iPhone Piracy: The Inside Story

[Many game developers don't think of the iPhone as being a system which has extensive game piracy. But recent comments by developers and analysts have shown otherwise, and Gamasutra speaks to multiple parties to evaluate the size of the problem, and whether there's anything that can be done about it.]

When indie game developer Bram Stolk detected 1,114 copies of his The Little Tank That Could being played online, he suspected something was up. He had, in fact, sold only 45 copies of the new iPhone game.

Stolk had fallen victim to what is being called rampant piracy in iPhone titles, possibly worse than has been experienced for so long on other platforms because of the ease with which it can be perpetrated.

Indie developer Smells Like Donkey has been quoted as saying that more than 90% of users of its recently released iPhone brawler Tap-Fu were playing pirated versions.

And, in a talk at GDC China in Shanghai, Alan Yu, VP at San Francisco-based ngmoco, characterized piracy on the Apple handheld as a big issue, with 50 to 90 percent piracy estimated in the first week on ngmoco titles.

In Vancouver, Stolk was floored. Like most indies, he hadn't gone into the business expecting to have his creations stolen from him -- at least not at the rate he was detecting. For every copy he was selling at the App Store, 24 others were being bootlegged. Most distressing, he admitted, was that legitimate copies of his game sold for only $1.99.

"They were stealing my game for a whole one dollar and 99 cents," he says, admitting being "disheartened" from the experience. "I mean, how sad is that?"

Tap-Fu

But Greg Yardley confirms that getting ripped off by pirates is the rule rather than the exception. Yardley is co-founder and CEO of Manhattan-based Pinch Media, a company that provides analytic software for iPhone games.

The software gives developers a sense of how their application is performing, how many people are using it, and what they are doing within the game. It also includes a few simple checks to determine whether the game has been pirated. He estimates that about 8 percent of the iPhone app market uses his analytic software.

"What we've determined is that over 60% of iPhone applications have definitively been pirated based on our checks," he reveals, "and the number is probably higher than that."

While it's impossible to estimate how much money developers are losing, it involves more than the price of the game, he says.

"What developers lose is not necessarily the sale," he explains, "because I don't believe pirates would have bought the game if they hadn't stolen it. But when there is a back-end infrastructure associated with a game, that is an ongoing incremental cost that becomes a straight loss for the developer."

"Many developers run servers to provide content dynamically, they run high-score servers, and that sort of thing costs money. If your application is pirated, you quickly find that cutting steeply into your profit margin, especially given the low price point of iPhone games."

What does the typical back-end infrastructure cost a developer?

According to Yardley, it is rare to see developers paying more than 10 percent of what they are taking in, but "you need to consider that a pirated game can be used many times over by multiple pirates, and so your losses are multiplied many times over as well."

Additionally, not every iPhone game is a low-budget production like Stolk's The Little Tank That Could. In Hamburg, Germany, it required a six-digit budget for developer Fishlabs to create racer Rally Master Pro 3D in nine months with a team of 10.

But the results were similar -- the piracy rate on the day it went on sale for $6.99 was around 96 percent. It has since settled down to "only" 80 percent after three weeks, reports CEO Michael Schade, sarcastically.

What Schade has learned from the experience, he says, is how simple it is to pirate games "from a platform that is supposed to be relatively secure," something he had never suspected.

For example, he says, "I've learned that the iPhone cracker community has automated the whole process. Someone downloads a paid version of the game, they run an application like Crackulous which only works on jailbroken -- or modified -- iPhones, and that strips out the DRM resulting in a cracked copy that anyone can install. If you introduce checks into your game, then it becomes a little harder for the cracker; but even that's not too difficult. I mean, none of this is difficult; just Google 'Crackulous' and you'll see what I mean."

In fact, the process of jailbreaking the iPhone has also become a largely automated affair using downloaded software. And while it is true that each time a new version of the iPhone operating system is released, the jailbreaking software is stymied by the new OS, an active hacker community has been successful at updating its tools quickly. New jailbreaking software is usually available within a couple of weeks of the unveiling of the new operating system.

The simplicity with which iPhone games can be cracked may be the reason why piracy is out of control -- even on games as inexpensive as Bram Stolk's $1.99 creation.

Indeed, says Schade, pirates do what they do because they can. And, he says, the problem is worsening; the ratio of unpaid-downloads-to-paid is growing, possibly because iPhones are increasing in popularity and it has become easier to jailbreak them.

