Inevitable fight coming re: digital distribution

[Zeus]

It's already started in Europe where the EU already ruled that digital games should have the same rights of transfer (ie. sell, trade) as boxed games. Now, a German company is suing Valve to be able to do the same thing on Steam:

http://www.gamespot.com/news/german-gro ... ve-6403307

I'm not trying to stir up a fight here. Everyone knows my views on digital distribution. I'm just pointing out the start of the inevitable legal fight that Europe is starting which will determine how the inevitable future of digital distribution only for gaming will shape up.

It'll be interesting to see if they force the whole "reasonable sale, trade, and other transfer" of purchased content upon the distributors or not. I personally think what'll happen is the move to streaming gaming within the next 10-20 years (once real internet access is reasonably accessible to the majority) will make it all moot. But if they decide to charge per game for that as well (as opposed to Netflix-type overall-access service), whatever rulings occur in the digital download fight will probably extend to access to that particular game even if you just stream it and don't own it as well.

[Don]

I see no reason why you shouldn't be able to sell your digital copy of whatever to someone else for $5 since stuff like Steam clearly could handle permanent transfer of such things. Unlike the retail version, if this second market is supposed to be significant there's really nothing stopping the game makers from vastly undercutting any reasonable price a user may sell for (i.e. sell your game for $2) if they think it'd be advantageous to do so. I guess the game developers are afraid of this because then you could have something hyped up like say Diablo 3 or Final Fantasy 14 that gets immediately destroyed with people dumping their digital copy of the game for $10 3 days after the game is live but then that's game maker's fault. I'd say Diablo 3 easily could have millions of second hand sales given the game was really terrible at the beginning and certainly the millions of guys who got it via annual pass in WoW would've no problem dumping their copy for cheap. That'd have devastated the game but being exposed for failure is a good thing, not a bad thing.

[Zeus]

Two reasons:

1) Developers and publishers view used games as the enemy. They believe a used game sale for which they don't receive any royalties is a lost new sale. It's the same stupid argument that the MPAA and RIAA use to massively over-estimate the lost revenue due to piracy. It's likely far closer to 5% but that's still lost revenue they wanna recover. Of course, since this transfer will occur in a controlled, closed environment, you can easily build in a percentage transfer to the publisher and developer and eliminate the entire basis for their argument. Problem is, you can eliminate the bigger issue in #2 below

2) Publishers and developers would lose control over the pricing of their games. This is the real reason they will fight this to the bitter end. How many times have you said to yourself "I'll wait for a price drop" to pick up a game? Most gamers due this on a regular basis......and even more mothers and grandmothers. They have a measure of control now with the biggest used game companies (EB/Gamestop and Best Buy) too afraid to undercut the new price by too much in fear of losing precious new game distribution. It's no accident a used game is only $5 less than a new one.

It's also no accident every game but a very select few come out at full price. Companies simply don't want to create a lower tier of pricing for anything other than shitty shovelware. They don't want to release a Dishonored at $40 to boost sales, have a hit, then lose pissed off customers when the sequel jumps to $60. Nevermind that Batman and Borderlands showed the exact opposite when they were $40 on launch day. They simply don't want to create consumer expectation for games priced at that level.

With digital distribution, they can eliminate other pressures on pricing that exist now through used physical media availability and have complete control over pricing. You see it already with the pricing of full games on XBLA and PSN being so much more expensive than at your local games store

[Don]

I'd say game developers are more worried about a spontaneous crash in price if the used game market is easily available then the fact that somebody two years later might buy this game from a guy used for $15 instead of still paying the full $40 for it. It's easy to imagine if some hyped game failed hard you could see the used market price crash because all the guys who bought the game and hated it wanted to get some of their money back, and people would obviously notice that there are a million copies of this game for sale of the used market for $10 and, even if you're a diehard faithful, you'd almost certainly still buy the 'used' version instead of paying full retail. Most people would look at it and figure 'this game must sucks if so many people are bailing' and this might create further sell-offs or prevent sales from ever taking place at all.

