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Used games: the new industry boogeyman

28 October on Blogs, Editorial  

Dennis Dyack, founder of Silicon Knights and creator of games like Eternal Darkness and Too Human - and also a very outspoken member of the industry - decided to give his two cents about the used videogame market. Despite losing some of my respect for him in the last few years, I always admired the way he addressed the press... until Too Human, at least. But I digress. The point is: he now paints a bleak picture about how sales of used videogames will harm the industry by killing the Long Tail. While I have high regards for the book of the same name and its theory (which I recommend to pretty much anyone), I have to say this seems more like spouting marketing buzzwords than actually trying to... you know, stop and look at the situation and give it some thought.

Having grown up during the 80s and 90s, I had the privilege of seeing the console business give some very important first steps towards becoming the multimillion blockbuster market it has become nowadays. During those years I rented, traded, sold and bought a lot of used games. Yes, the predatorial (one could even argue parasitic) style that Gamestop employs nowadays of shoving used games at the counter did not exist, but the environment was very much organic with sales, resales and rentals - not unlike other industries like cars.

But there are a few things that rub me the wrong way in his doomsday scenario. First, as aggressively as Gamestop is taking over margins with their used market practices, a chunk of that money is still coming back to the industry: obviously people are buying games new at one point to resell them used. And while I have no hard data, just from visiting stores occasionally I can see that a lot of the credit generated from used games is being used... to buy other games, especially new ones. So to completely write off that revenue as not coming back to publishers is not entirely true.

Secondly, he mentions the good old days in which there were no used sales (despite the fact there were used sales), but he forgets that those glorious days were before the advent of extremely cheap optical media, when the margin to print cartridges was enormous - and demanded orders to be put months in advance. If the whole licensing and packaging now barely reaches 15 of the 60 dollar pricetag (and I am being generous here), cartridges used to cost 35-40 of the 50 dollars the consumer would pay. Did I also mention it was a lot harder and not nearly as common for games to receive more than one print run? The business was riskier and had smaller margins - and the platform holders were actually a lot harder to deal with, Nintendo being especially obnoxious in this regard. So while I might dislike Gamestop, it's kind of hard to paint them as such a threat when the market is much more amicable these days.

Finally, I find it extremely ironic that he would mention Warcraft in this sentence:

There used to be something in games for 20 years called a tail, where say you have a game called Warcraft that would sell for 10 years.

Uh, hello, Dennis, did you notice that Blizzard games to this day still sell hundreds of thousands of copies every month years after launch, like World of Warcraft and Starcraft 2... a strategy that seems intimately connected with their extremely meticulous release schedule? Unlike companies that are releasing a new Call of Duty, Need for Speed or Assassin's Creed every year, Blizzard takes their time and can go 3 years without releasing a single game. But they make sure that such a title would stay relevant for years to come. You know, Iwata once mentioned during the GameCube days that he was concerned with software being overpriced, which was resulting in games having prices slashed a few months after reaching shelves. He said Nintendo made it a point to ensure that you wouldn't make that into a trend, or you might teach consumers to just start waiting for the inevitable price drop. Check how long a new Mario or Zelda keeps its original pricetag. Also, notice that they have a fluid price strategy, releasing a great title like Rhythm Heaven Fever with a lower price tag.

It's funny, actually, that there has been pressure to do exactly the opposite: games are being carefully manufactured to not last TOO long, mostly because people don't want to spend too much time with one title... but this is also a reflection of an industry that is trying to churn blockbusters at an alarming rate. My point is that these three factors above are sort of a snowball of a horrible influence the videogame industry learned from Hollywood.

By growing extremely fast, the multi billion dollar game industry quickly become the land of huge companies that need to please shareholders. Now, this is a personal pet peeve of mine (which is not exclusive to gaming), but I think adding shareholders to any somewhat artistic process is always a messy proposition. I dealt with this before, but I will reiterate: you have a bunch of people that most probably have very little grasp of the workings of your industry, who also happens to be swayed by any fad without looking at the big picture - I could name several examples, but Activision trying to shoehorn subscriptions into Call of Duty because of the success of World of Warcraft or Nintendo shareholders demanding investment in iPhone apps should be more than enough. While I understand these are businesses that run based on profits, I think it's safe to say most shareholders nowadays are almost invariably only interested in the short term returns of their stock and rarely worry about the longer term repercussions of their demands. Never mind that Nintendo has one of the most solid profit histories in the world, as soon as they have their first quarter of losses in decades, everybody starts panicking and not trusting their internal decisions.

What we have here is an industry that is trying desperately to be Hollywood: to live off of blockbuster hits that generate insane profits at the cost of ridiculous marketing budgets. Everything must be huge! The marketing budget for Halo Reach could probably pay for the development of a triple-A title. Don't get me wrong, marketing IS important (as Beyond Good & Evil and Prince of Persia: Sands of Time will attest), but one has to be careful not to set bars too high sometimes. If anything less than a revenue of hundreds of millions of dollars can mean failure, creativity is usually the first victim. Hollywood has some scary mathematical formulas to guess revenue based on recycling formulas that are becoming more and more common in the gaming industry.

