Gabe Newell: Piracy is a “Non-issue” to Valve; Providing better Services Will Result in More Sales

No one knows the PC market better than Valve, and in a recent interview with TCS, Gabe Newell explained why Valve is so successful. Recently we reported how Ubisoft were shunning the PC market due to Piracy, and imposing heavy DRM on their customers, but according to Newell that’s not really the right way to go about it.

He said that there is a general misconception about piracy, and it’s not really the high cost that forces people to pirate. It’s about the delivery service and how convenient it is to people with purchasing power.

“In general, we think there is a fundamental misconception about piracy. Piracy is almost always a service problem and not a pricing problem,” he said.

“For example, if a pirate offers a product anywhere in the world, 24 x 7, purchasable from the convenience of your personal computer, and the legal provider says the product is region-locked, will come to your country 3 months after the US release, and can only be purchased at a brick and mortar store, then the pirate’s service is more valuable.”

In a way, I agree with him. Imposing heavy DRM on software will only turn off the legit customers and that’s more detrimental to sales than being beneficial. Coming back to the Ubisoft example, they do make very good games for the PC.

The quality of the Anno franchise is inarguable, and they have released some quality exclusives now and then on the platform. But most of these software contain one type of DRM or the other, and it’s confusing why Ubisoft chooses to go this route.

Recently Ubisoft said that, “95% of people will pirate our game.” It’s a ridiculous thing to say without releasing any sort of data and they have also cancelled Ghost Recon: Future Soldier for the PC. Yes, they may be hurting due to piracy, but going from one extreme to the other is not the solution and Ubisoft needs to understand this.

Newell explained a lot more as to how they were providing better services and creating a sense of brand loyalty. He mentioned that piracy is basically a “Non-issue” for Valve.

“Our goal is to create greater service value than pirates, and this has been successful enough for us that piracy is basically a non-issue for our company.”

He also gave a nifty example as to why this is the case.

“Prior to entering the Russian market, we were told that Russia was a waste of time because everyone would pirate our products. Russia is now about to become our largest market in Europe,” he revealed.

If only Ubisoft and others could learn a thing or two from this man, the gaming industry would be in a much better position.

P.S. He has no idea about Half-Life 3.