I have been there twice when this has happened. The first time it bust the company I worked for, and it was not the only one. The companies that survived were considerably weakened. The second time the company I worked for had massive redundancies in order to survive whilst many around went bust. This danger is still costing the industry billions every year. Yet not much is done by the industry to protect itself.
Yes, I am talking about piracy. The first time, at Imagine, it was tape to tape copying in the 8 bit market that suddenly came from nowhere and totally cannibalised sales. The only, imperfect, answer that the industry could come up with was to lower price points till the games weren’t worth copying. Hence the era of budget games. The second time, at Codemasters, it was the sudden appearance of cheap CD burners for PCs racked up in criminal back rooms that destroyed the market for PS1 games. We lost about a quarter of the workforce and cut costs to the bone. It was only a global PC hit, Operation Flashpoint, that kept us going. Then the gradual increase in installed base of PS2 and Xbox allowed a return to normality.
And it could happen again. The current proliferation of platforms makes it a little more difficult, if one is destroyed by piracy you still have the others. However piracy is still here. Nintendo have just siezed 10,000 pirate devices in Hong Kong. And according to their own figures piracy is costing the companies that create, license, market and sell its products $762 million a year in sales. Extrapolate that across the platforms and the industry is losing billions.
My own experience in the industry is that nobody cares. Or they pay it lip service. It is always someone else’s problem. ELSPA do a good job and their anti piracy unit does wonders on a shoestring. I worked with them lobbying our local MPs to get the UK IP law changed. But it is not enough, especially with peer to peer IP distribution so rampant.
So if you work in the industry piracy is costing you. What are you doing about it?