Thursday, November 01, 2007

Sturm und Drang

Oh, my. From MCV:
Leading developers have spoken out against pre-owned games at retail – warning that studios could turn their back on the ‘traditional’ publishing model if the trend continues.

TimeSplitters and Haze developer Free Radical Design and Frontier Developments’ David Braben have both told MCV that the current system is flawed – as, while retailers rake in profits on a title every time it goes through the trade-in system, developers are left with nothing.

"Of course it isn’t fair that retailers are claiming all of the profits from the sale of second-hand titles, and it is bizarre that our industry tolerates it,” said director at Free Radical Design Steve Ellis.

...The brains behind Frontier Developments David Braben agrees: “Clearly from the developer and publisher point of view, the second-hand market is a real problem. The shops are essentially defrauding the rest of the industry by this practice, whether they intend it or not.

First off, MCV, commas are your friend. Writing "the brains behind Frontier Developments David Braben..." conjures the image of some kind of ghastly science experiment gone wrong.

Second, until David Braben releases a game in this century, I'm not interested in his opinion.

Third, this is totally ridiculous. Isn't there a used market for just about everything? Yes, operating systems and productivity applications seem to be exempt, but games are neither--they're entertainment.

Look. We have absolutely zero rights as consumers when it comes to returning games. When EA put out a late alpha of NBA Live last year, could we return it as being shitty and defective? No. All we could do is trade it in for a ridiculously low percentage of its original value. Who's getting screwed in that situation--EA, or us?

Us, obviously.

It is ridiculous for a developer to complain about the used game market when we, as consumers, don't have the ability to return games that are crap. Maybe it's different in Europe, but in the U.S., we have no recourse at all. Developers are constantly shrieking about the used games market, but how many of those same developers ever speak of the responsibility that they have to release finished, polished products? To be "fair" to us?

At last count, none.

Speaking of EA (a transition utterly ruined by the intervening paragraphs), CEO John Riccitiello gave an interesting talk at the Berkeley Haas School of Business this week about the business model of the gaming industry. Here's an excerpt:
Riccitiello says the $31 billion gaming industry will suffer if it doesn’t start to reevaluate its business model. Game executives at Sony (SNE), Microsoft (MSFT) and Activision (ATVI) must answer some tough questions in the coming years, like how long they can expect consumers to pay $59 for a video game. Riccitiello predicts the model will be obsolete in the next decade.

“In the next five years, we’re all going to have to deal with this. In China, they’re giving games away for free,” he says. “People who benefit from the current model will need to embrace a new revenue model, or wait for others to disrupt.” As more publishers transition to making games for online distribution, Riccitiello says he expects EA will experiment with different pricing models.

Every time I hear a gaming executive say that games cost too much and that they need a "new revenue model," I get a firm grip on my wallet.

Let me ask this question: when has EA done anything to make games cost less?

That answer, I believe, would be "never."

Here's the realistic translation of what Riccitiello said: we're charging $60 for games and STILL can't make enough profit, so we're going to do everything we can to bundle content in such a way that consumers pay more for the full game over time.

These are the same guys who are charging $5 for ONE downloadable Tiger Woods course. They're not looking to replace the revenue model--they're looking to enhance the revenue model.

Based on what's being done with Hellgate: London--like anyone can figure out what the hell that is, exactly--I'm guessing that EA's strategy is going to have two primary avenues of attack. First, every game that can come up with any excuse for charging a monthly fee will do so. Second, the small number of games that can't come up with some flimsy reason for monthly subscription fees will exclude increasingly desirable content from the game you buy in stores, then force you to buy it via download, ultimately paying far more than the $60 you would have paid in year's past.

Will it work? Well, in the first case, not with Hellgate. I strongly believe that Hellgate is going to puke all over itself financially. Unfortunately, though, that doesn't mean we're not going to pay more in the long term.

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