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Localization Can Bring Big Rewards, but Pirates Are Waiting
Posted by Arle Lommel on March 30, 2016  in the following blogs: Global Marketing, Best Practices, Business Globalization, Mobile Localization, Translation and Localization
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CSA Research has consistently shown the benefits of localizing your products (see “Can’t Read, Won’t Buy,” Feb14, which polled 3,002 customers from 10 countries on their language and buying preferences, and “Consumer Language Preferences by Country,” Jan16). It makes your offerings accessible and attractive to a larger market and increases sales. From a business perspective, it usually brings in far more revenue than it costs. But there is an aspect of software localization we seldom consider: It makes software more attractive not only to buyers but also to pirates.

Alex Nichiporchik, the CEO of game developer tinyBuild, recently provided country-specific figures on piracy for the game Punch Club. On the day it launched in Portuguese, the localized version appeared on torrent sites within four hours. TinyBuild sold 373 copies that day in Brazil, but it logged 11,627 additional new users of the Portuguese version, meaning that 97% of them had pirated the software. The piracy rate in Brazil went up roughly six-fold overnight and stayed elevated (although not as high) for several weeks afterward.

Nichiporchik posted purchase and piracy figures for some other markets. On that particular day 34% of new users in Germany bought the game (rather than pirated it), the highest buy rate of any country. The next best countries were the United States (23%) and France (17%), but less than 4% in Russia, China, Turkey, Ukraine, Romania, and Poland bought the game. Even allowing for some cases where gamers bought the software and activated it on multiple devices, it is clear that piracy dwarfs purchases.

Some Brazilian commenters jumped in on the post to discuss how pricing models contribute to piracy. The Brazilian government says the average monthly salary is around 2,789 reals (around US$750). Punch Club’s price in Brazil is 20 Brazilian reals (US$5.42), lower than the PC price of US$9.99 on Steam (but more than the U.S. iOS App Store price of US$4.99). Although that price does not sound particularly high, it is about three times more expensive than in the U.S. relative to average wages. The commenters pointed out that such relatively high prices means that individuals in lower-income countries, especially younger ones, are more likely to turn to pirated copies simply because they cannot otherwise afford them.

Although there are no obvious or easy answers for how to deal with piracy, Nichiporchik’s post highlights some issues to consider when localizing software:

  • Study which markets respect intellectual property. Nichiporchik’s data shows that Germans overall are prone to buy localized software than pirate it, while Russians and Brazilians are more likely to download it illegally. Chinese users will pirate software regardless of whether it is localized or not. Do your own analysis and factor in these differences in when you project revenues from localized markets. Nichiporchik found the best markets for his localized games in one region: “You should seriously localize your games for Western Europe[.…] Punch Club clearly shows that localizing games to Western European languages pays off, and has a very low piracy rate.” His conclusion is consistent with studies of unlicensed software that find that North America and Western Europe have very low piracy rates compared to the rest of the world.

  • Even with piracy, localization makes sense. TinyBuild is still committed to Portuguese localization, because the sales increase justifies the effort, even with very high piracy rates. While it is discouraging to see piracy rates greater than 90%, the localized sales represent revenue that they would otherwise never realize.

  • Consider your locale-specific pricing strategy. If you want to fight piracy in developing markets, lowering your price point to make your product attractive at local salaries may make sense. However, the ideal price point and the impact of changing your pricing model will vary from country to country and there is little hard data on pricing models for different application types. Unfortunately, enterprises tend to see such knowledge as a competitive advantage, but you can look at price differentials for products similar to yours to try to figure this out.
The situation may be more positive for developers of enterprise software. TinyBuild found that piracy rates vary by platform, with 69% of piracy on the PC, 28% on Android, and 3% on iOS. The Android/iOS split (see “Global Mobile App Development,” May15) is particularly significant because it is much harder to pirate software on iOS than on Android, indicating that barriers to piracy do have an impact on customer behavior. Enterprise software developers are much more likely to use digital rights management (DRM) or sign-in systems that deter casual piracy. The ongoing shift of business software to cloud-based solutions also promotes legitimate purchases because cloud services are inaccessible without valid access credentials. If localized piracy is a particular concern, moving to the cloud or implementing DRM may be a wise decision.

Although Nichiporchik is strongly pro-localization, his post adds additional factors to consider in market entry decisions (see “Market Entry Decisions,” Jul13) and provides concrete data about a problem where authoritative information is scarce. Developers have to consider not only how localization affects sales but also how it influences sales and piracy in the context of specific countries. They need to balance negative factors against positive outcomes such as improved brand control and customer satisfaction. In most cases the benefits of localization will outweigh the cons, but being aware of both sides will help developers make informed decisions.

 

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