XBox One, PS4, DRM, and You

[eastmen]

I wonder how widespread the problem of games selling for $5 less a week later really is?
We know it does happen, but is that really where most used game sales come from?
I don't know but I imagine that if you are the type of person who wants to play the game within the first few weeks and you are already willing to pay $55,is an extra $5 really going to stop you. I think they are using an extreme specific example to justify a widespread all encompassing policy.

Its not just $55 games. Its every price point.

So look a $60 game starts slowing down in sales what do you do ? Well $55 is now gone of course but most likely the $50 mark is gone too as once sales start to slow gamestop will drop the price.

But the developer drops to $50 so they get some sales but now gamestop is at $40... So the dev drops to $40 but gamestop is at $30 and the dev drops down in price and so on and so forth . Gamestop beats them to each price point all the while picking up sales for people who only buy at those price points . So when a developer gets to those points they have fewer customers willing to buy.

 

[ninzel]

Its not just $55 games. Its every price point.

So look a $60 game starts slowing down in sales what do you do ? Well $55 is now gone of course but most likely the $50 mark is gone too as once sales start to slow gamestop will drop the price.

But the developer drops to $50 so they get some sales but now gamestop is at $40... So the dev drops to $40 but gamestop is at $30 and the dev drops down in price and so on and so forth . Gamestop beats them to each price point all the while picking up sales for people who only buy at those price points . So when a developer gets to those points they have fewer customers willing to buy.

I can understand pubs being upset at the $45-55 mark,even I think it's cheap and I buy a lot of games used. Heck I could even learn to accept if they had hardcore control for the first month to prevent it. But at some point I think devs have to let go and listen to what the consumer is telling them by buying games at much lower prices. At that point I would rather pubs incentivise me to pay a fee rather than try and create and prop up an artificial value.
Make me an offer. And tailor the incentive more specifically to each player. For example if I take the used game home,offer me the option to either play the MP portion or single player DLC for the same fee. Often times I don't buy a new game not because I cant afford to but because I don't see the value in paying $60 for a 15 hour SP game that I may or may not like. I'm not waiting to buy it at $30 because at some magical point in time the package becomes worth $30. I'm waiting to buy it at $30 because it never was worth $60 to me in the first place.It's often not about time but packaging and content, And that's not going to change simply because they want it to. I'm not going to wake up one day and say "OMG all these years I thought games were worth this but now I realize they are worth this! "
If they are going to change the rules,then it would be in their best interest to also change the things like packaging. They seem to want to continue to offer the same old all in one retail package but move towards a more digital distribution type licensing model.
If they want us to accept that change then they will have to change as well.

 

[Strange]

Its not just $55 games. Its every price point.

So look a $60 game starts slowing down in sales what do you do ? Well $55 is now gone of course but most likely the $50 mark is gone too as once sales start to slow gamestop will drop the price.

But the developer drops to $50 so they get some sales but now gamestop is at $40... So the dev drops to $40 but gamestop is at $30 and the dev drops down in price and so on and so forth . Gamestop beats them to each price point all the while picking up sales for people who only buy at those price points . So when a developer gets to those points they have fewer customers willing to buy.

It doesn't really matter if Gamestop beats them to every price point. as Gamestop wouldn't lower prices if there were enough people to support the market at that price.

Or are you suggesting that if Gamestop didn't sell at 5~10 below your price point everybody will buy the dev version instead? Laws of economics don't agree.

Plus, I don't believe second hand market is that big a toll on the publishers anyway. Trading between customers result in first hand users having more money to buy new games.

If a first hand buyer can buy games at $60 and sells them two weeks later at $30, for a $300 budget he can buy 10 games., providing $600 revenue for the publishers. If he cannot sell his games, he will only be able to buy 5 games, which only amounts to $300 revenue.

Unless you have a way to milk the remaining $300 from the 10 second hand buyers that you have lost from the first example, (which I doubt you can do, due to the developers being much less flexible in pricing than individual sellers and thus will be less effective at providing the optimal pricing points at different stages of the product's life) it doesn't seem like a win situation for developers/publishers.

