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THQ: Buying Preowned 'Cheats' Game Makers
by Colette Bennett [PC, Console/PC]
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August 23, 2010
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In a recent interview with UK consumer news site CVG, THQ creative director for wrestling titles Cory Ledesma spoke out against the sales of used games, calling it "cheating" the developer.
THQ recently confirmed that the upcoming wrestling title Smackdown vs. Raw 2011 will come with a single use code printed on the back of the manual which will unlock the game's online features and provide a DLC pack for free.
Consumers who buy the game used can purchase the same features through the Playstation and Xbox 360 stores for a charge, similar to recent moves by Electronic Arts and a number of other console game creators.
"I don't think we really care whether used game buyers are upset because new game buyers get everything. So if used game buyers are upset they don't get the online feature set I don't really have much sympathy for them," says Ledesma.
"That's a little blunt but we hope it doesn't disappoint people. We hope people understand that when the game's bought used we get cheated," he continued.
Ledesma also said that this offer was specifically crafted with the loyal fan in mind, and that THQ wished to reward gamers who purchased the title new with additional content.
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Edit: Also, you should all burn your library cards, because you're cheating all the authors of the world! Shame on you!
Digital Content doesn't degrade like books, and so a games value will be identical new and used. The same cannot be said for books (especially public books). People don't scribble in the margins of a HUD, don't tear out levels, etc... . And if the disc is scratched you get a replacement.
This is not to mention that the book publishing world has tried to find a workaround for used book sales for a long time. Why do you think all the educational textbooks seem to come with CDs now, as well as fill in the blanks locations scattered all over them like workbooks? Games are just on a much better foothold to increase a new products value relative to a used one.
And a Library card is a horrible analogy, as Used Games are not free, and are not temporary. You are still paying 95% of the original price for the game, you are just no longer paying 50%(ish) of it to the guys who actually made the thing.
If you don't support companies that are doing these sorts of benefits systems, I don't think you are going to be supporting many games companies in the next few years.
Also, your assumption that books will be unreadable by being read by multiple people is far from watertight. Many of my books are pre-owned (because it's cheaper than buying new) and are still perfectly readable: no pages are torn out and you can still see each letter clearly. Compare that to the degradation present in videogames: if you buy a game that was released 10 or 15 years ago, there's no guarantee that it will run on a modern machine.
There generally isn't a clear-cut publisher/developer split in most retail scenarios. The developer will usually be getting royalties at a certain (small) percentage above a certain level of sales, having been funded by the publisher. Every situation is different though.
If the game is old enough that you literally cannot find a new copy, then it should be cheap enough used that the $10 to play online won't be a bother.
BTW, I almost always by new games when I can, though I do typically wait till the prices come down from the sticker price of $50-$60. That I also cannot abide.
The consumers are not dumb. They know what is going down. They want their monies worth. Giving more not less is the answer.
Publishers are implementing a system whereby they recoup some of the costs involved with supporting the multiplayer component of a game they created. Charging for an ongoing service doesn't violate any laws of which I'm aware.
As an aside, the games don't come gimped from the publisher, they only come gimped from Gamestop.
Not trying to put these above games, just pointing out that I don't think you make a great argument that game development/publisher relationship is somehow unique.
Variable cost go, well that is business, again all of the business have to keep up with marketing if they what their products to stay in the consumer's mind.
What about movies? Should Fox Studio get a cut every time a buy/sell a dvd?
The fact that digital goods are far easier to copy and don't "age" isn't a bad thing. In fact you can deliver your goods far easier and with less overhead than most of the other examples.
I personally feel the $60 price point is hurting game development worse than the used game market. You need to figure out why your customers are not buying new and try to come up with ways to fix that problem that doesn't involve punishing your existing customers. The people who are going to buy THQ game new are not going to change, the used game price is going to flex to handle the cost of online play.
For that reason the "online pass" doesn't seem onerous to me. No existing customer are punished, no new game buyers are punished, and the pubs may get a little bit of additional revenue to offset multiplayer infrastructure from used game buyers.
