What are the effects of Piracy?

Computer & Videogame Piracy:
What are the effects of Piracy?

The effects of piracy are widespread and felt throughout the entire software industry. Some violators commonly feel that--acting individually--they could not significantly effect the software's publishers because of the sheer size and financial success of such companies. However, the costs of piracy are often reflected back upon consumers in the form of higher prices. If the majority of computer users pirated software the incentive for individuals to be innovative and to create new and better software would be greatly reduced since they might rightly fear that their work would not be protected. Without protection, the profit-motive--which is the foundation of our market-based society--can be extremely weakened. Software companies may feel little incentive to expend the necessary resources to develop new and innovative products. 2

Software companies must also spend considerable time and resources in fighting piracy and filing lawsuits against violators and copyright infringers. Relatively recently both Nintendo and Electronic Arts filed such a lawsuit against Yahoo "for copyright infringement due to the sale of pirated games in Yahoo auctions and classifieds."3 The lawsuit was dropped when Yahoo signed an agreement to "halt the trading and sale of pirated software in Yahoo auctions."4

Piracy results in major losses of revenue to the industry which (for business applications) the SIIA has estimated at around $12.2 billion worldwide (1999 Data). With respect to the game industry "up to 109,000 jobs, $4.5 billion in wages and $1 billion in tax revenues" were estimated to be lost during 1999.5

Graph courtesy of Gamespy

To further illustrate the costs of piracy, according to the Interactive Digital Software Association (IDSA) "With the money lost to piracy [1998], U.S. game publishers could have developed about 1,600 new high quality games."6 Many violators do not realize that their actions are unethical; furthermore, they are unaware of the legal ramifications to which they may be subject.
What measures are being taken to deal with Piracy?

Introduction page
Why did I choose this topic?
What is Computer & Videogame Piracy?
What are the effects of Piracy?
What measures are being taken to deal with Piracy?
What methods are people using to acquire pirated games?