Games Retail Is Broken. Can Anything Be Done?

On one side, you've got publishers complaining about second-hand sales and the cost of making the AAA titles that the majority of game buyers slurp up in their millions. On the other, gamers unhappy about the inability to resell games that they feel they "own", although that's quickly becoming a rather vague concept. Change is in the wind in games retail, but what should the future of games retail actually look like?

Photo: kss_cville

A couple of months ago I wrote a column over at Gizmodo looking at models for future TV production, and I'm pretty much using that as the base line for this particular feature. It may help to read the earlier column (I can't make you, I guess) which is based around the premise that the traditional TV production model is one that needs radical reinvention, but nobody's quite sure how that's going to look.

Gaming is a slightly different creature, but only in part. We've seen over the last week — and may indeed get clarification this week at E3 — how Microsoft's taking a fairly controversial stance on the "ownership" of games. Plenty of people are mighty annoyed by that, although quite how many will then switch to other consoles, PCs, pirating or whatnot is something of an open question. I've seen it argued that Microsoft very deliberately released its sour information pre-E3 so that it would be quickly overshadowed by all the shiny new games it's going to reveal there.

Because, you know, Malibu Master Chief. Except this time, he's got a new hat!

Still, Microsoft's move to make the division between physical and digital goods even more nebulous does bring into light the fact that the games industry is in a period of intense change. The models that the industry relied on — physical products sold (or licensed) to consumers who could then re-sell them has been supplanted by everything from cheap iOS apps to free-to-play-with-hefty-IAP games to digital-only services such as Steam and XBLA. So which model will (or should) gaming ultimately adopt?

I'm not going to be arrogant enough to say that I know outright, because if I genuinely did, I'd be making the smart investments and sitting back waiting for the billions to roll in. But here's some thinking points about each model that currently exists, and what it would mean for gaming if it became the new primary model. There's nothing that says these models can't co-exist, but in an industry that burns through talent, it's likely that one model will predominate at a particular point in time. I'm throwing these out here as much as discussion points as anything else; you're more than welcome to agree or disagree.

Physical/Digital Split

Over here, you've got your stacks of unsold Petz: Godzilla carts, and over there, your ethernet plugs... Why it's great: In most respects, this is what we've got right now; you can buy full retail copies of games, or the digital download, whether it's a disc for PC/Xbox/PS3/WiiU/3Ds or whatever. There's a reasonable amount of choice and relatively few barriers to entry, depending on the platform you favour. Why it could suck: As we've seen with the Xbox One, the question of "ownership" becomes very muddy indeed, and that's not good. Equally, from the publisher's side, there's a lot of risk in the physical product, because if it doesn't sell, you've put even more money into your dud than if you'd just offered it up over a server. The existence of a dual model also makes it less likely that you'd see equal discounting between physical and digital copies, because publishers have to keep two different models afloat.

Physical Only:

Hey, let's forget about this digital distribution thing, and just go back to games on carts, discs and holographic snails! Why it's great: A return to the "good old days" of physical distribution would solve the second-hand problem, because a game you can hold is a game you can sell to somebody else. Why it could suck: Remember when stores would run out of copies? You'd see a whole lot more of that. Physical production costs add to games costs, and they're a strong inhibitor for independent games development. How many indie Super Nintendo games were there? A physical copy is still a copy that can stop working due to physical defects to boot.

Photo: Tim Sackton

Digital Only, Single Store

I love the Apple iTunes store, and want a really convenient one-stop shop for my games! Why it's great: Apple (or for that matter, Valve) would love it if they became a one-stop-shop for all things digital. No running out of copies. No particular inhibition on indie games devs, who can sit side by side with Call Of Duty: Future Combat 27 (featuring Ya Kid K). One place to take your grievances with refunds and the like.