On a large scale, I believe the second hand market is a good thing for the industry as a whole.
You probably can increase your profit marginally by cutting yourself off from the market as a whole but it would be at the cost of the whole industry. When everybody starts doing this then the entire industry will have a smaller size than if everybody did not. It's a prisoner's dilemma.

 

[eastmen]

Look at it this way. MS can offer devs real time reporting of how many copies of games are sold. No longer do they need to wait for npd or the likes. MS can tell them exactly how many games were activated daily.

So now a publisher can spot trends with their games and see spikes and dips in sales. So it can give a developer much more power in terms of changing the price of a game.

Steam gives developers that power and because of it they are able to drop prices as they want.

So we can see the same type of sales on xbox one as we do on steam. Think about it a year after a game is released a developer can slash prices for a week or a day or something to drive sales drasticly up.

Or when part 2 of a game is coming out they can sell the first one for $5 bucks instead of $20.


Steam prices aren't that great unless its during some mega sale. Bioshock infinite will still cost me $60 on steam today.

 

[eastmen]

It doesn't really matter if Gamestop beats them to every price point. as Gamestop wouldn't lower prices if there were enough people to support the market at that price.

Or are you suggesting that if Gamestop didn't sell at 5~10 below your price point everybody will buy the dev version instead? Laws of economics don't agree.

No people wouldn't buy the more expensive price but there will be more people having around waiting for a price drop than if there was already a cheaper alternative. The used game becomes that price drop for many people (not all as some still want new)

 

[ninzel]

Look at it this way. MS can offer devs real time reporting of how many copies of games are sold. No longer do they need to wait for npd or the likes. MS can tell them exactly how many games were activated daily.

So now a publisher can spot trends with their games and see spikes and dips in sales. So it can give a developer much more power in terms of changing the price of a game.

Steam gives developers that power and because of it they are able to drop prices as they want.

So we can see the same type of sales on xbox one as we do on steam. Think about it a year after a game is released a developer can slash prices for a week or a day or something to drive sales drasticly up.

Or when part 2 of a game is coming out they can sell the first one for $5 bucks instead of $20.


Steam prices aren't that great unless its during some mega sale. Bioshock infinite will still cost me $60 on steam today.

So you think the only reason why games are more expensive from Live on Demand vs Gamestop is because they don't know what Gamestop is selling the games for?
They couldn't just send someone in and check on a week to week basis?

 

[eastmen]

So you think the only reason why games are more expensive from Live on Demand vs Gamestop is because they don't know what Gamestop is selling the games for?
They couldn't just send someone in and check on a week to week basis?

I think its pressure from gamestop and other retailers actually . MS / Sony / Nintendo still do the majority of their sales at places like gamestop / bestbuy / toys r us / amazon all of which have used games.


This generation with day and date digital I bet it starts to shift enough that can wrestle the power back

edit* just look at the changes in the pc market over the last decade. While pc games are still sold at all those stores listed above the vast majority of game sales are DD now and thus they can be priced as the companies want.

 

[mrcorbo]

And what's the minimum required for the game to work? What about your saves? Are you going to download your saves over? which parts do you download then?

Partial downloads are good and all if you know perfectly where the user will play to within the first 1 hour or so. If you bring your saves over you're going to need everything.



And how long do you have to wait for the parts you need? Can you predict the second console's loading behavior, especially when the second console has legitimate saves? Imagine loading a level taking a hour. That will be a interesting sight.

Developers would do doubt want players to get consistent experiences, and partial downloads only work when you know exactly what the player will go through in the beginning stages of the game, and can stop them when they start to hit un-downloaded portions.

This basically only works for New Games, so I can't imagine partial downloading alleviating this issue.

What I would expect to happen is that while you are downloading enough of your game to start playing it, you'd be doing something else on the console like maybe playing one of your buddy's games and it would notify you when the game was ready to be played at which point you'd swap over. Worst case scenario where the game has to grab more data over the network to proceed, you'd just swap over again to something else until it had grabbed the necessary data.

