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A publisher's dream, a retailer’s nightmare, and a consumer caught in the middle; digital distribution is coming, but what form it takes is anyone's guess at the moment. For the moment though, digital distribution is an extra in the consumer market; with physical media still dominating most sales.

What needs to better defined if digital distribution is to succeed is ownership; who owns what, and what rights are given for the content. Currently, purchasing content - either physical or digital - grants the consumer rights for viewing or playing content. The consumer does not own the content. OK, so I don't own the content, but what of the viewership rights? Right now if I were to purchase Fallout 3 I would have several options: Xbox 360, Playstation 3, or PC (with PC having options to purchase the game at retail or digitally such as from Steam). The choice of platforms given to the consumer is good up to a point, but what is really happening is if I decide to purchase Fallout 3 for the PC at retail, I only have the rights to play that form of Fallout 3.

So lets say extra paid DLC content is made available exclusively for Xbox 360 version of Fallout 3, but I already had purchased the PC version of Fallout 3; that means if I want to pay for and play the extra DLC, I would have to repurchase Fallout 3 (or more technically, the license to play the Xbox 360 form of Fallout 3). This is the problem with the current model of digital distribution. If I truly am purchasing a 'license' to play a game, this license should extend to any platform the game is made available for within a certain form. Does this mean I should get to play the iPhone version of Fallout 3? Only if the form of play is the same as that found on other platforms. A service such as OnLive shows the potential of what a global license could be.

Ideally, the delivery mechanism shouldn't factor into the licensing of content. In the perfect consumer experience, I would only need to purchase the license to play Super Mario Bros 3 once, and any device capable of playing the game is something I could use. Unfortunately, the publishing industry does not see it this way; what they see is a means to make more money by selling the same game over and over across different platforms. In the publisher's case, they make money off the Nintendo version sale, the Gameboy Advance version sale, and the Wii Virtual Console sale; all of which are the same game. While it is understandable for a publisher to be in the business to make money, the consumer in the end is getting screwed.

The content is the selling point, and the means to protecting the rights of the consumer, while still allowing the industry to make money. So if a publisher wants to make the Ultra Super Mario Bros 3 with bonus levels, two forms of digital content should be made available for purchase: the full game with extra content, and the extra content only as DLC for those who already own the original title. A timed exclusive could be a marketing mechanism in this case to milk a few extra sales for those who can't wait. While I am aware there are plenty of loopholes in this scenario (just label the game as a sequel for example), it is at least a base to start from. Just as consumers should be trusted with the ability to make local backup copies of content, publishers should be trusted to offer new experiences at a fair price. Backstabbing from either end will only result in a crippled market.

Another aspect of digital licensing that will need to change is that of fair use. With the purchase of content, the consumer should also get the right to make a local backup copy. This is an important right for the consumer as it gives them a means to use content without the need for service reliability or publisher authentication. Network lag and bandwidth caps are just two problems that could arise when a consumer tries to use digital content; not to mention time itself. Is time a part of the license for using the digital content? What happens five, ten years down the line? The ability to use digital content locally from a backup is an important feature that will help smooth out the transition to a more digital marketplace.

And what of physical media in this new world of digits? It won't go away, anytime soon at least. There is still a certain satisfaction for having something to hold in your hands, something to add to a collection. The direction of physical media may need to change in order to compete with its digital counterpart. Special and limited editions is one area that could be expanded upon. Sure, you could get the digital copy of Starcraft 3 a little cheaper and instantly now; but this limited version comes with timed exclusive bonus content, as well as a behind the scenes making of video! The timed exclusive content would eventually make its way online as paid DLC, and the making of video is something offered as a bonus for the physical media (note that this is also something that does not affect the game in any way). Another reason physical media will stick around is due to B&M stores. Where else would you be able to hold a launch event or find someone knowledgeable in an area that could make other recommendations. And browsing just isn't quite the same with an online store; though many online retailers do offer suggestions of what you may like based off other customers purchasing habits.

Digital distribution will come, it's only a matter of time. However for it to succeed some compromises and changes will need to made on the publishing end of business. Consumers would do well to honor the rights given to them with content in order to foster a healthy ecosystem; and pirates will keep everyone on their toes. Oh, and by reading this blog post, you agree to the license that this was only read on Giant Bomb and not 1up.

tl;dr
Content licensing in its current form will not work for the emerging market in digital distribution. Compromises and trust is needed between both consumers and pusblishers for digital distribution to work.

9 Comments
10 Comments
Posted by Eelcire

A publisher's dream, a retailer’s nightmare, and a consumer caught in the middle; digital distribution is coming, but what form it takes is anyone's guess at the moment. For the moment though, digital distribution is an extra in the consumer market; with physical media still dominating most sales.

