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Ritual's Mike Russell on Piracy

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This weekend, Michael Russell of Ritual Entertainment made a sobering post on his personal blog about the costs of piracy to a small developer. Ritual recently released SiN Episodes: Emergence through Valve's Steam service as well as to retail shelves. In addition to his official duties heading up the company's QA department, Russell handles consumer technical support for its products as well. Some recent calculations revealed that, last week, gamers with pirated copies of Emergence requesting support outnumbered gamers with legitimate copies of Emergence requesting support by a ratio of nearly five to one. This, understandably, is a source of great frustration for Russell, who is essentially performing two jobs at Ritual and who only has a finite amount of time to spend on each.

Responses he has received when attempting to troubleshoot problems have laid painfully bare which users are playing the game illegally. "What's Steam?" one asked. "I don't have one," replied another when asked for his Steam ID. "Oh, my copy didn't come with an installer," replied yet another user, "it's in a folder on a DVD. I just drag it to my machine and then run the game."

For an independently funded developer such as Ritual, these time sinks and lost sales have a clear and measurable impact on the company's income and, thus, its long term self-sufficiency. I took some time to chat with Mike and hear in greater detail his thoughts on piracy, both in the context of support costs and in a more general sense, as well as topics such as the developer transition from PC to console and why Vista might help.

Shack: Would you like to start out by explaining your official title and duties at Ritual, and what else you do there?

Mike Russell: My official title is QA Manager, and essentially I'm responsible for making sure the product gets tested. That's pretty much it. I use whatever means I can to get there, but we couldn't afford a very large testing staff on SiN Ep. I managed to test the entire thing with only about two and a half heads, and we did a pretty good job.

Shack: But obviously you're doing quite a bit of customer tech support as well. How much of your time is spent doing support these days as opposed to testing for future episodes?

Mike Russell: Right now, my time is split about 50/50 [between testing and support].

Shack: Do you have a support staff under you, or are you mainly doing it yourself?

Mike Russell: I've been doing it all myself.

Shack: So you definitely have a firsthand view of the situation.

Mike Russell: Yeah, I'm a lot closer to it than I have been in the past.

Shack: When you are relatively sure you've encountered a pirate, what do you do? How do you deal with the person?

Mike Russell: Actually, I contact their ISP [laughs]. I know it sounds silly, but ISPs have been a lot more responsive towards pirates than law enforcement has been. Most law enforcement sees piracy as petty theft. It's under a hundred bucks, it's piddly crap. But ISPs, they're really responsive towards pirates, because most pirates are the people who are munching all the bandwidth. So if they have, essentially, a legitimate excuse to boot a pirate off, they'll take it.

Shack: A common defense of pirates on the internet is that developers are going to receive relatively little of what people pay for games in the first place. I realize you might not be able to discuss a lot of this in detail, but can you discuss at all how developer compensation and royalties work for games released via retail versus Steam?

Mike Russell: I can't go into details on that, but I can actually address how it works for general titles, not SiN Ep. Generally what happens is that a developer is paid, say, $2-5 million to develop a product. When a unit is bought from the publisher, the publisher gets their cut, which covers cost of goods, testing on the publisher side, and so on and so forth. Then, a portion of that money from that sale goes towards what the developer was paid to make it, and it's only once that number reaches what the developer was paid to make the product, that the developer starts making money.

So, a good example is, if I'm working on a first party title with a $2 million budget, it takes about $15 million worth of retail sales before I break even. If I'm a developer, because of the way the royalty structure works, it can take about $40 million worth of retail sales before the developer sees a dime of their advance.

Shack: On that note, Ritual is obviously an independent developer. In terms of piracy, how does the problem affect a developer like Ritual differently than it would one of those larger publisher-owned developers?

Mike Russell: Well, from the big publisher standpoint, it affects them because only 15% of all titles break even. That's not "make money," that's just "break even." So that's 85% of all titles that lose money. That 15% pays for the rest. If you're, say, working for a publisher and you're working on one of these titles that's losing money, you're not going to be getting as much for it, you're not going to be getting as much funding, because you haven't been succeeding. For independent devs, it's even more lethal. For Sin Ep, we put our own money into the product. We put our own money there. As a result, we don't have that advance to run out against. Every single lost sale is money out of our pockets.

Shack: You distribute through Steam. Do you see there being any steps Valve could feasibly be able to take to craft stronger copy protection for Steam games, or some kind of verification process for support, or would we be approaching, I don't know, StarForce levels of intrusion there?

Mike Russell: Well, if I ever work on anything with StarForce levels of intrusion, I'm going to quit the industry again [laughs]. But copy protection only really serves to stop casual copying. Anything above that, while maybe gravy, is only worthwhile if it does not put unreasonable limitations on the customer. Steam is giving a major benefit to the customers. Back at Microsoft, when I was working on Links, less than 20% of our customers were actually installing patches. With Steam, we can make sure everyone gets the patches, so we can ensure better quality of service for everyone. We're giving people a benefit there.

The flip side of that is that we ask people to log in. It's not like StarForce where we're stopping piracy, and we're also stopping three quarters of external storage devices from working [laughs]. But as far as adding in extra authentication steps, anything that puts too much of a boundary between support and customers is really an unreasonable restriction. The closer I am to my customers, the better they feel about the experience.

Shack: On the issues of patches, in your blog you mentioned that a lot of the support requests deal with issues that Ritual has in fact already fixed in patches. I would assume that this means the ratio of pirate support requests to legitimate support requests is rising over time. Is this the case?

Mike Russell: Yes. At first, it was about one to one, and over the last couple of weeks it's gone up to five to one.

Shack: That's pretty horrible that it starts at one to one.

Mike Russell: Yeah. Back at [Links developer] Access, it was almost like there was a business model built around a certain level of piracy, but we don't have that luxury.

Shack: People have a lot of theories as to why it sometimes seems like the PC industry is slowing down in comparison to the console market. Do you think that this really is one of the factors in that?

Mike Russell: I'd say that piracy is pretty much tied with config problems. On the console, you write it once, you test it once, and it works or doesn't work. On the PC, you have millions of combinations, and testing them is prohibitive. So it's very hard to effectively test a PC title. It's cheaper to test a console title, and there's less piracy. That's why everyone is moving to console.

Shack: Do you think there's any chance that initiatives such as Vista, which attempts to take more of a centralized platform approach to the PC, will have any positive affect in that area, or is that all Microsoft marketing at work?

Mike Russell: I'm really hoping. I know that we have less problems now than we did with [Windows] 98 or ME as far as config testing goes, just because of the additional level of abstraction. I'm hoping that Vista, with the new display driver model, will make things significantly easier. Also, the more we can move things to a unified shader model, where drivers really don't matter, where we're just sending a program to the card and saying "Run it" and it's up to the card to say "Yes, I work in DirectX 10," that's a good thing.

Shack: Good to hear. Speaking of consoles, this may be a bit outside the domain of this interview, but is there any word on the progress of the semi-announced console versions of SiN Episodes?

Mike Russell: There is some publisher interest, but I can't say anything else.

Shack: Okay, and any word on when we'll see Episode 2?

Mike Russell: I'm not allowed to say anything on Episode 2.

Shack: Fair enough. Anything else you wanted to comment on, in relation to this whole situation?

Mike Russell: I've been in this industry for seven years, and I've seen the effects of piracy. I've seen studios close as the result of it, I've seen people lose their homes. I guess I'm more vocal than a lot of people because I've seen the personal side of it, and it's just sad that we have so many people looking for a way of justifying it.

Shack: Thanks for talking to us.

Mike Russell: No problem.

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