Piracy Is Big Business
Hollenshead laid out that, in no uncertain terms, piracy is a serious problem for the PC industry. Why should we care? ESA estimates that the video game industry loses three billion dollars from piracy annually and that doesn't even reflect piracy over the Internet. Scott Miller of 3D Realms estimates that as much of 50% of PC game sales are lost to piracy. It affects the development cycle too. For example, when the Half Life code was leaked at Valve, and many people were playing the game and passing judgment without paying for it, those sorts of things can really affect team morale.
Current methods of combating piracy outlined by Hollenshead included physical protection, online "guerrilla" warfare (against nefarious groups that run warez sites), the legal system that comes into play with the DMC, infringement lawsuits, the FBI and customs. Education through the ESA and other organizations is key in getting the word out about the problems piracy causes for the industry as well. It's important, because some of the gains from game piracy are even used to fund criminals and terrorist groups, said Hollenshead.
id Software has had its own fair share of experience with piracy. They've had leaks galore, with every game they've ever made having found its way onto the 'net before its release. This goes all the way back to Doom, and includes Hexen II, Doom 3, and they know someone must have the yet to be released Enemy Territory: Quake Wars, since there have been screenshots surfacing that id never released. They've also had to deal with hackers trying to get around certain things in the game. It's a huge problem because it's a perpetual war of oneupmanship, where they patch and the hackers find a way around it in a couple weeks, so it wastes a lot of resources. Still, he noted, this is one of those cases where "one person can't fight the whole Internet."
Hollenshead did acknowledge that some progress had been made, though. There's now CD key authentication systems on all of id's PC games. He noted that Quake III's system still remains uncracked to this day. Still, there are ways around it on the server side and people have uploaded legitimate CD keys, so it's not the perfect solution. Hollenshead also stressed that it's important to be more careful around the office and when dealing with the press to make sure that pre-release versions of games don't end up in the wrong hands. Another method described that has been somewhat effective against piracy was the use of dongles. Without the dongle code plugged into the back of the machine you can't play the game. Hollenshead ventured that this dongle method might be the reason why they haven't seen a build of Enemy Territory on the Internet, even though they're positive someone has a copy of the game.
Looking ahead to the future, Hollenshead proposed a few ways that piracy could be combated. Perhaps PC games should adopt a subscription only method, he said, or perhaps it should be a requirement to connect to the Internet to finish installing (something that certain Steam games already require). Or, he proposed, the drastic measure of abandoning PC entirely and going to consoles. He gave a few key examples of that happening, like Halo from Bungie and Epic's Unreal and Gears of War franchises. You know the situation is bad when the CEO of id Software, a bastion of PC gaming, is saying that maybe they should just go to consoles because that market is bigger anyway.
Hollenshead also said that there needs to be more governmental involvement and that they need to take it more seriously, in the U.S. and around the world. In some countries, the government unfortunately may even be in league with the pirates, he said. Hollenshead would also like to see more focus paid to physical protection without hassles from DRM providers. Internally at game studios, it's important to be extra careful with pre-release code, to avoid laziness with passwords and ftp protection. He also remarked that piracy can be fueled in part by consumer attitude problems, where they see hackers as icons and even heroes. But these consumers should know that they're poisoning the well with that mentality, Hollenshead said. The id executive even pointed out the general attitude problems among developers themselves who feel it's okay to download all sorts of media they didn't pay for. He said developers need to take a long look at themselves: if they have gigs of South Park on their system are they part of the problem?
The battle against piracy will no doubt continue for quite some time, but Hollenshead concluded by saying that he hopes that one day, "we can make the jolly roger flag go down."