This Week in Business is our weekly recap column, a collection of stats and quotes from recent stories presented with a dash of opinion (sometimes more than a dash) and intended to shed light on various trends. Check every Friday for a new entry.
Every now and then, piracy becomes relevant to the day-to-day reporting of games industry news, usually when a big new game has been leaked online before its actual release date, like Grand Theft Auto: San Andreas, Halo 2, or more recently, Splatoon 3 and The Legend of Zelda: Tears of the Kingdom.
And in those cases, the websites covering the leak often get very shy about where exactly that new game can be found online, perhaps because they’re worried about assisting piracy, or maybe because they want to keep in the good graces of the publishers whose games have been pirated.
I’m going to tell you exactly where you can go to get a treasure trove of pirated games
Well forget that noise. I’m going to tell you exactly where you can go to get a treasure trove of pirated games. I’m going to tell you exactly which sketchy website out there is taking on immense legal risk just to sell some bootlegged games. And not just any games. Nintendo games.
Ok, there’s a process to this. First, open a new private or incognito window… on second thought, I don’t know how much I trust those. If it’s still the same program, maybe there’s a chance they could somehow access your normal browsing history and figure out who you are. If we’re going to visit the shady underbelly of the internet, we need something completely separate, untraceable. An entirely new identity with no history, no ties to anything you’ve ever touched.
Open Microsoft Edge.
Using the InPrivate mode (and/or the VPN of your choice), you’re going to navigate to the website I’m about to name for you.
That’s right. I don’t believe that whole fable about if you stand in front of the mirror and say the name of a pirate site three times Nintendo’s lawyers show up and drag you away forever. So I’m just going to do it.
[deep breath]
Ok, here we go.
Amazon.
Amazon.
[Nervous glance over my shoulder]
…Amazon.
Are… are they behind me? No? That’s a little weird, right?
Nintendo is famously heavy-handed about IP protection in all its forms and Amazon is absolutely loaded with blatantly infringing products. (Oh, and you can close Edge now. That was a joke. I can’t believe you actually did it, that’s so gross.)
STAT | Between 366 and 589 – The number of items that Amazon.ca returns for the search query “R4 card,” depending on which browser I use for some reason. Granted, some of them are rookie trading cards of Toronto Maple Leafs superstar Willie Nylander, but a bunch of them are really just for the notorious Nintendo DS piracy-enabling devices that had importers and re-sellers fined in France and Australia, and sued in the US, while the cards themselves were banned in the the UK and Japan. (Which makes it extra weird that they’re still readily available on Amazon.co.uk and Amazon.co.jp, right?)
And if that’s not to your taste, perhaps you’d be interested in one of Amazon’s many multi-terabyte external hard drives advertising themselves as containing 120,000 games playable across scores of emulators. They aren’t so bold as to include a list of exactly which games they’re pirating, but the user reviews of these are more than happy to tell you that they’ve got Dreamcast well covered, or that they wish there were more PS3 games or what have you.
But surely this is a game of whack-a-mole the industry plays with Amazon third-party sellers, right? Companies like Nintendo must have armies of lawyers issuing takedown notices to ensure that even if unscrupulous sellers have pirated goods up for sale on the world’s largest online retailer, they don’t stay up for long.
Well, maybe not.
STAT | 40 – The number of user reviews on that external hard drive I just mentioned. The earliest is from October of 2021.
STAT | 0 – The number of reviewers surprised or upset that the 120,000 games included pirated copies of games.
STAT | 1 – The number of reviewers surprised or upset that the games were too legitimate. (They were miffed the pirated PC games had not been stripped of DRM first.)
STAT | 1 – The number of reviewers surprised and upset that the game they primarily purchased the drive for, the 1991 arcade game WWF Wrestlefest, would not boot up. Understandable, really.
And you don’t even need to be looking for this stuff for Amazon to shove it in your face. If you’re just poking around for legitimate games on Amazon, there’s a good chance the site is going to redirect your attention to the illicit stuff.
