Microsoft to GameStop: Drop Dead
As a guy who enjoys his Xbox sometimes, I’m hoping this report is wrong:
Microsoft’s next console will require an Internet connection in order to function, ruling out a second-hand game market for the platform. A new iteration of Xbox Live will be an integral part of Microsoft’s next console, while improved Kinect hardware will also ship alongside the unit.
Sources with first-hand experience of Microsoft’s next generation console have told us that although the next Xbox will be absolutely committed to online functionality, games will still be made available to purchase in physical form. Next Xbox games will be manufactured on 50GB-capacity Blu-ray discs, Microsoft having conceded defeat to Sony following its ill-fated backing of the HD-DVD format. It is believed that games purchased on disc will ship with activation codes, and will have no value beyond the initial user.
A lot of games are purchased by kids and young adults without a lot of money to spend. They finance new game purchases in part by selling their used games. If MS really does intend to kill off the secondary market, they seriously screwing some of their most devoted customers.
We accept that games we download digitally have no resale value for a couple simple reasons. First, they cost less. A lot less. Many are free, the majority are just a few dollars, and most of the top-end games top out at about $10. New Xbox games go for $50 or $60. But you can make up some of the difference by taking your used disc down to GameStop for cash or store credit.
Digital downloads are also easily ported between your devices. Buy a game on your iPad, and it can be automatically downloaded to your iPhone. Or vice versa. And it’s long been assumed that Apple will be bringing App Store functionality to Apple TV. One purchase, one manual download, up to three different kinds of devices. What’s not to love?
And on your Mac or Windows PC, digital downloads aren’t your only choice. You can guy something from the Apple’s or Microsoft’s app store, and accept the limitations imposed. Or you can buy it on disc and maintain more control. Will you give up some features for a lower price and the convenience of a digital download? Your dollars, your choice.
But if Microsoft takes away that choice — if they impose digital purchase constraints on expensive, physical media — then they might just alienate enough customers to lose money in the bargain. And that’s why I doubt this report is correct.
Then again, Steve Ballmer seems like the kind of guy who would cut open the golden goose with a rusty spoon, just to get one last egg that much faster.
We’ll see.
I saw an article a month or so ago about Sony patenting a method that will have a similar impact … its PSwhatever game discs on the next generation console will only be usable by the initial purchaser. Seems to be the way the industry is headed. I hope their sales suffer and kids go back to social “physical world” activities such as playing sports / riding bicycles / skiing / whatever, and they do so in droves. Wouldn’t be the worst thing in the world, IMO.
I must just be getting old. I hate DLC, especially launch-day DLC. That’s just insulting for me. For $60, I want a complete game. Assassin’s Creed 2 actually had 2 chapters removed from the game – you literally went from Sequence 11 to 14. You want to fill in that gap? Pay extra for part of the game we cut out.
Final Fantasy X-2 didn’t have an ending. You had to buy a DLC pack to get the real game ending. And even still, it says “To Be Continued…” with a 3rd game.
Things like that and now the idea of subsidizing systems with useless premium accounts and cutting off the used market just make me want to give up on the whole market.
Unless Sony and Microsoft are inventing a 5 or 6TB HDD to put in these systems, the idea of all-digital and waning support for physical media is a pipe dream. It’s already like a survival horror game now trying to decide what game to delete so I can have room to download another. Sure, I can go buy another hard drive, but really?
Killing GameStop is probably born by the developers. It turns out that you can’t half ass a game and then pump out DLC for years and turn a profit as EA and THQ have recently demonstrated. They think this will force people to pay full price and they’ll finally get that piece of pie that the used market has kept from them. Wrong. People just won’t buy it once the negative reviews hit compared to buying it discounted and possibly liking it and then spending money for DLC. Funny how you can resell a used car without paying Ford or resell your TV without paying Samsung, but ‘media’ has this special rule applied to it that it is somehow more important.
Final Fantasy XIII-2, I meant.
Apparently for Diablo III and Civilization 5 both you need an internet connection, because they’re played online. I passed on them both.
I got off the Civ upgrade train after freeCiv came out. Most of the fun, none of the headaches.
For Civ 5, that’s not entirely accurate. It’s using Steam as its DRM and licensing mechanism. Steam does have an offline mode, but you do have to basically register the game, and no re-selling it. Being ‘licensed’, it does mean that, if your machine gets hosed and you build a new one, you just sign into Steam and re-download the software to install. It might even have your saves stored on the ‘cloud’. So, online registration, but can at least be played offline.
Diablo 3, on the other hand, forced online-only, similar to the Guild Wars games. Given their Real-Money-Trading scheme going on with the auction house… well, connect the dots.
“And it’s long been assumed that Apple will be bringing App Store functionality to Apple TV.”
