Why the anti-consumer mentality in contemporary gaming?

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Be warned, this is going to be a very lengthy post.

I’ve been thinking of writing this for a while now, but the latest from Kotaku has encouraged me to get onto it.

Today’s soapbox rant is on the emerging anti-consumer mentality becoming prevalent amongst publishers and some developers. The general consensus is about clamping down on second-hand sales as it has a direct effect on sales of new titles. The practice is spurned by game retailers selling second-hand games alongside new games for a fraction of the discount compared to the cost of the new title. This means within a week of the latest blockbuster coming out, in addition to the RRP$120 brand new copies, there will be second-hand copies for $10-$20 less; to the average consumer, the second-hand copy is fine for their purpose and they pick up the cheaper game. This flows more money into the retailer (as the margin on the second-hand game sale is significantly higher compared to the brand new retail copy), leaves extra spending money for the consumer, but it means the publisher has missed out on a sale, and lack of sales at retail equal less money going back to the publisher and in turn to the developer.

The angst from the publishers and developers makes sense, especially if you look at the short-term economic impact. New titles only have a finite shelf-life, and they need to maximise the first few weeks to bring a decent ROI for the publisher. If this is compromised by retailers selling second-hand games with a higher margin to a consumer that’s happy to save a few bucks, the situation gets worse as sales of new titles plummet.

Thus, from the publisher, their issue is that retailers are “double-dipping” the game sales, having made money on the sale of the new game, then making another sale with a considerably more healthy margin on the second sale. Publishers need capital return in order to invest in funding new games from their developers, so if the ROI is affected, it in turn affects the amount of time/resourcing allocated to new games development.

The next portion of the equation is the retailer. Their issue is to be profitable in order to satisfy their investors, pay their rent and pay their staff; these are all common issues to publishers as well, including the final part of the equation in maximising their short-medium term return on investment. In order to achieve this, they need to look at their business and maximise revenue. For years now dedicated game retailers have complained that the margins on new game sales are incredibly slim, so the paradigm has changed to reflect the market – accessories and auxillary merchandise (premium editions, guides, figurines, etc) assist with diversifying their income due to the higher retail margins, not unlike how the sale of cables, extended warranties and powerboards boost the margins for home electronics dealers. Used games are a natural extension of this, as they allow a higher margin at retail and therefore make the running of a dedicated store a sustainable venture, to the point where used game sales are to a large degree propping up the retail model due to the poor margin of new game sales.

The final slice of the pie is arguably the most important one – the consumer. To the average consumer, as long as the game works, there’s no issue – they just want to play it. For the enthusiast, purchasing habits can often be a little more pragmatic, with an emphasis on purchasing brand new copies. Where money is an issue (very important to the average consumer), the purchase of a used game makes sense; conversely, it is also equally important to have the ability to trade in used games and use that credit to purchase new titles as part of a consumer-product lifecycle.

This last point is often cited as a key part of keeping used game sales alive, as the habits of many consumers suggest that games are traded in for credit used to purchase new titles. By extension, it also reduces the risk of purchasing a new game as it allows the consumer to return the product for credit if they don’t like the game and use that credit to purchase another game they may enjoy more.

As a final extension to this model, there is also the preservation side to gaming. At the moment, I can load up a game that is over 30 years old on my Atari 2600 and play it. One may question the logic in doing such an activity, but it’s an important fact to consider. By extension, used games allow for people to enjoy retro games and is good for for the long-term health of gaming as an accessible social history. If you remove the ability to play used games, you effectively destory the ability to experience and partake in gaming from a socially historic perspective.

From a pragmatic business perspective though, this final argument holds absolutely no weight at all, particularly from a short to medium term perspective. This is because it gives the publisher the ability to strictly control the game’s usage patterns, and by extension, purchasing patterns. Control equates to an ability to extract maximum income from a past venture. This is part of the reason publishers hate the growth of emulation, as it allows intellectual property to be preserved and played without taking into account an additional revenue stream. Thus, the publisher has no interest in the social history of gaming and its contribution to society when viewed from an historical or anthropological perspective.

