Quick Denuvo DRM Cracks Cost Game Publishers 20% in Revenue, According to Study

[AleksandarK]

According to a study by William M. Volckmann II from the University of North Carolina, we have received an insight into the financial consequences of digital rights management (DRM) breaches in the PC gaming industry. The research, titled "The Revenue Effects of Denuvo Digital Rights Management on PC Video Games," offers valuable insights into the relationship between piracy and game sales. The study's most striking finding reveals that when Denuvo, a popular anti-piracy technology, is quickly compromised, game publishers face an average revenue decline of 20%. Interestingly, the research suggests that long-term DRM implementation may be unnecessary. Volckmann's analysis indicates that games cracked after the first three months of release or those from which publishers voluntarily removed DRM protection after this period experienced negligible revenue loss.

The study also explored potential predictors for quick DRM breaches but found no conclusive indicators based on game characteristics. This unpredictability poses a challenge for publishers in assessing the risk of piracy for individual titles. Volckmann acknowledges gamers' concerns about DRM's technical drawbacks, recommending that publishers consider removing such protections after the critical initial three-month window. This approach could balance piracy prevention with user experience optimization. The findings present a compelling case for publishers to reconsider their DRM strategies. While protecting games during the launch period remains crucial, extended DRM usage may offer diminishing returns.



View at TechPowerUp Main Site | Source

 

[aktpu]

Putting Denuvo in your game costs you 20% in revenue

 

[Klemc]

1/5 work

 

[DarbyOGill]

Anyone who cracks / pirates a game was never going to buy it to begin with, so is it really lost revenue in that sense?

From my own perspective, performance impacting DRM like DENUVO makes me not want to purchase. I'd rather wait a year, until the Devs remove it and by then I'm getting it at 50% off during a STEAM sale... so that's real lost revenue.

 

[JWNoctis]

Interesting, but somewhat less so than the more salient, and messed-up, question of revenue differences, after factoring in such things as licencing costs etc. of not implementing any DRM whatsoever, versus implementing them.

Latest high-profile release without any DRM I know of was Frostpunk 2. I wonder how it worked out for them.

On the subject of Denuvo DRM, the case of the Switch version of Hogwarts Legacy indicated that the game required a 30+GB download despite being in cartridge format, and contained "anti-piracy measures" which I presume meant Denuvo, on a console game with a physical cartridge. I promptly returned it the same day.

 

[lexluthermiester]

Quick Denuvo DRM Cracks Cost Game Publishers 20% in Revenue, According to Study

This is blatantly untrue. GOG titles have ZERO DRM and deals with very little piracy. Sure, there is some piracy(there's always going to be), but it's such a small factor it doesn't effect their bottom line.

Denuvo is lies. They fabricate numbers to push their crap product. It is shady, deceitful humbuggery at it's worst. Pure garbage.

 

[Haile Selassie]

This is blatantly untrue. GOG titles have ZERO DRM and deals with very little piracy. Sure, there is some piracy(there's always going to be), but it's such a small factor it doesn't effect their bottom line.

I would assume you have a statistically relevant source for this, which tracks redistribution of unlicensed copies of their DRM-free installers.

 

[chrcoluk]

I would assume you have a statistically relevant source for this, which tracks redistribution of unlicensed copies of their DRM-free installers.

I myself am proof, as a young guy with no money, struggling to pay rent and buy food, I would pirate PC games I wanted to play, now as a middle aged adult with money, I buy games I want to play.

The main reasons for using pirated products in my opinion are.

1 - Cant afford to buy (so not a customer anyway with no cracked availability).
2 - Region locking, staggered releases, basically availability. (founder of steam mentioned this)
3 - Try before you buy approach.
4 - To avoid DRM, dont like the idea of a online DRM server going down, performance hit of Denuvo etc. There is people who deliberatly dont buy or buy it but then play pirated version. Netflix and co will be falling into this, as we now in an era where content just gets pulled when they dont renew streaming rights.

Its lunacy to suggest that anyone who downloads pirated media would have otherwise purchased it.

 

[londiste]

Putting Denuvo in your game costs you 20% in revenue

Denuvo is lies. They fabricate numbers to push their crap product. It is shady, deceitful humbuggery at it's worst. Pure garbage.

I mean, did you read past the headline? Or even past the part where Denuvo was mentioned?

