argument.

    My point was that even under the current copyright regime, piracy is going to exert a transformative effect on these industries — but that this doesn’t mean we’re not going to be able to watch movies or play games. Here’s the paragraph that followed the ones Tim quoted:

    Piracy’s going to continue to be effective. It’s also going to become much more accessible to people without soldering irons and Linux servers. The industry will respond by chasing ad revenue; by adjusting the cost:benefit ratio for piracy by making smaller, cheaper games; and by continuing to move toward service-based offerings (e.g. subscription fees in MMORPGs). For Madden devotees, this is bad news. For those of us bored by the industry’s addiction to big titles and consequent inability to innovate, it’s not a bad thing at all.

    Adam, I assure you that I do understand what goes into game development. And I expect many big franchises like Madden to continue to thrive. But piracy and increased ease of distribution will change the sorts of games that are most profitable, and that’ll change what sorts of games are made — in the same way that Hollywood stopped making sprawling historical epics and extravagant musicals (although digital effects have made the former cheap enough to produce once again). You can already see this happening in the runaway success of many smaller games on Xbox Live Arcade.

    If you’re dead-set on the enormous franchises Adam cites, then yeah, I think you’ll be disappointed to find that you have a smaller selection of them in the future (relative to the overall size of the market, anyway). But there’s no reason to think that the current trend in game budgets is sustainable as the predominant model for the industry — people like John Carmack and J Allard have acknowledged as much. So have the folks at Nintendo, whose latest console represents a conscious retreat from the graphics arms race. I’m looking forward to an era of smaller, cheaper, riskier games; I can understand that others might not. But I think it’s going to happen either way.

  • http://anomalyuk.blogspot.com/2006/11/clear-thinking-on-ip.html Andrew

    I mostly agree with you – the only thing I think you haven’t covered is that without copyright, large-scale products can be built incrementally. The first release might be cheap and amateurish, but if others can add to it, the quality of the finished product could exceed even the mega-blockbusters of today. This process could apply to games (although it hasn’t as yet, unlike other types of computer software), and possibly to animated films, but I can’t see a way of making it work with films using human actors.
    (Click my name for a longer treatment)

  • http://anomalyuk.blogspot.com/2006/11/clear-thinking-on-ip.html Andrew

    I mostly agree with you – the only thing I think you haven’t covered is that without copyright, large-scale products can be built incrementally. The first release might be cheap and amateurish, but if others can add to it, the quality of the finished product could exceed even the mega-blockbusters of today. This process could apply to games (although it hasn’t as yet, unlike other types of computer software), and possibly to animated films, but I can’t see a way of making it work with films using human actors.
    (Click my name for a longer treatment)

  • http://www.techliberation.com/ Tim Lee

    Tom,

    That makes sense. Clearly, if there’s no feasible way to get people to stop pirating movies and video games, then we’re going to have to live with that, and those companies are going to have to find more creative ways to generate revenues. And no, that won’t be a disaster. But I do think it’ll be unfortunate for people like Adam who are willing to shell out big bucks for elaborate games, and so if we can find reasonable ways to forestall that outcome, we should do so.

  • http://www.techliberation.com/ Tim Lee

    Tom,

    That makes sense. Clearly, if there’s no feasible way to get people to stop pirating movies and video games, then we’re going to have to live with that, and those companies are going to have to find more creative ways to generate revenues. And no, that won’t be a disaster. But I do think it’ll be unfortunate for people like Adam who are willing to shell out big bucks for elaborate games, and so if we can find reasonable ways to forestall that outcome, we should do so.

  • http://www2.blogger.com/profile/14380731108416527657 Steve R.

    Tim: It appears to me that you could be taking a baby step towards the “dark side” on this issue; that the holder of a copyright may actually deserve DMCA like protection. You wrote: “It may be that technological advances will simply make it impossible to enforce copyright law without turning the country into a police state. But even if that outcome were shown to be inevitable, that doesn’t mean it’s something to cheer about.

    First, in theory we have a free market system. That means risk. Risk can come in any number of forms, one form of course is piracy. If a company cannot make money because they did not properly evaluate risk, too bad. We seem to forget that profits are not guaranteed, profits are earned.

    Second, how much a company invests in a product does not justify appeals for pity. Like everyone, I like to enjoy well done entertainment that is in many cases expensive. Nevertheless, if a company invests a lot of money on a speculative project and they fail to make money it implies they did a poor job of designing the product to match the potential market and in conducting market research.

  • http://www.blogger.com/profile/14019452 Steve R.

    Tim: It appears to me that you could be taking a baby step towards the “dark side” on this issue; that the holder of a copyright may actually deserve DMCA like protection. You wrote: “It may be that technological advances will simply make it impossible to enforce copyright law without turning the country into a police state. But even if that outcome were shown to be inevitable, that doesn’t mean it’s something to cheer about.

    First, in theory we have a free market system. That means risk. Risk can come in any number of forms, one form of course is piracy. If a company cannot make money because they did not properly evaluate risk, too bad. We seem to forget that profits are not guaranteed, profits are earned.

    Second, how much a company invests in a product does not justify appeals for pity. Like everyone, I like to enjoy well done entertainment that is in many cases expensive. Nevertheless, if a company invests a lot of money on a speculative project and they fail to make money it implies they did a poor job of designing the product to match the potential market and in conducting market research.

  • http://www2.blogger.com/profile/14380731108416527657 Steve R.

    Tim: I may be over-reacting as you also wrote: “if there’s no feasible way to get people to stop pirating movies and video games, then we’re going to have to live with that, and those companies are going to have to find more creative ways to generate revenues.” Which is my position.

