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EMA: Video Game Retail Activation Tech Could Generate Billions In Extra Sales
EMA: Video Game Retail Activation Tech Could Generate Billions In Extra Sales Exclusive
June 22, 2009 | By Chris Remo

June 22, 2009 | By Chris Remo
More: Console/PC, Exclusive

Video game retailers could see billions more in revenue by implementing "benefit denial" technology requiring activation of games at point of sale, claims the Entertainment Merchants Association trade group.

The EMA, which represents North American entertainment retailers, has been publicly discussing such a service for months and has been doing research into its potential effects.

It claims that benefit denial -- "a physical lock that is opened via radio frequency" -- would reduce losses from theft as well as save on operational costs currently associated with keeping games locked in cabinets or held behind the counter.

Research by consultancy firm Capgemini on behalf of the EMA forms the backbone of the group's claims. The group estimates up to $6 billion per year across the video game and DVD supply chain could be saved with the implementation of benefit denial, approximately $3.3 billion of which could directly benefit retailers, who are most heavily affected by theft issues.

"Until now, however, the lift in sales and reductions in costs had not been quantified and analyzed," said EMA CEO Bo Anderson in a statement.

"If we can utilize emerging technology to reduce the shrink in the DVD, Blu-ray discs, and video game categories and eliminate barriers erected to deter shoplifting, consumers will have easier access to the products, additional retail channels will carry these products, and costs will be eliminated from the supply chain."

Capgemini says an activation-based solution would remedy problems with current shrink prevention methods, including internal employee theft, ineffective or cumbersome physical shrink techniques like magnetic strips, and the discouraging effects of customers requiring staff assistance to reach games.

However, the firm also outlines a considerable number of obstacles with the technology: a lack of current prototypes and accepted standards, the necessity of considerable staff training and enough awareness to substantially deter shoplifters, potentially difficult returns, and costs of implementation and maintenance.

Despite the challenges (which were not addressed in the EMA's statement), the EMA believes an activation solution -- which it calls "Project Lazarus" -- could be deployed in the fourth quarter of 2010, pending results of an upcoming cost analysis.

[Update: Clarification added as to the physical locking nature of the proposed device. The EMA sent Gamasutra the following explanation:

"Actually, this is not a software-based activation. And it is not DRM or other coding of the discs. The technology to which we are referring would be a physical lock that is opened via radio frequency at the point of sale. (Think of a key card that unlocks a door.) The is a store-based solution only, to fight shrink (shoplifting, etc.). The purpose is to make it easier for the consumer to purchase the product and enable additional retail channels that have significant shrink issues to carry the product."]

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Ken Nakai
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What a crock. For PCs, activating online once per computer or something is manageable if they offer a solid way to manage the number of computers and have something like a 1-2 year cut off where it automatically opens up the online activation restriction. It's still not perfect but it goes a long way.

For consoles, all the majors (not counting handhelds) have online accounts. Just tie the game to the online account and enable transfers and you're done. Whether you like it or not, games will trade hands. I know they mention above that they need a standard...they do...but honestly, you're already developing some sort of HAL to deal with the fact that you're on three different platforms already...does it need to really wait until a standard is hammered out? Don't go the route of the automakers where you just procrastinate on making changes so you don't have to deal with it right away.

And for the "licensee" versus "owner" argument, "licensee" proponents need to accept the fact that transfers have to happen. Sorry, your greed will never win over the consumer. Here's a better idea: make a game that is replayable and longer so the gamer won't WANT to give away their game thus reducing the supply of used/traded games and increasing your short-term sales. Too many game publishers are pushing the Hollywood model of getting people in the door to take their money rather than building longer relationships with their customers. Have you noticed how trailers are even including the ending of the movies nowadays? Once you're in the door and have paid your money, they could care less if you enjoyed the least until the DVD comes out.