The study takes some liberties in estimating revenues having to resort to roundabout ways like Steam game ownership and player numbers. But the results do look reasonably substantiated. And they did look at a reasonably large sample with varying times of game getting cracked. What they found was that if the game is cracked within 12 weeks, there is a 20% average drop in revenue after the game is cracked. 12 weeks is largely because then the game is no longer new, buyer numbers have dropped and the effect of piracy can no longer be determined.

 

[JWNoctis]

This is blatantly untrue. GOG titles have ZERO DRM and deals with very little piracy. Sure, there is some piracy(there's always going to be), but it's such a small factor it doesn't effect their bottom line.

Denuvo is lies. They fabricate numbers to push their crap product. It is shady, deceitful humbuggery at it's worst. Pure garbage.

It had been that way since SecuROM was new, and even before that when I seem to remember people pressing deliberate bad sectors or even special spiral-tracked floppies to get around piracy. They were kind of justified in the context of much more lax anti-piracy and IP enforcement than now.

These days, though? I doubt that DRM is Denuvo's biggest problem. But hardly surprising, given how there are now whole industries of doubtful "natural products" people would gladly put inside their bodies, not merely their computers.

I myself am proof, as a young guy with no money, struggling to pay rent and buy food, I would pirate PC games I wanted to play, now as a middle aged adult with money, I buy games I want to play.

The main reasons for using pirated products in my opinion are.

1 - Cant afford to buy (so not a customer anyway with no cracked availability).
2 - Region locking, staggered releases, basically availability. (founder of steam mentioned this)
3 - Try before you buy approach.
4 - To avoid DRM, dont like the idea of a online DRM server going down, performance hit of Denuvo etc. There is people who deliberatly dont buy or buy it but then play pirated version. Netflix and co will be falling into this, as we now in an era where content just gets pulled when they dont renew streaming rights.

Its lunacy to suggest that anyone who downloads pirated media would have otherwise purchased it.

There is a 5 - Genuine freeloaders, people I've seen too much in earlier times, and still more common in some markets than others. How much of an impact they would have is the exact debate here.

 

[Vayra86]

I mean, did you read past the headline? Or even past the part where Denuvo was mentioned?

The study takes some liberties in estimating revenues having to resort to roundabout ways like Steam game ownership and player numbers. But the results do look reasonably substantiated. And they did look at a reasonably large sample with varying times of game getting cracked. What they found was that if the game is cracked within 12 weeks, there is a 20% average drop in revenue after the game is cracked. 12 weeks is largely because then the game is no longer new, buyer numbers have dropped and the effect of piracy can no longer be determined.

And now, let's consider the revenue drop on a game like say, The Witcher 3, or Cyberpunk 2077 which didn't have Denuvo at all.

Woops. Data missing. We do know that even despite their launch clusterfck Cyberpunk still sold. The Witcher 3 sold enough to make CDPR soar to unforeseen heights. Gaming as a whole keeps posting revenue record after record YoY. Covid? Gaming go up? Post-covid? Gaming go up. Inflation? Gaming go up. War? ... You guessed it. That revenue isn't coming from pirated games

There are so many influences on revenue loss at launch, it all depends on what you choose to look at. Denuvo in isolation? Sure, but let's also consider that Denuvo is applied specifically to a lot of high profile titles, games these days you really don't WANT to buy at launch at all. And once you've played a few hours of them, games like, say, Starfield (never bought it, for good reasons evidently), would you then proceed buying them?! The only people who play that game are those who wasted 70-100 bucks on it, because otherwise you're doubly screwed. Bethesda doesn't really do returns, as we've seen far too often - they just happily present you the middle finger. The absence of demo material is another reason to just circumvent Denuvo and try a game before buying in ways left unmentioned. Was I gonna be a buyer to begin with? Doubtful.

Regardless, Denuvo's selling point is the supposed return of lost revenue because of its presence... but below that is the sentiment of buyers simply getting hit with a subpar experience. So Denuvo is actually damaging the entire playerbase for its presence. What do you mean 'balance between UX and preventing piracy'? If I was paying for my product, why would I need to care about piracy? This has always been the core issue with DRM practices and it will never go away. The only DRM that should be allowed to begin with, is the DRM we don't see, don't notice, and never get motivated to even care about. Denuvo is not that. Its a complete POS and honestly it just inspires me to not pay for said product at all.