That's assuming, of course, that any of this is actually a problem.

 

[ninzel]

I think its pressure from gamestop and other retailers actually . MS / Sony / Nintendo still do the majority of their sales at places like gamestop / bestbuy / toys r us / amazon all of which have used games.


This generation with day and date digital I bet it starts to shift enough that can wrestle the power back

I must have have misunderstood. I though your post was suggesting that publishers need online data from MS to tell them whats going on in retail. That prices are out of touch with the street price because they don't know any better, even though I believe they are probably acutely aware of whats going on at street level.

 

[Strange]

No people wouldn't buy the more expensive price but there will be more people having around waiting for a price drop than if there was already a cheaper alternative. The used game becomes that price drop for many people (not all as some still want new)

The problem then is how long will people wait for you to drop to their current price point before they perceive that you should be priced even lower.

The second hand market is pretty good at that. The publishers are not. If you don't catch as many consumers at the price point at the right time, you're not maximizing profit. Game value does depreciate over time, so you do want to get as many copies moving as soon as possible to capture the most number of people at every price point.

I'm not trying to defend gamestop, as they actually leech from the system in a way, but they do provide a platform for lazy people to be able to just dump whatever they don't want to have lying around and re-circulate games for money that could be used to buy new games that otherwise would not be bought.

 

[-tkf-]

I wonder how widespread the problem of games selling for $5 less a week later really is?
We know it does happen, but is that really where most used game sales come from?
I don't know but I imagine that if you are the type of person who wants to play the game within the first few weeks and you are already willing to pay $55,is an extra $5 really going to stop you. I think they are using an extreme specific example to justify a widespread all encompassing policy.

The evil empire called Gamestop, take a look at the financials:

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm#tx283661_8

New video game hardware...........1,756.5
New video game software............3,730.9
Used video game products...........2,394.1 (26.4 %)
Other ........................................1,196.5
Total..........................................9,078.0

And acording to: http://www.gamesindustry.biz/articl...ost-of-games-cannibalizes-industry-says-dyack

Remember that used video games have a residual value. Remember that GameStop generates $1.2 billion of trade credits around the world with our used games model

Which would seem like 1.2 billion goes back to the customers. These are numbers from different years so use with caution.

 

[Strange]

I went around and dug for papers regarding second hand markets.

http://eclips.gatech.edu/files/articles/eclips_demand_dematerialization.pdf

A key factor in this model is whether the second-hand price is or is not effectively zero. Examples of second-hand markets with nonzero second-hand price might include markets for cars, housing, and some books. In these markets, buyers of new goods may buy more readily and at higher prices because they can resell the goods later. Examples of second-hand markets with effectively
zero second-hand price might include the markets for electronics, clothing, and garagesale items. For these items, most of the price that a second-hand buyer pays is effectively the transaction cost. People who buy these items new rarely expect to recoup any of their outlay by selling second hand.

The model indicates that in markets with positive second-hand price, such as the market for cars, housing, and some book markets, increased second-hand sales would not correspondingly decrease sales of new goods. If all other variables remain constant, increased second-hand sales in these markets can increase sales of new goods and increase material consumption.

On the other hand, in markets with zero second-hand price, such as markets for electronics, furniture, clothing, and garage-sale items, increased second-hand sales can be expected to decrease the demand for new goods. This is typically not a one-for-one trade-off between new goods and second-hand goods. The relation between the increase in second-hand sales and the decrease in sales of new goods reflects, basically, the extent to which the increase in secondhand sales are coming from consumers who previously bought new or from consumers who previously did not buy. If the service provided by a new good is significantly higher than the service provided by a used good, that is, if k >> v, then an increase in second-hand demand has little effect on the demand for new goods. In such a case, almost all of the increased demand for second-hand goods comes from those who previously did not buy.

This paper's model concludes that it depends on whether the second hand-price is or is not effectively zero.