Sure maybe somebody can explain this to me, maybe I am just naive, because I just don't see where all of these continuing cost come from. Not to mention I doubt that the servers are used solely for one game, and as far as I know, no publisher has guaranteed that online play will always be available. At some point they are going to shut that part off if its hosted on only their servers.
On top of that online play is a feature you market as a reason to buy the game, if the cost of offering online multiplayer is killing the industry, well I guess isn't that a different problem?
Discount "all" or some of the dlc / expansion packs for those that buy new.
Digital Downloads at a reduced price
Split the game up, half the game comes on a disc for $30 new and if you like it you can download the rest for 15 or 20.
The price of games good be reduce down to 45 "quickly", every x time period the cost of the game goes down by $5.
You could offer expanded downloadable demos for $5 dollars, that allow you $10 discount if you buy new. Just need to be able to continue your game :)
Why try some authoritarian push, don't buy new you can't get online without buying x, seems like your just cutting off your nose to spite your face. People who would have picked up the game used, fall in love with the IP, and then buy the next game new won't be there for you. Not to mention people don't like to feel like they don't "own" the game.
Then there's the whole the used game market isn't trying to hit a particular price point. If feature x now cost $10, the used price of the game will just be $30.00 and gamestop will only trade pay $20.
Just seems to be some many better ideas that put your customers first, before going down this road.
I wouldn't use the term 'Cheating' because used game sales don't violate any rules, but used game sales clearly make it harder for developers to stay in business.
IMO publishers should have every incentive to rapidly embrace digital distribution, from both a retail and used game perspective. But I wouldn't be surprised when the consumer doesn't see much of a savings when the wave of digital distrib does come and the publishers are getting a much larger share of the pie.
I noticed Blizzard set the digital download version of Starcraft II also at $60. One would think they would want to encourage those to retain the larger profit and to eliminate used sales (but no).
Same price at launch to keep retailers happy so retailers keep your shelf space and push your product.
It will be interesting to see how prices change (or not) as game sales shift further toward digital distribution. When the power shifts to publishers and away from retailers, will they reward gamers with lower prices? Will the power actually shift to publishers or to another form of retailer (Steam, Impulse)? Time will tell.
I'm of the opinion they should stop retail distribution entirely right now and embrace digital. If the top 2 or 3 publishers moved entirely to digital at the same time it would push consumers to switch and take the power and profits out of the hands of the retailers. They would take an initial hit in some reduced sales but that is bound to happen no matter when the tides of distribution change and after a year or so consumers would become comfortable with the change and it will be better for the industry.
EA made a brilliant move IMO in the mid 90s by being the first to abandon floppy disk distribution on computer and that spurred faster CD adoption by the game playing public and payed off big time for EA (with a much lower cost of manufacturing). We shall see who makes the first big leap with digital distribution and when (likely still 2-3 years away IMOHO).
However, the big pubs could experiment now by pulling all of their PC distribution in house and getting the infrastructure up and running with a smaller subset of their customer base. A subset that is already more accepting of digital downloads. That would give them a chance to slowly ramp up in-house dig dist and work out all the minor and major kinks in the system.
This DLC for new titles only will work on certain games or genres, not across the board.
The $59.99 cost for a new console game is just too much. It makes me not want to to take a chance on new titles, but focus on the biggest bang for your buck games, like a Bethesda or Bioware game.
On PC, I'll wait for awhile till I can get it cheaper on Steam, Direct2drive, or Impulse, on console Ill rent or buy used. If new games were $29.99 to $39.99 most of the time, I'd buy more.
Personally, I support the THQ's idea.
And then there's the price point. While I understand that the price of AAA games has gone up, we're in a rather poor economic state right now. Even a small price drop ($5-$10) would make a noticeable difference in sales. I'm sure of it.
