Piracy Heats Up

Electronic Gaming Business, Feb 25, 2004

In submitting information to the IIPA for its report to the U.S. Trade Representative, the ESA said that game counterfeiting was an organized criminal behavior overseas. "International piracy tends to be more institutional," says Stevan Mitchell, VP, Intellectual property policy, ESA. "It's the nature of the beast. When you are setting up lines of CD production that stamp these discs instead of burn them you are talking about a level of investment that is unavailable to individuals -- $250,000 to $1 million."

The IIPA report finds that Pakistan has an optical disc production capacity of 180 million, up to 45 times the production necessary to satisfy domestic demand, with pirates in Bulgaria and Indonesia also obviously producing illegal discs for a worldwide market.

Policing piracy on this scale requires cooperation from the local officials, and the ESA credits recent U.S. administrations with taking a hard line with foreign governments about protecting U.S. intellectual property rights. "The government and particularly the trade representatives have been extremely responsive," says Mitchell. Recent agreements with Singapore have helped shut down local Internet servers trading in pirated software. In addition to holding hearings on countries under special scrutiny, the trade rep uses a number of tools to reward cooperation, including preferential trade programs that proffer duty free benefits on select countries.

And these efforts have an effect, says Mitchell. A major bust last year of a known supplier of bootleg Nintendo software and PlayStation peripherals in Singapore was shut down after an extensive investigation by local police and ESA attorneys. "That had a major impact on piracy," he says. "The market was much cleaner after that, although there are more players trying to fill the void."

While combating organized piracy is a never-ending pursuit, shaving just a small bit from a region's bootleg market can make enough room for legitimate publishers and hardware makers to see their way in. "There's a long way to go for governments to clean up," says Lowenstein. "If we can reduce piracy even a little bit the risk/rewards model is more palatable."

Contacts: Julia Bishop-Cross, 636/720-3600; Ric Hirsch, Doug Lowenstein, Stevan Mitchell, 202/223-2400

2003 Trade Loss & Copyright Piracy Levels (Entertainment Software)
Country       $ Loss (in millions)  Piracy Level
Brazil        125.7                 56%
China         568.2                 96%
Egypt         NA                    90%
India         113.3                 84%
Israel        NA                    75%
Italy         168.5                 47%
Saudi Arabia  64                    83%
South Korea   248.4                 36%
Taiwan        261.8                 42%
Ukraine       NA                    85%
Source: IIPA ( http://www.iipa.com )

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