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November 10, 2004


OK, right after reading your post I read on CNet that Halo II reportedly brought in $125 million in sales on its first day of release. The gaming industry and definitely the Xbox team, have to be ecstatic. Anyway, while I won't dispute the demographics that you use - suggesting older gamers on average (who hence should possess more disposable income) - I'm not sure how big a role loyalty plays. I agree that there certainly is some loyalty and appreciation, to game titles, software companies, teams and programmers. When a Russian programmer starts blabbing about Half-Life source code, well, he's going to draw attention no matter what. It's not as though people didn't download the short segments of Half-Life II that were made available though; it just was not something that was playable.
I think that the gaming industry is largely immune from the problems of the music and film industries however. For one thing, there is a relative paucity of worthwhile games available, so whenever anything decent comes down the pipeline (especially if it's 16 or so months late, like Half-Life II) everybody is going to rush out to buy it. It might well be a different story if there were thousands of releases a year, with a zillion artists trying to peddle games, as with music.
Secondly, there are significant differences in the technical factors at play. Gaming systems don't have the same legacy issues that CD and DVD players must contend with, as they only have 4-5 year generations typically before being replaced. Anti-piracy technology can be therefore be stepped up every few years in the newer iterations of consoles. Consequently, at any given time, it is much more difficult to copy games than music, due to a variety of different boot sectors used that are unrecognizable in PCs and other features. (I'm conveniently ignoring PC games of course, which are more readily copied.) Additionally, relatively few people want to take apart their systems to solder in mod chips that are required to use many pirated games that originate in other regions or use different media. Rather than add $10 to $15 per game to combat losses that I just do not believe are present, at least in North America, the industry should continue pushing US government trade reps to demand enforcement of IP laws in China, Malaysia, the Phillipines etc... where countless factories produce mediocre-quality countereit products that flood the Asian marketplace.

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