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Issue 16 - February 25, 1999
 
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Profit Margins

Dear Future Gamer,

First of all, why didn't you publish my previous email about Amigas? Secondly, (Re: Michael Flaherty's letter in FG14), piracy of PlayStation and N64 games is hardly going to destroy the market. Can you really see Sony going bankrupt or something similar because of piracy? I can't. However, piracy on the Amiga is killing it off - yes, there are still people pirating the new Amiga software!

The price of software isn't just high because of piracy - how can Microsoft charge a few hundred quid for simple software and say its price is high due to piracy?

Companies like Sony make most of their money on the games. They sell the actual consoles at very low prices, which means selling them at just above production costs or even selling them at a loss. They then sell the games at very high prices to get the money.

Sam Brookes


FG: First of all, because it was boring. Secondly, yes piracy can destroy a company. Suppose pirated PlayStation games became readily available to everyone - the first people to lose out would be the developers who would simply stop developing. Then Sony would simply abandon the PlayStation - they wouldn't go bankrupt because they've got dozens of fingers in dozens of other pies, but they'd cut anything that was losing them money hand over fist. Thirdly, Microsoft and others don't charge hundreds of pounds for business software because of piracy - they charge that much because the application they've created is for a very specific task. Finally, the profit margins on hardware is either tiny or non-existent and yet to get the mainstream public to buy their hardware, companies have to position it at an attractive price-point. This does, indeed, mean that sometimes the only profit these companies will see is from the games sold for their system.

Got an opinion or a question? Write to me at andy.smith@futurenet.co.uk...