The NextBox 720 Dilemma: Next Gen DRM
The impact of an anti-used game approach
©2012 Nicholas Laborde
Recently, Kotaku reported that a reliable source hinted to them that the next Xbox may not run pre-owned games.
Words cannot truly fathom what went through my mind (and the corresponding facial expression) upon reading this, and it led to deep thought about this issue.
Pre-owned titles are the life, blood and central source of revenue for corporations such as GameStop, and many others around the world.
What will this do to not only those corporations, but the gaming economy as a whole?
It’s a topic that can be viewed from many different viewpoints.
Long ago when I first began working at GameStop, my manager, Danny, brought me to the back store-room during one of my first shifts. He picked up an Xbox 360 and asked me, “How much do you think GameStop makes off of this single 360?”
Being the ignorant youth that I was, I guessed around forty or fifty dollars (USD). He laughed, put it down, and informed me that they make at most four or five dollars. He then proceeded to pick up a used copy of Assassin’s Creed, which was marked at $19.99, and repeated the same question.
Trying to one up my manager and appear to be at the top of my wits, I responded with “Five dollars.” Danny again chuckled, and I was puzzled. What I didn’t realize – as Danny went on to explain – is that this single copy represented one hundred percent profit for the company.
When GameStop sells a new game, their profit (as on the 360 console) is minimal. The real profits arrive when customers get tired of that game, bring it back, get their credit or cash, which is giving GameStop that copy back, allowing them to mark it back up to the current price much higher than what the customer just received for selling it back, with the copy eventually being sold again, lo and behold, allowing for an envious profit margin.
It’s a simple, ingenious system that allows one hundred percent profit an exponential number of times in this major aspect of their business.
Other companies around the world (GAME, et cetera) focus on the same principle, allowing them to profit off of a common practice.
In this generation of gaming, though, publishers have become exceedingly annoyed with this practice as it cheats them out of potential sales that the retail corporations – not the publishers – are receiving.
There have been many different ‘attacks’ against this practice, first starting out with some games giving free DLC in new copies of the game (i.e., Gears of War 2).
This did not catch on as widely as it should have, and a bigger, more revered practice came into play: the ‘online pass’.
I don’t quite recall what the first game I played that required an online pass was, but I know the trend began in mid-2010 and has grown to be a staple method of anti-pre-owned games activism of current generation console gaming.
Being a faithful PC gamer, the online pass is not a new concept to me or any of us in that market, as it is essentially acting as a product key to enable online functionality.
Why do we make such a big deal over this, especially someone such as myself, who purchases most of his games new?
It’s almost a social attack. Consoles have traditionally been associated with socialization: it’s played from the couch in the lounge room, not at a computer screen in a bedroom. It simply appeals to a wider gaming audience (and an increasingly casual one).
With this approach I can’t lend my copy of Dead Space 2 to my buddy and have him try out the online.
A friend can’t go out and buy a used copy of Saints Row: The Third and play co-op with me. He has to buy a game new, even if he only wants it for occasional bouts of shenanigans with me.
Another form of the online pass is a practice that has become infamous: the locking of content onto the disc.
RAGE featured a specific method of this: if a player purchases a used copy, they can’t enter specific underground portions of the game. Although unconnected with the primary story, it’s publishers telling you “Your money belongs to OUR corporation, NOT that one.”
Another prime example is Batman: Arkham City. Used copies of the game lack a DLC code to play specific portions of the game as Catwoman, and while not extremely important to the understanding of the main story, certain decisions are no longer available, and some aspects are now unattainable (such as collectibles that can only be obtained by playing as her).
GameStop, in response to this, buys Catwoman codes in bulk to stock inside the used copies, essentially giving money to the publisher (which is all they want).
It’s a hairy, clunky system with no unified method. This is only an explanation of current events, and not factoring in what could happen if the next Xbox (or other next generation systems) includes some type of anti-used game DRM.
Microsoft needs YOUR money, corporations!
While not elaborated upon in the article, it was stated that the next console is highly likely to feature some sort of DRM. Presumably, new games can only be played on one system and that specific system alone, or be tied to one gamertag, eliminating the entire pre-owned games market.
Everyone can agree with me that we currently live in a rough, unstable economy. Money doesn’t hold the same value as it did this time last year, and it can be challenging purchasing every game new at release (especially with crammed release seasons like this past holiday), even more so if you can’t resell or trade your games for new ones.
This proposed DRM method would eliminate any ability for reselling or borrowing games purchased for this system, and would cut out a large percent of the profit of companies that specialize in the pre-owned market. That’s game stores, who already struggle with online competition.
Keeping in mind what Danny told me, do you think it feasible for a large corporation to only make four to five dollars on every single purchase, rather than have a consistent amount of full profit sales that occur thousands of times each day?
My biggest question is as to how the exact method will function. It certainly can’t be something physically on the disc, yet it can’t be as simple as an online pass.
Who is to say that Sony and Nintendo will not implement similar systems? The simple notion of this will inflate the gaming economy tremendously; companies will suffer and take huge losses, and in an economic climate like the one we’re currently in, that just doesn’t cut it.
It all comes down to one simple idea: publishers want your money, and as much of it as possible. When someone else comes in and takes the publishers’ money – and continuously, at that – it’s not a happy situation.
If something such as this does not occur, will more publishers follow in the footsteps of RAGE and Arkham City as we move forward? In a world such as that, both retailers and publishers take slight losses but still make slight profits.
To boldly go where no console has gone before…
What happens when several years down the line, that game is unavailable due to age and is nearly impossible to find?
Will that game become available in downloadable form? If that’s the only place you can get it, will you have enough space on your hard drive, or will you pay whatever they want you to, because there is no competition?
What could go wrong in a world where if you purchase a game and don’t like it, it’s nothing more than a paperweight? Many people use GameStop because they know they can return unsuitable games or simply trade them in towards another purchase.
Don’t even ponder what will happen to the select market that still hasn’t hooked up their systems to the internet.
Is this a future we want? And yet, why should we deny the publishers the right to do this, when other companies are profiting off of the fruits of theirs and others’ labor?
What do you think?
©2012 Nicholas Laborde
Filed under: Blogbanter, Console gaming, Editorial, Game Industry News, GameBanter, Hardware News, Industry News, Oxcgn Special feature, Polls, PS3 News, Xbox 360, Xbox 360 News Tagged: | DRM, GameStop, Next Gen consoles, Next-Gen, Nextbox, Playstation 4, PS4, Saints Row The Third, Sony Playstation 4, video gaming, Xbox 360, Xbox 720