And on the whole online code thing, I agree with it, I just don't like the way THQ's creative director for wrestling games shot off his mouth like that. Not that I ever enjoyed Wrestling games in the first place, but his attitude would definitely have swayed my opinion against his work if I were interested. I really don't think his behavior in regard to used game purchasers is going to garner the franchise he works on any more new sales or online access purchases than just keeping his mouth shut and releasing the darn thing would have.
With that said, Right now Used and new games are the same exact product. Adding more value to new games is the only way to distinguish between the 2 , I really don't see any other way to go about it. But in that regard, "adding more value" has to be adding more value not simply handicapping the product. I fear if this catches on though, it's gonna be taken to a WHOLE OTHER level like restricting the game itself entirely without the code. Doing something like that would damage the used market.
BUT IN THAT REGARD people usually sell back games to help buy new ones so that could actually severely hurt the game industry as a whole if used games become worthless. There is definitely a fine line...
Used and new games are the same product only in theory. In practice, the online and multiplayer community will be much larger and more reliable toward release. As the product grows older, multiplayer updates cease and the userbase wanes as players move on to other products. Eventually, sometimes within as little as four or five years, the publisher will kill the multiplayer server. I'd be hesitant to buy the multiplayer componant on a used game a few years old because chances are there's not much of it left.
When other people buy used copies and fire them up online it makes it harder to sunset that infrastructure, since the natural attrition of online players is disrupted and the pub gets zero compensation. Therefore, to keep the servers running they want those who buy used to contribute.
The online code thing doesn't bother me, since all it does is recoup infrastructure costs from those who didn't contribute to the revenue stream when they purchased the game. Logical, sane, not evil.
Perhaps some of the annualized titles keep support for a number of years but others are discontinued every year?
And while having those servers up may be a 'cost', it is one long since paid for and attributed as such by the companies.
You estimate as best you can what the average lifetime IT use will be for a connected customer and then you see how much of that you can put into product pricing. Then you work your ass off to reduce IT operating costs so you can meet your profit goals and stay in business.
If you throw used sales into the mix where you get NOTHING from the sale of the product and then have to support the connected user you absolutely destroy your IT cost estimation.
What you are actually asking, is that the revenue stream continue, which does not happen if the original owner keeps that disk. This seems to mean you want that disk to get into as many new hands as possible, with each new owner forced to buy that ten dollar online fee. Which thus should be an encouragement to want the used industry to thrive.
So, if you initiate a cost for second hand users to extend the IT upkeep you are able to recoup more of your ongoing cost (lower losses), you may perhaps even come out ahead on your upkeep cost for a given product (VERY unlikely). That's a good thing because it means you stay in business and people don't get laid off.
Your second paragraph details why the "online pass" is a great business idea for game creators. It helps to offset the upkeep cost of second hand users while not killing the actual used game trade.
I'd suspect a used game buyer would reach their played 'out' position quicker than the initial new user -- you would think the level of one's interest would be higher for a day one purchaser.
My issue is that the industry seems too willing to speak ill of its customer base -- I am sure most of us here have legally obtained at least one game from something other than a new retail purchase -- and that the customer does not deserve such behavior from the industry.
I think it's fair to question whether or not $10 is an appropriate price point for the online pass. Without access to financial numbers I can't really make any determinations but that's still a question worth asking.
As for the attitude, well, I think that the language in the comment in the article is too harsh. The obvious sell for game companies is to focus on financial stability and the willingness to work with used game buyers so that both the game creators and users feel they are getting a fair deal.
As a technical point, a used game buyer is not a customer in a sense for the pubs when referring to a used game purchase. However, as you mentioned, I think that there is enough overlap to warrant treating the situation more judiciously.
That way I pay what I think a game is worth and the creators still get a cut.
Do publishers realize the used game market can actually help support their new game sales? It seems as though nobody is bothering to consider the great number of people who trade in a few old games for one new game. Then again, if your business model is supported by constantly churning out the same content that got stale 15 years ago, you're probably not reaping much benefit from this as your games are probably in the used game trade-in pile.
The woman introduced to a company through a $10-15 3-4 year old game who falls in love with their product and is a day one purchaser for life on future releases.