And let's face it. I think despite this stance I've got a library of over 800 games purchased across various launchers, and I'm no exception. Good games simply thrive, on goodwill, on community drive, whatever, but they just remain because of pure merit. The rest is just trying to get by and Denuvo is simply a bandaid, along with shitloads of marketing, peer pressure and influencing. Its a fairy tale piracy is influential on any of these factors. The idea to fight piracy is just an example of the endless corporate greed, gotta catch all the coins, while being blind to the emotions underneath. The REAL issue here, is that there's far too much content, far too many games coming out, and far too much crap amongst it. We could do with far less, but higher quality titles, and I'll guarantee you they'll all get bought then. Effectively the fight against piracy is also a way to maximize a market, even though it doesn't deserve that size at all for what it offers.

 

[londiste]

And now, let's consider the revenue drop on a game like say, The Witcher 3, or Cyberpunk 2077 which didn't have Denuvo at all.

What do you mean? The revenue of a released games generally follows a pretty similar curve - relative to the revenue at launch day/week of course, nominal numbers vary.

Ars Technica has a better write-up on what the study found:

The true cost of game piracy: 20 percent of revenue, according to a new study

Analysis of Denuvo DRM cracking shows significant impacts on publishers’ bottom lines.

arstechnica.com

This graph is probably the best illustration of their findings:

 

[kondamin]

If I were a game publisher I would be more worried my product loses its relevance after a mere 3 months especially considering AAA titles have development times measured in years and budgets in the hundreds of millions

 

[qlum]

Not sure without the actual paper, but it would not surprise me if biasses crept in the study. For example higher budget games with similar review scores may be better protected. I don't know if there even exists good data to make this conclusion with any degree of certainty. On the other hand high profile games have more eyes on them to be cracked.

I no longer pirate games myself and have not done so for a long time but when I did, a game not being cracked meant I played a game which was cracked.

I feel like this 20% buying specific games because they are not cracked does not pass the smell test, as there are plenty of other games for pirates to play.

 

[Vayra86]

What do you mean? The revenue of a released games generally follows a pretty similar curve - relative to the revenue at launch day/week of course, nominal numbers vary.

Ars Technica has a better write-up on what the study found:

The true cost of game piracy: 20 percent of revenue, according to a new study

Analysis of Denuvo DRM cracking shows significant impacts on publishers’ bottom lines.

arstechnica.com

This graph is probably the best illustration of their findings:

Stop and think for a minute. Cyberpunk sold a lot in pre order and at launch. Without Denuvo. You could pirate it... but it was never even a talking point. Are we saying now that we know Cyberpunk lost 20% at launch? And even if it did, was that 20% not recovered later down the line, when Cyberpunk either got discounted (and then opening up the sell of Phantom Liberty, mind) or people bought it come patch 1.21 or later down the line when things were 'fixed'? You can present a graph here but it only measures a single angle of a game's release and the influence on revenue. There are various examples in the industry doing things differently, and we don't see those studios struggling with piracy. The real struggle is budget and then consequently selling the product proper, getting enough attention for it.

The only studios that struggle with piracy are those who release shitty games. So in the grand scheme of things... piracy is irrelevant. It won't kill devs who release good products because those always survive on merit alone, and if it kills a dev that releases shitty products... nothing of value was lost.

 

[64K]

It's pretty obvious that the most revenue comes from gamers buying at release or shortly thereafter. Gamers aren't a patient lot. That's why there is little point in keeping Denuvo beyond a few weeks or so.

I can't back this up with proof but I strongly suspect that the majority of pirates are people who can't afford the $60 or $70 for a game to begin with so they will never be 'lost sales' to any publisher. I do know of a good bit that can afford the games but choose to wait and get them for free and even boast about it openly on some game sites. They are the only ones that are hurting our hobby but what can be done about them?

 

[londiste]

Stop and think for a minute. Cyberpunk sold a lot in pre order and at launch. Without Denuvo. You could pirate it... but it was never even a talking point. Are we saying now that we know Cyberpunk lost 20% at launch?

That was not the point of the study.

 

[Shihab]

Hmmm. I wonder what the consequences to Elsevier's revenue would be if someone uploaded this paper to you-know-what this week. </s>

Not sure why y'all hating here. What the abstract proposes is a win-win situation for everyone (except for opinionated, hopeless consumerists, I suppose).