For the 'original game sale losses' argument I'd say it's just a matter of economics. I could put my game at $50 forever and some number of guys (presumably very small) will still buy it 3 years later. That sale would be lost if people are allowed to sell their used game for a price less than my $50, but I could also be proactive and just lower my game's price to $20 and perhaps get considerably more original sales that way. Sure I'll still lose some sales to the guys willing to sell for less than $20 but if my game was actually sort of good then people might not want to part it for less than $20. If anything seeing the prices people are willing to sell their game 'used' should give me more information on whether I should hold firm at $50 or lower the cost of the game by a lot. Let's be serious. I doubt there are very few sales at full price ($40+ range) by someone a few years after a game's out just because the guy can't possibly wait any longer. If you're a bargain hunter you obviously don't need the game that badly. The used game market most likely will cost devs money if they adapt the 'hold steady at full price' but there's no reason to believe this is even a good idea.

The only reason I can see used game hurting the industry is if you're planning to just hype up a game that turns out to totally suck so you don't want anybody to have the possibility of reselling it (which is what people will do once they play the game). All the other arguments is merely speculation. If your game got hurt by people selling used copy of the games at $15, perhaps it's a sign that you should've lowered the game's price to say, $25, even in the absence of used game sales because there's a very high probability that even in the absence of game sales, you won't be moving very many copies at the full $50 price. No it won't always be right but nobody is entitled to a profit for just existing so you got to do your research and figure out what's the best price to set your game at instead of hoping some regulation or law guaranteeds profit.

I don't think having full pricing control on games even matter because there are too many games. Suppose Street Fighter does some study and found out that if they can set the price to $500 per copy in a world where used game does not exist and do so, even if that would've worked in whatever world the developers imagined to be in, in the real world we have a lot of substitutes for fighting games so it's hard to see this working at all. And if every fighting game conducts the same study and set their price to $500 then obviously very few fighting games will ever be sold. You can even argue the current retail price of $40-$50 is some kind of indirect collusion that's attempting to sell at the monopoly price, but because there are way too many game makers out there, someone (usually a smaller dev) is going to feel compelled to cheat by lowering the price. Diablo 3 is probably as close as a monopoly on a genre as it gets, but Torchlight 2 and now Path of Exile seems to be have some success by selling cheap. Torchlight 2 seems to have a more favorable opinion than Diablo 3 by the players, no doubt helped by its $20 price tag. Used games would simply be another form of competition in terms of cheap games and that already exists in every genre of gaming.

[Zeus]

It's easier to see what others are sayin' than to simply take my word for it:

Game Revolution - general "why the industry hates it" article: http://www.gamerevolution.com/blog/sliv ... ales-85879

CNet - why CEOs hate used games: http://news.cnet.com/8301-13506_3-57405 ... whole-lot/

Ars Technica - why used game buyers ain't customers: http://arstechnica.com/gaming/2010/08/b ... about-you/

Escapist - Crytek backpeddling on "used games being blocked is awesome" comment: http://www.escapistmagazine.com/forums/ ... Games-Hate

Nukezilla - why the industry shouldn't feel special about their used product: http://nukezilla.com/2010/08/26/game-de ... o-special/

TechDirt - why used games are the law and how it helps new sales: http://www.techdirt.com/articles/201008 ... 0761.shtml

First Sale Doctrine - very important aspect of trademark/copyright law protecting used sales: http://en.wikipedia.org/wiki/First-sale_doctrine

[SineSwiper]

Corporations are people; your argument is invalid.

[Zeus]

Corporations are people; your argument is invalid.

?

[SineSwiper]

Corporations are people; your argument is invalid.

?

Just an expression of disdain on the constant losing battle between corporate interests and protection of rights.

Also, to throw fuel on the fire...

[Flip]

Also, to throw fuel on the fire...

Such a misleading title. New XBox WILL block used games... then

"A new Edge report suggests that Microsoft's next Xbox gaming console, code-named Durango, will require an Internet connection to use. It also won't be able to play used games, Edge says.

We have not been able to confirm the veracity of this new report, which claims that Durango discs will ship with one-time-use activation codes that render them irrelevant to anyone but the person who first uses them."

However, it wouldnt surprise me if thats the case. Back in the day, yes i would swap games with friends all the time, but as an adult i dont really care and I'm not sure if modern kids still swap as much as we used to in our youth. If they do, all this is a shame, but i bet they download their games all the time now, which in itself isnt very transferable.

