The Computer Entertainment Suppliers Association (CESA) has announced its belief that the video game industry lost $41 billion on pirated Nintendo DS & Sony PSP games between 2004, and June 2009 (Source 1).
To arrive at these figures, researchers checked download counts at the top 114 piracy sites for the Japanese versions of the top 20 software titles from 2004 to 2009. They calculated the total Japanese figure by factoring in the price of the games and the ratio of sales for the top 20 to the whole market. To get the worldwide figure, they multiplied by four under the presumption that Japan accounts for 25% of of the world’s software market (Source 2).
Bad Research Methods
To begin with, the CESA’s research methods are deeply flawed. Their sample isn’t even close to random; it’s a sample of convenience. For all we know it was chosen to make the numbers more dramatic; I don’t know.
Regardless, nothing in this research suggests good reason to apply the piracy behavior of individuals who download the Japanese versions of video games, to the remaining population of the world. It would be just as illogical to claim that Japanese television viewing behaviors were comparable to American television viewing behaviors.
Faulty Conclusions
I’ve made this point before, and I will make it again…
Just because one is willing to download a game for free, that does not mean that he/she would be willing to pay money to acquire the very same game.
Many pirates download content simply because it is there. They might download a game and never play it, or try it for a few minutes and decide that it isn’t worth playing.
Let’s change mediums for a second. Think about television.
You have access to tons of shows for free via basic cable, or for a flat rate. You can watch as many shows as you want, and it doesn’t cost a dime extra.
Now imagine that you had to pay for each show. Would you continue to view every show that you watched when it was free? Probably not.
I have no doubt that the video game industry loses sales to piracy, however claiming a one-to-one ratio between illegal downloads, and real sales is intellectually bankrupt at best, or a deliberate distortion of reality at worst.
The Geek Whisperer 
Maybe this is a ploy to veer the issue away from illegal downloaders of movies
which are being sued left and right by the US Copyright Group.
I doubt it’s a unified plot between the game and music industries to divert attention, but I wouldn’t be surprised if video game industry groups were gearing up for their own lawsuits.
I totally agree that it is very much distorted and appreciate the way you spell it out. In addition to being a gamer, I am also a watcher of anime, something that has probably become more pirated than video games — that is if you compared the sizes of the fanbases. I’ve seen people in the anime industry claim that if anime piracy doesn’t stop, anime won’t exist anymore. They talk about how in only a few years it will all be over with really dire, OMG type diction. And I understand that they are losing money, but to act like they are being put out of business is ridiculous. Anime boxsets sell for outrageous prices, and many fans are OCD collector types that fill their wall up with them, not to mention all the silly memorabilia and over priced stuff that anime sells. I understand that they want to encourage people to not pirate, even if it means distorting the truth. But the truth is certainly distorted.
Theft is still theft, I mean if I walked into a store and took something and just left the clerk would still be like “Dude, WTF, pay for that!”. It’s easy to say yea but this isn’t like that, but its actually worse, cause you don’t consume media, it doesn’t disappear once you use it all up or you can only use it at one single point in time. Digital Media can be duplicated a billion times and given to anyone.
So a stolen sale isn’t necessarily a lost sale when it comes to media, but it’s still theft, you’ve just made that thing less valuable, and the people who made it don’t get reimbursed for their work. It’s not just a BIG CORPORATION that loses money, they have many average waged employees, that live their lives like us, and make a simple wage and not even that much.
Especially the anime industry, it’s true they may out vanish in an instant because of piracy, but steadily they lose money and go out of business.
The anime industry nearly went bankrupt in the 90’s, but they were bailed out by the introduction of anime to the American fan base, America became a new market and saved them, but as piracy worsens American companies like Funimation and ADV and Geneon that do Dubs, lose money, and Geneon has gone bankrupt, not because that they did bad work, but because after their work was done people, pirates, just ripped it all and put it online.
Simply put, a pirated media isn’t a total lost sale, but a huge blow none the less, you may as well just take the DVD or Game from the store, and just walk out, honestly that would be better.
Theft is theft, just cause it’s easy doesn’t make it something else.
James – I can appreciate where you are coming from.
The point I am making in this post is not a moral judgement on piracy, that’s a different issue altogether. What I am explaining is that the arguments and “research” made by the anti-piracy crowd are both loaded, and false. This research is done poorly. The conclusion that every single download equals lost profit is a bad conclusion.
To clarify, copying files is not the same as stealing them. I am respectful of the fact that people need to make money, but downloading an album is not the same as shoplifting the album. You can see what I am talking about here https://geekwhisperin.wordpress.com/2010/12/23/copying-is-not-theft/