Business ramifications of piracy *spawn

[Shifty Geezer]

As long as they didn't use any Sony IP(copyrights, trademarks, patents, trade secrets) that they didn't already have a license for or weren't covered under fair use (aka "works on playstation 3"), then yes. In fact anyone could do it for any of the consoles.

The issue is it is pretty hard to do that without knowledge of the hardware, using middleware, etc. They would probably have to firewall a team which would only be able to utilize publicly available information and likely no third party or internally developed middleware.

Yes. It's probably worth highlighting that, regards artistic works, which is what software is, a console as a piece of hardware is in effect a blank piece of paper on which you are not allowed to refuse the artists what they will create. You won't buy a block of water colour papers with the licensing deal on it stating you may only paint pictures approved by the paper's manufacturer. As owner of the console, I am free to produce whatever art I want, or display whatever arts from other people, just like a TV - Samsung can't refuse me access to channels it doesn't like, and if it's FW blocks some channels, I'm allowed to unblock them if I find means.

However, to make money from the consoles, the console companies lock out developers using copyright laws that mean the console company's IP rights have to be respected when producing software, such as having to use Sony codes and encoding software, or documentation of essential systems covered by NDAs. Sony only agree to allow use of their IP for a fee, which is where the current model exists. The moment someone doesn't need to use Sony IP to create software, such as being able to sign their own code, they no longer have to pay Sony anything to publish to PS3. Sony have no software rights whatsoever regard what is run on a PS3. They only have control of what gets published through their mechanisms. It is quite possible and legitimate for an indie store to appear selling XMB apps as long as they aren't infringing Sony's software IP rights.

 

[AzBat]

Personally I don't see things changing much for Sony. They'll probably just eat the problem & do nothing to ban or fix existing systems. If anything they'll ship new systems with proper security(new keys). Not sure how the firmwares would be taken care of. Maybe split the codebase between the compromised & secure systems?

Tommy McClain

 

[obonicus]

It is quite possible and legitimate for an indie store to appear selling XMB apps as long as they aren't infringing Sony's software IP rights.

This is true, but it's possible that CFW will be illegal, under some DMCA (or DMCA-alike) nonsense, at least until the law's tested, so the legality of services running on CFW might be moot.

 

[Laa-Yosh]

The rest of your post is pretty interesting and I agree with a lot, however here's this:

In fact, it can't do, there can't be any decent model, because so many titles are hit and miss the industry clearly has no way to predict sales!

That isn't completely true nowadays. As customers start to go for safe purchases more and more, it's becoming quite easy to predict that the next AC, COD, Halo, UC are all going to become hits. Publishers also realize this trend and are focusing more and more of their resources on these 'safe' titles, further justifying the customer behavior.

On the other hand the lesser known titles and new IPs are becoming more and more risky and that is where most of the cost cutting probably happens. We've started to hear about more and more canceled projects, the most interesting is ShootMyMonkey's comment about how the new Tomb Raider is basically a new skin for a previous no-name project.

 

[eastmen]

so do you guys think the psp phone and psp pad will be safe or are they already hacked before release

 

[obonicus]

so do you guys think the psp phone and psp pad will be safe or are they already hacked before release

Aren't they probably running Android?

 

[mrcorbo]

Aren't they probably running Android?

So, not yet, but probably within a week of their release then?

 

[obonicus]

So, not yet, but probably within a week of their release then?

Basically.

 

[Fafalada]

They'll just cut the budget for the PS3 development and release inferior ports and conversions.

From where I stand, there's really nothing left to cut on projects that aren't leading on PS3 (which is majority of multiplatform titles really) - short of killing the PS3 versions completely that is.

That isn't completely true nowadays.

It never was, pubs base their marketing budgets on sales expectations, so you end up with circular dependency, and the usual - low-risk = low(but relatively consistent)-rewards mantra applies.
Trouble is identifying breakout hits early, and the fact existing business model is working against long-term sustainability of hit-IPs. Which is why so many are looking at alternatives to just selling software and those success stories and the ridiculous bubble that has been growing in F2P segment in past few years.