[Don]

I don't get all this crying about laws and stuff. Games are not a necessity and there are a ton of substitute for games, including other games. The crux of the problem is that most games aren't worth the full retail price and for whatever reason developers believe passing laws will incentize people to buy games in an era where you got Steam sales and hundreds of cheap games available. Guild Wars 2 had return policy that at least goes on for a month even after you played the game. It's not widely advertised but it exists and that'd totally kill the used market for a different reason (anyone who would want to sell their game would just refund it for full instead). I have a hard time believing that developers can simply win by holding the price constant, or otherwise we wouldn't have all these threads posted when certain games go on sale on Steam.

[Zeus]

There's no doubt in my mind both Microshaft and $ony are putting out feelers to determine if they can get away with the activation codes Valve and Blizzard have on the PC. They want to make that disc you have useless and wanna use this as a stop-gap measure until things become all streaming in 10-20 years.

I just don't think the console market will accept it. Neither do they, honestly. They're just trying to get people more and more used to the idea so they can introduce it in the following gen

[Don]

It's fine if they want to sell you a license as long as they let you refund the license, like Guild Wars 2 does. With the game pushing 'always online DRM' like Diablo 3 it's pretty hard to play any game meaningfully with your primary account deactivated unless you've some other ways to get a copy (in that case you should've pirated the game to start with). If you allow say a 3 month period to refund something that will most likely kill any secondary market too because anyone who wants a copy on the cheap would just refund the game before time's up (and again if you want something more complicated to cheat your copy you should start out pirating the game) and likewise anybody unsure about an investment can be assured that the game is refundable. Of course that will probably eat into your profits, but Guild Wars 2 looks surprisingly profitable based on the earning statement I see from NCSoft which supports that it's the game not the model of payment/acquisition.

FYI this is Guild Wars 2's refund policy:

If you purchased Guild Wars 2 from http://buy.guildwars2.com and would like a refund, please do the following:
1.Open the Ask a Question tab above.
2.Select Refunds from the Issue Type drop-down menu.
3.Enter a valid e-mail address and let us know in the Subject field that you would like a refund.
4.In your submission, please provide the following: ◦Your Guild Wars 2 purchase Order ID provided in the receipt of the purchase (if available).
◦The e-mail address you used when making the purchase. (if available).
◦Your billing zip code or postal code.
◦For transactions involving a credit/debit card, ONLY the last 4 digits of the credit/debit card used.
◦For transactions involving PayPal®, the invoice ID or transaction ID from your PayPal® payment history for the transaction.


Note: The refund process includes permanent closure of the Guild Wars 2 account. If you wish to continue to play Guild Wars 2, or if you desire to play in the future, you will need to purchase a new serial code and create a completely new account. Characters, names, items, and other features from the refunded account cannot be transferred to a new or different account.

There's some kind of time restriction too, but it's pretty generous. I missed it by like a day or two after I heard about it, though I think it's likely I'll figure 'maybe the game will get better' or just too lazy to refund it even if I heard about it earlier. You can play the game as much as you want and return it and as long as it's within the period you get your money back. There would be no real incentive to have a secondary market in Guild Wars 2 even if the game supported it with such generous policies.

[Zeus]

Its much easier than that. Just force a sale/trade marketplace upon Sony and Microshaft and give a small cut to them and the publishers. It may happen in the EU if that ruling holds up

[Don]

I've seen argument that refunds are better than a cut from the secondary market just because a lot of people are too lazy to remember to refund your game and end up paying for the full price, and obviously anyone who would buy a game because of the possibility of reselling it as a cushion would definitely buy it if you tell them the game can be refunded for full. The point is that distributors like Sony and Microsoft might even make more money if they just embrace this. Anybody who is resourceful enough to take advantage of the new system is likely already resourceful enough to pirate the game to begin with, and I'm sure there's well-known statistics on how often people actually refund something on physical goods.

[Zeus]

I've seen argument that refunds are better than a cut from the secondary market just because a lot of people are too lazy to remember to refund your game and end up paying for the full price, and obviously anyone who would buy a game because of the possibility of reselling it as a cushion would definitely buy it if you tell them the game can be refunded for full. The point is that distributors like Sony and Microsoft might even make more money if they just embrace this. Anybody who is resourceful enough to take advantage of the new system is likely already resourceful enough to pirate the game to begin with, and I'm sure there's well-known statistics on how often people actually refund something on physical goods.

A one-time use secondary code COULD work. But I think it's still too restrictive for the next generation