Video game industry divided on impacts of usage-based billing

Canadian video game developers are divided over the impacts that usage-based billing has on their industry. Senior industry insiders would not comment on the record but told The Wire Report in background interviews that some developers feel bandwidth caps hinder digital distribution and others say it protects against game piracy. “The gaming industry is divided on the issue of limiting bandwidth because it is good for piracy. Pirates tend to download huge amounts of data. There is a positive aspect for industry in that regard, but it also limits what our customers can do online,” one senior industry source who asked not to be named, said in an interview. The CRTC is reviewing its decision on usage-based billing that, if adopted, would put an end to unlimited download plans offered by third-party Internet service providers (ISPs) connecting to Bell Canada’s network. Under the policy now being reviewed, ISP resellers leasing Bell’s infrastructure would instead have to match Bell’s monthly bandwidth caps and overage fees—but many third-party ISPs differentiate their services by offering unlimited monthly plans or higher usage caps than the incumbents. Bell’s monthly bandwidth cap is 25 GB in Ontario and 60 GB in Quebec. Overage fees average at about two dollars per gigabyte. Industry experts say many users subscribing to unlimited Internet service plans offered by third-party ISPs download large amounts of pirated content. During a consultation for a 2008 CRTC decision, Bell told the commission that a small number of users running peer-to-peer file-sharing applications were generating a disproportionate amount of traffic and congesting its networks. The proposal to implement caps would radically reduce the amount of data users could download in any given month and potentially limit online content piracy, an industry source said. But usage-based billing also affects legitimate online gaming and game downloading. Video games tend to range between 10 to 60 GB in size, and when downloaded from popular distribution sites like Steam, they also require the download of regular updates and patches. Steam, developed by Valve Corp., is an online gaming distribution platform that allows users to download games to their computers from small independent developers as well as large software houses. Bandwidth caps could also hinder the Canadian adoption of cloud computing video game services such as OnLive. OnLive is an on-demand gaming system that allows users to play games stored on remote servers and delivered through the Internet. The service requires the continuous streaming of video content, so that it can be bandwidth-heavy. Jane Anderson, a spokesperson for OnLive, said in an email that the service consumes less bandwidth than Netflix. But Davidson acknowledged that usage-based billing is more likely to affect OnLive gaming than online play from home consoles or massive multiplayer online games such as World of Warcraft. Unlike OnLive, neither of those platforms require high-definition video streaming. “It is one of the reasons why, as an industry, we are kind of mixed on this,” the source said. “While it’s clear that it will negatively impact the new and growing areas of the industry, particularly the digital stuff, we have to acknowledge that there is a reasonable probability that these bandwidth caps will have a positive impact on piracy and result in piracy reduction.” Logan Foster, vice-president for Northern Alberta at Digital Alberta and a developer at Max Gaming Technologies, said in an interview that content creators will face piracy no matter what and that no one should be looking at usage-based billing as a “magic bullet solution.” “I’m sure the VPs of would probably say yes, UBB will cut down on piracy and that we should love it and embrace it. But if you talk to the people who are actually making the games and are in-the-know of what pirates are doing … I think they would say the opposite,” he said. “ might decrease for a little while, until people realize that the usage fees are still less than paying for the content.” Tony Davidson, coordinator of Algonquin College’s game development program in Ottawa, said in an interview that video game piracy was around before the prevalence of the Internet and that the benefits of capping bandwidth don’t outweigh the negative impacts on development and distribution. “If someone is going to suggest that is going to be a positive, maybe. But it’s a very small positive when you look at the negative impact that this will have on everyone else.” Davidson said the online distribution of video games has knocked down some of the barriers to entry in the retail market and opened the door for independent developers to enter the marketplace. Davidson said bandwidth caps will hurt independent developers the most. “Indie game developers deliver their games over the Internet. They don’t shrink-wrap and package their games … and a game can have a great deal of content that needs to be downloaded,” he said. George Geczy, co-founder and co-owner of Battlegoat Studios, a small PC strategy game developer in Ancaster, Ont., said in an email that, in the last two years, the video game market has shifted from a majority of sales in retail to a majority of sales from digital downloads. “For many developers, the biggest way to combat piracy involves offering bonus content, online features, and shared communities—and surprise, all of these features use even more Internet bandwidth,” Geczy said. Davidson said independent developers are concerned that bandwidth caps will discourage the purchase of content-heavy games and may push developers to cut back their designs. “Suddenly you’re looking at, ‘If we make the package this size, we’ll have to cut some scenes and take this and that out,’ so that its more palatable to the consumer in terms of the bandwidth cost to download it,” Davidson said. Davidson said he is most concerned about the impact of bit caps on innovation in the creative industries. “Canada is a big player in the gaming industry. It’s over $4 billion annually in this country and we are the third largest per capita game developer in the world. This is not a positive for the gaming industry in any way that you look at it,” he said. asmith@thewirereport.ca

Video game industry divided on impacts of usage-based billing

Broadcast | February 22, 2011

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