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"For Sega, it was a losing battle and the end results were quite
predictable. Every month or two, Sega would succeed in shutting down almost
all of the major Dreamcast bootlegging sites on the Internet. Within two to
three weeks, even more new ones would appear, many with the latest releases.
Sega could never stop the millions of transfers taking place via UseNet,
IRC, FTP, FXP, and so on all across the Internet. For every site or auction
that Sega and the IDSA managed to shut down, at least three and perhaps as
many as four more sprang up in their wake. It still remained dreadfully
easy to get Utopia backups off the Internet, provided you knew where to look
and were willing to put up with the hassles and posturing of the many
strange denizens inhabiting the darker corners of the Internet underground.
For all their trouble, Sega's efforts at shutting down Dreamcast piracy on
the Internet worked about as well as shoveling sand with a pitchfork. C. H.
Phoon, president of Hong Kong's Golden Harvest Studios, described the
problem with another metaphor. "[Combating piracy] is like pushing water
uphill. We are talking about piracy in 10 or 12 different countries around
the region, all with their own legal systems and interpretations of
copyright laws. You can solve a problem in one market and it just moves to
another." For their part, the pirates claimed that their actions were
justified because they helped increase Sega's dismal console sales, with
some unofficial sources claiming as much as a 20% boost. The number sounds
ridiculously inflated (a lower figure of 11% sounds more reasonable, based
on my own independent research at the time) yet in the end it really doesn't
matter. Why? Because the software pirates were hitting Sega hard below the
belt in the one place where profit mattered - Dreamcast software sales.
If you were an Internet-savvy Dreamcast owner in 2000 and you knew how
to get the Dreamcast bootlegs and from where, then one question was obvious.
"Why pay for the game when I can download it for free? I know it's illegal,
but I've got better ways to spend US$50 than on a videogame that I might
only play for a few weeks." Many of these gamers around the world chose
to
set their morals aside and do just that. Oh, a few would hear the calls of
their conscience and actually go out and buy some games, but not all of
them. Some, especially the out-of-market releases, could not be obtained in
any other way save through pricey export shops. No gamer in their right
mind was about to pay close to US$100 for a game in a language he or she
couldn't read when it could be downloaded for free off the Internet back
channels, and again many chose to do just that. It has been estimated by
the Dreamcast bootleggers themselves that they averaged between one and
three million hits a day on their pirate file servers whenever popular
Dreamcast titles, such as Shenmue, Grandia 2, Resident Evil 2 or the Sega
Sports games came up on the Dreamcast bootleg release schedule. The
millions of people illegally downloading Dreamcast games from the Internet
for the most part didn't care that Sega was losing millions of dollars in
lost software revenue as a result of their actions. In the words of one
proud FXPer, "F--K SEGA I'LL LEECH THEM DRY."
Dreamcast software piracy was more than just an annoyance to Sega. It
was one of the major factors, if not the major factor, that kept the console
from ever turning a profit. "
"May 2000, Moore left Japan with US$500 million in his pocket for Sega
of America and
a firm command from Okawa: Make the Dreamcast a success in North America
... or else. "
"In closing, consider the following estimates, which are very conservative
and probably don't even come close to telling the truth. The average price
of a Dreamcast game during the summer of 2000 was US$42. From that Sega earned
about a 20% royalty per title, or US$8.40 per game. As of 13 August 2000 there
were about 150 or so bootleg Dreamcast titles available on the Internet. Let
us assume a minimum of 1 million illegal downloads per bootleg title; also,
let us assume that 50 of those 150 games are 100% owned by Sega. That means
that Sega is losing the full price of US$42 on those 50 titles, not just the
US$8.40 royalty fee. Now, let's do the math, shall we?"
"1% of 1 million is 10,000 games a day.
100 out of 150 non-Sega games is 66.67%, were 3rd party games downloaded
50 out of 150 sega 1st party games is 33.34%, were 1st party games downloaded
6667 downloads at $8.40 per title = $56002.8 lost revenue per day
3334 downloads at $42.00 per title = $140028 lost revenue per day
Non-Sega($56002.8) games + Sega ($140028) games added together is $196,030.80
lost revenue per day. That amount adding up over 30 days is $5,880,924 of
lost revenue. Adding up over a year, or 365 days is $71,551,242 of lost revenue.
Try to budget your expenses with only 500 million dollars left to your name,
when people are stealing that much from you unpredictably.
These numbers are created assuming that only 1% of the 1 million hits per
day on one pirate site all downloaded a game, and all would have bought the
game otherwise. This only includes the 1 million hits per day pirate sites
boasted, and does not include usenet downloads, bootleg sales, or any other
source or multiple pirate sites getting 1 million hits per day. A more realistic
estimate in my opinion is that 10% of those hits both downloaded and would
have otherwise bought those games. This would make the numbers:
$1,960,308 per day, $58,809,240 per month, and
$715,512,420 per year."