The Return of the Used Game

So you thought with the advent of digital distribution that second-hand sales would go the way of the dodo? Well think again ­– as yesterday the European Court of Justice ruled that publishers can not prevent their customers from reselling games they have bought digitally. This means that consumers within the European Union are now free to sell any games they have purchased from sites such as Origin, Steam and Gamersgate, regardless of any End User Legal Agreement they might have signed when they downloaded. This is bad news for publishers as they were hopeful that digital distribution would slay the dragon of used games sales.

Right now, of all the major digital distribution sites out there, only Green Man Gaming allows customers to trade some of their games back in and it is unclear whether the rest will look to incorporate this feature into their sites, or whether it will take a customer to enforce this right before there are any changes. Whatever the reaction, I am sure it is a major blow to publishers.

It is a well-known fact that second-hand sales are a major problem for companies like EA and Activision. Indeed in the past few years they have tried to come up with a variety of schemes to limit used copies of games and entice people to buy a new copy, such as EA’s Project Ten Dollar. The reason for this is because they do not receive any money from the resale and it also counts as a lost sale because the customer has not bought a new copy of the game. It was always believed that digital distribution would expunge this’ annoying’ feature of the market as it is not as easy to trade-in downloadable games and currently there is no real way to do so. However this ruling changes all that and will require publishers and content providers to provide a way for customers to be able to sell on any games they download.

I wonder whether this ruling will change minds and put a break on the current rush to a digital world. On the same day as the ruling was announced, our old friend EA Labels boss, Frank Gibeau, told Gamesindustry International that “...we're going to be a 100 per cent digital company, period. It's going to be there some day. It's inevitable." He went on to say that this change will take place in the not too distant future. Will this new development push their plans back a bit, or will they carry on regardless? Whatever publishers such as EA choose to do, there is no doubt that this ruling will eat into their profits, much like pre-owned sales at retail are currently doing.

However, with publishers now having a more direct route to customers through digital distribution and knowing about this development, ahead of it becoming a widespread practice, they can move to lessen the impact. Green Man Gaming shows the road forward in the way they currently deal with trade-ins. They have setup deals with various publishers where they receive a payment every time their game is sold, thus making them a bit of money from trade-ins. However, the boss of Green Man Gaming, Paul Sulyok, sees another issue that may arise now that people can resell digital games.

"The classic technique of deep discount, short time limited discounts, all of that will be slightly skewed now, because you don't want to have a deep discounted game that can then be sold on elsewhere. The secondary market then cuts in and then what will happen is the same sort of thing as you've seen in the high street whereby a supermarket chain puts a fantastic discount on a product for consumers and all the other high street retailers trot down to the supermarket to buy them to stop them." (Quote courtesy of Eurogamer) 

So you could see one company going to say, Steam, buying up a load of copies of the game at a cheap price and then selling them on at a slightly higher price, thus making a nice profit. This would be fairly easy to solve by preventing people from buying numerous copies of the same game, but it is still a headache for publishers and digital distribution companies to have to deal with.

I think the way forward is for publishers to follow Green Man Gaming’s example. They know about this ruling now so they should be proactive. Setup deals with all the major digital distributors that allow them to see a bit of the money from any resale of a product. However with publishers more concerned about the bottom line, any loss of money will most probably be seen as heresy and so instead they will no doubt try to fight against any digital distribution platform offering any kind of trade-in or resale scheme.

As it stands this is a good deal for consumers and helps to reaffirm a right that many feared may disappear with the move to a digital world; namely that when you buy a product, whether it is physical or digital, you own the rights to do with that product what you wish. This ruling strengthens that right and puts it down in law.

I look forward to seeing what the industries’ reaction to this is and in particular how the ‘darling’ of the digital distribution world, Steam, deals with it. But for now I’ll finish by quoting the prescient part of the ruling.

"Where the copyright holder makes available to his customer a copy - tangible or intangible - and at the same time concludes, in return form payment of a fee, a licence agreement granting the customer the right to use that copy for an unlimited period, that rightholder sells the copy to the customer and thus exhausts his exclusive distribution right. Such a transaction involves a transfer of the right of ownership of the copy. Therefore, even if the licence prohibits a further transfer, the rightholder can no longer oppose the resale of that copy." (Eurogamer)

Do games have to please everyone to be successful?