But there’s a counter-argument to this, which suggests that the birth of emulation has also given way to an acceptance of retro games as a pursuit of leisure and products worth revisiting or re-purchasing. It’s all very chicken/egg, with one side claiming the ease and portability of emulation gave legitmiate market interest in facilities like Nintendo’s Virtual Console; conversely, publishers would argue that the interest was always there, and the presence of free emulation undermines the value of old games.

Things get muddier when you think about how the developers of the emulators themselves are tied up in the situation, with open-source emulation projects inherently contributing to commercially-emulated titles or closed-source emulation authors being hired to create commercial emulation software. There’s also the issue of quality – where freely available emulation has proved superior to commercial emulation, the core gaming community’s desire for comprable (and ideally superior) commercial emulation has lifted the quality of the product. Thus, it could be argued that the improvements in free emulation has in turn contributed to superior commercial emulation, which results in a superior product for the consumer.

Still with me? Good, so to recap, here’s where we’re at:

Publishers want maximum return from their investment and a cut of all sales relating to the sale(s) of games. Their motive is extracting maximum income from the sale of games, and their lack of a cut in the sale of used games undermines their business model. Their emphasis is on short-medium term gains, and to leverage their reputation to create long-term equity in their brand.

Retailers want to maximise their income stream to remain sustainable and profitable. This means making up for low margins on new games by selling items with higher margins (such as used games). They are focused on short-term returns and long-term sustainability of their business.

Consumers want a comprable experience for the best price possible. Consumers should be able to enjoy official (i.e. not bootleg) games for the life of the physical item, even if that means being able to play them in years to come. Consumers have demonstrated an interest in re-purchasing old games on newer systems if the price is right, the quality is in line with a commercial product and the content/setup is accessible and logical.

This then means that, in an ideal scenario, the publisher sells more titles to generate more money, retailers have a higher margin and higher sales to return more money into the store/franchise and consumers purchase games for a cheaper cost.

Something accordingly has to give.

One solution offered is to reduce the RRP on games and allow retailers to retain a higher margin; the crux of this argument is that the lower price will make the purchase of new titles more accessible to consumers and the volume of sales will offset the reduced income per item received by the publisher (economics 101 – sell more at a cheaper price and use volume to sustain your income projections).

The issue with this model is that, should game retailers continue to sell used games, then the consumer habits won’t change and the net result is that publishers will be generating less revenue per capita from sales, retailers will be making higher margins on new sales whilst retaining higher margins on used games and consumers won’t be prepared to pay a premium for their games.

The logical extension is to come to an agreement with retailers to either stop the sale of used game entirely (unlikely), or to add a window of exclusivity so that new titles have a period of time where used games will not be accepted as trade-ins or sold. The issue this would hold with retailers is that if they were to follow in this stead, would the margins from the new game sales be enough to make their businesses sustainable?

For the consumer, they ultimately want to purchase the game at the cheapest price; if games are cheaper, it either means less money in the budget to buy and play new games. A more ambitious outcome would be that gaming budgets remained the same or increased slightly, with the consumer using the same amount of money to purchase more games than before. This equals more sales for gaming, which in turn improves the sustainability of the business.

But it’s a risky move, and in an industry that has severely contracted over the last 5-10 years and has become decidedly risk-adverse, this is not an enticing move.

So, with all parties at a standstill, the break to the stalemate has been to slowly introduce anti-consumer strategies to bully consumers and control their purchasing habits. There are degrees of impact with this strategy, including region-locking consoles (a historical approach to price fixing in the gaming sector), restricting additional online content via a serial key (available free as a one-off use with the game and available for purchase as DLC thereafter), requiring an always-on internet connection to play (including playing single-player) or inherently altering the physical media to not allow for the game to be “factory reset” for a new user.