I was actually unaware how sketchy Amazon was about this until I did a search for “3DS games” a few years back wondering if there were any good leftovers still selling for the usual MSRP, and there were obvious bootlegs peppered throughout the search results. I just did that same search again, and the first two results were bootleg multigame carts.
The top result was even tagged “Amazon’s Choice” and eligible for free shipping with Amazon Prime, because it’s actually being shipped by Amazon itself, even if it’s being sold by [checks notes] “Greatt gamerr.” It was a classic 3DS title you might recognize by the super catchy name “208 in 1 Game Cartridge Multicart, Game Pack Card Super Combo compatible with Nintendo DS/NDS/NDSL/NDSi/3DS/2DS XL/LL.” The product page not only featured a full list of the 208 games included in the cart, but Amazon threw in a sponsored ad in the product description for a retro handheld pre-loaded with 11,000 games of dubious origin.
Oh, and “Greatt gamer” has a perfect customer feedback score because the one-star review saying “Games constantly crash or won’t load at all” didn’t count against it.
QUOTE | “This item was fulfilled by Amazon, and we take responsibility for this fulfilment experience.” – Amazon’s message underneath the struck-through user review, which was clearly not taking issue with how the game was delivered, but with the shoddy quality of a bootleg game collection.
I know that whole “fulfillment provided by Amazon” thing muddies the waters a bit, but it’s really important to remember these are third-party sellers. They’re the ones actually selling the pirated games here, so the responsibility lies with them. Amazon is just a company offering a service and taking a reasonable and modest commission on the eventual sale.
STAT | More than 50% – According to e-commerce intelligence firm MarketplacePulse, Amazon took more than half of its third-party sellers’ revenue on average in 2022, a cut that has steadily risen from the mid-30s in 2016.
So Amazon is profiting off sales of blatantly counterfeited game sales. It is profiting off ads that it places into product pages and search results on behalf of those infringers. It is directing customers in search of legitimate copies of games to these infringing alternatives, sometimes identifying them as preferrable to legitimate offerings by using the “Amazon’s Choice” label. It is handling the logistical issues around shipping these infringing games to countries around the world, and it is coming to the defense of the counterfeit sellers when the people who buy their shoddy products try to warn other potential customers that they are, in fact, shoddy. And to top it all off, Amazon is the primary beneficiary of the sale of these games because it keeps most of the money (depending on fulfillment and advertising fees).
I’m not bringing this up because I think game publishers are suffering some incredible loss here when a history of games they can’t be bothered to commercialize any longer is kept available for people. And I’m not bringing this up in the hopes of getting these products taken down or making them unobtainable. In fact, I probably wouldn’t bring this up at all if I thought for a minute that the industry was unaware of this.
I’m bringing this up because the continued existence of these pirated games on Amazon tells me the industry either doesn’t care enough to stop it, or more likely, couldn’t stop it even if it wanted to.
And I’m bringing this up because it is incredibly messed up that the world’s largest retailer gets a pass for profiting massively off the sale of bootleg games for years when the nickel-and-dime operations it facilitates get much harsher and heavy-handed treatment.
A guy who sold Switch hacks got more than three years in prison for actions “estimated to have caused more than $65 million in losses to video game companies,” which sounds suspiciously like they just added up the number of illegally pirated copies of games and assumed each one was a lost full-priced sale.
That kind of math has always been bunk, but it’s only fair we apply it to giant corporations the same way it gets applied to individuals.
So how do we even begin to quantify what Amazon has cost the industry under that approach? The hard drive we mentioned above has 120,000 games on it. If we assume a $50 price per game (arcade games offsetting lower-cost portable games perhaps), we’re talking $6 million for every unit sold. The one I linked to has 170 customer reviews, so right there we’re already talking about over $1 billion in “losses” for the games industry, just from the people who bothered to review one product on one Amazon site for a market one-tenth the size of the US.
If we actually added up all the “lost sales” from every one of these products sold across every Amazon site, I’m worried it would turn out the industry has actually lost more money than there is money in the world to lose.
