October 17, 2008

Tackling the Issues: DRM, Piracy, Digital Distribution and More with Stardock President and CEO Brad Wardell
By Louis Bedigian

“I want to put out games that when consumers see Stardock on the box they say, ‘That’s a good game, I can trust it.’”

Stardock is best known to gamers as one of the leading strategy game developers and publishers. With hits like Galactic Civilizations and Sins of a Solar Empire (and the forthcoming Demigod), most players would never guess that Stardock also runs a successful business creating desktop enhancement utilities. But that's not all they're into. As most of you are already aware, Stardock has also created its own digital distribution service, Impulse, which was designed to avoid the hurdles created by DRM (digital rights management).

Looking at the problems the game industry has recently faced with piracy and DRM complaints, who better to discuss them than Stardock's President and CEO, Brad Wardell. In our in-depth interview, Mr. Wardell tackles digital distribution, the effects of piracy, The Gamers Bill of Rights, the risk of releasing a game before it's truly finished, and the problems that could arise from a digital-only world.

“From my perspective, I’m not a big fan of DRM, or most types of DRM," he says. "When I buy a game, I understand that developers want to protect their intellectual property. But that doesn’t give them the right to treat me like a crook. If I’m paying $50 for a game, I should be able to play it without messing around [with DRM restrictions]. If I own three laptops and two PCs, I should be able to install the game on all of them. If the game wants me to use the DVD as a dongle, it better not install anything on my hard drive. I don’t like that sort of thing. That’s why our games ship with no copyright protection on DVD at all.”

Demigod, Stardock's newest RTS.

How does piracy affect Stardock?

Brad Wardell: All things that can be pirated are pirated. The question isn’t whether they’re pirated, the question is whether they’re costing [the publisher or developer] money. In other words – would that person have purchased my game if they hadn’t stolen it? And what happens is, [some publishers] get obsessed with the idea of keeping people from playing their game. “Oh no, they didn’t pay for it.” And the point is, I understand why it would p*ss someone off, but if they were never gonna buy it anyway, the focus has to be on the people who buy games. Don’t inconvenience them.

There are things you do, and the things we do, to keep people who would normally buy our games from pirating them. For example, when you want to get an update to Demigod, you have to get it from us. You can’t go on FilePlanet or whatever and get a zip file.

How do you prevent that – the update – from leaking?

BW: Because you have to get it from Impulse. The updates are actually attached to your unique account. So if you don’t have an account with us you can’t get the updates. So even if you were to get the zip, it won’t work because the updates are only available online and therefore we can require an online account to get the updates. That’s been our main focus – people who would normally buy the game. If people are going to pirate our stuff, I don’t like that they’re pirating our stuff, but that’s not going to be the main focus.

Tell us about The Gamers Bill of Rights.

BW: We released this thing called The Gamers Bill of Rights, and we’re working with other publishers. First you need to come up with something that’s acceptable to customers, and then standardize it. Then everyone who agrees on it can put it on their box so that when I go to a store, I know if I see a Gamers Bill of Right symbol on the box – not now but a year from now, let’s say – I know this game is adhering to this agreement, such as: I can return this game if it doesn’t work on my computer.

Let’s say you bought Demigod and your machine just can’t run it for some reason. You should be able to return it. And if you can’t return it to the store, you should be able to return it to the publisher and get a full refund. That’s something we do for our games now because it comes up – you have people who have older machines that don’t support Pixel Shader 2.

Do you know what Pixel Shader 2 is? You shouldn’t have to know. Would your cousin or uncle know this techie stuff? And that’s the thing, our games require Pixel Shader 2 to play. Well, that’s a DirectX 9.0c thing. If I go to the store and buy a game, and it doesn’t work because I don’t have Pixel Shader 2, I should get my money back. But most publishers won’t give you your money back because they say, “Well, you could be pirating it!”

That’s really not the consumer’s problem. If you want to be in the game industry, or the PC game industry I should say, that’s an issue that publishers have to deal with.

Stardock has mostly stuck to the PC market. Have you considered console development?

