Customer Service - a better business model?

[galent]

Ok, so two topics that have been troubling my over-extended mind lately has been customer service and piracy (they seem to go well together, don’t they ). The solution to one would seem to be the antigonist of the other. However, I just read a response to a Gamasutra article (ok, an older article and post, but still…) that give me pause for thought.

Let me frame this up for our discussion, the article deals with anti-piracy measures, particularly DRM, and the love-hate relationship even within the game industry. The responder is from, what the publishing industry would consider, a “secondary” market. Now, as the responder begins I see the standard idological arguements, with some tangible real-life issues related to the economy of his location. What struck me was what he adds as he expands his idea of “understanding pirates motivations” and the target consumers in his area.

My thoughts lately have come around to how customer service is a revenue opportunity, not the traditional “sink hole” and necessary evil of doing business. The game industry has long struggled with carrying the costs of customer support, and in almost every case I have experienced, customer support is left to a basic “level 1” technical support service (lately, an “arm’s lenght” service offered largely via e-mail or web based forums).

Ok, let me pause and drop the Gamasutra article response in here for you to review (edited slightly for more family viewing ):

I think that the industry issue with piracy is missing in some points:

First, they do not analize the reasons of piracy, when someone talk about them that person gets back a: “You f***ing pirate, stop defending the other pirated”

But anyway, I was a f***ing pirate, and I know why people pirate games, and now that I am becoming a dev I know how to avoid they pirating my game and that I should not care about some piracy.

First: Great part of the piracy is coming from people that would not ever buy the original anyway (at least not when they got the pirated game).

Reasons: Many are students, students do not has any money, and many parents refuse to give money to their sons because of the moral panic that is still around the games (in fact in my country there are still a moral panic with comic magazines, I own only two, that I bought when I was doing a paid internship, my parents never allowed me to buy them, but since the money was mine I bought that two Batman comics anyway)

Also many places do not has a store, neither good internet access, some pirates end showing up there or for accident and making their own “store” usually illegal because sometimes opening a legal store is really hard (here in Brazil the laws to open a small company suck so much that it is calculated that 30% of our market is illegal, and needed, without that market a lot of people would lack all sorts of suplies, ranging from food to games), sometimes publisher wars trigger piracy, example:

Here a company made a game called “Incidente em Varginha”, it was a shooter made in 1997 I think (or even before), a company that was publishing Quake here, named MPO, started to wage war agains the “Incidente” publisher, the two refused to sell their games (Quake and Incidente) to a store that bought the other. In the state of São Paulo both lost, neither games got widely sold, and the piracy of those games here was rampant (because they could not be found legally)

First conclusion: Piracy will always exist, and that piracy will not decrease your sales (because it is from people that do not has money or resources to get a legal copy anyway), also piracy is greater on places without legal access to the games.

Second main reason for piracy: Price.

Here 60 USD is what a large part of our population has to survive a entire month, with 60 USD I can buy a excellent pair of snickers [I believe the author means Sneakers](and those are a rarity here…), in fact anything that costs 60 USD here (anything, whatever it is), is considered that its price is “rip off”.

A pirated game (or original game bought from magazines) are around 5 USD, and more widely avaible, obviously people would prefer a pirated game (or a magazine game, here Ubisoft is winning, they love to sell their games on magazine)

Conclusion from part 2: Current games are TOO expensive, I have several friends that has several original games, but all those games are 30 USD or less (in fact I am willing to buy 20 6 USD games than to buy 1 60 USD game…)

Reason 3: People dislike publishers and retailers.

What?

Yes, I know several people that will get Mirror Edge pirated (even with piracy dealers wanting 20 USD for it) just because they dislike EA.

In fact I have some EA games pirated for that reason, I know that it is wrong and I do not plan to do it again, but some years ago to me it was right to do it, and I see that many people see it that way too, to them stealing from a “enemy” is right, and EA is easy to think as “enemy” because their poor policies (like outrageous DRM… Btw: I have a pirated Mass Effect, altough I had money to buy original and was willing to do so, I got pirated because of its DRM that do not work on my computer, and I know that because I installed a original copy from a friend that s****ed my system, to avoid having more pirated games I will not get any of the other games of the franchise)

Also piracy dealers give better support.