Its lunacy to suggest that anyone who downloads pirated media would have otherwise purchased it.

To be fair, it's equally lunacy to claim the inverse.
The late emperor has a point. Without hard data and analyses, it's just opinions.

 

[lexluthermiester]

The study takes some liberties

Yes. That is the involved in the "lies" part.

That was not the point of the study.

The study itself is inherently flawed.

 

[londiste]

The study itself is inherently flawed.

Why?

Yes. That is the involved in the "lies" part.

Unfortunately, the lack of good publicly available sales data for most games makes it difficult to measure these revenue effects directly. To estimate a Steam game's relative sales decline in each week after release, Volckmann uses a proxy that combines the number of new Steam user reviews and, for single-player narrative games, the game's average active player count. While Volckmann acknowledges that these imperfect estimates represent "the biggest limitation of this study," any estimated biases away from actual sales data seem likely to cancel out across the various games in the sample.

 

[silentbogo]

Here we go again. Over 25 years ago I've heard the exact same crap, yet in regards to video games specifically - it's even a bigger load of bullcrap.

Lemme tell you a very funny story. Just gotta find a link this study real quick.

So, the story goes: EU decided to create a commission to perform a study on impact of piracy on multimedia, probably and most likely to prove few points and pass some laws afterwards to tighten the grip on the legal front against evil pirates. The study concluded in 2015 but the results were so unexpected that they kinda held on to it for awhile and didn't publish right away.
Methodology is still inheritly flawed, especially when it comes to movies. Every "pirated" instance is treated as "loss", but at least they are considering "conversions" this time, unlike anything before that.
Same for games, where if a potential "pirate" can afford, let's say, a "subscription" at minimal price bracket but not considering it, it's also a loss(at least as far as I understand their logic).

The study is quite long(300+ pages), but TLDR is as follows:
1) on page 14 there's a summary
2) Games actually benefit[!] from piracy in terms of later conversions, thus increasing sales by 24%

https://felixreda.eu/wp-content/uploads/2017/09/displacement_study.pdf

So, pirates of EU, ahoy! You are saving the gaming industry!

 

[Vayra86]

That was not the point of the study.

But its crucial to it, because the study tries to quantify the 'value of Denuvo' for publishers. The real story here is that Volckmann measures something that is not measurable, because you can't look into people's heads. The unstoppable human drive to capture emotions and behaviour in statistics never really works out all too well. We're not machines, and we're not statistical averages. We're people who get influenced by thousands of factors every day, local, external, internal, regional, global...

All those factors are lost here but now we attribute some kind of value to a 'loss of 20%'. I'm sure in the tiny corporate board room mind, this is a thing. But it shouldn't be for us.

The article on ars is full of disclaimers. 'Yeah, you can't, but he did anyway' and then some number rolls out, but really, it could be anything between 5 and 50% given all the factors left unmentioned or simply not possible to calculate. Additionally, there's no counter study assessing the positive impact of piracy, which exists, see above. Effects cancel each other out.

Here we go again. Over 25 years ago I've heard the exact same crap, yet in regards to video games specifically - it's even a bigger load of bullcrap.

Lemme tell you a very funny story. Just gotta find a link this study real quick.

So, the story goes: EU decided to create a commission to perform a study on impact of piracy on multimedia, probably and most likely to prove few points and pass some laws afterwards to tighten the grip on the legal front against evil pirates. The study concluded in 2015 but the results were so unexpected that they kinda held on to it for awhile and didn't publish right away.
Methodology is still inheritly flawed, especially when it comes to movies. Every "pirated" instance is treated as "loss", but at least they are considering "conversions" this time, unlike anything before that.
Same for games, where if a potential "pirate" can afford, let's say, a "subscription" at minimal price bracket but not considering it, it's also a loss(at least as far as I understand their logic).

The study is quite long(117 pages), but TLDR is as follows:
1) on page 14 there's a summary
2) Games actually benefit[!] from piracy in terms of later conversions, thus increasing sales by 24%

https://felixreda.eu/wp-content/uploads/2017/09/displacement_study.pdf

So, pirates of EU, ahoy! You are saving the gaming industry!