What needs to better defined if digital distribution is to succeed is ownership; who owns what, and what rights are given for the content. Currently, purchasing content - either physical or digital - grants the consumer rights for viewing or playing content. The consumer does not own the content. OK, so I don't own the content, but what of the viewership rights? Right now if I were to purchase Fallout 3 I would have several options: Xbox 360, Playstation 3, or PC (with PC having options to purchase the game at retail or digitally such as from Steam). The choice of platforms given to the consumer is good up to a point, but what is really happening is if I decide to purchase Fallout 3 for the PC at retail, I only have the rights to play that form of Fallout 3.

So lets say extra paid DLC content is made available exclusively for Xbox 360 version of Fallout 3, but I already had purchased the PC version of Fallout 3; that means if I want to pay for and play the extra DLC, I would have to repurchase Fallout 3 (or more technically, the license to play the Xbox 360 form of Fallout 3). This is the problem with the current model of digital distribution. If I truly am purchasing a 'license' to play a game, this license should extend to any platform the game is made available for within a certain form. Does this mean I should get to play the iPhone version of Fallout 3? Only if the form of play is the same as that found on other platforms. A service such as OnLive shows the potential of what a global license could be.

Ideally, the delivery mechanism shouldn't factor into the licensing of content. In the perfect consumer experience, I would only need to purchase the license to play Super Mario Bros 3 once, and any device capable of playing the game is something I could use. Unfortunately, the publishing industry does not see it this way; what they see is a means to make more money by selling the same game over and over across different platforms. In the publisher's case, they make money off the Nintendo version sale, the Gameboy Advance version sale, and the Wii Virtual Console sale; all of which are the same game. While it is understandable for a publisher to be in the business to make money, the consumer in the end is getting screwed.

The content is the selling point, and the means to protecting the rights of the consumer, while still allowing the industry to make money. So if a publisher wants to make the Ultra Super Mario Bros 3 with bonus levels, two forms of digital content should be made available for purchase: the full game with extra content, and the extra content only as DLC for those who already own the original title. A timed exclusive could be a marketing mechanism in this case to milk a few extra sales for those who can't wait. While I am aware there are plenty of loopholes in this scenario (just label the game as a sequel for example), it is at least a base to start from. Just as consumers should be trusted with the ability to make local backup copies of content, publishers should be trusted to offer new experiences at a fair price. Backstabbing from either end will only result in a crippled market.

Another aspect of digital licensing that will need to change is that of fair use. With the purchase of content, the consumer should also get the right to make a local backup copy. This is an important right for the consumer as it gives them a means to use content without the need for service reliability or publisher authentication. Network lag and bandwidth caps are just two problems that could arise when a consumer tries to use digital content; not to mention time itself. Is time a part of the license for using the digital content? What happens five, ten years down the line? The ability to use digital content locally from a backup is an important feature that will help smooth out the transition to a more digital marketplace.

And what of physical media in this new world of digits? It won't go away, anytime soon at least. There is still a certain satisfaction for having something to hold in your hands, something to add to a collection. The direction of physical media may need to change in order to compete with its digital counterpart. Special and limited editions is one area that could be expanded upon. Sure, you could get the digital copy of Starcraft 3 a little cheaper and instantly now; but this limited version comes with timed exclusive bonus content, as well as a behind the scenes making of video! The timed exclusive content would eventually make its way online as paid DLC, and the making of video is something offered as a bonus for the physical media (note that this is also something that does not affect the game in any way). Another reason physical media will stick around is due to B&M stores. Where else would you be able to hold a launch event or find someone knowledgeable in an area that could make other recommendations. And browsing just isn't quite the same with an online store; though many online retailers do offer suggestions of what you may like based off other customers purchasing habits.

Digital distribution will come, it's only a matter of time. However for it to succeed some compromises and changes will need to made on the publishing end of business. Consumers would do well to honor the rights given to them with content in order to foster a healthy ecosystem; and pirates will keep everyone on their toes. Oh, and by reading this blog post, you agree to the license that this was only read on Giant Bomb and not 1up.

tl;dr
Content licensing in its current form will not work for the emerging market in digital distribution. Compromises and trust is needed between both consumers and pusblishers for digital distribution to work.

Posted by Suicrat

It is kind of ridiculous to expect a content publisher to 'trust' the western world's consumer base to make local backup discs and NOT share it with friends. It's easier for the company to simply make it impossible to copy, and then sell people the game because if people want to play it, enough of them will buy it for themselves instead of borrowing it from friends. Considering the disposition of the average Occidental media consumer (i.e., crack it, ISO it the minute it goes gold), it would be commercial suicide to allow software discs to be copied in any way.

