Sunday, December 7, 2008

dealing with the gamestop problem

Rob’s last post touches on two oft-discussed issues in the game industry today, those being DRM and used game sales. It also talks about how Spore wasn’t a very good game in spite of eight years of development and three years of hype, but I don’t want to beat a dead penis monster (nsfw) here.

Given the importance of these issues and the frequency of their discussion in the community lately, I would like to encourage all of our contributors to weigh in on either (or both!) of them during this, the second week of CHARGE SHOT!!!


Says the esteemed Mr. Kunzig, Spore’s aggressive DRM “brought the industry to a new low - that is, until publishers started discussing subscription fees for single-player games.” This sentence refers in part to a recent rumbling from developers and publishers that they should be compensated for the sale of used games in some way, whether it is a fraction of the money from that game’s sale or otherwise. This comes on the heels of several quarters of impressive recession-proof growth from Gamestop, the game retailer/pawn shop that everyone loves to hate. Their last quarter yielded $1.7 billion in sales with some $46 million in pure, undiluted profit.

Sounds like a lot to me!

Gamestop makes most of its money from used game sales – a customer walks in with a game which Gamestop will buy from them, usually for less than half of what they intend to sell it for. The difference goes straight into the company's pocket. The same game can go through the Gamestop machine as many times as people keep putting it back into circulation – ten people can play the same game without the people who made that game seeing a cent.

So the publishers and developers are mad about this, as well they should be. More of them are merging with and being devoured by giants like EA and Activision all the time, and they want to make enough money to remain afloat. Still, the argument that publishers should be entitled to money from used game sales is unrealistic and has little by way of precedent. In the history of media, have publishers made money from used book sales? Have record labels made money from used CD sales? Does money from the sale of used DVDs go back to the distributor? No, no, and no. That stuff was all paid for once, by the original purchaser – what happens to it after it is sold is no business of its creators.

Don’t get me wrong – this is where any defense of Gamestop that I write is going to end. They happen to have found a business model that works. Good for them. They also make money at the expense of the industry and its patrons while rarely giving much of anything back. That doesn’t mean we should change the rules to punish them for doing well – if they weren’t making money hand over fist, no one would be interested.

This console generation marks a shift toward downloadable content – all platforms, even the PSP and the new only-out-in-Japan-for-now DSi, offer some mix of new, indie games and old legacy games for download. These are one-time purchases, with no refunds given and no trades allowed. Same goes for downloadable content from disc-based games, most notably Rock Band and Guitar Hero. These sales cut Gamestop and other middlemen out entirely, excepting whatever profit they can make from selling the “points” that these download services use in the stead of actual currency. This is the way all media is moving – not just games, but movies and music and television. People are increasingly willing to have full, retail-worthy experiences delivered to them over the Internet, completely cutting out the middleman. I can only assume that Gamestop executives are looking at the inevitable growth of this trend with trepidation.

In the case of used game sales, the best thing the industry can possibly do at this point is to stay the course. Don’t strangle the life out of the used game trade – love it or hate it, it’s the way many people experience the things that you make, and you’ll alienate more people than you’ll help. If the thought of Gamestop making money from something you created makes your blood boil, continue offering up worthwhile and compelling downloadable content, and in just a few short years I guarantee you’ll see Gamestop’s star begin to fall.