Why it could suck: Gatekeeping can do a lot to keep the dross out, but not everything, and having a single arbiter of "gaming taste" is problematic. Within the purely Australian context, one of the ongoing challenges for digital distribution remains game ratings, and whether a global giant would even be interested in Australia's smaller gaming market if it meant messy legal hoops remains to be seen. A single store would have no interest whatsoever in allowing second-hand sales, and if particularly dominant, the only pressure on sales remains from within, with developers seeking attention via sales. That's less likely with a single point of contact for your game sales, however. An added issue for any digital-only play is the natural observation that it makes it harder to sell actual games hardware. If you want your Xbox 8, you may have to be ready to buy it online, sight unseen directly from Microsoft or its approved partners.

Digital Only, Many Stores

A digital shopping mall, full of the latest and greatest from MS, Sony and those great garbage truck simulator games! Why it's great: You know why Steam is so particularly cheap right now? Because they have to be — you've got the choice to go to a number of other PC-based outlets for your digital gaming needs. A multiplicity of stores does (somewhat) bypass the issues of resale value, because they keep the cost of access generally quite low, so it's less of a sting if you can't trade in your games.

Why it could suck: Fragmentation of the gaming base leads to either compromise (i.e terrible ports) or exclusives to a given platform, which means you might need a Playstation 7 in order to play Battlefield 33: Bob Morrison Strikes Back!. There's not much of an impetus for those on the console/fixed platform side of games retail to allow multiple stores to flourish. Sure, Android has plenty of stores, but that's inherent in the design, and Google by default blocks installation from "unknown" sources on security grounds. You've got to go down the jailbreak route for iOS devices, and while it may become possible to jailbreak Xboxes and Playstations in the future, the likely development picture for them is going to be on the small side.

The Indie Alternative

Screw the AAA shovelware, let's all make games about floating rotating ocelots! Why it's great: Some of the very best titles we've seen in recent years have been Indie titles, or at least from independent studios. Braid. Super Meat Boy. Fez. The big studios rely on their AAA titles as revenue streams, but they're not always innovative. If we gave them the flick wholesale, we could have a whole lot of innovation, and a whole lot less of "Bland Brown Military Shooter 47 (with realistic waterboarding DLC!)". Why it could suck: There are lots of indie games, and lots of indie dreck. While many (sometimes including myself) look back to the era of two-buck C64 tapes with fondness, the truth is that innovation invites risk, and the risk is that your game isn't terribly good. Try going back ten to fifteen years in the development, of, say Madden games. They may only move slowly and incrementally, but they're working off a very solid basis. After all, Codemasters started off as an indie… but you wouldn't call them that now.

What do you reckon? Which way should games retail go so that it can survive as an industry and we can all keep playing the games we love?


Comments

    as a pirate who still buys stuff, i have found Digital Download is Better, weather its games i buy cheap on steam sales or ISO from the bay, digital is better, but i fear that i will loose my games if steam ever goes down

      The last time i pirated a video game ( i could have legitimately paid money for) was in the PS1 ERA when i was around 10 and only ever owned pre-order games from rental shops or cash converters because my family was so poor. I would trade in all my games then buy something and repeat every 6 months as my owned games steadily shrunk (though i never traded something i still played)
      The first time I got into RPGs and became a hardcore gamer was because my mum found a dodgy as used version of FF8 at the video store for $8 and bought it for me.

      Now that i have money i buy all the games i want, with maybe 1 per year being pre owned when i like a game but know i wont play it much, like the latest Xcom which i bough used (from Ebay) for $30, half what i could get it elsewhere anywhere in the world brand new at the time.

      So when i see this bullshit about used games killing the industry and then the attempts now to eradicate and limit them I'm outraged. What about other families who were like me, no way in hell could they can afford an even moderately capable gaming pc and turn to console as a cheaper alternative and then find themselves unable to rent/borrow or buy used games (of which my entire youth consisted of, each fortnight renting 1 or 2 games if we had the spare money and was the only way i got to play 95% of the games i did).

      Probably gotten off topic but anyway my point is digital sucks, as it is right now (if movements to trade and rent/borrow games become available digital as well that could change). I have a hardcore gaming PC mainly so my mmo's would run above 60 fps in raids and the occasional games like the witcher, I don't like steam, i don't like not being able to freely trade and sell games, I don't like the DRM restrictions.

