Saturday, November 5th 2011

Games: The Push To Online Distribution And Removal Of Your First Sale Rights

Newzoo, a games industry market research and consulting firm firm has published a report entitled "Newzoo Topic Report DLC, Pre-Owned & Digital Distribution". This explains the ongoing push towards distributing games online, as opposed to physical copies on disc. It explains that there are three basic reasons for this:

1 Free-Riders: Only 44% of US console gamers ever spends money on Console Games
2 Pre-owned: 23% of console and boxed PC/Mac games budget goes to pre-owned trading
3 DLC: Americans will spend $950 million in 2011 on game and add-on content downloads

In their "key facts" summary, Newzoo make the point that the retail channel will not go away, since this is an important outlet. Retail distribution has an important advantage when it comes to eyeballs, plus the box makes for a pleasing, tangible gift. What's nicer to receive: a scrap of paper with an unlock code, or a nicely presented gift box with the same unlock code and perhaps a collectible item? However, the crucial point is that the enclosed disc will disappear as superfast broadband becomes increasingly ubiquitous. For aficionados of tangible representations of their intengible computer games, having the presentation box can make for a satisfying addition to their collection.

In its second reason, the report points out that the games companies see no income or more appropriately, "kickback", from used games being sold legally in high street second hand shops or sold just as legally, directly between private individuals. These companies like online distribution, because it does away with this used market completely.

Of course, this little racket forces gamers to buy "new" games all the time at much higher prices, fattening the companies' bottom lines at the expense of their customers. Nice. This is exactly the kind of silver bullet technical solution that the big music and movie industries are looking for, but thankfully haven't found.

What the report doesn't say, is that this also does away with a purchaser's first-sale rights in the name of attempting to increase profits. The fact is that these companies have no right to a kickback from used sales and this loss of customer freedom and rights is a result of simple money-grubbing greed on their part and possibly a false sense of entitlement. They achieve this restriction through the DRM systems of the various online distribution systems, such as Steam and more recently, Origin, which deliberately disable the transfer of an unwanted game from one subscriber account to another. For a great deal of info regarding used sales and the blinkered approach of the games companies, please see some of the various articles published by Techdirt, by clicking on this search link here. An especially pertinent article from that search is, Video Game Exec Claims Used Games Defraud The Industry. There's also this important article, which explains How The Used Book Market On Amazon Helps The Sale Of New Books. While the story is about books, the principle is equally applicable to computer games.

The full Newzoo report is available free of charge online and is full of stats, figures and brightly coloured pie charts for the reader to chew over.

The report can be downloaded as a pdf here. Note that the file was not downloading very reliably at the time this news article was published. The same content can also be viewed as a web presentation, here. The "key facts" summary is at gamesindustryblog.com and the firm's home page is at www.newzoo.com
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54 Comments on Games: The Push To Online Distribution And Removal Of Your First Sale Rights

#1
Rowsol
This is a cool story bro. For realz.
Posted on Reply
#2
Ross1
by: qubit
Only 44% of US console gamers ever spends money on Console Games
I dont see how that could be true, at all. Just a nonsense figure.
Posted on Reply
#3
Neuromancer
this has been in the works for a LONG time. Microsoft I think was one of the first to look into the license per user stuff, and stuck with per machine instead, as it makes people happier.

Gaming companies however do not sell the kind of products Microsoft does and do not have a residual support income.

However this is a spin article.

notice that the first two statistics are percentages nad hte third is a monetary value?

that instead should be a percentage value of total game sales (new retail not free/2nd hand) and would most likely come in far less than either the freeloaders or 2nd hand percentages.

So the move to DLC based, does not create a large income.

(that is the gist of the article right? DLC being the future?)

Games are SUCH a rip off anymore. I purchase two or three games a year, but always make sure to try out the "full game demos" you can find on line first ;) Good ones get money, bad ones get trashed.
Posted on Reply
#4
entropy13
by: Neuromancer
notice that the first two statistics are percentages nad hte third is a numerical value?
You're saying you want spending to be shown in terms of percentages? :confused:
Posted on Reply
#5
qubit
Overclocked quantum bit
by: Ross1
I dont see how that could be true, at all. Just a nonsense figure.
It should make sense in the context of the original article. Check out the key facts link, or look at the full report. Warning: all those stats will make your head spin! It did mine. :laugh:

Oh and welcome to TPU. :cool: I see that you've been a member for a while, but have chosen to make your first post against one of my news articles. Thankyou very much! :toast:
Posted on Reply
#6
Neuromancer
by: entropy13
You're saying you want spending to be shown in terms of percentages? :confused:
Yes I editted. Im not used to such a faced paced forum. LOL
Posted on Reply
#7
LAN_deRf_HA
They must mean only 44% ever buy brand new. Though even that sounds way off. Everyone buys at least one new game. The fact that that number is so bogus makes the rest highly questionable.
Posted on Reply
#8
Neuromancer
by: LAN_deRf_HA
They must mean only 44% ever buy brand new. Though even that sounds way off. Everyone buys at least one new game. The fact that that number is so bogus makes the rest highly questionable.
Might refer to games before they drop from $60 new to $19.99.

also I may have read too much into the story, but noticed that qubit has also posted other articles and polls and stuff about DLC before, and assumed it was supposed to be obvious he was doing so.
Posted on Reply
#9
AsRock
TPU addict
They just want every thing digital so you cannot sell your game after. Steam might sell games cheap but it all so stops me from reselling my games and cashing a bit back.