The news from Kotaku (at the top of this rant) suggests that Sony are looking at going down an extremely anti-consumer path of creating individual keys embedded in the media or printed/inserted with the product that requires the consumer to lock a title directly to their online account. Without the key, the game is stuck in “trial mode”, with the consumer required to pay an additional fee to play the game in its entirety. I can see the logic of locking down the online/multiplayer experience like this, but for single-player or offline games it’s definitely an example of strong-arm contracts.

While this may seem achievable (if mean-spirited), these anti-consumer methods are inherently flawed as it fails to take into practice of playing these games when the servers are ultimately switched off, if there was a misprint with your key or if you have issues with your internet connection in the immediate-term. Pragmatically, the publisher has no issue with this, as you’ve paid your money for the game, and in the instances where live server connections are required for play, it allows them to re-release the title on succeeding platforms and maximise their investment in the title by shutting down any access to the content outside of their rules. It invariably moves console gaming into the same realm as PC gaming, and we’ve all seen how successful strong-arm tactics in the PC gaming arena has been.

Now, all of this assumes that the rights-holders actually stay around though in order to support or re-release their titles – anyone who has read up or been involved with managing rights for old games in order to redistribute them commercially knows its a minefield that can often make it financially unviable. This means for the purpose of short-term profit, an entire generation (and future generations) of social gaming history will be lost owing purely to control and corporate greed.

But this fails to take into consideration the importance of second hand games, their financial accessibility and how these tie into brand equity for the long-term sustainability of the gaming sector.

After all, how many kids played second-hand or emulated Sonic titles in years past, all of which have contributed to the enourmous brand equity in the Sonic franchise to date?

From a personal perspective, when I was a kid we had a collection of new and second-hand games for our consoles – as I was in primary or high school depending on the system, and had limited sources of income, this was how it was; you also borrowed games between friends or took them over peoples’ places for gaming as a group. Where possible, I was lucky enough to have some new titles, and alongside those were a number of second-hand games.

Fast-forward to where I am now, and over the three current generation systems in our household, the collection sits well beyond double-figures, and almost every one was purchased brand new at retail.

If I didn’t have the option of supplanting my gaming habits when I was a kid with second-hand titles, I daresay I wouldn’t be the avid gamer I am today. Sure, it doesn’t make much sense financially short-term, but long term? Those numbers speak for themselves. That’s what makes this industry sustainable long-term.

Going beyond purchase habits, there’s also the topic of harm-minimisation, something I’ve talked about before. If the leaked details are anything to go by, antagonising consumers will do very little to reduce the likelihood of console hardware (and related networks) being compromised in order to attain extended functionality that should have been present day one or play pirated titles (or being able to play legitimate titles offline if the above is any indication); it also raises the question of compromising the network as an act of rebellion or to improve the consumer experience. As before, I’m not endorsing these actions, I’m merely pointing it out as a likely act that may follow in the wake of antagonistic behaviour.

This kind of heavy-handed behaviour also adds fuel to the fire of those wishing to preserve the social history of gaming – under the leaked conditions, this means that once the servers are switched off, none of those games will be accessible. Even if you purchased it at retail but hadn’t opened the seal until the servers had been turned off (granted this is unlikely, though having picked up a brand new 32X in 2011, I don’t think it’s out of the question), the game will not be active.

Therefore in order to preserve the next generation of games, you will need to pirate the software.

This suggests a very short-sighted and flawed approach to the gaming paradigm, and one that is actively setting up the next generation of gaming to be extremely problematic.

Despite all the above being said, I obviously don’t have the answer – after all, I’m a nerdy retro gamer running a small, independent blog where I wax lyrical without any editorial panache.

But I’m also a passionate gamer, and it seems incredibly daft to return to a mindset from several decades ago in order to maximise profits in a way that is antagonistic to your consumers and focused incredibly tightly on short-term cashflow vs a long-term relationship built on respect, progressive attitudes and cashflow.