      The other problem with digital is downloads, I get 200gb a month (for around $110 which is ALOT to pay for internet also the cheapest i can get in tassie ) Given current trends downloading a fullsized ps4 of Xbone game will take somewhere in the realm of 50gb and that will take 48 hours straight to download at my current speed ( of which money can't buy better). Thats if not a single soul uses the internet, to youtube browse game or anything.

      Its the reason i own my consoles, because I can buy stick the disc in and play, NO RESTRICTIONS. Whatever needs to change to remain with the times or to stay profitable, it HAS to be done without restrictions like the XBone is currently pushing. You can't take away things i have lived with my literal entire life and give nothing in return. I can assure you if it ends up that both sony and Microsoft try and take a dump on used and borrowed games I will become a pirate of epic proportions.

      This ended up less concise and very rant like, my apologies if anyone even reads it.

      Last edited 10/06/13 5:01 pm

        Nah, it makes sense.

        People buy console because they aren't PCs. But now they're all trying to make their consoles into PCs.

          Yeah that is pretty much the overall point i was getting at.

        for the first time in my entire life i finnaly get "the lost for words" saying, i get were your coming from, i kinda had the same thing as well, i pirate as a try before buy thing, then buy cheap games durign steam sales, yes digital Download is a pain because of huge file sizes, i guess ive had a few luxurys now that have gone to my head, i have heaps of used games from the ps1 and ps2 era, dont buy many ps3 games, only exclusives due to high powerd gaming PC

    Ummmm.... I think it's fine the way it is?

    I do feel for the retail stores though. Why should I ever buy from them, when I can just wait for a sale on steam and pick it up for pennies?

    For example. Batman Arkham City with all DLC for $6. Yes I've played it on PS3 (and then sold it). Yes I already own it on GMG. But now I own it on steam, with extra characters for the price of a deluxe coffee. I miss my game box collection, but I get much better value now. I remember when computer games went for $120 a pop. 1992. I bought Wing Commander 2 for that price. So I'm pretty happy with the prices these days. If you're patient, you can get games for a steal.

    I own a PS3, 360, NDS, Vita, PSP, Wii and a 6 month old gaming PC. If I could, I would download all of my games because that is what works for me. I don't care about resale value, in fact I quite commonly go back to replay old games. This has lead to me having a very large collection of old games which I can't bring myself to get rid of, many of which I never play any more and it's just a big clutter taking up space.

    Digital Downloads make sense because I can download, finish, delete and months later redownload if I want to try some DLC or revisit the story. I don't feel bogged down by the details over who owns what or how much DRM is restricting me because it works and it's better than getting up to swap in a new disc.

    I would leave it as it is at the moments, because i like to buy games digitally, but as someone with slow download speeds, (and the NBN not coming to my area for YEARS still) I tend to buy larger games at Retail. If i had to have downloaded Max Payne 3 off of Steam, by the time i was done, I wouldn't want to play it anymore.

      If I could download 10-15gb a month back in the day on 56k, I'm sure you could leave Max Payne 3 downloading overnight.

        My internet speed at best on steam is around 500Kbp/s

    Hahaha, I have a vinyl copy of "DJ Spin That Wheel" feat Ya Kid Kay.

    Digital multi-store is clearly the best by miles. All the advantages of digital one-store, none of the terrifying disadvantages. The two most obvious downsides are "exclusivity", which is already a problem we have (so we're no worse off in opting for it), and "it's never gonna happen" which basically means that because people like shiny things more than they like rights, X1 will sell super well, and PS5 (if not PS4, at launch or later!) will adopt all the anti-consumer evil that X1 has. PC should be good for a while, but between hardware DRM gaining favour, and reduced competition as EA/etc decide to work exclusively on consoles with evil built in, AAA PC will likely diminish severely over the next 10 years.