I think we can all agree that second hand games are not essentially the "transaction cost", by this paper's model the initial buyers can recoup some of their money, leading to more people buying first hand.

 

[phil-t]

I think we can all agree that second hand games are not essentially the "transaction cost", by this paper's model the initial buyers can recoup some of their money, leading to more people buying first hand.

I also note:

If the service provided by a new good is significantly higher than the service provided by a used good, that is, if k >> v, then an increase in second-hand demand has little effect on the demand for new goods. In such a case, almost all of the increased demand for second-hand goods comes from those who previously did not buy.

Secondhand games in the new DRM model have offer exactly the same 'service' as a new one, so by their model, that seems to say that increase in second hand sales has a large effect on demand for new goods.


I think that unfortunately, we'll probably have to wait and see how it pans out.. no simplistic model is going to predict the complexities of game DRM.

 

[Deleted member 11852]

That annoyance, and the fact that all the sub accounts in a family account were automatically children, so you would continuously get those stupid "one of the logged in accounts has restricted chat" stuff. And you could not get it to acknowledge that there may be more than one adult in a family. It was a completely broken system.
I'd be fine with a single charging account, as long as you could designate more than one account to be able to add points from it.

Let's forget sub accounts entirely for a moment - I think it's likely that Microsoft will overhaul Xbox Live accounts now that Kinect will be able to accurately identify everybody accessing any device. Let's say Microsoft offer a new family account and you attach all of your family's Xbox One consoles to it, just like iTunes has you attach and authorise devices to an account.

Managing everybody's access under the account, thanks to Kinect, is now much easier. Responsible adults (mum, dad, big brother etc) don't need to login to a specific account, Kinect knows who they are; which is effectively system administrators for the family account. The responsible adults can authorise credit card transactions and manage everybody else's permissions, like limiting how much time little Johnny can play games or watch TV and movies as well as limiting how much credit he can add to the account from pre-paid cards - or just limit how much he can spend in any week.

The trick to this is making this accessible and understandable to non-technically literate responsible adults so you want to avoid terms like "system administrator".

None of this would compromise the ability for anybody in the family to visit a friend or colleague and access their account from someone else's Xbox One.

 

[Deleted member 11852]

It's obvious to me that there's an overproduction crisis for games either because of the recession, too many companies producing too much stuff or the population range which would play is shrinking in the west/japan which is due to happen anyway. I don't think all this DRM crap will really help them survive this natural process. They'll need to shake the tree so the rotten apples fall out to clean the market. It's the nature of the game, pun intended.

I think the 'rotten apples' are part of the equation but I think we just have too much bread. E.g. A village baker bakes 200 loaves a day but sells only 140. Why? Are the 60 remaining bad? No, but only 140 people live in the village. Simple over supply.

I'm told 7/10 games aren't profitable. Ok, so in the time it took to produce those 10 games, how about we use less resources and produce only 5 games. With consumer spend being spread across less product, I wonder if we are more or less profitable now. I'd estimate we are more profitable assuming the absence of rotten apples. I wonder how many people only buy a new game when they've completed current games and, because of this, end up buying games cheaper than full price.

I still have Assassin's Creed Brotherhood in cellophane, unopened. Once I eventually finish AC2 (which I need to be in the mood to play, and have time), I'll have a go at Brotherhood. So I've passed on buying AC3 but may do so in future when it'll likely be cheaper to boot. This is a loss for the publisher/developer due to over supply for somebody in my circumstances: money to spend, not enough time to game - particularly when consoles offer other things (netflix, blu-ray, music) which compete for my free time.

I've still got about two hours left of Bioshock Infinite, but I know I'll start and complete The Last of Us before I get back to Bioshock because I will make time for TLoU. And while I'm juggling time for games like this, everything else released that is good, but not awesome, will get ignored for the time being and maybe forever.

