95% is a shocking number and would mean that Ubisoft cannot possibly be making any money on game sales. Still somehow they have managed to make money. In Q3 2012 their earnings were 625 Million Euros (about $785 Million US Dollars). In Q4 they had a bit of a slump but managed 161 Million Euros ($202M USD) which was only .01% below their estimated earnings, but was 75% less than Q4 2011. One of the big reasons for this was the lack of games published by Ubi in Q4 2012 about the only thing they did launch was a new form of DRM which tends to bother gamers. However to claim a 95% piracy rate in the face of the actual numbers is very disingenuous.  To put things simply that means that they can make a profit on only 5% sales putting their markup for their products even higher than Apple. There is no mathematical way that 5% sales can make the money that they have reported.

This number also highlights something else that is less than honest. Ubisoft has always defended the use of DRM to protect their games claiming it was the only way to combat piracy. If there is a 95% piracy rate that means that the DRM used by Ubisoft was useless and, in keeping with what we and most developers have said, only hurts the paying customer (in this case 5% of the people that play their games).

Ubisoft is using these massively inflated numbers in an effort to move into the world of cloud gaming. They want to spend less on developing games (you do not need high-end graphics for most web-based) games and also to work on a better revenue stream. The concept of the always on, connected DRM model has caught on with game publishing companies. They feel that it offers a better revenue stream than standard game sales. With a standard game, you sell the copy and that is it. With the Connected model (free to play or pay to play) you can continue to gain revenue over a longer period of time. The more someone plays the more they are likely to buy items to keep playing (at least that is the theory).  

There is an interesting push to pull things into the cloud from multiple sides of the computing market and now we are seeing it hit the gaming market as well. This push makes sense for many businesses in financial terms, but has more than a few pitfalls for consumers. The recent rash of data breaches have shown that the cloud is not a safe place to hangout, but this has not deterred companies form making the move. Most feel that the potential for lost user information is far outweighed by the potential financial gains. The cloud is being viewed as another method to control piracy (which will not work) while gaining a much more consistent revenue stream. Any concerns about user data protection and safety are secondary.

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