"In general we’re thinking about how we make this a more broadly appealing franchise, because ultimately you need to get to audience sizes of around five million to really continue to invest in an IP like Dead Space. Anything less than that and it becomes quite difficult financially given how expensive it is to make games and market them."

The above is a quote from EA Labels President Frank Gibeau. He is talking about the next instalment in the Dead Space series, Dead Space 3 and the quote is in answer to the response that the game received from the gaming world during and after E3. At E3 Electronic Arts focussed very heavily on the action side of the game with new features such as unified ammo, an emphasis on action with the introduction of a cover system and two player co-op very much to the fore. There was less shown of the horror side of the game, something that fans associate with the Dead Space series. Consequently fans got a bit upset and questioned whether Dead Space 3 was heading in a direction they didn’t want the series to take. The cover system in particular had people claiming that the game was going to be action focused and that the horror elements were going to take a back seat.

Visceral Games, developers of the game, have quickly moved to quash any fears series fans might have by saying that the original horror element is still present. Senior producer on the game, Dave Altman, told Eurogamer,

"A traditional fan wants to have that alone in the dark on the couch moment. That game's there for you...Tight corridors, atmosphere, tension, horror, everything you've come to know and expect. No AI followers, not anyone chatting in your ear the whole time. It's the game that you know when you see Dead Space."

We won’t know if this is really the case; or whether Visceral are trying to keep fans onside, until the game is released in February 2013. But whoever is right, it is the comments by Gibeau that highlight a problem that I see developing in the game industry, and it’s something EA are becoming more and more guilty of.

It seems that EA and others think that all you need to do in order to make a good game sell better is to bung in a load of features - such as multiplayer and if it is a third person game a cover system - that apparently appeal to a broader audience. Do this and you are guaranteed to instantly boost sales. However, I question the wisdom of spending more money on a game series in order to try and open it up to a wider audience in the hope that it achieves more sales. I just feel that this doesn’t achieve anything.

I have no problem with developers and publishers making games that specifically try to appeal to the broadest market possible. After all they need to make money and just look how successful Call of Duty has been by following this strategy. However, I fail to see the sense in trying to take an existing series that is well liked and has a large, if not huge following, and trying to turn it into a mass market game; all the while trying to keep the series fans on board. I just don’t think it works and EA more than anyone should know this. They tried to do this with Dragon Age 2 and ended up with an inferior product that didn’t attract many new players and seriously alienated those who liked the original. Dragon Age 2 sold around 150,000 units in its first ten weeks which compares with the 250,000 units sold by the original game, Dragon Age: Origins. In total DA2 sold around 1.45m units while DA:O sold over double that at 3.79m. These figures demonstrate that all EA succeeded in doing by making the game more appealing to the mass market was to seriously impact sales, probably by driving away series fans with the precise changes that were meant to result in more sales. Now they look like making the same mistake with Dead Space 3.

Certain companies seem to have it ass-backwards when it comes to making games. They want to hit the magic sales mark, in the case of Dead Space 3 five million, because of the cost of making the game, but the game has only become more expensive because you want to appeal to more people, so you have to put extra resources into it in the hope of broadening the audience. The game then fails to hit the necessary sales mark because the publisher/developer changed the game so much that they ended up not pleasing anyone. 

Just introducing certain features like co-op or multiplayer into a game in order to make it appeal to a wider audience isn’t going to work. It’s not ‘back of the box’ features that sell games, but the quality of the product in the box. The reason why the Call of Duty series is so successful is because Call of Duty: Modern Warfare was an excellent game and the series built off that. Make an excellent game, market it correctly and the sales will come. Trying to take a pretty successful franchise and boost it into the top-tier sales wise by messing with the formula and alienating the fans doesn’t work. The fans lose out because the game changes and becomes something they no longer want to play, the publisher loses out because sales aren’t high enough and they either don’t make enough money or no money at all, and the developer loses out as they end up being closed down because the game didn’t sell enough.

I hope Dead Space 3 turns out well and doesn’t end up alienating fans - whilst failing to find that broader audience it strives for - as no one wants to see a good game fail, but if publishers continue to mess around with popular franchises in this way, then we are all on a 'hiding to nothing.' 

Mass Effect, the end.