BW: Sure. We make PC games because the games we like to make do best on a PC. Real-time strategy games – they don’t do so well on a console. But if we were to make an action game or something that would work on a console, then that is definitely something we’d consider.

Sins of a Solar Empire has proved to be a colossal hit, already selling more than 500,000 copies.

Going forward with the market, a lot of developers want both consoles and PCs to be completely digital. They envision a download-only or online-only world for games. But what I always think about is, when music went digital, that’s when people really started to pirate CDs. You didn’t have people passing around CDs before then.

BW: Oh sure they did.

Not like it was when Napster hit. When file-sharing hit it big, that’s when it really happened. So what do you think will happen with video games – should we stay with the current disc-based format?

BW: Five years from now all your stuff will be coming online. It’s a practical matter. They’ll require you to have an Internet connection because that’s how they get you the content.

What about hard drive space? How will developers remedy that? Will it be a case where, instead of buying several individual hard copies of games, I have several hard drives?

BW: Well, do you have a TiVo at home?

No, I don’t have a TiVo for the very reason that I’d eventually have to delete all the shows I watch. I like to record and save specific shows so that I have a VHS copy to re-watch until the DVD is available.

BW: The idea with digital distribution, or with Impulse, is that you purchase something that becomes part of your account. That’s one of the other problems we have with digital distribution is that you don’t really feel like you own [what you’ve purchased]. You delete it and it’s gone. With Impulse you have a download manager – it’s not a DRM system. I’m buying this game or this application, it’s a part of my account and library. The licenses are not tied to your computer, they’re tied to you. And that’s a big difference.

We don’t have to worry about, “Oh, well you already installed it on another computer.” Impulse doesn’t care. Impulse cares that it’s your account. Now if you share your account with people, you can tell. If we’re getting download requests, once from China and another from Europe in the same day, your account has been hacked and we can shut it off. The issue is, I buy a game, it’s my game, forever.

Five years from now, I want to play a game, I only have finite hard drive space, I pick which game I want to play and it installs it. In another couple years, the download speeds are going to be insane. Where were Internet speeds five years ago? In 2003, most people were on a 56k modem. Now cable modems are at 16 megabit connections. In another five years we’ll be at 100 megabit or a gigabit. At that speed, I mean, you’ll be downloading these games [very quickly].

If I have 50 games in my library and my library exists on Impulse, and I want to play Grand Theft Auto 6, and I haven’t played it in six months, well that’s okay, [I can get it from Impulse]. The beauty of this is that it solves a lot of the piracy issues. It will still be pirated but only by people who are willing to go out of their way to pirate it, who are really into the warez scene, and they were never gonna buy it anyway. Whereas today it’s more convenient to pirate a game than it is to be a legitimate owner.

The Political Machine 2008

I haven’t tried Spore, but I’ve heard…

BW: Spore is a good example. When it came out you could only install it on three machines. Well, I have this computer, and I have my laptop that I carry around when I go on business. And I have my home desktop. There’s my three systems right there. EA released a statistic claiming that only a tiny percent of users have a game installed on three machines. They said 16% install on two machines, and less than 1% install on more than three machines, and I said bull. I’ve never seen a curve like that. The curve is not 80%, 19%, 1%. It’s going to be 70%, 30%, and it decreases by about half.

But even still, you’re going to have a significant number of people who are going to want to install it on multiple computers over the course of the lifetime of the game. With the Sims, and I’ve installed that on so many computers over the years because I’ve upgraded – I get a new machine at work or a new laptop, and it drives me crazy thinking I have to call some number to play a game I paid for because I’ve installed it on more than a couple machines. Or I get Windows 7 or upgrade to Windows Vista or whatever, so now things have changed. Or I get a solid state drive or a new video card.

What about the plug-n-play aspect? You mentioned dongles before. Wouldn’t it be easier if…

BW: Oh, I don’t like dongles.

Wouldn’t it be easier in some cases if a company like EA provided a USB dongle with each game?

BW: But I’m gonna lose that dongle. Imagine if every game did that – every time I want to play I gotta look for my dongle. I’ll be looking for USB keys to play a game. Pirates don’t have to do that.