 

[aaronspink]

This is true, but it's possible that CFW will be illegal, under some DMCA (or DMCA-alike) nonsense, at least until the law's tested, so the legality of services running on CFW might be moot.

DMCA doesn't apply in this case. Beyond the fact that you aren't violating any copyrights, there is the issue of expressed exception in the DMCA for application compatibility. It really is an issue of getting out from under any NDAs and contract language which has already been agreed to. If someone went through the effort to utilize these hacks to completely document all the interfaces, published it, and then some greenfield developers use it to write a game and utilize the publicly available keys to sign it, it is all above board. Now Sony could always sue and try to delay things, but they'll lose just like IBM did.

 

[-tkf-]

What i don´t understand here is the use of the Sony key, if i steal a password and use that to gain access to information or whatever shouldn´t i be in trouble?

 

[Silent_Buddha]

Right now PS3 userbase should have surpass the 50 million mark due christmas sales. Does really anyone think that 3rd parties are going to cancell their games and stop working on PS3?

It all depends on the cost/benefit analysis their accountants will do. Big titles that are virtually guaranteed to have a high ROI will likely be unaffected (COD for example).

Where things start getting tricky is if you're already predicting a minor ROI or if the title is considered high risk with a greater than normal chance to not make back the initial investment, you're going to be far more likely to cancel those type of projects.

It's one of the reasons that developement of most AAA multiplat titles lead on X360. It has the greatest chance for a good return on investment. Up until now it was followed by PS3 and then much farther back PC.

The ability to sign everything puts PS3 actually behind the PC for developement purposes IMO. Security will actually be slightly lower and difficulty of developement significantly higher. So while multiplatform titles going from X360 -> PC is a fairly painless process with similar developement tracks. X360 -> PS3 is going to be looked at more closely as there will be far more effort involved in making sure things will work acceptably on PS3.

I'd imagine the few multiplatform companies that want to lead on PS3 are re-evaluating their decision to use PS3 as the lead platform. Obviously any changes won't be happening overnight, but I'd imagine that contingency plans for budgeting and developement are being written up depending on how the next few months proceed with regards to sales on PS3 and Sony's ability to deal with it.

It's a shame also. Since WW numbers indicating PS3 basically on par with X360 install base is what prompted some companies to consider PS3 as the lead platform in the past year.

Regards,
SB

 

[Docwiz]

Was there a change in DS budgets when it was blown wide open? I honestly don't know. As I see it, piracy has an impact, but it varies title to title, and one problem with decreasing investment is producing a lower quality product that people will be less likely to buy. Looking at CDs, a difficult parallel but one of the closest I think, file sharing has been shown (in different and conflicting reports) to actually aid artist sales. If the musical producers saw piracy and thought, "let's just use cheap, quick production as it's only going to be pirated anyway," they'd decrease legitimate interest from those who are willing to pay despite piracy being an option.

I don't know if a formula for investment and returns exists. In fact, it can't do, there can't be any decent model, because so many titles are hit and miss the industry clearly has no way to predict sales! But even if there was, I don't think piracy offers a simple coefficient where best ROI comes from reducing investment by x% accomodatin y% loss through piracy. There also isn't an easy way to scale PS3 costs of a port. You're going to create the same assets for all platforms, and the same content. You're going to need a PS3 version of the engine. Downsizing the PS3 coders from 5 to 4 or 3 isn't going to save much. Basically if you looking at losing...1 million units to pirates of a 2 million seller, those losses aren't going to be recovered in any way from reducing PS3 development of a cross-platform title.

Thus you either abandon PS3 and don't develop for it at all, losing potentially lots of sales, or you carry on pretty much as normal, only getting less returns than you used to. I suppose where PS3 is ~50% of the HD market, it may drop now to 30% in terms of revenue, but that generally too big a slice to ignore. I expect some titles will not get a PS3 port as a result, but I don't see that being many at this point. Only if piracy takes on insane proportions could that change.