WHAT? PIRATES GIVE BETTER SUPPORT???

Yeah, just to show this, I will talk about the most pirated game here, the Winning Eleven franchise games (btw: console game! yeah, here console piracy is higher than PC piracy, in fact 90% of piracy here is console piracy)

To get a original Winning Eleven, disregarding price: You need to go to one of the few stores that has it, if you dislike the game, there are no return, also the game is not localized.

A pirated Winning Eleven: The game is properly localized (everything from boxes to in-game content), the game is modded to be more balanced and have national teams, and the most important: the dealer accept returns.

Yeah, here you can buy a pirated game, and if you dislike it you can return it! Also pirated games usually come pre-patched, sometimes with patches that the pirated made themselves fixing something, also pirated games come with DRM removed.

Another good example, a game from EA again… Ultima IX.

Ultima IX s*** in its original form, it has severe continuity problems and severe bugs.

Pirated Ultima IX comes with all fan paths installed, and some dealers sell it localized, also the dealers accept returns and offer substitution to damaged disks (something important for RPGs)

Also any game with DRM is widely pirated here, (like… Spore), because pirated games has no DRM, also idiotic games are also widely pirated (like Crysis: those that have it has pirated, and I know many people that regret having it pirated because they wasted their time and disk space with a stupid game, the few that keep the game installed is just to showcase his computer power for his friends)

Conclusion 3: Until publishers do not do what stardock suggested, they will get pirated.

Btw: I once asked dealers about several games the level of sales (oh yeah, another note: here the majority of game ADs are from pirates), and they told me that Stardock games was a loss (because they spent money with ADs and whatever, and still people do not bought the games), Crysis sell well only when new hardware is launched, EA games are the most pirated ones, and Assassins Creed has a high number of returns from people complaining that the game s***, Rainbow Six Vegas PC s*** too, and DMC4 PC got pirated only after Capcom complained of piracy, because before that not even themselves (the pirate dealers) knew that it existed.

Ok, so let me net out what I read about local pirates in his market:

1. They removed the problematic DRM (so do north american hackers)
2. they patched the game, sometimes creating better fixes than the original creators
3. they localized the game, that was nice of them!
4. they made at least some efforts at cultural sensitivity (local teams, bad guys don’t always look like my family reunion, and so on). Now that’s good customer relations!
5. they accept returns, even after the box was opened! Pure customer service right there…
6. they run the majority of advertisements in the country/region. WTH? Secondary market or no, that’s just treating a population like second class customers!
7. all that at a price which is within the means of the local population (people felt like they were getting a deal).

By the author’s accounts, this business model is profitable in his market.

Ok, so where am I going with this? The local “pirates” have created a innovative and viable business model (don’t tell me if Apple MS can call what they do innovation, that that ain’t innovation right there!!). These individuals took an existing product and wrappered real customer value (ok, let’s skip the legal implications, but rather focus on the fact we are talking about a true apples to apples comparison of two identical base products with the real differences being customer support/service).

So, my questions (for what will no doubt become a raging “debate”),

1. What do you think of my assurtion that customer service is not a cost, but a revenue opportunity?
   2)instead of driving more complex anti-pirating technical solutions, should we not find a way to take these notions and deliver better customer service?

Let me try and layout some assumptions/givens:

1. you will never completely stop piracy
2. you will never completely satisfy everyone with any level of customer service

Cheers,

Galen

[imaginaryhuman]

A quite interesting read, thanks. Goes to show you that mainly if the publisher/developer basically does not understand the needs/motivations of people in a given culture/economic climate, then their lack of sensitivity is going to leave a gaping hole which other people can rush into to provide a bridge across the gap. If the publishers were more adaptive to the people instead of expecting the people to worship them, the people wouldn’t be so at odds with them and there’d be no foundation for such a strong black market.

Also if you have places like Brazil where the people are barely scraping by to live and survive, it’s obviously not going to be good for the publisher to just expect that people there will pay the big bucks. The marketing/price point is out of sync with the cultural/economic background.

