If Wednesday's reports are true surrounding Microsoft's new console -- specifically the requirement of an Internet connection for even the most basic functions, and the prohibition of used games -- then the industry could be in dark times ahead.
It seems that ever since the beginning of this console generation, publishers and developers alike have lamented the sales lost due to the prosperous second-hand market. To them, every time a gamer walks into a Gamestop, or a pawn shop or any local video game retailer and buys a used game, it's a loss of a new game sale to them. Their belief is that if that used copy hadn't been available cheaper than a new copy, the gamer would have bought it new and the publisher would get a cut of the sale. The logic doesn't exactly hold water, because who is to say that a gamer would be willing to shell out the extra money for a "new" copy?
But operating under this rationale, publishers and developers have waged war against not only the second-hand market, but against gamers themselves -- the very people they rely on to purchase their new games. Between EA's Project $10 and the rise of online codes that unlock portions of the game already on the disc, publishers are trying to squeeze what money they can out of players. The belief is that instead of paying $10 extra for a code for a game that one bought for $5 less as a used copy, the gamer will go ahead and buy the new copy. Thus far, it hasn't worked. Gamestop is still in business and doing remarkably well.
I don't necessarily blame publishers and developers for trying to get what they can out gamers at the moment. Between the rising costs of developing for the HD systems to the economic downturn -- a one-two punch that crippled even some of the most prominent companies -- expenses dramatically increased and revenues dropped. If a publisher is going to shell out $30-50 million for a game, of course they're going to want as many people to buy it, and buy it new.
In their quest to secure as much money as they can, they don't see that they're alienating their loyal customers. How many of us have gathered up a bunch of old games and taken them to Gamestop, EB Games, Best Buy or even shipped them off to Amazon and used that credit to buy new games? In-store credit still counts as cold-hard revenue to publishers in the end. It doesn't matter whether the revenue comes from cash, debit or credit cards or store credit, it's still money in the bank. Looking back, how many of those games would you buy if you didn't have those extra games to trade in?
That's the harsh reality facing gamers if the reports are true surrounding Microsoft's new console. Some will point to PC gaming and how it has thrived under a similar business model through Valve's Steam storefront. Once someone buys a game on Steam, it remains in their personal collection forever. One can't sell that collection either, otherwise it will be banned and the person will lose all access to those games forever. So a person needs to be sure the game they're about to purchase is one they're going to enjoy. So why then is Steam not only dominating PC gaming, but leading a resurgence to levels the likes of which haven't been seen for more than a decade? Steam sales.
The concept of purchasing a game for $5-10 that would otherwise be $40-50 is extremely enticing. I cannot count how many games I have impulse bought during one of Steam's sales simply because they were such great deals. I haven't even installed most of them. I don't regret making the purchase, because they were so cheap. If I install a game and find I don't like it, I'm out $5-10, which is just one less meal out during the week -- not that big of a loss. Under Microsoft's reported strategy, I'll be out $60, which is quite a few meals.
Sure, Microsoft could implement sales of its own. It already does weekly sales on Xbox LIVE -- for Gold subscribers only. But let's not pretend those sales are anywhere near the massive discounts Steam regularly advertises.
One of the aspects of console gaming that truly set it apart from PC gaming is the relative portability and the comradery that can develop among gamers. "Halo: Combat Evolved" was hailed as "the game that launched a thousand LAN parties," which was a huge contributor to its success -- and thus the success of the Xbox brand in the years moving forward. Gamers packed up their Xbox consoles and copies and take them over to friends' houses and play for hours.
Many reading this no doubt were or are in school as video games rose in popularity. How many of you traded games among your friends and tried them out? How many of you enjoyed those games so much that you talked your mom and dad into buying them, or saved up enough money to purchase it yourself? I certainly did -- numerous times.
None of that will be possible now -- all because of publisher concerns surrounding the loss of sales due to the second-hand market. But where is the loss in revenue, and why is it only affecting the video game industry? Chevy, Chrysler and Ford weren't complaining in 2008 and 2009 about used cars cutting into their sales when they were climbing out of bankruptcy. Book publishers and Hollywood studios aren't constantly blasting used book stores and pawn shops for the loss of sales. What makes the video game industry so special -- or inefficient -- to the point where even the threat of losing a sale to the used market can cripple it?
It's simply not there. If these reports are true, publishers will find that the used game market actually contributes a great deal to industry revenue. Without the ability to trade in games, many gamers will buy less titles throughout the year, leading to an even greater loss of revenue. In the end, we all lose.