On that note, we actually have a damned interesting sample base for analysing the impact of piracy. We have a console with 3 years zero piracy where unit sales of a game have been exactly based on what users would buy. This user base is now (potentially, barring security changes) being offered the easiest possible piracy, meaning no barrier to entry except knowledge and willingness; there's no financial costs to prohibit piracy. In the coming years we can compare sales of titles with others in the franchise, like COD and Uncharted, alongside XB360 as a control, and get an excellent measure of how much in terms of lost sales (and not the fairly useless unit downloads from torrents) piracy actual produces. It's a potentially expensive experiement, but one that will provide a lot of relevant data for establishing user rights in law, as real world examples can be used to show what costs companies really bare when considering what potential limits to impose on people's freedoms.

Here are some points that you are not responding to.

#1) Games that are made for the PS3 cost a lot more than that of a DS game.

#2) Piracy is easy on the DS, but you have to buy something from shady store (possibly outside the country if you live in the USA).. Piracy is actually even easier on the PS3 because it requires a FREE DOWNLOAD from the INTERNET.

#3) This is a down economy, people who were likely to buy before are possibly going to not buy now because they can get a high quality product for FREE thus saving money for other things. This is why I don't think downloading from torrents numbers are useless. The economy is a real important piece of what you are missing, these games are expensive and when word spreads that all you have to do is download something to get free games you don't think people who are laid off or trying to save some money are going to do so, not by cutting out the number of games they buy, but by downloading free games or renting them at Blockbuster, seriously?

#4) Putting a title on both platforms at the same time means that the company loses a lot more revenue. This is because there is crossover with the hardcore crowd. A lot of them have both PS3 and Xbox 360 consoles, guess which version does not get bought? Both, because the hardcore person can just get the game for free. A sale that is lost here as well.

A lot of developers are laying off as it is, and a lot of software companies are going out of business and surely piracy and a down economy isn't going to help this either.

#5) Sales for a lot of PS3 games were down before the pirating started and 360 sales have for the most part always been a lot better for the same game. If they can't pirate the game because it isn't on the PS3, that will either make them buy a 360 or they just won't play the game. This seems like a smarter move to me.

 

[patsu]

PS3 software sales is proportional to its marketshare. Some genre sold slightly better proportionally. Some worse.

We should know within a month or two the impact of these exploits on software sales. Some content partners may make short term plans.

Kaz Hirai and Howard Stringer can't run away from this costly incident. Should they choose to rectify the problem, the question is how they can turn this into a momentum for them (since a lot of money will be involved anyway). The content partners will re-evaluate their positions in response.

If Sony let the issue roll forward, they may have to find a mechanism to give some content developers a "You have nothing to lose" deal. The rest is play by ear.

 

[Laa-Yosh]

From where I stand, there's really nothing left to cut on projects that aren't leading on PS3 (which is majority of multiplatform titles really) - short of killing the PS3 versions completely that is.

To be more specific I was talking about titles that still had 100% parity, like the new Need for Speed or Dead Space games. I'd assume that it took significant developer effort in those cases to get such good results, which means that there's still room for cost cutting.
There's also stuff like expecting Bioware to re-compress the Mass Effect 2 FMVs to a higher quality level to use the additional space on the BR disc, or id software creating a better version of Rage's megatextures. I'm sure we could still list a lot of examples where devs might decide to make different choices.

 

[jeff_rigby]

How do you lock the console in a way Sony can unlock but hackers can't, when hackers are able to run any code they want? If it's a FW update, the hackers will just patch the FW or release their own one.

I worry that this exploit allowing access to Sony custom code might delay or end the development of new features for the PS3.

IF Sony is creating a Cell OS Digital infrastructure which the recent Cell Patent and purchasing of the controlling interest in the Cell production plant might support then they might want to protect the code for the Cell OS. If they control the Cell CPU supply, they don't have to secure the OS. Was the purchase planned knowing of the eventual cracking of the PS3 OS?

Shifty, you thought that Sony might write their own player supporting Flash Media server 3.5 streams. You may be correct in this.