So executives came up with a magical formula to increase revenue: microtransactions. Most of you will recognize this as downloadable content (DLC). What was originally conceived as a way to offer game expansions as digital content sent via Internet quickly evolved into what we nowadays refer to as "horse armor", a synecdoche for overpriced throwaway DLC (inspired by the outrage caused by Oblivion back at the launch of the Xbox 360), just one of the common offenders. On-disc DLC actually happened as early as the original Xbox, and many consumers can't help but feel cheated that the content on the disc they bought is being peddled as an artificial way to pad revenues. Finally, nowadays we are also getting a ton of "timesaver packs" and similar microtransactions that add money or levels that could be achieved by simply playing the game - you know, the stuff we used to call cheats back in the day. Here is EA's CEO take on it:

This actually make sense in Free to Play (commonly referred to as F2P) titles, in fact, their model is greatly - and justly so - based on that. But when you already spent 60 dollars in a game, it's hard not to feel cheated by practices like that. The recent SSX game does that in a pretty insidious way: you have a store with rotating items that can be purchased with in-game fictional currency... but the store gets special time-limited promotions that create a false sense of urgency. Isn't it practical that you can spend REAL money to get VIRTUAL money to take advantage of that? I can live with that in a free game, but I paid premium for this title, can I please not have my experience messed with to increase your bottom line? And to think we're supposed to be the entitled kids...

So while we are being nickel and dimed (though there is nothing about short change in some DLC) into bankruptcy by some companies, lo and behold, others are making fortunes out of the exact opposite: look at Team Fortress 2 and The Witcher (both the original and the sequel). The first was sold as part of a package or separately below the price of a regular game, while the second was sold as a regular-priced title. Both received considerable doses of DLC, all of it free, only to become best-sellers in their respective genres and make huge profits (TF2 eventually started doing paid microtransactions for aesthetic items, but then quickly became free to play). The strategy was simple: instead of trying to squeeze every last cent of the consumer, they made their games stay relevant for years, creating a steady income that fueled even more development. This isn't charity. Sure, it's not going to create flashy headlines like Call of Duty, but I expect it to have a pretty nice ROI.

And since we mentioned Valve, we should also remember that services like Steam and GOG (and Xbox Live, PSN and WiiWare as well) have created a fairly efficient outlet for old games to capture the fabled Long Tail our friend Dyack complained about. So blaming this supposed disaster of used game sales as the bane of this particular market phenomenon that is the Long Tail seems like a pretty ridiculous excuse.

So let's see - Dyack is complaining that games only sell well during the first three months and after that the used market hijacks any potential? Interesting... but isn't it more interesting to note that game nowadays seem to be carefully crafted to last around 8-to-10 hour campaigns and multiplayer that relies heavily on DLC to stay relevant? I will agree that shorter games go in line with older gamers with more disposable income but also less time to play. But they also seem to be purposefully balanced to not consume attention for too much time so as to take attention away from the next blockbuster to be released in a month's time. Like I mentioned before, most companies seem to have pretty much standardized that major IPs need to receive yearly iterations - I bring the usual suspects again: Call of Duty, Need for Speed, Halo, The Sims and Assassin's Creed. They are not only making sure that the brands stay relevant, but also making sure that their marketing investment is maximized. The fact that the quality of the product might suffer as a result seems like a minor concern. Did you notice some titles that used to fit that rule like Guitar Hero, Tony Hawk's Pro Skater and Tomb Raider don't fit that category anymore? They share the same problem: they saturated the market on a rush to make a quick buck. They sure pleased shareholders... until their lack of foresight basically killed their respective Golden Geese.

Let me make one thing clear: I don't think Dyack got to this conclusion on his own. I truly believe he is just a mouthpiece for the publishers who are shaking in their boots and coming up with "solutions" like online passes to discourage used game sales. Want proof that those are a desperate attempt? Well, given that a lot of the games that use those actually work on a peer-to-peer (P2P) system that doesn't require ANY server upkeep, that would seem like reason enough. But then you have companies like EA that force people to use their servers for no apparent reason since P2P would work just as well if not better... but then shut them down fairly quickly as is the case with MMA. And to think some companies used to just give away the server software and let users host their own servers...

... But I digress again. Publishers have been complaining about used sales for a while now. And I am pretty sure they are even more vocal than we realize, given that rumors point that both the Xbox 360 and the PS3 successors seem to have made a priority not to run used games, which to me seems like more of a publisher request than something Microsoft and Sony might come up with on their own. In fact, Gamestop has done their own share of shoving around by threatening not to stock games that come out simultaneously as online downloads or even removing coupons for digital services from their game boxes before selling them.

The fact is: Gamestop needs the console manufacturers and the manufacturers need Gamestop... so the poor consumer is caught in the crossfire as the biggest victim. There is a good chance that whatever crazy DRM they come up with will hurt the person who purchased the game the most. Can you imagine being unable to let your spouse play the game on his/her account or being kept from taking a cool new title to a friend's house to show him? What about people who would like to have two consoles in different locations, like at a beach house or having one in the living room and one in the bedroom? As it is, some of these cases are already a problem nowadays.

So please, mister Dyack, put that "strong educational background" you like to flaunt so much when describing your studio to good use and analyze the situation a little more carefully before running your mouth. I know your publishers probably don't feel comfortable voicing those opinions by themselves in a more corporate manner, but I preferred your outspoken self when it was more personal.

Esta postagem também está disponível em: Portuguese (Brazil)

Author, freelance videogame journalist, cinematography major and a little insane.


  1. Jesus says:

    your a fucking idiot. Its bescaue of morons like you that mw3 is just mw2 all over again. I already paid for mw2 and all its maps, why the fuck would I pay for a new game, to play the same old maps all over again? WTF is wrong with you people?? You want the old maps? Go play the old game! And Smithbr91, rust was garbage! They have never released a map like shipment. And they probably never will again.