For the "owner" proponents, get over it. It's software, not a computer. You think you own the software? Okay, what happens when the disk breaks in half? You're not getting a replacement from the company. You think you should? Since bandwidth is easier and cheaper to obtain, and a bit is a bit, you really think you should have the "license" to manufacture as many copies of that software as you want? Convenient for you...I think the majority of people who argue this case are the same ones who are greedy (yes, greedy) and want to either distribute the game to their friends because they're morons or think they're owed something for paying money for the game.

All I want and I'm sure a lot of gamers want are quality games that don't cost you an arm and a leg and don't come with shackles. We want to be entertained and, most of us at least, are happy to give money to devs and publishers if we know we're getting something we want. Delivering a 6 hour, checkpoint-based, dead AI, buggy pile of junk that also includes barbed wire and requires you to bend over backwards and grab your ankles is surprisingly not something we're interested in.

david vink
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@ Ken Nakai: I think you should read the article again closely. It is not about copy protection. It is about 'activation' of games in stores purely for retailers, as an alternative to keeping all the empty boxes in the store and all the games in the back.

Peter Dwyer
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:) I did wonder why Ken went off on some totally unrelated rant about copy protection.

Casey Thorp
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So, what would this do to the infrastructure of re-selling of games? My theory is that this tech if permeated industry wide would dissolve that mode of business entirely.

Theft, which may effect first run point of sale purchase numbers by possibly as much as 10% on a per case basis, is being scapegoated and even pawned off on employees in the article.

What this tech will create is a gamers version of a Red Box (automated DVD rental machine), and cause a full collapse of the infrastructure of gaming stores. No need to pay salaries for employees who are dirty thieves, no need to pay rent on a building as Micky D's will plop them on all of their locations, and unsurprisingly, first run sales will nose dive tremendously after a brief honeymoon of fast profits.

First run sales will drop tremendously over time, because the larger mass of the populace will not be able to exchange their old games for in store credit, because they activated the game for their personal use, and no one else can use it unless they pay full price for it.

David and Peter, please reread the article and then refer to this definition of DRM found on wikipedia. Digital rights management (DRM) is a generic term that refers to access control technologies.

The above article is about "benefit denial" technology which is an access control technology. DRM has been proven a failure several times in recent years, and yet someone keeps thinking its a good idea and keeps pumping money into the concepts. Call it what you will, but this is DRM tech. If the world started calling atomic bombs Happy Sunshine Unicorn Rainbows instead of Nukes would they be any less explosive?

C'mon people, pump money into making great games instead of shilling for tech that is unwanted and wholly unnecessary. For you money pinchers here is an analogy, drink deep of the fountain instead of trying to wipe condensate off of the nearby rocks.

david vink
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"..because they activated the game for their personal use, and no one else can use it unless they pay full price for it."

I don't see in the article anywhere that the activation is only for one particular customer. The way I read it is that as soon as you pay for the game they activate it in the store (through some new technology) after which it can be played on any machine, by anyone.

Casey Thorp
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David, a nod to you and your ability to shill this DRM tech. You managed to quote part of a theoretical sentence and warp it into something out of context and on top of it postulate your own theory on how the tech will solve all that ails cross platform development.

I salute you.

Isaiah Williams
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No, Casey, the article is clearly referring to an activation system, such as the ones already in use with phone cards, iTunes cards, and retail gift cards. I don't see it working, as it would require all consoles to be online, at which point the manufacturers would just go to digital distribution (though retailers would probably be fine with selling redeemable cards, like Patapon 2). But there's really no way to tie a purchase to an account at point-of-sale via a scan.

Shaun Greene
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My questions all lie around the used game market.

So if a person comes in and buys a new game, the game is then activated. When he brings it back to resell it, I highly doubt they are going to DEactivate it. So all the cost saving theft-prevention they are talking about has no merit to the used game market, which is an enormous subset of the game market, as used game retailers would still need to use cabinets and empty boxes and all that fun and games.

I also find it extremely difficult to believe there is $6 billion worth of video game shoplifting going on. They may expect Barnes and Noble to start carrying games, but it seems they must have a "used to new conversion" aspect to their increased revenue to be getting their numbers up that high.

That of course is with no facts or figures to back me up.