>Games are just like any other consumer good be it books, cars, CD's, ect.
This is patently false. Games are not just like cars (nevermind the fact that used cars come with a whole set of headaches that new cars don't). When you want to play a game online you are using a company's servers and bandwidth. This is not free, but it is assumed in the cost of the game. If you buy the game used then you are skirting this cost.
Think about another pricing model that seems more reasonable. A new game costs $50 instead of $60. But to play online, you need to order a $10 online package after retail. Whether you buy the game new or used, you must pay for this $10 charge if you want to use the publisher's servers and play online. This model that THQ and others are following is the same exact thing except they force the new user to buy the online package.
People who like buying used games should be happy about this pricing model, because 1) Used games will be cheaper if they don't want to play online, and 2) if they do want to play online, used games should cost about the same. The consumer has even more choice than before. Where's the problem?
It's also intellectually disingenuous to claim that someone who buys a game used is somehow a bandwidth thief, because the original owner is no longer playing the game and, by extension, no longer burdening the company's servers: from the developer's perspective, the user load is the same.
It's easy to see why companies are doing this: they want a piece of the used pie, and charging a toll at the one place they're gatekeeper once the game is out in retail is a logical place for that. It's silly, however, to laud this as a triumph for the consumer (since Gamestop is not the only place on Earth that sells used games and part of a game's price is essentially fixed at a +$10 chunk that will likely never decrease).
I replied to Eric's comment above as to the bandwidth usage.
I am not sure where you're going by bringing up Gamestop specifically, but you better believe that retailers selling used copies will need to lower the price if they cannot offer a feature complete disk. If they don't, then, 1) it is the retailer taking advantage of the consumer (not the publisher), and, b) the retailer will likely be involved in a class action lawsuit eventually.
In fact it would be great to see the number of people that bought MW only for the single player, I think the number would be dismal.
In fact as a consumer why can't I just pay the $10 then to play online, I don't care about the $50 single player at that point.
The used game market is not trying to hit a price point. You will loose this race to the bottom, or rather your customers will loose.
Don't let THQ lay the guilt-trip on you!
Gren Ideer, you say you're a developer. But I think you're a publisher (they tend to see themselves as "developers" too -.-)
As far as this business model goes I have no problem with it. Used game sales are legal and so is making a product that hinders used sales. If this strategy works then the people making the games will be happy and if it fails it will go away.
For full disclosure, I am a computer programmer working at a non-publisher owned development house. We have nothing to do with this business model- I am just voicing my personal opinion.
Videogaming became a multi billion dollar industry so fast, and they are still getting used to being at the top of the entertainment medium pile. The next five years might be the most important years for the industry from a business standpoint.
As Alan stated, you can't blame the people paying your damn salaries (i.e. the customer). Which is indeed what you are doing by attacking the used market. Gamestop/Amazon or whomever does not have a used item to sell unless a customer resells a game that was initially purchased new. If the industry either by accident or design continue to basically say one does not have the right to do what they please with their $$$, the response will be finding somewhere else to spend that $$$.
Used game buyers are definitely not the people paying developers' salaries... that would be new game buyers. I know there is overlap but we're speaking in hyperboles here for effect, aren't we?
You have a point that the comment in the article is not worded very well, and when you're that high up in the business world you should know better.
A system like this one is a way of changing the contract forcefully (since the product itself has changed). We will see if it actually makes them any money, but I would warn them that initiatives that are not consumer-driven are bound to fail in the long term. And this is most *definitely* not consumer-driven. If they continue down this path then they will simply lose out to companies that care about their customers being happy.
It is a sign of an immature industry if it cannot weather out a recession without constantly blaming everyone else...
As far as price, consumers have the last word on that. I've bought games for $1 and I've bought games for $120 and in order to play games I've spent thousands upgrading a system or building / buying a new one. If what I thought was the greatest game was released, I'd buy it new, and I'd spend hundreds to own it. I'm sure millions of other would as well. Hell, people were crazy enough to spend the $700+ on the PS3 first release. Consumer wise, money is not the ultimate factor, its quality.
