Thursday, March 26, 2009

OnLive: What No One Is Talking About

You guys have sent me so much interesting e-mail about OnLive that I haven't even catalogued it all and asked follow-up questions yet. I'm still working on it, though.

In the meantime, I realized today that no one is talking about an absolutely huge implication of the OnLive service.

Let's go back to Dean Takahashi's article for a moment. Remember his breakdown of who gets the money when a new, $60 game is sold?

--$27 is retained by the publisher

--$15 is kept by retailers (plus all resale revenues)

--$12 is lost to piracy

--$7 goes to the game owner (through resale, apparently)

I know, that's $61, not $60. Those are the figures in the article, though, so it's as close as I can get (I assume it's a rounding issue).

Immediately, publishers are going to retain $19 more, because the piracy and resale markets go to zero. No one who uses this service can copy a game, and no one who uses this service can resell a game.

I promise you that publishers won't be giving $15 to OnLive for each copy sold of a game, because the publishers have 100% of the leverage here. OnLive is a new service, and if the publishers don't support it, it's DOA. Let's say that publishers agree to pay $10 to OnLive per copy sold (and I think that's an incredibly high guess).

[apparently, there's a song with the lyrics "What makes the monkey dance?" because I'm listening to it right now]

So instead of keeping $27 from a $60 sale, publishers will be keeping $50. At least.

See where I'm going here? Publishers, at the same time they have been screaming that current piracy rates represent the apocalypse, have also told us over and over again that game prices would be cheaper if it weren't for pirates. They've also been screaming that the resale market is just absolutely killing them.

Well, if this service actually launches, we will all see if, to put it delicately, they were full of shit. They have every reason in the world to want this technology to succeed, and one of the ways it has a much, much better chance of succeeding is if they reduce the price on games sold through OnLive. I don't mean $5 off a $59.95 game--I mean at least $15, and preferrably $20.

I mean, they should, right? They're keeping $23 more per unit!

How much of a shot in the arm would it be if it was $20 cheaper to buy a game via OnLive? Hell, people would be falling all over themselves to sign up, even with an annual subscription fee. And unless the publishers have been lying to us all along, it should be easy to do, right?

So if this service launches and games are still being sold at $59.95 (no different than retail), then we should all raise our middle fingers in their general direction, because we will be getting screwed.

This is everything the publishers said they wanted. Now it's time for them to put up or shut up.

Site Meter