Revenge after 'Freebies' Are Gone? Effects of Curbing Piracy on Online User Ratings

40 Pages Posted: 12 Jul 2018 Last revised: 17 Oct 2018

See all articles by Zike Cao

Zike Cao

Erasmus Univeristy Rotterdam School of Management

Date Written: June 21, 2018

Abstract

Recently, the advent of Denuvo as a highly effective anti-piracy instrument in the video game industry delivered a huge blow to illegal gamers. In most cases, games that adopted Denuvo were uncrackable for a unprecedentedly longer period of time. By exploiting this natural experiment and some unique institutional features of the video game market, I identify the effect of adopting Denuvo on a video game's user ratings on Metacritic.com using a difference-in-difference (DID) approach. Various estimates suggest that a Denuvo-protected game suffers, on average, a decrease of 0.5 -- 0.9 points (out of a 0-to-10 scale) in mean user rating about its PC version (affected by Denuvo most) relative to its console version (largely unaffected by Denuvo). The decrease in mean user rating seems mainly due to a significant upsurge of extremely negative ratings (ratings with a score of 0 or 1). By conducting a battery of additional identification tests, several alternative explanations are ruled out and the results consistently point to one explanation: Illegal gamers revenge Denuvo-protected games by posting malicious negative ratings about them on Metacritic.com. The findings offer important implications to both owners of online platforms thriving on user-supplied content and digital-good providers' strategies to cope with piracy.

Keywords: Anti-Tamper, Denuvo, Digital Piracy, Online User Reviews, Online User Vandalism

Suggested Citation

Cao, Zike, Revenge after 'Freebies' Are Gone? Effects of Curbing Piracy on Online User Ratings (June 21, 2018). Available at SSRN: https://ssrn.com/abstract=3200465 or http://dx.doi.org/10.2139/ssrn.3200465

Zike Cao (Contact Author)

Erasmus Univeristy Rotterdam School of Management ( email )

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