Used game controversy continues; e-book vendors could stand to learn from Valve (again)
August 26, 2010 | 10:15 am
Video and computer games share a bit of an odd similarity to books and e-books. Like books, they can be an example of intellectual property encapsulated in an object, which can be bought and sold new or used—but like e-books, they can also be delivered purely digitally, and equipped with restrictive DRM.
And as with both, there’s some controversy surrounding the idea of used sales.
While many print book publishers look at the sale of used books and gnash their teeth, they are largely powerless to do anything about them. The First Sale Doctrine states that it’s perfectly legal for people to resell the media they buy, after all. Some publishers might make noises about forcing used book dealers to pay royalties on titles they resell, but it would take an act of Congress to mandate something like that, and it doesn’t look like it’s in the cards.
On the other hand, just as e-book publishers are able to connive their way around the Fair Use doctrine by putting DRM on their titles and making it illegal to break the DRM, video and computer game developers actually can make buying used titles less attractive—at least, titles that have an on-line play component, interoperability with other games, or some other function that the publishers can block.
All they have to do is include a single-use code with each new version of a game that won’t work for someone who buys it used, and in one fell swoop they remove a lot of the value inherent in the price savings on the used game. (Of course, this also blocks pirated versions of the game, but piracy would have happened anyway—it’s the used resale market that they’re squarely aiming at.)
Used Computer Games: Cheat or Helper?
The controversy over used video games has sprung up anew as game developer THQ’s creative director for wrestling games said in an interview that used games “cheat” developers (by way of explaining why THQ’s latest wrestling game includes such a single-use code). As might be expected, this has caused a burst of traffic as Internet commentators on both sides have rushed to make their opinions known.
Penny Arcade and (in covering them) Ars Technica have come down largely on the pro-developer side. (Not too surprising, given that the Penny Arcade duo have had a game developed based on their comic.) They point out that, unlike used books that degrade over time, used computer games are essentially identical to the new one. Also, unlike movies and music, video games have no secondary markets from which to make up revenue shortfalls—the sold game is their only means of making back their production costs and earning a profit.
If there’s a healthy secondary market for products, it reduces the risk for the buyers in the primary market. That is, if they buy the product and don’t like it, they know they’ll be able to resell it and recoup some of their losses. That makes it effectively cheaper for them to buy the primary product, increasing the number of sales.
He notes that it also serves to bring new gamers into a franchise—people who can only afford a cheap used copy of one game might later buy the sequels at full price.
Building Up Steam
Of course, another similarity between e-books and games is that both are moving to pure digital distribution, which basically eliminates the possibility of used sales. Though with computer games, at least, this has its compensations. As I’ve mentioned here before, game publisher and distributor Valve has shown a level of pricing savvy completely alien to most e-book sellers.
Rather than keeping the prices of its games uniformly high, on a par with the physical versions, Valve runs some incredible sales every so often, especially around major holidays, on its Steam distribution platform, bringing digital game prices to a par with, or even considerably below, what used game stores would charge. Games can go for 66%, 75%, even 90% off. It even gets pirates to go legit.
It’s not a big surprise, when you think about it—used game stores have to make a profit over what they paid for the physical games, whereas there are effectively no variable production costs (e.g., pressing, packaging, etc.) for digital games. If a $30 game sold for as little as $5 digitally, it still earned money for the developer. It certainly earned a lot more money for them than a $20 used sale did. Though not held through Steam, a name-your-own-price indie digital video game sale earned hundreds of thousands of dollars, to be split between its developers, Child’s Play, and the EFF.
But we certainly don’t see book publishers adopting this pricing strategy for their e-books. Can you imagine if there was a chance any hot new $15 bestseller might go on sale for $3 for a weekend? And websites sprang up devoted to tracking these sales? They say that having a chance of a reward makes people more interested than if there’s a guaranteed reward. What marketing lessons might e-book vendors take from Valve’s popular occasional sales?
While people might want to be able to resell their computer games, an e-tailer like Steam seems to represent the best compromise for people who want to be able to buy computer games cheaply. Sooner or later, just about any game will go on sale, and those who pay attention will scoop up major bargains. No wonder nearly half of all computer games sold in 2009 were digital downloads.
Why can’t e-book vendors have similar sales? Granted, they’d have to get permission from the publishers, but I highly doubt Valve can decide to put anyone’s games but its own on sale on a whim, either.