The true cost of game piracy: 20 percent of revenue, according to a new study
Analysis of Denuvo DRM cracking shows significant impacts on publishers' bottom lines.
Throughout the game industry's short history, there's been ample debate about how much piracy actually impacts a game's legitimate sales. On one side, some publishers try to argue that every single pirated download should count as a "lost sale" that they would have logged in a theoretical piracy-free world. On the other side, some wiseacres argue that most pirates would never consider paying for a legitimate version of the game in the first place or that piracy can actually be useful as a word-of-mouth promotional tool.
While the true effect of piracy on sales revenue is likely somewhere between those two extremes, piracy's precise financial impact on a game has always been hard to nail down. Now, though, a recently published study uses post-release cracks of Denuvo's DRM protections as a sort of natural experiment on games sales in pre- and post-piracy worlds. The results "imply an average proportionate loss of revenue of around 19 percent in each week of release if a crack is available," according to the study, suggesting that effective DRM can actually have a significant impact on a publisher's bottom line.
The data dance
In "The Revenue Effects of Denuvo Digital Rights Management on PC Video Games," published in the peer-reviewed journal Entertainment Computing, UNC research associate William Volckmann examines 86 different Denuvo-protected games initially released on Steam between September 2014 and the end of 2022. That sample includes many games where Denuvo protection endured for at least 12 weeks (when new sales tend to drop off to "negligible" amounts for most games) and many others where earlier cracks allowed for widespread piracy at some point.
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