Quality is the key here. Lets talk about disc quality. Unlike Tom Baird "Digital Content doesn't degrade like books". I have books that are in great condition that I toss around often, yet I have game discs that have MULTI-FAILED to the point where it will not read, I'm using it as a coffee coaster right now.
Game Quality example, Mass Effect 1, bought it brand new and it had a somewhat frequent galaxy map / Elevator crash issue. Downloaded the no-cd "crack" and it worked like a charm. Brand new it was $59.95 at the place I got it. We're not talking about one of my in-game weapons being discolored. It was a full crash! Want that car analogy now? " Hey there, pay me the brand new price for this vehicle and later on sometime we'll get around to fixing the brakes and headlights". I wonder how a similar analogy would work with a food product or even a nuclear device. You can say how complicated making a game is, but when every game released has issues, some of which never get fixed, that's the point where I go from consumer to beta tester.
Marketing quality. Playing CGI video scenes then finding out that the game graphics are nowhere near the CGI maybe Crysis was the exception?
Sales Quality. Someone mentioned earlier that they keep the D2D's at the same price as the physical discs for fairness? I thought price fixing was illegal? If you want to debate that quote me something from economics law and I'll concur.
Game quality. Fluctuates per user unless the game is DOA, which has been known to happen oooor of course, if present, the ever invasive DRM that hates honest buyers and sometimes, but rarely annoys pirates. Bringing me back to Mass Effect, that supposedly has a DHD (Dial Home Device). If you pirated a copy you wouldn't have this issue which is probably why most people who bought that game and don't have an internet connection or who travel have a pirated version as well.
Bottom line: If you make great games, gamers WILL fit the bill, whatever that bill is. We don't want the industry to starve and die. However, if you make terrible games you'll have to find all kinds of DRM and weird stuff to screw and trick people out of their hard earned cash until they decide to stop buying your products. Then you starve and die.
This model will change as digital distribution grows in popularity and overtakes physical retail. I know there is some debate on whether that will ever happen but I firmly believe it will.
I can't tell you whether or not that will result in lower prices for consumers, though.
if people are discouraged from buying 2nd hand, gamers can't trade their games in at the shops (because there is less value in a 2nd hand game)
a lot of new purchases are made against trade-ins of games... often these purchases wouldn't be made at all if they couldn't cheapen it by trading in a couple of "played-through" games.
a lot of younger folk can't afford new games all the time.. so they trade in their old games.
it can be seen as money 'dodging' the publishers when 2nd hand games are bought, but that money sticks around.. if little johnny has £60, he can only buy one £40 game initially.. but then he trades it in a month later, and gets £20 off his next game.. so now he's bought two new games, and traded in one old one (which might get bought). if he couldn't trade in that game - he would've only bought one new game!
hey - you know what IS cheating?? if two people share a house, and they both share an xbox..and only one of them buys the game, but they both play it. that's two people playing for the price of one!!! THQ is losing out big time to this one - they could have sold twice as many copies if people didn't share consoles. sharing games with your housemates is as bad as piracy, folks.
What service cost? The net code is written, if you allow your users to host their own servers, or write the code to use peer to peer hosting, or you are using a third party service like live, etc. the cost should be negligible.
Maybe I am just naive, because I just don't see where all of these continuing cost come from. Not to mention I doubt that the servers are used solely for one game, and as far as I know, no publisher has guaranteed that online play will always be available. At some point they are going to shut that part off if its hosted on only their servers. - What you are asking me to do now is distinguishing this feature from your product and telling me to pay for it.
If the cost of offering online multiplayer is killing the industry, well I guess isn't that a different problem? It is solved by allowing dedicated servers and your not paying for live / psn after the game sales from the console perspective.
Again your customers are trying to save money, give them a reason to spend it that doesn't make you (publisher/developer) look bad.
~repost from above because I am sort of interested in this new crisis that is facing the game industry you think that all the pirates just packed up and left town :) seems to be some developers on this board.
