By Danielle Parr
The video-game industry is the fastest-growing sector of the entertainment industry in Canada, and one of the most vibrant, fastest-growing industries in the world. Canadian video-game companies are renowned for producing high-quality games, and are behind some of the world’s most successful titles. In fact, 20 percent of the top-selling games in North America and Europe in 2008 were developed by Canadian video-game companies, many of them in B.C., and Canada recently overtook the United Kingdom to become the third most successful producer of video games in the world.
With increasing popularity, however, comes increasing instances of illicit activity, specifically piracy of video-game software and circumvention of digital locks (called technological protection measures or TPMs) that are built into consoles and handhelds that prevent illegally copied games from being played. According to industry research, some 34 percent of Canadian gamers have acquired pirated games (compared to only 17 percent in the United States), while 22 percent of gamers have modified their video-game consoles or handhelds to play pirated games. Furthermore, Internet piracy of video-game software in Canada has undergone explosive growth, and we detected a stunning 300 percent increase in the number of games illegally downloaded via Canadian ISPs between 2007 and 2008 (and this reflects but a fraction of the total illegal downloads in Canada detected by the industry as a whole).
Today, it costs between $10 and $30 million to develop a top-tier video game, and few games actually sell enough to achieve profitability. In light of the substantial investment required and the high degree of risk associated with the production of entertainment software, piracy fundamentally undermines the industry’s ability to recover its investment, resulting in fewer games as well as lost revenue and employment opportunities.
Particularly in this economic climate, where jobs are an especially precious commodity, it is critical that the government play its part in adequately protecting the Canadian video-game industry from piracy. Specifically, new copyright legislation must provide legal protection for TPMs, prohibit trafficking in “mod chips” and other circumvention devices and services specifically designed to facilitate piracy by defeating TPMs, and implement deterrent criminal and civil remedies against those who provide such services and tools—those who are profiting from piracy at the expense of legitimate businesses.
For the video-game industry, TPMs are not only used to prevent piracy and cheating (e.g. “modding” game code to give an unfair advantage over other players); they also enable access to a greater range of features and options that would otherwise be unavailable. Things like parental controls (which allow parents to control what games are played by their children and what kinds of content they are exposed to), “trial” or “demo” versions of games, and new digital distribution platforms like Valve’s Steam, Xbox Live Arcade, or the PlayStation Network, all provide greater choice and access for consumers.
Ultimately, implementing legal protections for TPMs will benefit consumers by providing greater certainty in the digital marketplace, which will, in turn, spur investment in the development of new digital products, services, and distribution methods; more consumer choice; and lower prices. Furthermore, legal protection for TPMs also enables a vibrant ecosystem of digital business models. If a creator or company chooses to sell their work as a digital product or service, legal protection for TPMs helps ensure that this choice is respected, much in the same way that locks on the doors of a bricks-and-mortar store allow the owners to determine when and how consumers can access their product. However, if they choose to give their work away and make money in some other manner (or not at all), they are free to do so.
By ensuring that consumers have a variety of digital offerings to choose from, legal protection for TPMs allows market forces to protect consumer interests, so if a consumer does not like the conditions of sale or terms of service for one digital product or service, they can simply take their business elsewhere. Failing to protect TPMs under the law effectively means that the government is dictating the business model, which is bad news for business and for consumers.
Canada urgently needs an updated copyright regime that protects our creators and rights holders, in recognition of the important role they play in the digital economy and in terms of Canada’s future prosperity. We have a lot to lose.
Danielle Parr is the executive director of the Entertainment Software Association of Canada, the industry association representing companies that publish and distribute video and computer games for video-game consoles, handheld devices, personal computers, and the Internet.