[galent]

@ImaginaryHuman - I tend to agree. One way I frame this up is a mix up in entitlement. The publishers feel entitled to full release day asking prices in markets where they export (ie dump) leftover stock from primary markets. What’s the lag time for one of these markets, from US release? (I really don’t know, so anyone feel free to chime in) I would guess you’re looking at at least 6 months. Now, 6 months out from a US release, and most games are starting to experience a falloff in sales (with the exception of a few very high profile titles). With that drop comes discount prices and the begining of support drop off. Just as these markets are seeing the games for the first time.

Flip side of that coin are the pirates (what an interesting term to apply to a reverse engineer aka hacker… oh never mind). There is a demand, originating from desire and a sense of entitlement. The publishers (aka the “establishment”, usually foreign, and from most perspectives rich beyond reason), make unreasonable demands (from the average person’s perspective) for entertainment which is (by the above author’s account) priced above average means, not readily accessible in the first place, not localized for them, and not culturally sensitive in some cases. So, they take what they want… well, in this case, they actually pay… a local person, who makes needed fixes, accepts returns, and in some cases at least, makes the game more… customer oriented.

The result, the publisher makes little money in those markets, doesn’t change behaviour or attitudes towards those markets, ups the “antipiracy” tools/legal pressure, and the cycle continues, ever deepening the divide.

There must be a better way…

Cheers,

Galen

[anon_65563011]

I firmly believe that you have to do more than just make something, whatever it may be, if you want it to be a success. Many publishers have assumed that they can stand still and go forwards (with the innovation of the game creators/musicians/whoever bring the only driving force), but it doesn’t work like that.

Engaging with customers is important, but you have to have a target market to do that. In the internet age it’s easy to say your target market it the whole world, but that’s an illusion. Realistically, I wouldn’t know how to sell in Brazil - and if I learned I’d be none the wiser about what Koreans would like. To do things right in other markets takes time, effort and understanding. Unless you’re native then these things clearly also require money.

So if we have our target markets, how much should we worry about people elsewhere stealing out product? Well, firstly I’d say, not at all if doing so impacts negatively on people who are in our target market. That is folly.

Of course, things are never simple. There’s always a raft of questions (how do people on $60/month have a computer that can play Crysis, pirated or not?), why’s and wherefore’s (I just love those). My view is, unless you’re actively catering to a certain market, don’t expect to sell much there, don’t lose any sleep when you don’t sell much there, and certainly don’t respond by compromising the areas you are selling.

[imaginaryhuman]

You were asking in general about customer service as a business model. Well, it’s part of one. I’ve been working in customer service for a few years on-and-off at an online retailer. The site has telephone support, live chat, email, fax, and several social networking options. We don’t sell software but the customer service stuff is essential. People have questions, people get stuck, stuff gets lost, stuff gets broken, stuff doesn’t work, stuff isn’t delivered, stuff is confusing, and people have all kinds of questions and interpretations of things that they need help with. Without that support I could well understand that many many people would not be happy and might not even want to buy from us.

[imaginaryhuman]

You were asking in general about customer service as a business model. Well, it’s part of one. I’ve been working in customer service for a few years on-and-off at an online retailer. The site has telephone support, live chat, email, fax, and several social networking options. We don’t sell software but the customer service stuff is essential. People have questions, people get stuck, stuff gets lost, stuff gets broken, stuff doesn’t work, stuff isn’t delivered, stuff is confusing, and people have all kinds of questions and interpretations of things that they need help with. Without that support I could well understand that many many people would not be happy and might not even want to buy from us.

[dogzerx2]

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Of course, things are never simple. There’s always a raft of questions (how do people on $60/month have a computer that can play Crysis, pirated or not?)

Well, I’m from uruguay, I never had to live on just 60 bux a month, but I worked a whole year as a 3D animator for 200 dollars a month. And no, i don’t think anyone living on $60/month or $200/month can get a nextgen pc, that’s out of the question, but some can get a hold of a pc or playstation, and they’re going to want games for it, and they might not get crysis, but as soon they find out games can be pirated, they’ll just go ahead and do it. Hell, pirated games are sold on the streets right next to the socks and incense, and kids might not even know it’s “pirated”.
As for people who can pay for it, but wont… well, brazil dude here might be right, a store in a country governed by piracy, will never have a good stock on good original games. So you get your pick from a wide range of easy to get pirated videogames, or old over-expensive(due taxes) original videogames. It’s ridiculous, I agree, but trying to stop piracy is like trying to stop pot, pretty difficult.