In the videogame/media world recently, there’s been a major push for “download-based” or “managed server based” delivery systems. In particular in the videogame world, there are now two parallel, competing channels for content. Major games are released on disc and go to stores (Walmart, Target, Gamestop, etc). Minor games and past classics are distributed/resurrected via the download services provided by Microsoft, Nintendo, Sony, and even for the computer over venues such as Valve’s “Steam” service.

Sony has recently taken this to a new level with their “PSP Go”, an ill-conceived console that can only purchase games from Sony’s download store, and takes ~3 hours to download a single purchase. Meanwhile, over at Slashdot there’s a raging debate over EA’s latest few debacles, most notable their constant stripping of game content off into “nickel and diming” paid DLC. Some estimates of the actual price of certain EA titles go to over $90 after the “release day” DLC, which most people agree is necessary to make the game playable.

Of a larger part in the picture, however, is the game companies’ repeated attacks on the used-games market. EA has teased the idea of games whereby certain downloadable content is only available to the “original” purchaser, making the title crippled (possibly even unplayable) if purchased second-hand. Sony, a while back, patented a system whereby games would “burn in” their processor ID number the first time a game was used, on a special section of a disc, and subsequently the disc would refuse to play in any other console (particularly vexing given that the failure rate of many consoles is 20% or higher, and an entire library of games could be made worthless by something as simple as a power surge). The PSP Go has no possible game cartridge slot unless Sony releases “pre-programmed” memory cards, meaning that the only time any store is likely to see any money from it is when they sell the console itself.

From the companies’ perspective, the more common internet access becomes, the easier it is to bypass the brick-and-mortar retailers. This isn’t unique to the video game industry, since the movie and music industries have been pioneering it (poorly) to some extent, but the hatred towards the secondary market (and to some extent, the multiple personality disorder, since Gamestop regularly cuts “exclusive release deals” with many game companies) in the videogame market is particularly strong.

I cannot put much of the blame for the situation on Gamestop or the other secondary-market stores (heck, it’s so lucrative even Wal-mart wants in on the action). Movies sell for (relatively) cheap, oftentimes less (thanks to ongoing borderline-illegal price fixing by music companies) than a movie’s corresponding soundtrack. Most people buying a movie have already seen it once (either in theater, over broadcast/cable, or via rental) and know what they’re buying. Videogames, by contrast, are purchased more or less blind. There are many cases in which a game has been preceded by a massive hype machine, only to be sold back to the store in droves because it was either way too short, particularly godawful, or some combination thereof. Most games have enough of a market of “hey, I don’t like this at all” types that within 2-3 days of release there will be at least a handful of “used” copies available at the secondary-market stores. Game manufacturers feel “cheated” by the fact that their new-title sales get cannibalized this quickly, and would prefer to stop it from happening entirely; at least one company attempted unsuccessfully to force Gamestop into a contract barring resale of their titles for at least a month after release, in hopes of making a bit more money that way. At the same time, rumblings of attempted copyright actions against Gamestop in the past smacked of antitrust violations and violations of first-sale doctrine, and attempts to claim a percentage of the revenue from Gamestop’s sale of used titles (via threat of withholding new-sales product) were outright extortion. In a market where a term for bad product (“shovelware”) exists and is commonly used, game companies are much more to blame for putting out product that’s so easily sold/forgotten and thus making the current system (whereby a given disc cycles through a Gamestop-style store an average of 5-6 times in its usable lifespan) to their own disadvantage.

Meanwhile, of course, from a pure revenue perspective I can’t blame the game makers from salivating over the prospect of both ongoing revenue streams (original title $59.99, DLC to the tune of $6-10 every couple months, onwards onwards) and for the “noncannibalized” sales model of downloadable content. It can’t escape them that every sale of a game over Xbox Live Arcade, for instance, can’t be resold or transferred to anyone else unless someone sells their entire console and transfers the Xbox gamertag information/login to the new owner (which may, or may not, violate some part of the Xbox Live ongoing subscription contract). From their perspective, when Gamestop sells a used disc they see no money, whereas any time someone buys a game via download they get “their cut.”

