Online gaming industry fighting new trend of ‘server piracy’

Server-based, online gaming piracy is emerging as a new trend that could cost the video game industry billions of dollars in revenues, according to the Entertainment Software Association of Canada (ESAC). “It is a new and emerging form of piracy that has particularly emerged in Asia, but is actually now migrating to the western markets,” Jason Kee, ESAC’s director of policy and legal affairs, said in an interview. Kee said industry estimates put the physical piracy of game discs in North America at about $3 billion each year. It is more difficult to determine the impact of online piracy, but Kee estimates it is in the billions of dollars. Server piracy tends to affect online multiplayer games, such as Activision Blizzard Inc.’s World of Warcraft. Individuals set up their own, private servers for the game by either reverse engineering the program server or stealing the code. They then redirect legitimate customers to their own private servers or sign up new individuals. Unauthorized, private servers can also host harmful malware and computer viruses that attack unsuspecting users’ computers and make them vulnerable to identity theft. “It completely eviscerates a lot of the emerging business models we’re seeing in the online space,” Kee said. Online multiplayer games normally charge a monthly fee for players to access their servers. Some use free-to-play models, in which users can play the game free of charge, but pay extra for premium, in-game content. In-game advertising can also be used. Tony Davidson, coordinator of Algonquin College’s game development program in Ottawa, said in an interview online games have historically been better protected from piracy than other games. “Online technology was a good way to circumvent a lot of piracy because it requires you to log into a server and you have to have valid credentials,” Davidson said. “From that perspective, they have been less vulnerable to piracy.” But cases of online server piracy are emerging. On Aug. 10, 2010, a U.S. District Court in California recognized the financial impact of server-based video game piracy when it awarded Activision Blizzard a $88.5 million US judgment against a company called Scapegaming. Activision Blizzard was awarded statutory damages of $200 for each of Scapegaming’s 427,393 users. Scapegaming had run a private, unauthorized World of Warcraft server and sold in-game extras using PayPal. The company was found to have broken World of Warcraft’s end user licensing agreement by hosting the server. According to court documents, Scapegaming made $3 million US from running the private server. “Our ultimate goal is to create the best games in the world, and that means we need to protect our games and safeguard our players’ experiences with them,” Activision Blizzard said in a release following the court’s decision. “Server emulators that use Blizzard’s IP facilitate piracy and offer unauthorized, inconsistent gaming experiences that can damage Blizzard’s reputation and goodwill with players. We take these types of threats very seriously and will continue to take every available measure to protect our rights globally.” But not all piracy cases are open and shut. Prosecuting individuals who operate private servers can be very difficult if they do not steal a company’s code to get the server up and running, Kee said. “There really isn’t much you can do because it’s entirely feasible to set up a pirate server without doing that , and if you don’t, there’s no other basis with which you can go after them,” Kee said. Davidson also said it is more challenging to prosecute those who operate private servers in jurisdictions outside of the U.S., such as China. One way for the industry to counter unauthorized copying of all forms of video games, including online games, is to use technological protection measures (TPMs), also known as digital locks or copy and access controls. ESAC has lobbied the federal government to ensure that Bill C-32, the Copyright Modernization Act, includes legal protections for digital locks if hackers crack them. The bill includes the measure and was recently referred to a legislative committee for study following second reading in the House of Commons. Kee said the video game industry wants to ensure Canada doesn’t become a destination for pirated servers. “Canadian law, with respect to anti-hacking, anti-computer intrusion and computer security, is in my view somewhat lacking,” he said. But George Geczy, co-founder and co-owner of Battlegoat Studios, a small PC strategy game developer in Ancaster, Ont., said in an interview digital locks are an unnecessary and ineffective extra layer of protection for products that are already copyrighted. “These things get broken within a day of the product being released, usually,” Geczy said. “We’re not talking about a big hurdle for the people who engage in wholesale piracy.” Geczy added in a follow-up email that digital locks ultimately end up hurting legitimate users, citing the example of Electronic Arts Inc.’s (EA) Spore, released in 2008. “That’s the game that has had one of the most draconian digital locks to date, with the initial release allowing only three installs total … plus mandatory ‘online activation checks’ every 10 days,” he said. “In the following months EA did ease up on those restrictions slightly, but without doubt Spore generated the biggest backlash of players looking for a pirated version instead of buying the original.” Davidson said the industry should consider using a carrot rather than a stick in its approach to combating server piracy. “Perhaps one of the better methods might be more incentives to use the legal server,” Davidson said. “Maybe it’s new skins or new assets you can only get on their machines. If you constantly update these things the illegal servers will have a difficult time keeping up.” jmigneault@thewirereport.ca

Online gaming industry fighting new trend of ‘server piracy’

Broadcast | November 19, 2010

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