Greed is good.

November 10, 2008

Please note the ironic title. I have not been the biggest fan of Epic Games in the past few years. I played Gears of War a year after its release and realized I was in the minority of the crowd that was displease and unimpressed with the title. I have disagreed with numerous comments made by Cliff Bleszinski. And like many PC gamers I know, there is an unwarranted begrudging feud with Epic’s output and perceived abandonment of the PC marketplace. With all the commotion for Gears of War 2 I can’t help but feel hesitant to pick up the game–especially when many reviewers claim that if you disliked the first game this will do little to change your stance. But I have grown increasingly critical of the company’s business model.

Epic boss Mike Capps commented in an interview from videogaming247.com about the company’s stance on second-hand retail sales and its effect on the game market.

“The secondary market is a huge issue in the United States. Our primary retailer makes the majority of its money off of secondary sales, and so you’re starting to see games taking proactive steps toward that… I’ve talked to some developers who are saying ‘If you want to fight the final boss you go online and pay USD 20, but if you bought the retail version you got it for free’. We don’t make any money when someone rents it, and we don’t make any money when someone buys it used.”

For those that do now know, Gears of War 2 ships with exclusive DLC in the form of weapons for purchasers of the game. This is absolutely fine, but the exaggeration that Capps makes is a frightening future. Personally, I am surprised by the stance the enthusiast press has taken upon second-hand gaming. More often than not, I have come into contact with journalists supporting developers that “force” gamers to purchase games and deter them from renting or buying used games. While they are the most vocal advocates are games as art, they have no issues with this blatant attempt at taken advantage of the user. It may not be to the scale of Activision boss Bob Koteck’s reliance on game franchises, but it is a similar philosophical sentiment.

It is confusing when the games industry is the fastest growing business market today, yet there is this perceived crisis of the second-hand market threatening games. The truth is, developers are getting greedy. This is a large factor in why Epic and many other PC developers have moved into the console space because it is widely more profitable for them. But they’re stuck in a triple “A” business model that will eventually implode on itself–this is what happened to the music industry. When games take $300 million to make there is definitely something obscene for the amount of money to make a game. This will eventually become a fiscal nightmare for studios that want to remain in the blockbuster marketplace without the finance–Midway’s gamble on Mortal Kombat vs. DC is the most recent example that comes to mind. Which is why second-hand gaming has grown to be such a large issue for developers that rely on million selling titles.

But my biggest issue with the current business model is that it is sacrificing content and convenience for the gamer in favor of the share holder, and it is doing it in a nontransparent fashion. Studios are stuck in this number of units shipped mentality that treats gamers as a statistic. And it is a relationship that I no longer want to be a part of. If you look today at the PC games market which has a mix of both the utmost hardcore players along with the largest number of casual players, companies are following different means of remaining a viable. Valve, Blizzard, Stardock, and PopCap have all created business models that not only provide quality content, but have a much more intimate relationship with its user base. Apart from continuous updates, user/developer interaction, transparent software, and arguable reasonable pricing for content, these developers have a better understanding of answering the demands of its users.

Currently, game studios have a tenuous relationship with its users. And that is a problem when the needs of its retailers and shareholder overshadow its customer base. We’ve seen this with EA‘s handling of Madden DLC and Activision‘s handling of Guitar Hero DLC. Criterion’s handling of its DLC and Harmonix’s approach to Rock Band song transfers are a step in the right direction. If you look at Phil Harrison’s recent tenure at Atari I believe a lot of interesting approaches for game distribution will be immerging from that company. Technology breeds a mentality of convenience and percieved rights in regards to content. And we have learned from the music industry that if a business is unwilling to adapt they will reach a crisis–which is happening now with second-hand games. Gamers have survived decades with used and rented games and this demand will no disappear. And if studios continue to combat user demand they will eventually become left behind and forgotten for good reason.


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