    My prediction, then: Digital multi-store indie only for PC + single digital-only store for each console/platform.

    I've been a lifelong Nintendo gamer, so to me the concept of buying a game means it's mine to sit on the shelf and revisit whenever I like, regardless of what happens to whoever produced it. But recently having upgraded my computer, I was first hoping to go pick up Blood Dragon and kind of "christen" it with that. Luckily one of my friends knows what I'm like, and wanted me that I'd need a Uplay account to be able to play it. At first I was confused because I'd just checked out the box the day before and saw no mention of it at all. So later I went and checked more thoroughly and sure enough, there it was. Hidden away in that tiny white text on the lower-left corner of the back of the box, in the middle of all the copyright stuff that you usually don't read. Absolute scummy move, to me. Mainly because there was no connection between my bedroom and the home network at all, so if I had bought it I would have been unable to play it. And I don't know how stores feel about taking returns on opened PC games, but I've heard they don't like that kind of thing.

    But even if I did have a connection to make use of, I still wouldn't have. I really don't like the idea of having to run a whole separate program and create another kind of account (I have too many accounts already, I don't want any more thanks) just to play a game I brought home from the shop. Ok, it makes sense if I'm signing up to some kind of online service to purchase games through. But a physical product, the use of which is going to be totally disconnected from the outside world? No thanks.

    At least with most other games when they require an online activation or whatever, it's relatively clearly stated next to the system requirements - "requires Steam activation to play". Of course, reading that makes me just put the box straight down again. No Doom BFG or Xcom for me. But at least they were so nice as to at least try and tell me about it beforehand, rather than hide it.

    For now, I'm happy for all my PC gaming to come from Humble Bundles. It mightn't be a physical product like I'm used to, but it's about as close as it comes - paying less for not having a shiny box and manual, and a bunch of executables that I can do with as I please, and play whenever I like.

    free to pay charging $250 for "the full experience" is becoming the norm

      Don't forget free to play charging $40 per month in consumables purchases that would normally be covered by in-game cash. MMO model of the future right there. =P

    yeah for right now it needs to be a bit of both.
    I actually don't have an issue with microsofts current plan.
    I see the problems with it but id argue they don't affect ME
    id be download only if it wasn't for console games taking so much space and my quota and speed being insufficient.

    I am really glad that this generation around I will be able to buy a game, install it to my console and then not need the disc every time I want to play it if I am online. being able to have multiple users under an account (like the apple store) is great especially as I plan to eventually have multiple consoles in my house (as I do now)

      > I see the issues.
      > They don't affect me.
      > So I won't do anything.

      Welcome to why the world is a horrible place.

      "I see the problems with it but id argue they don't affect ME"

      First they came for the communists,
      and I didn't speak out because I wasn't a communist.

      Then they came for the socialists,
      and I didn't speak out because I wasn't a socialist.

      Then they came for the trade unionists,
      and I didn't speak out because I wasn't a trade unionist.

      Then they came for me,
      and there was no one left to speak for me.

      Remember this because at some stage as they keep changing the rules so they are further and further in there favor it will effect you and by then it will be to late.

      This is just the beginning.

        So the capitalists are coming for you are they? Why don't you crawl back in your "survival bunker" and put on that tinfoil hat? Loon.

    For digital distribution, you don't need printing companies, distributors/retails and that's jobs loss. So as a consumer I love digital but I understand the impacts it has and it's an unfortunate situation.

    Where ever the industry heads is not really the consumers say, we've always adapted to what they wanted it to become. It's not like the people are united enough to make a difference...the issues just aren't serious enough (even with the Xbox One) to provoke such a unity.

    OK, so let me get this straight....

    The Publishers want some of the "used" game dollars that is currently being enjoyed by retailers and gamers alike.... (i.e. the ability to sell purchases or lend to friends)

    The gamers want AAA titles and are not too fussed wether they get physical or digital, as long as it doesn't cost more than a few dollars....

    The Hardware manufacturers seem to be all about $$$, but are saying that it is up to the publishers......