Speaking of losing all the money, let’s talk about Roblox.
Roblox sticks it to the man a man
Companies know full well their IP rights are being violated on platforms like Amazon. Last week, Casey Hewitt of Hewitt Law PLLC posted on Mastodon about a lawsuit in the US Federal Court for the Northern District of Illinois involving Roblox going after a swath of companies for selling counterfeit Roblox-branded T-shirts and the like.
QUOTE | “Plaintiff has identified numerous online marketplace accounts and marketplace listings on platforms such as iOffer, Artistshot, Amazon, Teepublic and Printerval, including the Defendants’ Internet Stores, which were offering for sale, selling, and importing counterfeit products to consumers ” – Roblox, in its original complaint.
Clearly, Roblox knows where the bootleg stuff is being sold. But the company isn’t suing Amazon or its fellow online retailers.
STAT | 264 – The number of defendants Roblox names in the suit, because it’s going after each third-party seller offering bootleg merch instead of the platforms who are facilitating and profiting off the sale of that bootleg merch at scale.
What a tremendous pain it must have been to collect all those defendants and then go through the process of finding out who they are, where they live, establishing that they did the thing you’re accusing them of, and then serving them notice of the suit. But maybe it’s worth it. After all, when the defendants missed the deadline to respond, the judge went ahead with Roblox’s request for default judgment and ordered each defendant to pay Roblox $100,000, confiscating all the money in their accounts for Roblox (up to the $100,000 judgment), believing it was necessary because otherwise the defendants would transfer their assets to foreign jurisdictions and off-shore bank accounts.
And that brings us to the fun part, which is that Roblox never actually bothered to figure out who was behind all these accounts in the first place.
QUOTE | “Defendants are individuals and business entities who, upon information and belief, reside in the People’s Republic of China or other foreign jurisdictions… Each Defendant targets the United States, including Illinois, and has offered to sell and, on information and belief, has sold and continues to sell counterfeit products to consumers within the United States, including Illinois and this Judicial District.” – Roblox explains who it thinks it is suing in its original complaint.
It turns out one of the defendants named in the suit, the Teepublic seller Bigfinz, does not live in the People’s Republic of China. He is actually just a guy in Florida taking care of his sick son, who made next to no money from the shirts ($201.50 of sales over three years), and never even sold a T-shirt to anybody in Illinois, where the case was filed.
Roblox won a default judgment of $100,000 from Bigfinz, who sold barely $200 worth of shirts over three years
But this is the kind of thing that can happen with “Schedule A” lawsuits, which accuse hundreds and sometimes even thousands of defendants with the same basic allegations. We spoke with Woodrow Pollack, the attorney who represented Bigfinz against Roblox, and he said companies use Schedule A cases when they suspect the defendants are from other jurisdictions for a few reasons.
For one thing, it lets them pay to file just the one case instead of paying separate filing fees to go after each person individually. If you’re going after thousands of people, a $400 filing fee adds up in a hurry.
Second, they can keep the suit secret even from the defendants initially. The list of defendants in the case and the allegations against them are filed under seal while the judge hears the plaintiff’s request for a temporary restraining order that would let the company have the defendants’ accounts frozen. After all, it they believe they are dealing with a sophisticated counterfeit ring, they assume the counterfeiters would move money out of any accounts under the court’s jurisdiction as soon as they knew they were being sued.
It also makes it easier for the plaintiff to serve notice of the suit. When the person you’re suing lives in the US, the law usually calls for delivering a copy of the suit to the individual personally or leaving it with someone who lives with or represents them, so the chances are good the person being sued is going to know about it. But when you’re talking about people in a foreign country – as Roblox told the judge the defendants were – an email might suffice. And if the email that tells you about the suit gets filtered into your junk mail folder or deleted because you think it sounds kinda scammy? Oh well, it still counts.
