Game of Thrones is the first 'free-to-play' TV show, and gaming is racing to catch up

Game of Thrones is a massive hit for HBO, both in terms of the raw numbers of people watching and the cultural impact the show has had on television in general. It maintains the cable channel’s status as the home of prestige television, as HBO is a place you go when you want to keep up with what people are talking about on Monday morning.

It's also a giant "victim" of piracy. 1.5 million people reported downloading the episode "The Lion and the Rose" on its first day of availability online, with upwards of 200,000 people sharing the same copy of the episode. This is a record-breaking event in the world of media piracy, but HBO doesn't seem to care.

Why does a cable channel get to sit out of the piracy discussion, and even crack jokes about the popularity of its content when the question is asked? The answer is simple: HBO has created what amounts to free-to-play television.

Free-to-play television

The first thing to note is that HBO hasn't exactly given up the fight against piracy.

"There are numerous anti-theft tools we utilize and we have significantly shrunk the international distribution window for original programming to practically correspond with the US premiere," HBO said in a statement to Entertainment Weekly. "Unfortunately, with popularity comes piracy. Good news is Game of Thrones continues to grow significantly and tens of millions are watching the series legally around the world."

HBO can and does flag pirated content, and they've been known to send "you cut that out" letters to individuals who download HBO content. But they also have a realistic take on the situation.

"Basically, we've been dealing with this issue for years with HBO, literally 20, 30 years, where people have always been running wires down on the back of apartment buildings and sharing with their neighbors," Time Warner CEO Jeff Bewkes said on a conference call. "Our experience is, it all leads to more penetration, more paying subs, more health for HBO, less reliance on having to do paid advertising — we don't do a whole lot of paid advertising on HBO, we let the programming and the views talk for us — it seems to be working.

He went on to call Game of Thrones being the most pirated show "better than an Emmy." Indeed.

HBO CEO Richard Plepler was just as realistic when he spoke to BuzzFeed about people sharing their HBO Go login information with their friends. "It's not that we're unmindful of it, it just has no impact on the business," he stated. He called it a "terrific marketing vehicle for the next generation of viewers."

It's possible people you read online may have used a borrowed login to watch last night's episode, in fact. And had for a very long time, when writing about the show. I doubt HBO would go after such individuals.

These quotes and HBO's general attitude have been reported on time and again, but the company enjoys being part of a bundled subscription model that has helped them reach 130 million subscribers worldwide. Netflix has similar revenue when compared to HBO, but HBO wins handily when it comes to profits and warm bodies watching television.

We read funny cartoons that demonstrate how hard it can be to legally obtain Game of Thrones without paying for an HBO subscription, and people debate online about how HBO is backwards-looking when it comes to offering its content a la carte, but who can argue with the results? The system in that comic is working as intended.

This is why HBO can shrug off piracy; they would much rather you pirate an individual show and talk about it online or with friends to spread their brand rather than offer a breakout product that would allow people the option to drop their subscription.

HBO isn't a media company, it's a very profitable part of Time Warner Inc. and that company has its fingers in everything. This is why Game of Thrones will never be sold as a subscription on iTunes as it airs, and why HBO won't be offered by its own until the company has a metaphorical knife to its throat. The current model is way too effective, and it allows them to ignore piracy to the point of winning points by joking about it in public.

You can have a company that offers HBO by itself, or you can have a company that is fine with piracy as long as the show's cultural relevance remains high. You can't have both. The money is simply too good in the current model for anything to change, and the high levels of piracy don't equal lost subscriptions in a way that matters to Time Warner's bottom line.

It's an interesting business, and there are many more details to possibly discuss, but let's look at what this teaches us about video games.

The model dictates the distribution

The important lesson is that piracy numbers tell us nothing if we don't understand the company's business model and overall structure. You can't just look at the 1.5 million people "stealing" Game of Thrones and assume HBO is losing money due to its "antiquated" distribution methods and lack of viewing options. The reality is much more complicated, and ties into all aspects of the cable and content business. It's not going to change any time soon.