Yep... and then there's another effect that went unmentioned here, but throughout human history, piracy has proven key to preservation of history. This applies in a huge way to software that goes EOL/legacy or gets overwritten with a new version. It is piracy, unlocking, cracking, writing custom code, that keeps things useable when the publisher itself can't be bothered to.

In a way, piracy also promotes transparency in information, by making it available to the entire audience. It has a Robin Hood type of characteristic that way, elevating 'the poor'.

 

[JWNoctis]

Here we go again. Over 25 years ago I've heard the exact same crap, yet in regards to video games specifically - it's even a bigger load of bullcrap.

Lemme tell you a very funny story. Just gotta find a link this study real quick.

So, the story goes: EU decided to create a commission to perform a study on impact of piracy on multimedia, probably and most likely to prove few points and pass some laws afterwards to tighten the grip on the legal front against evil pirates. The study concluded in 2015 but the results were so unexpected that they kinda held on to it for awhile and didn't publish right away.
Methodology is still inheritly flawed, especially when it comes to movies. Every "pirated" instance is treated as "loss", but at least they are considering "conversions" this time, unlike anything before that.
Same for games, where if a potential "pirate" can afford, let's say, a "subscription" at minimal price bracket but not considering it, it's also a loss(at least as far as I understand their logic).

The study is quite long(117 pages), but TLDR is as follows:
1) on page 14 there's a summary
2) Games actually benefit[!] from piracy in terms of later conversions, thus increasing sales by 24%

https://felixreda.eu/wp-content/uploads/2017/09/displacement_study.pdf

So, pirates of EU, ahoy! You are saving the gaming industry!

I swear, when I get a way to travel across multiverse, I'd set up an observational experiment to settle this once and for all.

 

[chrcoluk]

Hmmm. I wonder what the consequences to Elsevier's revenue would be if someone uploaded this paper to you-know-what this week. </s>

Not sure why y'all hating here. What the abstract proposes is a win-win situation for everyone (except for opinionated, hopeless consumerists, I suppose).


To be fair, it's equally lunacy to claim the inverse.
The late emperor has a point. Without hard data and analyses, it's just opinions.

I have real life examples though, myself and people I knew. Never heard of someone pirating games routinely and then buying one if it cant be cracked, they just play a different game instead or wait as it will be cracked eventually. I consider that far more credible than this report.

I expect movie piracy dropped in the early years of netflix, and has likely gone up again now that market is super fragmented.

The biggest cause of lost sales is people mis-selling or mis-marketing their products, or the product been bad in the first place.

Make a good product, price it low enough, make it available everywhere, boom you get good sales, basic common sense.
Make a dud product, price it high, do staggered regional release, staggered platform release, get low sales. But instead blame piracy.

 

[lexluthermiester]

Why?

Indeed you ask... Well...

Here we go again. Over 25 years ago I've heard the exact same crap, yet in regards to video games specifically - it's even a bigger load of bullcrap.

Lemme tell you a very funny story. Just gotta find a link this study real quick.

So, the story goes: EU decided to create a commission to perform a study on impact of piracy on multimedia, probably and most likely to prove few points and pass some laws afterwards to tighten the grip on the legal front against evil pirates. The study concluded in 2015 but the results were so unexpected that they kinda held on to it for awhile and didn't publish right away.
Methodology is still inheritly flawed, especially when it comes to movies. Every "pirated" instance is treated as "loss", but at least they are considering "conversions" this time, unlike anything before that.
Same for games, where if a potential "pirate" can afford, let's say, a "subscription" at minimal price bracket but not considering it, it's also a loss(at least as far as I understand their logic).

The study is quite long(117 pages), but TLDR is as follows:
1) on page 14 there's a summary
2) Games actually benefit[!] from piracy in terms of later conversions, thus increasing sales by 24%

https://felixreda.eu/wp-content/uploads/2017/09/displacement_study.pdf

So, pirates of EU, ahoy! You are saving the gaming industry!

...this... I went looking for it. Ninja'd twice in one day again, not that I'm complaining.

For every study like the one subject in the OP article that says piracy hurts and gives out numbers which show only one aspect of a situation as dynamic and all over the place as this subject, they invalidate their work the moment they publish it because their work is woefully incomplete and narrow focused.

The study Silentbogo has posted is more trustworthy and meritful as it has a great scope and includes all relevant data.

I said it before and I don't repeating it: Denuvo is LIES! Trash and garbage at it's very worst.