I managed to complete my journey through the Mass Effect trilogy last week and originally I was going to write a bit about my thoughts on that ending, but since the Internet has been inundated with people arguing for and against how Bioware chose to finish up their tale I thought I would do something a bit different. (For the record I was disappointed with the ending and I think this article and this video sum up my problems with it.)

No matter how you feel about the ending though we should be praising Bioware for what they have achieved with the Mass Effect trilogy. Over the course of three games they have managed to bring to life a world and a cast of characters that players have grown to love. For the first time a series has allowed you to shape and mould the protagonist over not one, not two, but three games. The Sheppard and story that you had to tell at the end of Mass Effect 3 was one that was shaped by your actions, not one that had been predefined before you even started. This is pretty much unheard of in the realm of video-games and I think this fact has been lost beneath the vitriol coming from both sides of the divide. 

 

The amount of fervour on both sides of this divide about the ending, clearly demonstrates that people have become invested in the characters and world that Bioware has created. That people care so much about the way the story has finished shows what a great job Bioware has done with the series. People have become emotionally invested.

For me the Mass Effect series feels like the maturation of what Bioware started to do with the Baldur’s Gate series. In those games you had a few decisions to make that changed how things played out, but with Mass Effect they have taken that genesis further.

Despite the success however, I do feel like this may be a once in a lifetime series. With budgets increasing and EA already meddling with the design, I don’t know whether Bioware will get the chance to do anything like this again. The cost involved in designing a number of different stories must be quite large, added to that–people’s expectations will only grow leading to cries for more choices and even more divergent outcomes. It’s hard to see a publisher, especially one as conservative as EA, green-lighting such a project again.

So whatever your thoughts on how the series has wound-up, I urge you to recognise the feat that Bioware have managed to achieve with the Mass Effect series, especially as we may never see its like again. 

Game over...please insert £295m to continue

At the back end of last week rumours started to circulate that the largest video game retailer in Europe, the Game Group, had lost its credit insurance, meaning publishers selling games to the company would have to take risks on games that do not sell, something they are normally unwilling to do, leaving Game in a position whereby they would have to pay cash in order to secure stock. In total it is believed that Game owe suppliers around £295m. That's a lot of cash to suddenly have to rustle up.

This kind of situation is often the first sign that a company in about to head out of business. If you can't secure funds to buy stock then it won’t be long before you start to run low, profits then fall and finally you end up going out of business. Luckily by Friday, Game Group announced that they had managed to make a backroom deal to secure revised terms with their lending banks-the proviso being that in return Game looked at selling its overseas arm. However whilst this deal secures Game's immediate future long term, analysts believe they will have to acquire sustainable working capital in the run up to Christmas.

All of this might sound a bit dull and dry, but the wider point is what would be the impact on the gaming industry if Game were to go under? With HMV also in trouble, theoretically by the end of this year we could be in a situation where there is no video game retail presence on the high street. With the growth of internet shopping and the digital market some would say good riddance to bad rubbish, an opinion borne out by the majority of comments left on sites like Eurogamer, but would such an occurrence really be good for the industry.

When the story first surfaced about Game's troubles, EA CEO John Riccitiello was quoted as saying the following about a major European retail partner:

"We are concerned with the financial condition of one of our major European retail partners, which could lead to both increased bad debt and lost sales,"

If one of the largest publisher in the industry are concerned about how any failure of Game's business might affect them what about smaller publishers and developers. 


When it comes down to it, whilst internet shopping and digital sales account for a growing percentage of video game sales, bricks and mortar sales still provide the lions share, especially during the key fourth quarter. To suddenly see a large chunk of that sink beneath the waves would be pretty damaging for the industry. All you would be left with are the supermarkets and as they only tend to stock the best-selling games you can say goodbye to anything that isn't mainstream enough to sell in the millions. Publishers and developers could theoretically go out of business as the UK currently sits behind the US and Japan as the third largest video games market.

It's pretty scary stuff if you think about it and that's why it saddened me to see so much glee expressed on message boards and comment threads when the news first broke. Game provides a vital service as for many they are the only point of contact they have with the industry and to see that disappear would be a massive blow for everyone: publisher, developer and consumer. This isn't to say Game deserve a free pass. Some of its business practices leave a lot to be desired, especially their belief that selling games at RRP in the face of major competition is the way to build a solid business, but lets hope that this serves as a wake-up call to the company and that Game are able to turn it around and continue to provide a much needed source of income for the industry. If not we could be in for a rough ride.