    Something is wrong....as you can all see, we can't all have our cake and eat it too!!!

    If you buy a Ford car it is yours. You can lend it to a friend, decide to sell it to a caryard or online and keep the cash or use it to buy your next car. To my knowledge, Ford have never come out and said that they want a cut of the sale of my item because they were the person that made it!!!!

    This whole thing is silly, if you manufacture a product i.e. a game you do so to make cash. You have many options on how to go about it, i.e. free to play, AAA Blockbuster, B-Grade release or just digital no physical. As a manufacturer, why should you be able to profit from someone who has decided to sell the item you manufactured. It simply doesn't make sense.

    The whole argument is flawed. Gamers want to pay virtually nothing for the latest games and the publishers want to manipulate the system to make more money from something they have produced.

    It simply won't work. It can't work both ways......if the current XBOX ONE system does make it to market, publisher won't enjoy more profits at all, they may at the most make similar amounts to what to they now, but they won't see the pot of GOLD they are looking for....in fact the only people who make games popular is gamers....

    We are the ones who love the medium....
    We are the ones who tell everyone about it.....
    We are the ones who make it possible for game publishers to exist....

    Without us, there is no games industry.....might be time to have a long hard think about biting the hand that feeds them!!!!

      I hope to god you are aright and people actually vote with thier wallets.

      I fear however that once cod dog is out and halo party surprise #13 that all those people in an uproar will cave and nothing will change, then only when all their rights are stripped away completely will they realise what they have done.

    Well if the new consoles block used games then that's it for dedicated retail game stores, there's next to nothing in profit from new games and hardware, that's why places like Myer,David Jones and Dick Smith recently stopped stocking then.
    EB games will stick it out till they go the way of GAME, only high turnover low profit stores like JB Hi-Fi and Target and Big W etc will stock games.
    The allready dissappearing indie stores and smaller chains like GameTraders will also cease to exist.
    And that's not even taking into account digital sales.

    I’ve seen it argued that Microsoft very deliberately released its sour information pre-E3 so that it would be quickly overshadowed by all the shiny new games it’s going to reveal there.

    I never thought I'd say this, but it's not even about the games anymore. I don't even care what games they reveal because the platform they're running on is, in my eyes, such an obscenity that I'm not buying it no matter what they've got on it. And I've got a sick feeling in the pit of my stomach that Sony are going to reveal basically the same thing, meaning instead of buying a new console at or near launch (something I've never done but was contemplating this time), I'll be sticking with what I've got for the foreseeable future.

      What worries me is that if Microsoft is successful in selling there new anti consumer box, what will Sony and Nintendo do in future.

      This is a perfect testing ground for all these new anti consumer rules, if people accept them then Sony and Nintendo will soon follow and the days of trouble free gaming will be gone.

      I really hope people are intelligent enough to not accept what Microsoft is doing, sadly though i think they will succeed and we are all F$%&*#.

    I havn't read the article yet, but in response to the the title: It can start by not making me sad.

    The change to Digital Distribution and (C) is a joke and grab for your CASH !
    The REAL solution is HALVE the price of RETAIL games on DAY ZERO !
    You WILL double your SALES !
    DOUBLE your PROFITS !
    Make DOUBLE the CUSTOMERS ACTUALLY HAPPY !
    Every single industry in this world is out to maximize profit from Day one.
    Your all a bunch of C#$% to think a Measly Billion in Profits is just not enough.

    With the community moving more & more towards digital downloads already, it just seems odd that the consoles are picking a fight over something they dislike that is already solving itself.

    Personally for my money.. Make the hard drive small, portable, and extremely durable - make it so you can take the entire drive, throw it in another console and pick up where you left off, whether at your friends house, or into a new console after your new Xbox experiences its own version of the red ring of doom..

    That way, when your friend asks "can I borrow X??", you would have to lend them EVERYTHING you own, making it far less about "oh the console doesn't support X" and more about "are they really that gooder friend? who needs friends anyway? California sushi rolllllllll"

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