Snip from HTML5 thread:

IT is possible, even likely that Sony would produce their own Player with API hooks for DRM with support for Flash MS 3.53 streams. They would then probably use their own DRM tool.

I could find no listing or information on anyone or anything that could provide the same features required. I did however notice that when credits are listed for Vudu it's mentioned that it uses a Sony Broadcast Engine. There is no information for that on-line.

So I was left with Adobe provides the code free to do this or Sony could spend the time to reverse engineer Flash products and support their own parallel development of Player and DRM.

They certainly could do this and may have already done this for blu-ray and TV products. One other point, The VUDU credit for the Sony Broadcast engine was Sony BE Korea. Korea is where Sony blu-ray and TVs are produced, mostly by LG.

Samsung went the Adobe route and uses Air 2.5 for TV in their 2010 blu-ray and over 40 inch TVs. LG did not and probably uses the Sony BE engine or something similar or there are cross licences or who knows.

Samsung is going to have Air Apps and Sony products.....? Air requires a faster processor and more memory but not as much as Google TV. 2010 LG products cheaper but less powerful, (Speculation) 2011 LG products with the Sony label have a Cell processor and are more powerful allowing a custom OS that supports the Cell and Google TV. No need for Air as it would have Android apps.

Sony just bought back control of the Cell fabrication plant in Japan. Sony just published a Patent for the cell and multiple uses. Does this all tie together?

Stretching this further, Google purchased Widevine which has patents for many aspects of DRM and even code for embedded (SOC) DRM for BLu-ray and TV. This code typically is optimized more than Adobe DRM would be and uses less memory and resources. Perfect solution for Google Chrome HTML5 and DRM in handhelds as well as a Sony Cell OS Blu-ray player, TV, PS3, PSP2, PSP, Tablet, etc.

RE a Google TV port to the PS3: One unsubstantiated source even named the project "Snow white and the 7 bugs." He was referencing the bugs in the version seen by the source, What if Google TV is the prince rescuing Snow white (Sony).

3-D Sony cameras, 3-D display on Sony products, 3-D web view with WebGL and HTML5 (Google Chrome or webkit). LG working on 3-D LCD without shutter glasses starts with 4K resolution. Cell fast enough to support 4K resolution and system powerful enough to support Webbrowser. Cell would enable DRM across the home network to allow viewing from any media source to any media player in any room of the house via wired or wireless Wifi in the home. Distributed processing possible across Sony cell products.

 

[patsu]

It's a fine line. If they take it too far, they may lose sales, fulfilling their own prophecy.

If they make a good effort, more people may buy. They can't make plans based on pirates since these people are the least likely to pay. They should make plans for the paying customers. I doubt they will switch abruptly.

I'm still waiting for someone to sell me a WebKit browser on the PS3. They can also use alternate DRM scheme to protect their software.

so do you guys think the psp phone and psp pad will be safe or are they already hacked before release

Need to know more details first.


EDIT:Laa-Yosh, what's your next game ?

 

[Laa-Yosh]

Off
We have CG movie projects for three games, none of which I can say anything about... you'll see
(not seeing how it relates here though)

 

[patsu]

Is it available on PS3 ? You better do a good job coz I'll be watching… >8^P

Remember, Demon's Souls has a small budget but their effort came through. We can tell the difference between a half-hearted effort and one with heart and soul, even though I always forget what OBM… I mean, OMB is. XD

 

[Silent_Buddha]

It's a fine line. If they take it too far, they may lose sales, fulfilling their own prophecy.

If they make a good effort, more people may buy. They can't make plans based on pirates since these people are the least likely to pay. They should make plans for the paying customers. I doubt they will switch abruptly.

One really bizarre thing I noticed when looking at the comments on the recently released CFW for PS3 is some people admitting they pirate anything they can and hate DRM but hoping Sony puts some kind of DRM, ownership validation, or other intrusive protection scheme in order to protect their beloved console.

I swear, sometimes reading comments from console fans is like watching brainwashed cult followers.

Seeing stuff like that I can imagine diehard Playstation fans that pirate music, video, and PC games will avoid pirating on PS3.

Regards,
SB