Piracy threatens budding Filipino software company

Anino Entertainment is a small, Filipino software development company engaged in developing games for personal computers, personal digital assistants (PDAs), and mobile phones. The 10-man team comprising Anino has toiled for more than two years to produce its first PC game offering, Anito, the first and only all-Filipino PC game to date. Exactly a year after its launching, Anito’s developers came face to face with a formidable foe that is not only threatening the survival of their company, but, worse, is also dampening their zeal and idealism — software piracy.

“We all know that software piracy is a serious threat but it wasn’t until we read reports about the Optical Media Board seizing boxes upon boxes containing thousands of pirated copies of Anito that we realized how serious the threat is,” Neil Dogondon, chief executive officer of Anino Entertainment, said in an interview.

Anito was launched in November 2003. To date, Anino recorded sales of legitimate copies of around 3,000. Sadly, Dagondon has estimated that for every legitimate copy of Anito sold, two counterfeit units are bought. This translates to losses — revenues the company should have made — of as much as 4.5 million pesos (US$80,085).

“Pirated copies are outselling the original copies, and I can clearly see why. Original copies of Anito sell at 750 pesos each, while pirated copies cost only 150 pesos. Really, it is an uphill battle for us,” Dagondon lamented.

This effect is made more serious by the fact that Anino itself is just a start-up software developing firm that is still struggling to break even and make profits. With the rate software piracy is growing in the country, it won’t be long before Anino runs out of business and departs from its founders’ grand vision. Instead of creating and promoting Pinoy-developed games, Anino may have to do subcontract work for foreign game development companies, which will end up owning the intellectual property rights over whatever new game they develop.

“When we were just starting, our aim was to eventually export our games and bring them to other counties. Now, we are beginning to ask ourselves, if we cannot sell (legitimate copies of our products) locally, how can we hope to do well in foreign lands?” Dagondon said.

Anino’s chief also finds the speed at which counterfeit copies circulate locally to be really alarming. “We initially expected a timeframe of about two months before ‘pirates’ release illegal copies of our product. We are disheartened to find out that in as short as two weeks, counterfeit copies of Anito are already selling in tiangges and bangketas,” he related.

Bigger Picture

Anino is just one of the many companies severely affected by software piracy. In a recent press event, the Optical Media Board (OMB) reported that potential losses due to piracy are expected to reach 10 billion pesos for 2004. The local movie industry foresees losses of three billion pesos for the year; the video distribution industry’s annual revenue is estimated to be cut by more than 4.9 billion pesos; while the records and music industry has projected a revenue shortfall of nearly two billion pesos — all because of illegal software copying and distribution.

Actual losses, based on the raids conducted by the OMB between July to September this year, reached nearly 225 million pesos for the three-month period.

Citing figures from the Motion Picture Association, Optical Media Board chairman Edu Mazano said the piracy rate in the country is now pegged at 89 per cent, the fifth highest in the Asia Pacific region. Vietnam, China, Pakistan and Indonesia occupy the top four spots of the piracy watch list for the region, with piracy rates ranging from a high 100 per cent to a low 92 per cent.

“From 80 per cent in 2002, the Philippines’ piracy rate rose to 89 per cent last year. Clearly, intellectual property rights (IPR) violation has gone from bad to worse, and we cannot disregard the huge losses that result from this,” Manzano said.

Part of OMB’s efforts to curtail piracy calls for fostering cooperation with other anti-piracy advocates such as the Motion Picture Association, Cinema Exhibitors Group, and the Association of Video Distributors of the Philippines. Together with these groups, OMB is embarking on intensive enforcement and education campaigns.

“We will be vigilant in going after these pirates who are not only stealing intellectual property, but also ruining our country’s economy,” Manzano declared.

Dagondon, for his part, is calling for the “smarter implementation” of IPR rules and “stern punishments” for offenders to curb the incidence of piracy in the country.

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Jim Love, Chief Content Officer, IT World Canada

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