For me, I think the solution is to meet the retailers part of the way and addressing the needs of the consumer. This means reducing the retail price and working on volume sales whilst increasing the margin for retailers, coming to an agreement with retailers to manage second-hand games in a way that is acceptable to all parties and practicing harm-minimisation by being progressive towards your consumers (e.g. region-free, extensible features, user-serviceable HDDs, etc).

The industry learned some hard lessons this generation, let’s not see all that hard work go to waste with what’s to come.

Modding March, update 2

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More modding news!

I’ve finished off the tweaks to my Astro City’s control panel, and I can now swap in/out P1 and P2’s respective fourth button off the JAMMA harness, handy for my neglected MVS (which is now in my cab, giving Marvel vs Capcom a much deserved rest).

I’ve also disassembled my XB360 to get the model number of the DVD-ROM unit (which I could have simply ascertained by checking the cable off the front with the faceplate removed, but I figured I needed to disassemble it anyways so went ahead with it regardless), added a bit of hot glue to my SMS2 to reinforce one of the screws holding the dual-mono audio plate on the rear of the machine and also took apart my A500 to remove the floppy disk drive as I’m looking at grabbing a HxC Floppy Drive emulator and mounting it internally on my system (something I think Old School Game Blog would appreciate given his huge knowledge and appreciation for Commodore computers!).

In addition, I’ve had confirmation that the replacement Saturn cart slots are on their way, and the 10mhz oscillator for the SMD is in the post as well. If all goes well, I should be able to get the whole list done within a couple of days of April 🙂

I’ve also started thinking of tidying up a couple of other console mods – fellow modder Mamejay has shared a circuit for getting extremely nice composite and s-video off a PAL Atari 2600 (adapted from an A2600 Jnr mod he’s been doing for a while), so I’ll grab some CD4050s to give it a whirl. I’m also toying with the idea of overclocking my PAL and Japanese N64s since I still have a couple of switches in my stash.

So, the revised list (which will take me into April) is as follows:

  • Sega Mega Drive 10mhz overclock
  • Sega Saturn cartridge slot transplant
  • Atari 2600 AV mod
  • N64 overclock (PAL and Japanese consoles)

With all of those done, I’ll definitely have caught up on my backlog!

I’ll be looking forward to reporting back on when these are finished, as it means I can get started on two larger projects I have planned for this year, but details of those are to come down the road!

Atari issuing cease and desist letters to websites – huh?

This.

My feelings over Atari recent spate of cease and desist letters to websites pertaining to the Atari 2600 are reflected in a far-more articulate response at Atomic PC’s website. I merely wanted to add my voice to the chorus.

Given Atari allegedly gave the community their blessing to develop for and celebrate the history of the Atari 2600 more than a decade ago, it seems a bit petty to go after websites covering the platform. It’s certainly within their legal right to do so, but it does beg an ethical question. Given the enduring value of the brand “Atari” is attributable in part to the ongoing development, discussion and celebration of its legacy by fans, it seems unusually short-sighted to tarnish this reputation by attacking the very people who have assisted in building the ongoing awareness, and by extension value, or Atari.

Hopefully this is the last of such tomfoolery for 2011. It rounds off a trio of arguably anti-consumerist measures by some of the big names in the gaming sector (Sony removing Linux support from the PS3; Capcom’s unoffocial “DRM” for Resident Evil: The Mercenaries 3D on the 3DS; and now Atari and their IP battle for URLs and websites), so hopefully we can all move on from here.

Seasonal gaming habits and associations

This one’s a little left-of-center, but I thought I’d post it anyhows.

I’ve found over the years that, just as musos will track periods of time in their lives or historical phases by the music associated therewith, I have begun over the years to do the same thing with video games. I see this happening on two levels, micro (annual seasons/events) and macro (periods of time).

The most recent/up-coming example of Micro Gaming Associations (let’s give it a fancy acronym – MiGA – yeah!) would be Easter. And it’s a completely irrational.