My biggest problem with DRM, the DRM schemes that are out there – I don’t have a problem with DRM per se, the concept of it, I have a problem with any implementation that makes me as a consumer feel like a chump for buying the game.

Let’s use a dongle key as an example. I’m a good guy, I buy the game instead of pirating it, and I have a dongle, whereas the pirate doesn’t have to be inconvenienced with that. Now I feel like a chump. ‘Cause I can go on BitTorrent to get the game. I can pirate Spore on day one, but I’m not, I’m buying it. I’m being a good guy and doing the right thing. So any DRM that makes me feel that way… I think what you’re actually going to have is that games will require people to be on the Internet when installing them. And people will either agree to accept that or they won’t play games.

The problem with that is, under the most perfect situation, with the most perfect Internet connections, you’re eventually going to have servers crash, preventing people from logging on.

BW: Not to play, just install. Before they can make it online… Think of what happened when 3D cards were new. Games were incredibly flaky on these new 3D cards. Any time a new technology is introduced, there are growing pains. Look at World of Warcraft – when it first came out it was a disaster. But nowadays you never hear about people not being able to get on a server. That’s a thing of the past.

But when they’re first launching an online-only platform, it’s naïve for console manufacturers – or anyone in the industry, for that matter – to think they won’t have problems, and that’s what will turn people off.

BW: That’s because they try to invent the wheel themselves. What’s going to happen is, you’ll have companies that will provide these services to publishers, and they’ll simply rent these services which have already taken care of the backbone.

But will Sony, Microsoft and Nintendo and all the third parties be ready for that? I like being able to pop in a disc and take it out, and most consumers seem to as well.

BW: Five years from now, you will get the majority of your Xbox 720 or whatever games from Xbox Live Arcade, which has been a huge hit.

But those are small file sizes.

BW: That’s only ‘cause of bandwidth.

Galactic Civilizations

What about Blu-ray? Metal Gear Solid 4 is well over 30 gigabytes. The next generation of games will probably be twice that. So as Internet speeds increase, the space required for new games increases as well.

BW: Sure, but what they’ll have is, the platform provider will provide authentication. So, something like a Metal Gear Solid, there will still be some games that are so big they’ll come out on Blu-ray, but you’ll still have to have an Internet connection to activate ‘em.

That won’t go over well with some consumers.

BW: They won’t even know it’s happening.

But you have to be online. What if I don’t want to be online? What if I’m away from home?

BW: The [future generation of] consoles will require that you have Internet access to use them.

That’s gonna limit a console’s full potential. Look at all the people who own a Wii and don’t go online.

BW: Today. But long-term… Ten years ago, if someone had said to me that everyone would have cable TV and not be using rabbit ears, I would’ve thought no way. Nowadays, people accept that you have to have cable.

Right now [Internet connections are] spotty, but eventually connectivity will be ubiquitous. I don’t know how long that will be but when it does happen, when a certain threshold of the market share has Internet access, connectivity will be ubiquitous. You can bet that games are going to require that. And not just for copyright protection but because they can provide so many other services to the player. We’re not there yet. But I think that’s where it’s going to go.

Give us your take on release dates.

BW: When the beta testers say the game is ready, we’ll do it. Otherwise we’ll push it back. And not just for bugs – if the game isn’t really good, we’ll hold it back. We have an advantage because of our desktop enhancement [business], we don’t have to ship a game to meet some kind of financial quota. We can wait until we’re really happy with the game. We did that with Sins of a Solar Empire. That game was supposed to come out Christmas of last year. We decided to push it back a little, Ironclad [the developer] agreed, and we made a huge difference. We were able to add so much more to it.

That’s a great philosophy. It’s cool that you have two development venues – so many publishers and developers have one area of income.

BW: And they have to get their game out.

Is Stardock public or private?

BW: Private. I care about the games being profitable, but it has to be really good. I want to put out games that when consumers see Stardock on the box they say, “That’s a good game, I can trust it.”

Awesome. Thank you for your time, it’s been great.

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