Rally Master Pro 3D

For owners of jailbroken phones, pirating is simply "more convenient" than buying the games, Schade adds. "It's not a matter of saving money; it's just easier to go to wherever you can download the games, grab everything that's available, and drag and drop them onto your phone. They do that by the batch and then try the games out later. I also suspect that many of the pirates are kids who don't have credit cards and this may be the only way they can access the games."

Pinch Media's Yardley has also heard the argument that pirates steal because they want to try the games before they buy them but, he says, that excuse doesn't hold water.

"Our analytic software can measure when an iPhone first uses a pirated version of the game and then a legitimate version is installed over it," he reveals. "I can assure you that only one in 200 people ever do that."

While piracy rates are substantial in Western Europe and in the United States, they don't come close to those in countries like Russia, Brazil, and China. Some observers have suspected this is the result of people not having as much money in Third World countries but Yardley finds that hard to believe considering the fact that iPhones are not inexpensive devices.

"Until recently, you couldn't get a legitimate iPhone from Apple in many of these countries nor could you find a supported carrier, so the only phones that existed there were of the jailbroken variety," observes Yardley. "Which means that the only games you could play were pirated ones or nothing."

While piracy on the PC side has been thwarted in some cases by introducing DRM which introduces various license key checks -- and has been criticized for reducing the user experience -- developers of iPhone games have been reluctant to follow suit for exactly that reason. Instead, they have inserted other checks that make the games "self-aware" and that confirm that they are running in a pristine environment and are not pirated.

Should a game fail the "pirate test," different developers employ various methods to respond to the situation. In some cases, the illegitimate copy will fail to run. In other cases, the application reverts back to a "light version" with fewer features. Other times, a pop-up urges the pirate to purchase the game.

Pinch Media had considered selling anti-piracy protection but decided against it.

"If all developers were to implement the same anti-piracy scheme," says Yardley, "all the hackers would need to do is figure out how to circumvent that one scheme. Instead, we urge developers to come up with their own anti-piracy solution and most do that by inserting some sort of check directly into the game itself."

Others -- such as Ngmoco with prominent recent launches Eliminate and Touch Pets -- employ "in-app purchases" which, for example, offer the gamer advanced functionality and, at the same time, thwart piracy because the game is checked for legitimacy. But in-app purchases require an active internet connection to play the game; that impacts usage by legitimate users and is very likely to hurt sales.

"For that reason, in-app purchases are probably a bad idea for preventing piracy," observes Yardley, "unless your application always requires an internet connection anyway."

Indeed, Fishlabs' Schade was discouraged by his company's attempt at incorporating in-app purchases. "We kept some content on the server," he recalls. "Every time you wanted to play, you had to connect to the server and then we were able to verify if somebody was a valid user or not."

"But that turned off all the legal users who complained that not being able to play off-line sucked. And they were right. Of course, with an iPhone you pretty much always have to have a connection. But, on the other hand, many iPhone users are on the go and don't always have a WiFi signal. And so they can't play the game."

On one thing, everyone agrees -- it is nearly impossible to determine the financial impact piracy is having on developers. For that reason, many developers take the "ostrich" approach -- because they don't know how badly they are being hurt, they don't worry about it.

"Some developers are very, very active in their battle against piracy," says Yardley. "But others, because they can't quantify the amount of money they're losing, because they don't know how many additional sales they'd get if they put an end to piracy, they choose to put their efforts instead into improving their game instead of keeping out the hackers. I can point to people who have both trains of thought," he adds.

While Yardley believes that iPhone game piracy is having a stultifying effect on smaller developers who are just starting out and are shocked by the amount of piracy they are encountering, there are still stalwarts out there who are keeping the faith.

One of those developers is Bram Stolk, despite the massive amount of theft he encountered on his first game.

"At first I was shocked," he recalls. "I guess I expected some piracy, but I didn't know there was such a large hacker community for the iPhone. The numbers were staggering."

The Little Tank That Could

But after the initial shock, he remains undeterred. "I've accepted the fact that I'm not going to make millions of dollars on my games," he admits. "I regard making games as a hobby so, even if it's absolutely pointless to do it to make big money, it's so much fun to do that I'm continuing on... with newer and better versions of my game.

"The truth is that I haven't heard of even one iPhone game developer who is giving up because of the piracy situation. Apparently, like me, they are prepared to soldier on even if it doesn't make financial sense."