Back in March 1993, my brothers and I pooled our resources and sold off our Sega Master System, all our controllers (bar one or two we left behind, came in handy for 1-button games like Sonic or Sonic 2 on the Mega Drive) and all our games in order to pool the $300 for a Sega Mega Drive (original model, without the serial port though) pack that included Sonic 1 and vouchers to get Alex Kidd in the Enchanted Castle (boo!) and Columns (uber). I’ll leave the full, drawn-out story for a later post, but suffice to say we picked one up and come Easter, we had a Mega Drive, and it was the greatest thing to ever happen in the history of the universe to my pre-pubescent brain.

So, I still remember clearly on the morning of Good Friday, after partaking in copius amounts of hot cross buns (yum), I jumped in front of the telly and played – of all things – Michael Jackson’s Moonwalker. It was an awesome game in 1993, and while it’s probably a bit on the rubbish side, is still a lot of fun today. If you’re irrational like myself.

So, for the last couple of years I’ve gone to the habit of digging out Moonwalker and give the game a crack around Easter time because of the association with the season – in fact, if you check out my 10 April 2009 gaming session gallery, you’ll find a few pics from the first stage of Moonwalker 🙂 The same thing may happen this weekend 😀

Thus, when Easter comes around, you can count on me firing up the old 16-bit beast and having a crack at Moonwalker. But what about other seasons? Let’s have a think…

MiGA list:

  • Seasons –
    • Summer: Shenmue (Dreamcast), Asuka 120% Limited (Saturn), Wonderboy in Monster World (Mega Drive), Sonic 2 (Master System)
    • Autumn: Michael Jackson’s Moonwalker (Sega Mega Drive), Super Mario All-Stars (SNES), Donkey Kong Country (SNES), Secret of Mana (SNES), Sonic 2 (Sega Mega Drive), Skies of Arcadia (Dreamcast), Ico (Playstation 2)
    • Winter: Phantasy Star 4 (Mega Drive), Rocket Knight Adventures (Mega Drive), Ghostbusters (Mega Drive), TMNT: The Hyperstone Heist (Mega Drive), Zelda: A Link To The Past (SNES), Super Metroid (SNES), Dragon Force (Saturn), Magic Knight Rayearth (Saturn), Vampire Savior (Saturn), Saturn Bomberman (Saturn), Sonic 1 (Master System)
    • Spring: Road Avenger (Mega CD), Sonic CD (Mega CD), Thuderhawk (Mega CD), Marvel Super Heroes vs Street Fighter (Sega Saturn), Panzer Dragoon (Saturn), Panzer Dragoon Saga (Saturn), Mortal Kombat (Mega Drive), Street Fighter 2: Special Championship Edition (Mega Drive)
  • Holidays –
    • Christmas: Shenmue (Dreamcast), NiGHTS (Saturn), Virtua Fighter 2 (Saturn), Story of Thor (Mega Drive), Sonic 2 (Master System)
    • Easter: Michael Jackson’s Moonwalker (Mega Drive), Golden Axe 2 (Mega Drive), Sonic 2 (Mega Drive)

It’s a bit illogical and extremely inconsistent, but I thought I’d share anyhows 🙂

So what about Macro Gaming Associations (MaGA to keep things going) – for the purpose of my ranting and raving, I’ll use these to define where particular games emphasised or are representational of a period of years or within a particular generation of game systems. This one’s still a bit hazy/inconsistent compared to the former which I’ve spent more time thinking about, so bear with me for this more randomised list. Note that like the above, these are representational of my personal bias, hence why some systems/games aren’t represented and why some games that may have come out in other periods are represented out of date. Where games represent the period and were ported to numerous systems, I’ve placed them in favoured order of association. Thus, if a game came out on the C64 and arcade but I spent more time playing the C64 version, that gets preference, even if the arcade original was much better.