That's a gross simplification but that's the most basic way to say what the "costs" are.
Even if you allow private servers, peer to peer (which is used for official play servers at times as well), LAN play, etc you still have the costs associated with your official servers or using the aggregate console networks.
Now, if you don't provide any official matchmaking or hosting services for your game then you don't have a lot of costs and probably won't be charging for an online pass. Honestly, though, is that really an option anymore? Can you really include online multiplayer in your game, claim it as a feature, and then tell your players to go find their own place to play?
I don't think that would work out any better than asking used purchasers to contribute to the costs associated with the official multiplayer support if they choose to make use of it.
We were right above they are not the same and its a bad analogy, if anything this thread starting to build a better case for Ford to get some money from the used car market.
Going to throw this out about retailers again, offer a retail version for x for y amount of time, after a month offer a download version for cost of the used game ~$45. Or just scrape the retail model, if its not working why try to force it. There are better ideas that don't damage the customers end experience, scraping features is not one of those.
Some might even argue that the used game sales ultimately HELP the developers. If they release DLC, then someone who has picked the game up used and is playing it is more likely to buy that content than someone who just left the game sitting on their shelf and never intends to play it again.
@Kris : the retail model is well over 90% of the console market. Digital distribution on consoles isn't a very viable alternative at this point. Also, games do come down in price, often after a month or two, depending on how the game is selling. The problem is that used game sellers can ALWAYS undercut you. They have no development costs. Normally even games that have been out for only a week will net you no more than $20 or $25 on a trade in and then sell for $50 or $55. A pub can't lower prices enough to compete. Even if you start selling your game for $45 the used seller will just drop his price to $40. The used seller still has a hefty margin and the pub is selling at cost or below.
The alternative is to offer incentives to buy new (like some free DLC) or recoup online costs for second hand users by charging them to use the online service. We might as well explore some of the models you mentioned in an earlier post as well. I'm all for experimenting to see how we can increase developer profit share (and pub as opposed to retail).
You may have noticed a much bigger portion of PC game sales are digital downloads for this very reason. They retail cheaper anyway and their prices fall more quickly than than console titles. I think the next round of consoles will be a much better platform for digital distribution and we'll start to see a different model emerge.
If I am wrong about the above please point me in the right direction, this is how I understand that it works. To make it even more of hit to customers the games are often hosted on a person xbox, the servers are just brokers there not really a ton of bandwith going back and forth over live once the connections are setup. Exactly why when the "host" leaves the game stops or switches host. There is no bandwith cost for the devs or pubs if the above scenario is accurate.
PC would be a 'little' different, again though dedicated servers seem to solve this problem. Again the companies don't typically host the game, they just 'sit up' the connections. There just is not a lot of cost there, if so then it seems like they a developing multiplayer wrong.
Again what this is turning into is the cost of multiplayer is dragging the industry down. Not buying that, unless you mean the new drm with online only, save games are pub's servers, but those are cost that I am not willing to pay for, not a pirate if I am buying your game so don't treat me like one.
Assume that used games sales are not sales or at least those people are not going to pick up the game at 60 price point, then the arguments start to fall apart even more, if the game sales for 45 new the publisher is not making enough money by that time (several months after the game releases) to warrant the cost of providing "their" servers. What happens when I buy the game 5 years from now new in the $20 bargin bin?
If you buy games used I think in the end this scheme is a net advantage to you as a consumer. If you only buy new and sell used, it'll hurt. It'll hurt gamestop and help devs.
Take Bioware's Mass Effect: Since it's initial launch they have put out 2560 Microsoft points worth of lazy DLC. That adds an extra $30-40 to the initial purchase of $60 for the game. No game, I REPEAT, NO GAME is worth $100.
It is all greed. Debate it all you want about the validity of this. But DLC is a rip off, it is gouging the people you rely on, and it is unfair to those who can only afford the game at purchase.
Greed isn't art.
http://arstechnica.com/gaming/news/2010/08/buying-used-games-developers-publishe
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