As no steam game has any resell value games are only worth 1/2 price when new.
Only 44% of US console gamers ever spends money on Console Games
So what do the rest do ?. So the rest buy consoles just to watch netflix ?.
Posted on Reply
#10
Solaris17
Creator Solaris Utility DVD
this is really going to piss off alot of diehards. Online delivery systems like steam are nice for managing content. But i personally like to have a physical copy of my fav PC games. for example I love UT3 so i bought it. I then proceded to input the key into steam but i like having a physical copy.


by: AsRock
They just want every thing digital so you cannot sell your game after. Steam might sell games cheap but it all so stops me from reselling my games and cashing a bit back.

As no steam game has any resell value games are only worth 1/2 price when new.




So what do the rest do ?. So the rest buy consoles just to watch netflix ?.
i think its implied that they borrow them. though the latter isnt too unbelievable considering that HTPC's are getting more popular and to people that dont want to play configuration owning a PS3 or xbox with these services being easily obtainable is an easier and most cost effective way to get what they want. 7.1 surround instant movies HD video and a wireless controller. what could be simpiler?
Posted on Reply
#11
random
I call BS, they can anticipate the sales as much as they want but all their doing is adding more factors on the expenses of the individual who isn't interested enough to buy on release, they will make less money if this happened I can almost guarantee that because I can see it enforcing piracy and making alot of the casual gamers lose interest.

I can use myself as an example, I wasn't interested enough to pick up a copy of Uncharted 3 on release and em currently waiting for it to go dirt cheap before I consider touching the game. If it doesn't reduce in price then it is something that I can see myself passing on and saving the money for the games I am actually interested in.
Posted on Reply
#12
NC37
I buy all new...I just wait for steam sales for them to come down to sub $10!! :D

Before that, EB games before Gamestop bought them up, had some of the best used PC game deals.

Only rare events bring me to pay full price. Last one was BF3, next one is TOR. But thats maybe a once a year, if even that, event.
Posted on Reply
#13
n-ster
by: AsRock
So what do the rest do ?. So the rest buy consoles just to watch netflix ?.
Bluray players or a bunch in a cluster to make a supercomputer

Also there is 9% that crack their console and download the games illegally (the 9% is not based on anything, just a random #)
Posted on Reply
#14
shb-
what about reselling whole steam account : ) ? as far as i know, it is possible and ppl are doing so, at least in country where i live in. One game per account is the way to go :toast:
Posted on Reply
#15
qubit
Overclocked quantum bit
by: shb-
what about reselling whole steam account : ) ? as far as i know, it is possible and ppl are doing so, at least in country where i live in. One game per account is the way to go :toast:
Oh, that happens alright and I don't think there's much that Valve can do to stop it. :) However, you can see the problem where you have lots of games and have to log in separately for each one. I have over 100 games, so this isn't very practical. :ohwell:
Posted on Reply
#16
mediasorcerer
Im highly incensed at having to buy a disc now , and inserting it only to find it goes to download by default sometimes anyway, or like homefront, 5 gig comes off the disc, 6 gig as an"update", this setup is so wrong on so many levels.

Its not my fault theres piracy, and my privacy and convenience and choice should not have to suffer as a result.latest c.o.d is 100$ in aus, way too much money too.
Posted on Reply
#17
qubit
Overclocked quantum bit
by: mediasorcerer
Im highly incensed at having to buy a disc now , and inserting it only to find it goes to download by default sometimes anyway, or like homefront, 5 gig comes off the disc, 6 gig as an"update", this setup is so wrong on so many levels.

Its not my fault theres piracy, and my privacy and convenience and choice should not have to suffer as a result.latest c.o.d is 100$ in aus, way too much money too.
Duh! You said it right there, +1

And of course the most outrageous thing is that there's no proof at all that this damned "piracy" :rolleyes: is hurting content producers of any kind. Big Content just relies on false figures and their political influence to screw people over. :shadedshu

Just check out article Piracy problems? US copyright industries show terrific health by Ars Technica. This industry is totally outperforming many others in a recession and yet they want to pass ever more draconian laws to curb "piracy". Asshats. :nutkick:
Posted on Reply
#18
Mussels
Moderprator
by: Ross1
I dont see how that could be true, at all. Just a nonsense figure.
i own a PS3 and used to own a wii, and never bought a game for either.