 

[KongRudi]

I don't think it's used games beeing a problem - those people trading in used games, usually put the money back into other games, if game-publishers really saw this as a big deal, they'd just do like movie-companies do, and demand that the stores selling games, should not trade in used copies, or rent out games before the game had been 2-3 months on the market.
Server-costs for used market upping publisher-bandwith, is covered tenfold by online-passes, wich is much more friendly that 24 hour online connect to access your game-pass.

I feel this is just MS and publishers who wants to ensure people are online, so they can sell us more DLC and similar. And instead of making it worthwile to connect online by delivering solid content, they make it a necessity to connect by disabling our game-acess unless we go online.
It worked fine on Xbox Live memberships, this will work next generation aswell.

Unfortunately, this is not the only issue I see.
The most major problem is with the licensing, we don't own the games anymore.

examples:
EA is usually closing Tiger Woods 2013 servers half a year after 2014 come out, this generation it is only multiplayer wich is gone wich usually ain't such a big deal since the comunity will be much smaller that late, but next-gen on Xbox you'll loose full access since games are also in the cloud - so two years down the road the game is useless.

Another example;
Sega makes a mediocre Ironman game, Activision buys the license from Marvel.
Sega don't own the rights to Ironman anymore, what happens to the game you are licensing from Sega, they no longer have the license to distribute Ironman.

I think this is the reason why MS have been able to convince publishers to do this consumer-hostile DRM.
In my examples, EA can now force their userbase to upgrade, and Activision can complain that there are unlicensed competing games beeing distributed, and force their competition over to them.
And they have a direct line to consumers to sell them more content and advertisement.

I really hope Sony isn't doing a similar scheme. Luckily they've allready confirmed that you don't need to connect to internet to play a game, it's something optional.
So let's hope they're continuing the trend to be a more content-driven company.

 

[KongRudi]

doublepost

 

[Arwin]

I also noted that distro rights for say Rockband 3 have to be renewed quarterly. They recently lost about 8 songs as a result, one of which was necessary for an achievement I believe.

I think that kind of thing is preposterous and amazingly consumer unfriendly. I want to pay rights to a song once, and pay for Harmonix work on 'tabbing' the song once, and that's it.

 

[Deleted member 11852]

That's not exactly news, that is the point of DRM. So the owners of the IP can maintain control over it. It would be great if we could live in a world where it wasn't necessary, but there are just way too many assholes who ruin it for everyone.

The trick to making DRM acceptable is for the implementation to not overly affect the way people use the content.

I think the iTunes Music Store (iTMS) is an example where DRM wasn't welcomed but where the actual implementation didn't upset many people. You bought your music and it would play on any authorised iPod/computer device - five I believe, even back then. Although you couldn't easily re-download purchased content (you can now), you could back-up content any way you liked and you could still burn CDs from DRM purchases and even rip them back into iTunes for completely DRM-free versions, albeit with a quality loss due to two rips. Apple offered the ability to easily buy music that would play on your computers and iPod - which is what most people wanted to do.

Unfortunately for Microsoft (and possibly Sony too), gamers have long enjoyed the ability trade and lend games and if developers are to be believed, this loses them a lot of money.

Microsoft's DRM-strategy is a multi-factored gamble. I'm sure they and publishers are entirely willing to alienate and exile a statistically small number of existing Xbox owners who simply won't live with this, if the losses caused by them trading/lending will be offset by other people paying full price for games, because it's about bottom lines. Of course, not every used game sale or game lend is a lost sale.

In principle I have no problem with this use of DRM re-directing revenue from commercial used-game sales to developers, but it will be at a cost to what little retail still remains. Microsoft have been forced to pick sides and I'm sure this wasn't easy. But, 24hr phone-home policy aside, I'd be astonished if Sony's restrictions with PS4 were much different.

 

[dagamer]

With the advent of iOS App Store, Google Play, and popularity of Steam, I think people will shift to just buying games digitally instead of at GameStop. More importantly, when you try to find an old game and only one GameStop has it 20 miles away or you can order it online from someone and wait 3-4 business days, it's at that point where having a game available digitally where the publisher can make a huge number of sales on a $15 catalog title.