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>To DRM or not to DRM

>The FTC recently held a “Town Hall” meeting to address the use of Digital Right Management (DRM) technologies on March 25, in Seattle. Several consumers groups, including the Entertainment Consumer’s Association (ECA), were there to push for better disclosure of DRM on game packaging and better communication between gamers and game publishers on the issue of DRM. You can check out the ECA’s website, where you will see an attempt to outline a set of standard DRM rights for consumers and for copyright owners.

My two favorite PC games of 2008 were World of Goo and Sins of a Solar Empire. What is unusual about these two games is that neither of them are packaged with conventional DRM restrictions. 2D Boy, the publisher of World of Goo, reasoned that “people who pirate our game aren’t people who would have purchased it had they not been able to get it without paying.” Stardock, the publisher of Sins of a Solar Empire, feels that “the most effective way to increase sales is to protect IP in a way that doesn’t seem to punish legitimate customers.” Similar to the analysis conducted by 2D Boy and Stardock, each video game company needs to ask itself how it wants to balance the different business and legal issues surrounding whether or not to use DRM — just as piracy is a problem, we have also seen that using DRM can result in consumer backlash and legal problems, which may be just as harmful as the piracy.

For example, at the other end of last year’s video game DRM spectrum was EA’s Spore. Spore generated quite a gamer backlash with its DRM policies, such as a three install limit. EA eventually eased the game’s DRM restrictions by increasing the install limit to five and implementing a de-authorization process for old installs. Nevertheless, a group of gamers filed a class-action lawsuit in the Northern District of California last September, claiming that consumers were not warned about Spore’s DRM program, which is installed without notice and cannot be uninstalled, even if they uninstall Spore. The DRM program implemented by EA was developed by Sony, who, as you may recall, was involved in the CD Rootkit DRM lawsuits a couple of years back.

These lawsuits indicate that consumers are willing to bring lawsuits against DRM that conflicts with the consumers’ expectations of what they can and cannot do with purchased games and music. Whether or not EA or Sony believed that these lawsuits had merit does not remove the practical reality that EA and Sony had to defend against the lawsuits and deal with the resulting publicity. While not necessarily a true cause-and-effect, it is noteworthy that EA has already announced that its next hotly-anticipated game, Sims 3, will not include the same type of DRM restrictions as Spore.

Discussion like the FTC’s Town Hall and organized consumer groups like the ECA may lead to more standardization of DRM policies across the video game industry, such as disclosures on game packaging and standards for DRM technologies. These future developments may help to minimize the risk of unpleasant surprises for game publishers when DRM in a new game conflicts with consumer expectations and/or triggers lawsuits. In the meantime, a careful analysis should be performed when considering the whether to implement DRM, and if so, the type, mechanism, and the actual implementation.

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