dont forget people who buy PS3 for media use, or get given as a gift they never use.
Posted on Reply
#19
random
This would be more relevant to the PC games market imo, I don't even own a DVD drive or anything on my main rig and I honestly don't see the need for one nowadays although maybe down the track I'll get an external but right now for me it's being out-phased by my home network. When Fibre connection finally gets released in my area I'll be ready to throw out my CD's and stick with USB/External for transferring files on the go. With fibre on its way, it's hard not to think that a big part of the next generation of consoles will begin to rely on those services eg. storing saved files and keys into the cloud or even be able to play demos from it too, I mean consoles already have this function via PSN/Xbox live but its not very practical for those with really shit connections or low bandwidth since they still need to download and obtain the content.
Posted on Reply
#20
mediasorcerer
by: qubit
Duh! You said it right there, +1

And of course the most outrageous thing is that there's no proof at all that this damned "piracy" :rolleyes: is hurting content producers of any kind. Big Content just relies on false figures and their political influence to screw people over. :shadedshu

Just check out article Piracy problems? US copyright industries show terrific health by Ars Technica. This industry is totally outperforming many others in a recession and yet they want to pass ever more draconian laws to curb "piracy". Asshats. :nutkick:
Hah qubit, i read that article not long ago too i think, it is a sham, its a poor excuse to monitor us like children or wrong doers, and we are not either.

To top it all off, we are providing them with there means to an income, they should be bending over backwards to please us, not treat us as criminals, huge sham i feel.:toast:

Take bf 3, how many copies sold since released,3 million? more? times what?=60$-80$ average per person?=x$$$$.$$$$$$ millions.?

I suppose you can go in circles though, its either buy it and shut up and play, or vote with the feet, and miss out.its a hard one!!
Posted on Reply
#21
qubit
Overclocked quantum bit
by: mediasorcerer
Hah qubit, i read that article not long ago too i think, it is a sham, its a poor excuse to monitor us like children or wrong doers, and we are not either.

To top it all off, we are providing them with there means to an income, they should be bending over backwards to please us, not treat us as criminals, huge sham i feel.:toast:

Take bf 3, how many copies sold since released,3 million? more? times what?=60$-80$ average per person?=x$$$$.$$$$$$ millions.?

I suppose you can go in circles though, its either buy it and shut up and play, or vote with the feet, and miss out.its a hard one!!
Yes, it is a tough decision indeed. For me, the only DRM that I will tolerate is Steam's - and note that I said "tolerate", as it still stinks with the loss of first sale rights.

I'm interested in BF3, but I'm in no hurry to get it, because I'm not too sure what I think of Origin. I have to look into it properly, before I make a decision. Besides, waiting is easy for me, as I have several triple A games I bought ages ago and still haven't played. :laugh:
Posted on Reply
#22
FordGT90Concept
"I go fast!1!11!1!"
by: qubit
1 Free-Riders: Only 44% of US console gamers ever spends money on Console Games
2 Pre-owned: 23% of console and boxed PC/Mac games budget goes to pre-owned trading
3 DLC: Americans will spend $950 million in 2011 on game and add-on content downloads
#1: Not I, I buy all my Wii games new.
#2: Not I, last time I did that was over 10 years ago.
#3: I've only bought one DLC, ever, and don't intend to buy another.

Two things:
1) If they move to an online-only model, how many sales are going to lose due to lack of access and/or choice?
2) People need to wise up and not buy DLC. It's only encouraging them to put a noose on consumer choice.
Posted on Reply
#23
qubit
Overclocked quantum bit
by: FordGT90Concept
#1: Not I, I buy all my Wii games new.
#2: Not I, last time I did that was over 10 years ago.
#3: I've only bought one DLC, ever, and don't intend to buy another.

Two things:
1) If they move to an online-only model, how many sales are going to lose due to lack of access and/or choice?
2) People need to wise up and not buy DLC. It's only encouraging them to put a noose on consumer choice.

Thankyou, those "two things" are very good points.

I do buy DLC despite it going against the grain, but only if it's very cheap, which usually means on a Steam special offer.
Posted on Reply
#24
FordGT90Concept
"I go fast!1!11!1!"
by: mediasorcerer
Take bf 3, how many copies sold since released,3 million? more? times what?=60$-80$ average per person?=x$$$$.$$$$$$ millions.?
5 million in the first week and $50-60 per unit. Because PC DVD is the most expensive, figure about $54 average: $270,000,000 gross in one week
Posted on Reply
#25
bbmarley
i only buy less then a handful of games on release and i have only ever bought one dlc bfbc2 vietnam as most games dlc is shite
often wait a couple month then price is slashed in half on sites like play.com
really dislike digital copys of games as my internet is only 2mb and when i want to play a game i dont like having to wait a entire day to download it for the next
maybe these gamedevs should stop putting out shady console ports and games that actually work on day 1, i would not mind having to wait abit longer for a game what works
along with all this drm stuff what gets cracked often way before the game is released why do they bother with it anymore i cant think of a game what has not been cracked
all they are seeing is how to make more money from the user
these people are just getting greedy i dont think they can stop the selling of pre owned games places like game and gamestation stores on the histreet usualy 3/4 of there shop is pre own games for console
if anything they would have better luck putting a tax on pre own games
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