Is free-to-play the way to halt Android game piracy?

Federal investigators brought the hammer down on Android piracy Tuesday, charging three storefronts--Applanet, AppBucket and SnappzMarket--with illegally distributing bootleg copies of copyrighted mobile applications and games. The U.S. Department of Justice and Federal Bureau of Investigation teamed with law enforcement agencies across the nation and across the globe to execute the sting operation, with investigators downloading thousands of pirated Android apps, most stored on servers hosted in nations outside of North America. As a result of their combined efforts, the Applanet, AppBucket and SnappzMarket domain names are now in government custody, and site visitors are greeted by a seizure banner warning that willful copyright infringement is a federal crime carrying penalties of five years in prison and $250,000 fines for first-time offenders.

Consumers have never seemed particularly troubled by content piracy, however. Authorities have shut down a host of file-sharing services over the years--Napster, Grokster and Megaupload among them--but piracy continues to thrive in all corners of the globe. This summer, an All Things Considered intern named Emily White wrote a much-debated NPR blog post admitting that while her digital music library contains more than 11,000 songs, she's paid for only 15 CDs during her lifetime. "I honestly don't think my peers and I will ever pay for albums," White writes, blissfully ignorant to the realities of music business economics addressed in this response from by Camper Van Beethoven/Cracker frontman David Lowery. Some consumers even lent social network endorsement to the pirate Android app sites: Android Police notes that Applanet--the best known of the three stores, with a catalog of 15,000 Android apps--amassed more than 88,000 Facebook fans and 21,000 Twitter followers. SnappzMarket and AppBucket built considerably smaller social media followings, totaling 16,400 and 492 Facebook fans respectively.

In a recent interview with Gamasutra, Misha Lyalin--CEO of ZeptoLab, the startup behind the blockbuster mobile game Cut the Rope--suggests an interesting theory: Perhaps consumers don't even realize they're installing bootleg apps. "Users often search for Cut the Rope through a search engine and end up downloading a pirated version," Lyalin said. "That's just an honest mistake." No less interesting, ZeptoLab has made the conscious decision to forgo conventional strategies for halting piracy in favor of preserving the Cut the Rope gameplay experience. "While we do try to take down most copycats and pirates, a lot of ways to protect our games would be not very user-friendly or won't meet our quality standards," Lyalin said. "Because the user is the most important piece of our puzzle, we generally choose to focus on adapting our business model--utilizing ads and in-app purchases--rather than taking on pirates."

More and more developers seem to feel that piracy is an unwinnable battle, meaning they must adapt or die. Last month, startup Madfinger Games relaunched its Android zombie shooter Dead Trigger as a free-to-play download, transitioning away from its original 99-cent price as a result of Google (NASDAQ:GOOG) Play storefront piracy. "Even for one buck, the piracy rate is soooo giant, that we finally decided to provide Dead Trigger for free," Madfinger explained in a Facebook post. The company has since made its version of Dead Trigger for Apple's (NASDAQ:AAPL) iOS a free-to-play install as well.

Madfinger has been down this road before. Its previous mobile title, Shadowgun, suffered piracy rates as high as 90 percent before falling back to its current 78 percent, the studio's sales and marketing manager Anna Porizkova told Gamasutra. Porizkova doesn't blame the Android platform, however--she believes piracy is simply too deeply ingrained into the consumer culture to ever go away. "To us, piracy is a general contemporary problem. It is so easy to get a pirated copy everywhere for free that people don't even think about buying it," she said. "This is the norm nowadays. It's normal not to pay for anything you can have for free and nobody cares. All developers are tackling this problem."

Some developers are tackling the problem by avoiding it entirely, bypassing Android in favor of creating apps and games exclusively for iOS, where Apple's walled-garden approach negates many of the issues facing Google Play. But that's not a viable solution, Porizkova argued: "The Android install base is so big that it can't be cold-shouldered by developers." Instead developers should look to the Dead Trigger approach--i.e., making compelling games that are free-to-play. Not freemium, necessarily; there's a big difference. Madfinger was careful to underline the distinction when it abandoned Dead Trigger's premium download fee, doing its best not to alienate gamers who already paid for the game. "All players are able to play it without [in-app purchases]!" Madfinger wrote on Facebook. "We stand up for this statement, because all members of our team are playing (and enjoying) Dead Trigger without IAP."

The reality is that consumers who want to pay for Android games and in-app purchases will do so, and consumers who don't want to, won't. Free-to-play models serve both demographics while enabling developers to build sustainable businesses; freemium titles dependent solely on in-app purchases can be enormously lucrative, but also can lead to the same piracy issues hindering traditional premium downloads. "With no way to earn currency, [players] may be inclined to hack the game," Mike DeLaet, vice president of global sales and marketing at Glu Mobile, recently told FierceDeveloper. "We give them alternative ways to earn currency." Glu also foils piracy by constantly updating its games, contending hackers will tire of repeatedly coming back to obtain new content.

Seems to be working: Glu has slashed its piracy rate to about 2 percent while also reporting second quarter smartphone revenue of approximately $19.9 million--revenues generated almost exclusively by about 2 percent of the publisher's userbase. Android game piracy isn't going away, but mobile developers who scheme and strategize to minimize its impact will stick around for the long haul as well.--Jason