As for the alleged 'right' to use a game one any platform you purchase it on, console makers would have no reason to make consoles if they weren't able to sell licenses to publish games for their console. They already sell consoles for a loss, so what would their source of revenue be? Consoles would cease to exist if they all-of-a-sudden became 'open format'.

The conception of consumers 'rights' that most people seem to have would involve enslaving content producers to consumers, and hamstringing them to the point where it would be impossible to make a profit. Your concept of an 'open' gaming industry is first-of-all impossible, and secondly would kill the notion of the video game console if it ever came about.

OnLive is not an example of an open format, it is a gaming platform, one based primarily on internet infrastructure, but a platform nonetheless, and the makers of OnLive would, just like Nintendo, Sony, Sega, and Microsoft, charge licencing fees to publishers for putting games on their systems.

Posted by Eelcire

Actually, I would have to disagree that it is easier to just not allow backups. Those that want an alternative way to play will find a way; any restrictions most always only hurt the honest consumer. But that dwelves into DRM practices, which is not really what this post was about.

The notion of the platform is what needs to change in the industry; is it not ridiculous that I am required to purchase a license to play a game per platform instead of per content? Let's say you buy a DVD movie. It would play fine in your DVD player, but if the MPAA had it's way you would need to purchase a different version to play it on your PC DVD drive; because the PC DVD drive is a different platform than your DVD player. And they have tried this before. I am fully in support of making sure publishers get paid what they deserve for releasing content. However, it is the consumers at this point in time who are suffering while the industry moves into the digital era.

If different platforms are going to be available, it is the service they offer in addition to timed exclusive deals that will drive competition. Why should a consumer need to purchase the same game just to be able to play on different platforms? Maybe you buy Modern Warfare for the Xbox 360 originally, but all your multiplayer friends are on the PC now - the license to play that game should be made so that you are able to play it on that platform as well. What's this, timed bonus content for Modern Warfare is now available for the PS3 for extra money? Your licence to play Modern Warfare allows you purchase and play on the PS3 platform now. Why would a platform want something like timed exclusive content? Maybe for added revenue through ads or click throughs. Maybe the platforms offers a unique service that they want to promote. All platforms offer some form of online play, but they're all different. In this regard there is still competition between platforms, yet the model could still allow for content based licneses instead of platform based.

The ideals I write of are just that, ideals. Not everything will work out this way; but I am hopeful that the industry evolves to fit the needs of both puslishers and consumers.

Posted by Suicrat

Once again, you're ignoring the point that a console maker would have no reason to make a console if they could not charge licencing fees. Do you think the manufacturers care about exclusivity? No, but they all want EA to give them a slice of the Madden pie, so they charge for licences to offset the cost of selling the consoles at a loss.

A DVD player and a video game console are not the same thing. Unlike DVDs and DVD players, console manufacturers incentivize publishers to put out games for their system by selling them involved dev kits, giving them a strong platform with which to work, and demonstrating the breadth of their userbase. If you could pay Sony for your game disc and then use it on the 360, or vice versa, then neither company would bother making consoles any more.

You need to think things through before saying "I want the impossible to be done, but I don't want to have to do it."

Also, your point about the MPAA is specious, considering that practically every Blu Ray and DVD that comes out now comes with a digital copy as well as the disc. (Corporations responding to market feedback? Unheard of!)

I'm still waiting on you to explain why any company would want to undertake the enormous expense of developing, producing, manufacturing consoles, and marketing them at a price lower than the cost of production if they would no longer be able to charge licence fees to publishers.

Are you going to spend the hundreds of millions of dollars it'll take to build the next console?

Why is Microsoft or Sony going to do it if there's no way for them to recoup their investment?

Edited by Eelcire

While I don't have an immediate solution to the gaming platform, I once again direct you to the movie industry or even the music industry. I buy movie and it works on my Sony player, or my Toshiba, or my Pioneer, or Samsung (and yes, I realize that Blu-ray and Laserdisc and VHS all throw a monkey wrench into my arguement, or conversely strenghten my question); same thing with a music CD. So maybe along those lines part of what I'm arguing for is more of a unified gaming platform.

And yes, the MPAA has done what it could to stop the ripping of DVDs, it took them quite a bit of time too to respond more in the consumers interest. However, many of these digital copies are still limited in use, are they not? (I have never used one of these digital copies so I'm not aware of what form of DRM they use).