Of course, the generalized form of this debate is nothing new. A long time ago, booksellers tried to kill the idea of public lending libraries on the idea that it would put them out of business, and an attempted deal for Google to offer a sort of “online” booksearch/lending library model is going through all sorts of hell currently. What is new is the fact that, armed with the DMCA (some of the worst garbage legislation ever written), certain companies actually have been given the option to try to hide their content behind so many layers of “protection” that they have, in fact, begun attempts to destroy the customer’s right of first sale entirely.

I can’t imagine that this bodes well for consumer rights, or for the market in general. At the very least, should trends continue, Gamestop’s in real trouble 10-15 years down the road and we might see Target/Best Buy/Wal-mart’s electronics sections seriously reduced in size.


Category: Market, Theater

About the Author

Guy Webster (web) is an IT specialist at Southern Tech University, where he and Will Truman attended college.

4 Responses to Companies That Hate Consumers

  1. Transplanted Lawyer says:

    EA produces The Sims 3, which I recently bought and have enjoyed considerably until all the bugs and memory leaks manifested. It’s a separate gripe, I suppose, about how software companies release products known to have bugs and flaws with the idea that they’ll get around to fixing them later.

    Anyway, the relevant point here is that this game has an online “store” where you can buy new objects to put in the game with “SimPoints,” which you can purchase with real money. A user must register for the Sim-Store in order to unlock a large number of special features. But there’s nothing super-cool available this way; even the unlocked “features” are not particularly useful or even fun — and some of them contain more bugs, compounding the bugs that came with the original program. You don’t get your money’s worth with this online product. And after dropping forty bucks for the original (buggy) game, it’s a huge disappointment that makes me reluctant to buy further product from this manufacturer.

    EA also sells the Madden Football series of games. The next step would seem to be selling Madden Football with only the Detroit Lions and the Kansas City Chiefs pre-loaded, so you have to register and purchase the teams or players that most of the market for the game might actualy want to play.

    The best business model, though, would seem to be an entirely online game with subscription-only access. You get everything, all at once, but you have no locally-playable or offline copy of it. Then it charges a quarter an hour of play, or whatever other price point the market will bear. Of course, download time to the local machine will have to be substantially better than three hours for that to be feasible.

  2. web says:

    TL,

    “The best business model”, from the side of the business, might be the entirely-online model. From the consumer side, it’s lousy for anything that’s not an MMORPG-flavor game.

    The problem with not having a physical copy is that you’re relying on the goodwill (and proper recordkeeping ability) of the company to ensure that your purchased property stays “yours.” It’s impossible, for instance, to “back up” an Xbox Live Arcade purchased title whereas if you buy a physical installation disc, the worst you have to do is take good care of it (and maybe burn the patches/bugfixes to a later disc) to theoretically be able to use it on a new or rebuilt computer later.

  3. trumwill says:

    I don’t mind the online/rental method of entertainment and think that, except when it comes to hard physical things like books, it may even be preferable. The thing is, though, that they have to be priced like rentals. If Rhapsody and Napster make me pay a fee for music and then I don’t get to hear the music anymore after I stop paying them, that’s fair because I am paying $13 a month for over a million songs. But if they want me to pay $1 a song, I don’t want any limits at all as to how I use it.

    The same, I think, would apply to video games. If you want to call it a rental, call it a rental and price it accordingly. The problem is that they want to have it both ways.

  4. David Alexander says:

    The best business model, though, would seem to be an entirely online game with subscription-only access.

    I’m almost tempted to argue that may be a feasible option for the EA Sports series of games with yearly releases, given that a sizable number of people buy a new copy every year just to have the updated rosters for each season.

    if you buy a physical installation disc, the worst you have to do is take good care of it

    For those of us that grew up with console video games, repurchasing a new video game if the previous copy became damaged is basically a way of life. Even copying games wasn’t an option given that one would require modifications to the console to get such copies to work whether CD or cartridge based.

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