The 3 Step Plan in Solving Internet Piracy: Step 2

Step 2: Evolving Toward New Business Models

As mentioned before, a different business model in which availability and distribution are increased has been shown to decrease piracy. Two major factors that limit availability and encourage international piracy of digital goods are Geo-Restriction and Geo-Pricing. In many countries in Europe and Asia which are our largest markets, consumers may have restricted or removed features in their digital products or simply no access to even purchase them physically or digitally, this is called Geo-Restriction (More). Foreign consumers also usually pay more for the same or likely restricted version of the product that we buy. For instance, a game that costs $59.99 for us would cost €59.99 Euros for EU consumers, even though their currency has a higher value ($78.70), this is called Geo-Pricing. The majority of digital goods are distributed online and therefore shipping and logistic costs is not a problem or excuse. Geo-Restriction sometimes leave international consumers no choice but to pirate in order to access content, and Geo-Pricing leave consumers feeling hustled. It's not so ironic why Internet Piracy is so prevalent and going strong in Europe and Asia.

Geo-Restriction and Geo-Pricing exist because of tax regulation laws but more importantly, because it's an old business model that attempts to extract the most profit it possibly can from consumers. The solution is to repeal and fix this unnecessary practice. Distribution services such as Valve's Steam, Netflix and iTunes have done this, resulting in significantly reduced piracy in their respective industries, while greatly expanding and making billions. Their success is attributed to convenient universal access to content, fast/reliable service and affordable relative pricing to all, including international consumers.

To reemphasize the impact of this new business model that increases global availability of digital products, using reliable online distribution channels without Geo-Restriction and Geo-Pricing, Video Game Piracy accounts for 6.7% in 2011of all pirated goods which is significantly down from 10.4% in 2008, and still on the decline. This is attributed to services like Steam.

The new business models that have been described have been implemented and worked in successfully reducing piracy by better appealing to consumers and constructively listening to their market demand, and thus gaining their loyalty. New business models always concern industry leaders because of risk and the possibility of not being able turning back, but the inception of the internet has leveled the playing field.  

I'm not saying that companies directly copy/adopt iTunes, Steam, and Netflix's business methods, but the Industry should model their attitude and approach to these companies', in that developing innovative methods and new effective business models to significantly reduce piracy is the solution, and definitely more worthy than not changing and lobbying for draconian policies.

Ubisoft Has the Right Attitude

 


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Posted in: 3 Step Solution Plan