Pollack said Bigfinz had his Teepublic account frozen, as well as the PayPal account it was attached to. Both accounts had money in them. The PayPal account actually had a significant amount of money in it, because some people use the service almost like a personal bank account. (PayPal has been encouraging this for years.)
Pollack informed Roblox’s lawyers about Bigfinz’ identity, where he lived, and the minimal amount of money he had earned from allegedly infringing T-shirts. But rather than drop the case against him, Roblox’s lawyers pressed onward, filing for a default judgment and fighting Pollack’s efforts to have the case against Bigfinz dismissed.
The judge determined Roblox was acting in bad faith with “reckless indifference to the law”
When the judge realized that Roblox’s misrepresented who it was suing and fought to have assets frozen and confiscated over such a minimal amount of money even after being informed who Bigfinz was and how few T-shirts had been sold, he was not happy. He determined Roblox was acting in bad faith with “reckless indifference to the law.”
QUOTE | “In this case, and the hundreds like it routinely filed in this District, plaintiffs join dozens or even hundreds of defendants in a single case, saving themselves thousands of dollars in filing fees. Many judges in this District permit this form of filing because – for the reasons Roblox articulated in its complaint, motion to seal, and motion for a temporary restraining order – it is the most efficient way to address the epidemic of counterfeit goods being sold in the United States on the internet by defendants located outside the United States.
“But by filing a complaint with many defendants, plaintiff’s counsel assumes the responsibility to vigilantly and scrupulously monitor the case for defendants that do not fit the allegations and to promptly take appropriate action when such facts come to light. Roblox failed to do that here.” – Judge Thomas M. Durkin in his order dismissing the case and forcing Roblox to pay Bigfinz’s legal fees.
It’s lucky Bigfinz had a lawyer like Pollack in his corner.
Seriously, it was really just luck.
“I got involved because Bigfinz’ wife is a friend of one of my partners,” Pollack says. “They reached out to a friend who is a real estate lawyer. That real estate lawyer said this looks like intellectual property. I have an intellectual property partner and friend. He told me about it.”
I can’t help but wonder just how many of those other hundreds of defendants might be more like Bigfinz than the international counterfeiting ring members Roblox thinks it’s going after. How many of them are finding themselves up a creek and unable to access money they need and rely on because Roblox made some assumptions about who they are and where they lived, or because they missed an email, or because they didn’t serendipitously get connected with a friend of a friend who specialized in IP law?
It might not be that uncommon a story at all. Pollack says that other people have already hired him since they saw the judge’s order and understood that there were ways to fight these Schedule A cases.
“I personally think this style of litigation is just outrageous,” Pollack says. “It really is a deprivation of due process rights.”
We asked Roblox about its tactics and a spokesperson replied, “Like many major brands, Roblox takes action to protect its intellectual property and consumers from low-quality counterfeit goods by enforcing its intellectual property rights. The rise of e-commerce has made this challenging. While we cannot comment on this specific litigation, we only file such actions when we have solid evidence of infringement.”
It is baffling to me that Amazon is allowed to profit so clearly from promoting and selling and shipping and advertising obvious bootlegged products, while the companies that own the IP would rather go after hordes of randos they just assume to be evil foreigners, freezing their assets, and shaking them down for $100,000 a pop. So why is that?
Why that is
To help answer that question, I spoke with Michael Shortt, a partner with the Canadian lawfirm Fasken who works as a lawyer and trademark agent with a focus on games. And as you might have guessed, a lot of the reason is because the infringing products are being posted by third-party sellers.
“If you’re selling the product yourself, you’re going to be on the hook legally to a much greater extent than someone who’s just selling third-party products,” Shortt says. “With third-party products, you’ve got plausible deniability. The argument is that you just didn’t know because there’s so much traffic.”
Platforms like Amazon just have so many products coming through from third-party sellers that they can’t have a person verify every last product, he adds.
