The NextBox 720 Dilemma: Next Gen DRM
The impact of an anti-used game approach
by exterminat
©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?
Immediate ramifications
This generation has brought about one specific qualm, at least on the creation side of the industry: the sale of pre-owned games.
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.
These are not the games you're looking for...
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).
Fun is only allowed in designated fun zones!
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).
Pay up before you get hands-on...
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!
Want to play Skyrim, but can't afford a full price copy? TOO BAD!
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.
RAGE* (full game available in new copies)
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…
Imagine a world where everyone is forced to buy their games new at set price.
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
xxxxxx
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
If the publishers want to solve all problems and make the GAMER happy at the same time, here’s how to do it:
Step 1: Make the games complete and as bug-free from the onset. Screw fragmented games with DLC and on-line passes. DUMB IDEA.
Step 2: Create games with better longevity, and create less games. Games like Dark Souls with it’s completeness/online/longevity is what publishers should be striving for. Kinda like games on SNES like Zelda: A Link to the Past another good example. Treat the gamer right and we will return the favour ten-fold.
Step 3: Get all publishers to band together and create their own retail outlet. Put Gamestop out of business. Believe it or not, most gamers would like this.
Step 4: Don’t over-do franchises. I love the Assassin’s Creed series, but do we really need one every year? NO. We don’t. Every two years would be preferable. And last, but certainly not least…
Step 5: A unified gaming console would do good, whether people believe it or not; publishers could spend the extra money they would to port the games to other machines to make a better game. Period. The publishers could compete on a quality basis.
So there you have it. If this reply could reach the offices of publishers worldwide, and the CEO’s would have more than half a brain to realize how true these words are; they would benefit and WE THE GAMERS would too. Prove me wrong.
Peace.
IF publishers lowered prices on new software AND dropped prices earlier in a product shelf life, then this COULD work. A good example of a company that doesn’t do this is Nintendo, who’s first party software rarely goes down in price (if ever)
IF (the) Gamestop(s of the world) were not permitted to sell used games for 6 months after release THEN this could work. Of course, the hardware manufacturer implementing the piracy protection would have to put in software for this to work. That way I could try something used and discounted, but at least it’s not during the games initial rush.
I agree with the publishers/developers that used game sales CRUSH their revenue. Think about it, if 100 people buy the game day one and 75 trade in 7 days later because they complete it, those 75 copies are now a cheaper alternative to the next set of people who didn’t feel the need to rush out and get it. Now a potential 75% additional revenue is lost to the publisher within the most profitable time in that games life. How is that fair to the people who do overtime for months to get a product out (and then get shut down because sales didn’t meet expectations). This would actually go a long way in solving not only studio closures but start putting creativity back in the industry (publishers make more on AAA titles and can then take more chances on unique experiences)
I’m poor, barely afford anything new or used, and I still think this would be awesome, but I do feel that game prices should fall sooner after release if the used game industry is going to be eliminated.
Trying to make the issue a M$ thing takes away from any credibility the writer might have earn by being impartial. Microsoft is like any other company. To think this is strictly about them being greedy is silly. The developer loses far more than Microsoft. I’m not sure why anyone would be defending Gamespot for raping them on trade-ins. It would seem that people should be more upset about that. I only trade in games through Amazon so far. I refuse to lose $35 on a trade-in so that Gamestop executives can get huge bonuses.
No, just no. The article in question never once confirmed that this is 100% going to happen. The author instead stated a question of whether or not Microsoft had any plans to include such a system, to which his insider source couldn’t elaborate on as they themselves weren’t sure.
Everyone reporting that the next Xbox will incorporate some anti used gaming capability without any proof just furthers the opinion that not everyone should be able to write “news” articles.
I think the issue is valid: the issue of used games is one that is being looked at closely now.
Apparently Kingdoms of Amalur is the latest to feature “missing sections” for those who buy used games.
Be it online passes, missing content, or consoles of the future not allowing used games, it is worth seeing what consumers think.
As for what was reported, this is what is written:
“I’ve heard from one reliable industry source that Microsoft intends to incorporate some sort of anti-used game system as part of their so-called Xbox 720.” (see link to Kotaku in article)
While this is not confirmed by Microsoft, we are trusting Kotaku that they do in fact have a reliable source who has said this and discussing the implications for gamers.