  • http://www.blogger.com/profile/14019452 Steve R.

    Tim: I may be over-reacting as you also wrote: “if there’s no feasible way to get people to stop pirating movies and video games, then we’re going to have to live with that, and those companies are going to have to find more creative ways to generate revenues.” Which is my position.

  • Doug Lay

    What is the “anti-copyright crowd”? I’m just trying to figure out if I’m a part of it or not.

    Here are some data points about myself, that might help see if I fit the profile:

    - Contribute to the EFF.
    - Despise the DMCA anti-circumvention provision, and let eveyone know it.
    - Think Creative Commons and open-source software are way cool.
    - Don’t file share, and disapprove of those who do so frequently, especially if they have the money to pay for stuff.
    - Hope that creators will always get paid, ’cause that will lead to lots more good creations.

    So am I in the crowd or not? I’m trying to understand how such a term could be helpful…

  • Doug Lay

    What is the “anti-copyright crowd”? I’m just trying to figure out if I’m a part of it or not.

    Here are some data points about myself, that might help see if I fit the profile:

    - Contribute to the EFF.
    - Despise the DMCA anti-circumvention provision, and let eveyone know it.
    - Think Creative Commons and open-source software are way cool.
    - Don’t file share, and disapprove of those who do so frequently, especially if they have the money to pay for stuff.
    - Hope that creators will always get paid, ’cause that will lead to lots more good creations.

    So am I in the crowd or not? I’m trying to understand how such a term could be helpful…

  • http://www.uglyshz.com/blog Jon L

    Tim, excellent post. Oddly enough, there are even a lot of “new media” folks within our business that look at a set full of people and cannot connect that with what they see on the screen. I greatly appreciate hearing people who do understand that we put so much effort into things precisely so that we can create stuff that looks and sounds GOOD…. oh yeah, and we try to create good stories too.

    By the way, our latest film release was on Lifetime Movie Network last week for its cable premier, it was very exciting!

  • http://www.uglyshz.com/blog Jon L

    Tim, excellent post. Oddly enough, there are even a lot of “new media” folks within our business that look at a set full of people and cannot connect that with what they see on the screen. I greatly appreciate hearing people who do understand that we put so much effort into things precisely so that we can create stuff that looks and sounds GOOD…. oh yeah, and we try to create good stories too.

    By the way, our latest film release was on Lifetime Movie Network last week for its cable premier, it was very exciting!

  • http://weblog.ipcentral.info/ Noel Le

    Tim, how would you compare the necessity for copyright (not copyleft:) in video games to software applications and other computer related technologies? Surely, the costs for both are great; but for software and computer technologies you often propose peer-production, criticize the leveraging of DRM, mock the cost w/ which proprietary companies develop their products. If these are not your views, then please clarify. Still, I’m wondering why you look at games and software/computer technologies differently.

    Also, Tim, would you treat music, games and software differently in terms of copyright policy?

  • http://weblog.ipcentral.info/ Noel Le

    Tim, how would you compare the necessity for copyright (not copyleft:) in video games to software applications and other computer related technologies? Surely, the costs for both are great; but for software and computer technologies you often propose peer-production, criticize the leveraging of DRM, mock the cost w/ which proprietary companies develop their products. If these are not your views, then please clarify. Still, I’m wondering why you look at games and software/computer technologies differently.

    Also, Tim, would you treat music, games and software differently in terms of copyright policy?

  • http://www.techliberation.com/ Tim Lee

    Noel: I’m not proposing any change to the way copyright law treats different types of content. I’m far more interested in reducing the term of copyright, expanding fair use, and repealing the DMCA.

  • http://www.techliberation.com/ Tim Lee

    Noel: I’m not proposing any change to the way copyright law treats different types of content. I’m far more interested in reducing the term of copyright, expanding fair use, and repealing the DMCA.

  • http://weblog.ipcentral.info/ Noel Le

    OK, thats good that you’re not proposing content/tech specific copyright policy. There has been discussion on that issue for patents, so I was seeing if you’re going down the same road.

    I’m fine with reducing the term of copyrights, and patents for that matter. Fair use is something I think the DMCA should more clearly address.

  • http://weblog.ipcentral.info/ Noel Le

    OK, thats good that you’re not proposing content/tech specific copyright policy. There has been discussion on that issue for patents, so I was seeing if you’re going down the same road.

    I’m fine with reducing the term of copyrights, and patents for that matter. Fair use is something I think the DMCA should more clearly address.

  • http://weblog.ipcentral.info/ Noel Le

    Oh, and Tim, the DMCA is not going to be repealed any time soon, at least based on your grounds of criticisms. And I’ve only seen you criticize Section 1201. Why not amend Section 1201? It seems sometimes that you only propose the most far-reaching solutions.

  • http://weblog.ipcentral.info/ Noel Le

    Oh, and Tim, the DMCA is not going to be repealed any time soon, at least based on your grounds of criticisms. And I’ve only seen you criticize Section 1201. Why not amend Section 1201? It seems sometimes that you only propose the most far-reaching solutions.

  • http://www.techliberation.com/ Tim Lee

    Noel,

    If we repealed section 1201, that would address 90 percent of my criticism. I’m not wild about the other provisions, but they aren’t nearly as problematic.

  • http://www.techliberation.com/ Tim Lee

    Noel,

    If we repealed section 1201, that would address 90 percent of my criticism. I’m not wild about the other provisions, but they aren’t nearly as problematic.

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