“There are just limits to how much you can do up front, especially limits that are not going to slow your site to a crawl or just destroy the user experience.”Michael Shortt
“Automated tools exist, but they have serious limitations. It’s like asking why are there so many infringing videos on YouTube. There are just limits to how much you can do up front, especially limits that are not going to slow your site to a crawl or just destroy the user experience. So most of our systems rely on the rights-holder flagging problems to the platform and then the platform reacts to the problem being brought to their attention.”
That’s always struck me as strange. If someone wants to run a business that substantially benefits from trademark infringing activities, and it would be a big hassle for them to run it in a way that didn’t infringe – say, by vetting the goods that go up on the platform before they are offered for sale – I always just assumed that they wouldn’t get to run their business then. So why is it legal for them to profit from piracy just because they chose to have a business model that makes it exceedingly difficult to have oversight on what they’re helping to sell?
“That argument proves too much,” Short says. “In that case we should shut down all web hosts and domain name registrars because the internet is the problem here, not any particular website. How many infringing websites are there out there? Lots. I spend a lot of time taking them down. Why stop at Amazon? Why not just not have the internet?”
It’s a global issue, he says. And sometimes with global issues, all it takes is one big market to pass a law and then everyone else is effectively forced to comply with it, even if they aren’t in that market. He points to the DMCA in the US for copyright protection or GDPR for privacy protection in Europe.
The DMCA is sort of a double-edge sword for these platforms as well. It’s an inconvenience for the platforms to take things down when people complain about them, but doing so limits their liability.
“For most people, [legal action] is very much your last option, and not a pleasant avenue to be using”Michael Shortt
“There’s no equivalent to the DMCA for trademarks, which makes trademark-based takedowns a complete crapshoot because it depends on the policies adopted by every individual platform,” Shortt says.
Without a similar law specific to trademark infringement, the risks are less well-defined, Shortt says. There’s no mandate to take down contested items, but at the same time, complying with a takedown request doesn’t grant safe harbor either.
But even in the absence of such a law, Shortt is skeptical about just how many companies have an appetite to follow Roblox’s example.
“You only end up in lawsuits if you have no other choice, because you’re not going to get your money back,” he says. “Even if you win, you’re not going to see that money again. So for most people, that is very much your last option, and not a pleasant avenue to be using.”
On the other hand, he’s unsure about the effectiveness of pursuing platforms like Amazon too.
“I think if someone ever really tried to go hard after the platforms, [the platforms] would all band together and get some new law passed that would be like the DMCA,” Shortt says. “They’d be given some kind of carve-out where as long as you act expeditiously to remove the content, you can’t be sued. They’d be able to lobby for that.”
In short, fear not, Amazon. It sounds like you’ll be able to keep pocketing loads of money promoting and selling fulfilling pirated games for the foreseeable future.
And fear yes, individuals who sell “Eat, Sleep, Roblox, Repeat” T-shirts, for your $201.50 in allegedly ill-gotten (there’s always the fair use defense) triannual gains might cost you $100,000 and have your assets swiped by a company with a reckless indifference to the law because you didn’t read that spammy-looking email and/or you don’t have a friend of a friend of a friend specializing in IP law.
At least we can sleep soundly knowing that the piracy will continue unabated, but the industry’s misdirected efforts to crack down on it will probably hurt a whole bunch of people with minimal regard for their rights or actual wrong-doing.
The rest of the week in review
STAT | More than 13,000 – The number of entire seasons of Discovery shows that will be taken off the PlayStation Store at the end of this year. So if you ever paid money to watch Cake Boss, Deadliest Catch, How It’s Made, or MythBusters on a Sony platform, you will no longer be able to watch it and Sony is going to erase it from your video library.
Stuff like this makes me actually like subscription services a little more because the customer at least knows going in that they aren’t getting ownership of anything and shouldn’t rely on it as any sort of guarantee of permanent access to a piece of media. But if this is how media companies treat their customers, they should expect a lot more people to be a lot more interested in piracy in the future.
QUOTE | “A game reveal, particularly one of this scale, is a community event and an opportunity for fans to come together around a single moment. And you don’t get a bigger moment than this, not just for video games but for the whole of entertainment.” – Our own Chris Dring laments the Grand Theft Auto 6 trailer leaking online the evening before it was scheduled to arrive.
