How Piracy can Break an Industry – the Brazilian Case

This is a guest article by Tiago Tex Pine
I’ve been reading about Nintendo urging governments for more actions against game piracy around the world. Their claim specifically mentions Brazil. I’d like to add more information about this country (since I live here :D).

This is a short story of how piracy broke an once prosperous industry, and hopefully it can be a warning for the game industries of other countries.

The 8-16 bits Era

During the 8 bits and 16 bits era, Brazil had a strong presence of Sega products through partnership with a local company, Tec Toy. The Master System and later the Mega Drive (Genesis) systems were hits. Tec Toy made localizations of major titles like Phantasy Star and Riven (with voices dubbed for Portuguese!). Growth and media awareness was high – to the point a very popular TV show (Programa Silvio Santos) had a video-game competition around Sega games like Sonic.

In 1993, Nintendo arrived officially in the market with a join venture with the biggest toy-maker, Estrela, and a major electronic devices maker, Gradiente. Super NES was officially released, and one could find official cartridges in major super-stores, pretty much the way Americans buy games at Wal-Mart. The market was promising and realistic analysis projected a size of US$ 1 billion for the first years of the 21th century.

Playstation Era: piracy runs rampant

Then it came the Playstation. It was a shift for the industry globally, and even if not officially released here, it was expected to be imported and compete with local manufactured systems. Fair enough. But what happened next was completely different from a healthy competition.

The CD-based platform allowed piracy to take over the official players with incredibly cheap and low-quality copies of games. The government did nothing to stop it – on the contrary, taxes over games was (and still is) so high it was impossible for shop owners to sell at a competitive price. So they just stopped selling entirely. Why insisting on something so difficult if store spaces can be filled with more salable products?

Playstation was never released officially in Brazil, but smuggled units became wildly popular and replaced official systems. Every Playstation-owner had CD-cases filled with pirated games. The joint-venture of Nintendo bankrupted, and Tec Toy came very close to close doors as well.

Smuggled Playstation 2 units consolidated piracy afterwards.

Game market today

Game piracy is endemic: 94% of PC retail games and nearly 100% of console games are pirated. Not even the richest youth of the country bothers to buy original console games, which cost US$ 98. Like everyone else they can easily spot illegal street vendors selling pirated games for US$ 8 or less. On online-distributed games, even low-cost Brazilian titles in Portuguese like Brasfoot (US$ 7) and CaveDays (US$ 14,5) are hacked by piracy-dedicated blogs, foruns and Torrent sites.

The outcome: Brazilian game market is estimated to be around US$ 52 millions. A pathetic performance for the 8th biggest economy in the world.

Illegal street vendors and cops

Cops and illegal street vendors. Business as usual.

I applaud Microsoft for making a bold attempt to bring XBOX 360 in 2006, the first console officially released here in many years. I also applaud the few Brazilian game developers for the courage to struggle in such a hostile market. They are incredibly talented, could do wonders, but have only four options to survive as developers: subscription-based online games, mobile gaming, advergaming or exporting.

What about Nintendo claim?

Nintendo should forget about having any support from the Brazilian government. Because even if congressmen hear the claims, they will first have to combat the ever-increasing DVD piracy problem. What happened to games is happening with the DVD industry – street vendors with pirated copies will break it. Hey, even the President was cough watching pirated movies!

Could we write better laws? We already have good laws regarding copyright infringement. But police say “there are worse crimes to combat”. And that’s probably true: we also have good laws regarding homicide, but just 1% of murderers are solved in Brazil. One percent!

Impunity is by far the worst Brazilian problem as a nation. Law isn’t enforced. It won’t change anytime soon. Brazilian National Congress completely lost credibility and if Justice doesn’t reach murderers, it won’t reach pirates.

An actor of a widely-pirated movie, “Tropa de Elite”, goes after an illegal street vendor!

PS: I have faith that a steadily economic growth and the increasing education rates will change this country for good by the end of 2020. Will take that much time though.

Tiago Tex Pine