Time Warner Inc. has created an ecosystem where piracy doesn't matter, or even helps their bottom line if you look at the big picture of cultural importance. We see the gaming industry trying different strategies to remove piracy from the equation in similar ways, and they've been remarkably effective.

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How does one "pirate" League of Legends? The game can only be played online, is free for anyone to try with a rotating selection of free heroes, and has rapidly become a monstrously popular spectator sport. There is nothing to for pirates to take; the game is designed in such a way that it rests far above the piracy debate.

Riot clearly doesn't care about players who download the client, play online, and never buy a thing — this style of play is the closest thing you can come to a "pirate" in League of Legends — since those players keep the ecosystem healthy, provide opponents for big spenders, and they help to make sure it's easy to find games.

Every player who talks strategy or shares notes on their matches online or via social media, even if they never pay, ultimately furthers Riot's goals. Saying it's a "free-to-play" model misses the point, it's a model that is designed to turn every play interaction into value.

This approach is incredibly attractive to anyone in game development, but it becomes even sexier to those who own their own distribution platform. World of Warcraft has long been impossible to pirate, and it's never been easier to get into the game without paying anything, but the real push is coming from games like Hearthstone, a free-to-play collectible card game that gives up hours of play before you begin to feel compelled to pay anything.

Remember, we're now thinking of these games in terms of value delivery systems, moving from the player to the company. Even the communication systems of Hearthstone is designed that you can only add value to the game.

Heroes of the Storm is Blizzard's next big game, and it offers its own take on the MOBA genre while also embracing a free-to-play model and an always-online structure.

These games are controlled and organized through Battle.net, a distribution platform that Blizzard itself owns, so it gives up none of its revenue to any outside parties. Even signing up for a Battle.net account to download these free clients adds a player to that system, and gives up some information about your gaming habits. If the goal is to increase value with every player interaction, Blizzard has just about mastered this art.

Or you can look at the mammoth amount of players who play Dota 2, another free-to-play MOBA, or Team Fortress 2, a free-to-play game that has been monetized in mostly cosmetic ways. Team Fortress 2 quadrupled its user base and revenue when it went free-to-play and embraced trading and user-created content.

Decisions like the lack of a single-player campaign begin to make sense when viewed through this lens

"I'd suggest anyone doing an online only game release free-to-play," Valve programmer Joe Ludwig said during a talk at the Game Developers Conference in 2011. The numbers back him up. Dota 2 isn't just the largest game on Steam by a huge margin, according to Ars Technica's numbers, everyone who downloads it, plays it. And every single player in the game adds value to the ecosystem.

This is what HBO, or really Time Warner, has learned, although the lack of single-show purchasing options is somewhat consumer hostile. Everyone who pays for, or downloads, Game of Thrones adds value to the property. Piracy doesn't harm the business of selling bundled cable, and it helps raise the value of licensing fees for the property or the content. You're helping HBO simply by providing a set of eyes and an often vocal mouth, and it knows it.

You have to get rid of terms like "free-to-play" or "always online" when you apply that same thinking to games. The models are merely delivery strategies, the ultimately goal is a game that gains value when people interact with it, even if they don't pay. Once you see things through that lens, "odd" decisions like the lack of a single-player campaigns begin to make sense.

People can argue that Valve is leaving money on the table by not creating and releasing Half-Life 3, but the days of $50 or $60 single-player PC games from Valve may be coming to a close. It's very possible to interact with a game of that type without adding that necessary value, and there is no company that wants to create that situation in a flagship property. If Half-Life 3 is ever released, expect big changes that will anger die-hard gamers but will likely prove lucrative.

There is no way to watch Game of Thrones without benefiting HBO, even if you pirate the content, and gaming wants to be in the same position. Most of the big players in game publishing or development, such as Valve, Blizzard, and Riot, already live there comfortably.

It's telling that some of the largest, most powerful companies in gaming made the transition so smoothly, or even built their success around it. HBO has successfully created free-to-play television by leveraging its business model and turning pure attention into value. Gaming is following right behind, for better or worse.