QUOTE | “While a share of console gamers might save their money until the launch of GTA 6, many will be happy to shift their spending onto other games coming in 2024 or onto their favourite live service title. There is no doubt that GTA 6 will be a hardware sales driver and a boost to full game sales, but I’m still positive about next year’s console market.” – Ampere Analysis’ Piers Harding-Rolls is optimistic about the industry’s 2024 outlook even though GTA 6 isn’t arriving before 2025.
QUOTE | “Personally I feel sometime this quarter we’ll hit the low point and then really start coming back and growing again as an industry and get past that.” – Hi-Rez Ventures president Stewart Chisam offers a bit of optimism for the industry in an interview about what’s happening with live service games.
QUOTE | “That’s really important: this is our fault. At the end of day, we’re the directors of this business. It’s our responsibility to ensure that our products and our team are protected. It’s not lost on us that we’ve landed them in this situation and that it was our responsibility to avoid this, no matter what kind of boogeyman we could point to.” – League of Geeks CEO Trent Kusters talks about the studio laying off half its staff and put work on the Early Access game Jumplight Odyssey on hold after talks with major investors fell through.
QUOTE | “With the recent acquisition by Sega, we can benefit from their decades of expertise outside of mobile to achieve the goal of bringing the Angry Birds brand also to players outside mobile.” – Rovio explains why it’s closing Studio Lumi, the Montreal shop it set up to make games for console and PC.
STAT | Between 10% and 30% – The amount of TinyBuild staff reportedly laid off as part of recent cuts at the Hello Neighbor publisher.
QUOTE | “Most of the team” – How much of New World Interactive was reportedly laid off this week as part of Embracer’s seemingly endless restructuring process.
QUOTE | “Our business is constantly changing as we strive to deliver amazing games and services that keep our players engaged, connected, and inspired. At times, this requires the company to make small-scale organisational changes that align our teams and resources to meet evolving business needs and priorities.” – EA explains a recent round of layoffs at F1 developer Codemasters.
STAT | $801 million – The net profits reported by Electronic Arts over the first two quarters of its fiscal year, up 31% year-over-year.
QUOTE | “[Bungie is] not that type of company.” – According to an IGN report based on sources within the studio, a Bungie department head gave this answer when asked if leadership had considered taking pay cuts in order to avoid an October round of layoffs.
STAT | 83% – Portion of QA providers at Experis Game Solutions’ Milwaukee office who voted in favor of unionizing last week.
QUOTE | “The moment we mentioned that we were working on a report there seemed to be this kind of lightbulb moment and everybody was really interested. I was getting calls every week, trying to find out how soon we could get it, asking for an executive summary, [and so on]. And that was great. I felt like this was the first time that we could talk to the government in a language that they understand, because maybe this is how they consume information.” – Maliyo Games’ CEO Hugo Obi said the Africa Games Industry Report has already been instrumental in grabbing the attention of legislators in the hopes of receiving support for the growing industry on the continent.
QUOTE | “Our company has been persistently receiving threats targeting our employees, and recently, the targets of these threats have spread to spectators, staff, etc. of the Splatoon Koshien 2023 National Finals… Considering safety as our top priority, we have made the decision to postpone the event.” – Nintendo explains that it is cancelling the Nintendo Live Tokyo event and the competitions it had set for the show because of things that would be considered aberrant and shocking in most other industries but in ours just sort of come with the territory.
QUOTE | “The approach taken in the past few years has generally been to determine whether different types of loot boxes legally constitute ‘gambling’ in different countries and, if so, then seeking to regulate them using pre-existing laws. However, more recently, countries have explored other potential options, such as enforcing consumer protection law; requiring that specific information be disclosed; or demanding action from age rating organisations.” – Loot box researcher Leon Y. Xiao rounds up developments in loot box legislation efforts around the world over the course of 2023.