  • Decades –
    • 1980s: Asteroids (Atari 2600), Pitfall (Atari 2600), Enduro (Atari 2600), R-Type (Commodore 64, arcade), TMNT (Commodore 64 [platformer], arcade), International Karate (Commodore 64), The Last Ninja (Commodore 64), Bad Dudes vs Dragon Ninja (Commodore 64, Amiga 500, arcade), Wizball (Commodore 64), Combat School (Commodore 64), The Great Giana Sisters (Commodore 64), Bruce Lee (Commodore 64), Outrun (Commodore 64, arcade), Afterburner 2 (Commodore 64, deluxe hyrdraulic arcade cabinet), Wonderboy (Commodore 64), Space Invaders (cocktail arcade cabinet), China Gate (arcade)
    • 1990s: Wing Commander (DOS), Space Quest 3 (DOS), Warcraft 2 (DOS), Police Quest 2 (DOS), Double Dragon 2 (NES), Super Mario Bros. 3 (NES), The Flinstones (NES), Advanced D&D Collection series (Commodore 64, DOS), Sonic 1-2 (Master System, Mega Drive), Wonderboy 1-3 (Sega Master System), Alex Kidd in Miracle World/Shinobi World (Sega Master System), Sonic 3 + Knucles (Sega Mega Drive), Gunstar Heroes (Mega Drive), Story of Thor (Mega Drive), Phantasy Star 2/4 (Mega Drive), Super Mario World (SNES), The Legend of Zelda: A Link to the Past (SNES), Secret of Mana (SNES), Panzer Dragoon Saga (Saturn), NiGHTS (Saturn), Guardian Heroes (Saturn), Saturn Bomberman (Saturn), Virtua Fighter 2 (Saturn), Sonic Adventure (Dreamcast), Soul Calibur (Dreamcast), Daytona 8-way linkup (arcade), Last Bronx (arcade, Saturn), Sega Rally 2 (arcade), X-Men vs Street Fighter (arcade, Saturn), Dead or Alive (arcade, Saturn), House of the Dead 2 (arcade, Dreamcast), Street Fighter 2/CE/HF/Super/Super Turbo (arcade), Metal Slug (arcade, Saturn), King of Fighters ’96 (arcade, Saturn), Crazy Taxi (arcade, Dreamcast)
    • 2000s: Shenmue 1-2 (Dreamcast), Dead or Alive 2 (Dreamcast, arcade, Playstation 2), Skies of Arcadia (Dreamcast), Chu Chu Rocket (Dreamcast), Powerstone 2 (Dreamcast), Gauntlet Legends (Dreamcast), Ico (Playstation 2), Kingdom Hearts (Playstation), Viewtiful Joe (Gamecube), Tales of Phantasia (Gamecube), The Legend of Zelda: Wind Waker (Gamecube), Panzer Dragoon Orta (XBox)
  • Generations (in order of preference/emphasised experience) –
    • 8-bit: Atari 2600, Commodore 64, NES
    • 16-bit: Mega Drive, SNES, DOS
    • 32-bit: Saturn
    • 128-bit: Dreamcast, Gamecube, Playstation 2, XBox

Like I said, irrational, huh?

I think a special point needs to be made on the inclusion of the PS2 and the whole 128-bit gen note above – it’s actually all to Wifey’s credit that I had a big love of the PS2 in the last generation, as I was irrationally opposed to it on principle (being a bit of a Sega fanboy :P), but it garnered quite the soft spot in the end. It was also the first time I’d been in a financial position to actually get use of all the consoles in a single generation, so it’s quite interesting in that respect.

To be honest, I think I like the first list based on MiGA better than the second, as I feel like I’m making more of a randomised, generated list of games tied to extremely large swaths of time with the MaGA list, and the former seems more personal in its choices… but then again, when I think back on time periods, those are the games that stand out, at least at the moment I’m writing up this post.

I’ll have a thorough chuckle if either of these concepts get picked up anywhere else, or how many people throw on the rose-tinted glasses and look back on their classic games like this. I suspect I’m not the only one, but at the same time I don’t think I have my finger on the pulse in any way.

Anywho, I hope you enjoyed that long-winded return to retro gaming blogging. I promise I’ll start getting back into regular posting from now on!