Far as I know, I can purchase any content from iTunes right from my appleTV. I’m too lazy to look at it, but I’m certain when I setup parental controls restricting online purchase was one of them.
Far as Xbox goes – not only does my kid by used games, the console was used as well. He had enough friends have xboxes crap out he wasn’t about to pay full retail.
That is your digital content, like movies and music. What Steve is talking about is being able to download and run Apps on the TV. There have been all kinds of private APIs discovered by people hacking the OS which indicate it is a matter of when, not if.
If Apple can port GameFly to AppleTV, they will have a very real shot at outright owning the living room.
This is good news. If the xBox crumbles because of this, then Microsfot will be forced to release games for PC which they normally make xBox exclusive just to sell the xBox (well they could stop making games all together, but some sell rather well).
There are just too many internet compatibility issues for the system to work the way that Microsoft appears to want it to.
I used to manage for GameStop. They thrive on the secondary market, new game reservations, and gift cards (during/after the holiday season). The workers at GS also serve to help parents (soccer moms are the worst) and kids figure out what games are good and bad, and how to narrow their choices down. At every store I’ve worked in (probably upwards of 8 or so, in different regions), the hallmark of GS was this ability to tell customers that Predator: Concrete Jungle sucks donkey balls, or that Alpha Protocol is a buggy piece of shit. I’d also tell my customers to get Torchlight II instead of Diablo III.
If Microsoft tries to kill off the secondary market (and GameStop), it’s a bad idea. GameStop themselves will probably retaliate and block ALL Microsoft sales in their stores. I agree, that if this report is true, this is going to end up a net loss for MS.
Plus, it’s a stupid idea to render the game’s secondary value nil after the person buys it. The market already has a paradigm, a widely popular one at that, and their attempts at changing it are ham-handed at best.
I would hold off on all of the negativity. PC gaming has already moved to this and after some growing pains related to DRM has become better. It lowers the bar for entry into a higher dollar market, which will increase competition and hopefully make our current AAA video game studios get with the program. Blizzard is the perfect example of a giant which isn’t adapting, and lots of consumers are noticing.
I would like to hear someone explain how a move to a ‘Steam-esque’ marketplace will hurt Microsoft’s profits or the consumer’s user experience. I think most people commenting on this topic have never used Steam. I suggest they go buy $20 dollars worth of top rated indie games, play them for a month across multiple computers, and return with an apology.
I also wouldn’t shed a tear if every GameStop shut down. Generally speaking their policies are designed to screw over their customers, and their advice on a game is usually about as good as IGN. The only good aspect of GameStop is their employee’s total apathy about abiding by company policy.
The complaint isn’t about spending $20 and getting bunches of cool indie games. The complaint is spending $60 on a game you’re stuck with forever.
I’m not sure you read anything past the headline.
And?
The major PC games are $50-60, are sold primarily online via Steam or a couple of similar apps like EA’s Origin and still sell well.
Of course the PC market went this way only when it became clear that store like GameStop simply weren’t willing/able to stock a lot of PC titles, having decided instead to stock a few blockbusters and a bunch of cheap old discount titles.
The result has actually invigorated the PC gaming market, Steam et al allowed Indy games to flourish and also allowed midlist developers to break away from the big publishers and sell directly, which has allowed us titles like EagleSoft’s Digital Combat Simulations series of flight & combat sims which have revolutionized combat flight sims by bringing back the level of simulation last seen 15 years ago with Falcon 4.0 and the better Jane’s titles.
PC and console game buyers are not all the same people. Console buyers skew younger and therefore poorer. They’re more price sensitive, and more likely than PC game buyer to rely on the secondary market.
So.
The Vodka One is correct here. Outside of the MMO market, PC gaming tends to be for a much smaller and more demanding audience. There’s always market uncertainty with the PC world, thanks to compatibility and software/hardware issues (“Crap, my graphics card won’t play Crysis 2″). As a result, at some point, Joe Q Public said “Screw this” and went to play Xbox or Wii.
Also, what Steam has done is bring back ALOT of old games that places like GameStop can’t sell on the secondary market (even then, GS has contracts with Steam). And they make their big sales through Steam special sales/price drops, when games are heavily discounted.
And then there’s games like League of Legends, which have an entirely separate marketing/revenue strategy.
This is just another in a LONG list of M$ failures. Ballmer can get red faced and throw chairs with the best of the Springer guests, but as a CEO…he is no Gates. The tanking of their phone, Vista, Win8, the Surface, plus this mess will soon result in a “…has left the company for other opportunities” email.
Nothing infuriated me more then the first time I downloaded a game on steam, and I couldn’t play it until it downloaded “updates” that took an hour. I was irritated again when I was stuck in an airport and could not play my steam games without paying for internet access. I wasn’t even playing online multiplayer.
If Microsoft and Sony go this route, they risk people finding other activities that are more convenient.