Once again, you have not answered my question: Do you, as a consumer, find it ridiculous that you have to rebuy the same content for each platform? (Forget about the publishers, or the content creators, or the platform creators).

I do not have all the solutions. If I did i'd be much richer than I am right now ;) What I wrote about is nothing more than ideals and pie in the sky thinking. I have thought about your questions you raised before, and have not come up with decent solutions in my own mind. So instead, I wrote about the direction I'd like to see the industry take, in hopes to bring about discussion on what may or may not work. You have brought up many points on what you feel doesn't work, yet I haven't heard anything alternative solutions. Or are you fine with the direction digital downloads and licenses are taking?

Basically, what it comes down to is that current licensing models are structured around physical media. As we move into a more digital marketplace, shouldn't the licensing evolve along with it?

Posted by Suicrat

'Evolution' of industry is not automatic, it's based on market demand and investment input. You still have not demonstrated any reason for a technology company to undertake the expenditure of developing a new console. If a company doesn't profit from its undertaking, it will not do it. Unless there is a government subsidy encouraging them to be self-immolating. And I guarantee you we will never get to the point where there are government subsidizes video games.

Again, to DVDs, the technology relative to that which goes into video game consoles is relatively inexpensive to manufacture, so companies can sell the DVD players at a profit to make money, if Microsoft or Sony (or some other company) stopped charging licence fees, and wanted to stay in the console-making business, they'd have to find manufacturing and production methods that would allow them to sell their consoles at a profit. This means the technology improvement process either slows significantly (or halts altogether, or reverses course), or consoles start costing the same amount a motherboard, video card, RAM, and tower would cost combined.

Profit drives innovation.

Posted by Eelcire

Listen, I fully am aware of your arguements and agree that there are many flaws with my ideal thinking.

You have still not answered my question though: Do you, as a consumer, find it ridiculous that you have to rebuy the same content for each platform? (Forget about the publishers, or the content creators, or the platform creators).

That is the crux of my blog post.

Posted by Suicrat

If you want me to think of a value (in this case video games), it is impossible for me to not consider the people responsible for its existence (i.e., developers, publishers, and console makers).

It's like asking for a person to travel in an automobile without gasoline.

And this is my point, most of the 'consumer's rights' advocates out there want consumers to obtain unlimited value for limited expenditure, and that's not how the world works.

I don't have to rebuy the same content for each platform, I buy one game for one console with I choose and I adhere to that choice because I know that consoles wouldn't exist if the console maker didn't get a cut every time a game was sold.

You can fantasize and dream about so-called 'ideals' (though I don't see your vision as the least bit ideal personally) all you want, but I'll be here to remind you that reality doesn't work that way.


Posted by Eelcire
Suicrat said:
I don't have to rebuy the same content for each platform, I buy one game for one console with I choose and I adhere to that choice because I know that consoles wouldn't exist if the console maker didn't get a cut every time a game was sold.
Ah! Thank you for answering. It is apparent you and I think differently to content and its license for use; but don't get the wrong impression. I am not blind to the fact that game developement costs money; that the costs grows as more platforms are added. I am not blind to the fact that platform holders make money off of licensing. Nor am I the consumer advocate that promotes consumers first and business last (quite opposite, I despise the saying "the customer is always right.").

And my blog post in this current environment is nothing more than fantasy. Being able to use games across multiple platforms isn't just like ripping my own movie or music CD for use in something else (though by your writings it sounds as though you'd purchase a music CD and also the same music on iTunes?). All I wanted to bring up was 'What if?'. What if it was as easy to just 'rip' a game for use on another platform? What if instead of rebuying a game/movie/music that was rereleased with new content, I could just buy the new portion? These questions cannot be answered in this current environment. However, the other part of my post touched upon the digital future, and how it may be possible.
Posted by Suicrat

I do buy music on iTunes, (I would buy music from Amazon if the CRTC let me), and it's not like my music is trapped on my computer. I can send it to five different friends, and play it through my stereo, so I don't need discs. Though, for my favourite bands, Hella and The Roots, I own CDs of because at the time their discs were not available on iTunees. I have both CDs and digital music, but I rarely listen to music on discs anymore.

Back to the subject, I don't necessarily think open platform formats are bad, PC gaming is still more than viable, but consoles now provide more than just a closed-system computer for your TV, they're also now communication and media platforms, that, while they do limit control of content available (that's why I don't rent movies from iTunes OR XBox Live Marketplace), they also provide a predictable, unified platform for developers to develop, and game hobbyists to invest in. $450 for the console + $60x5 for five years of online service = $750 a year, about how much it costs to upgrade a video card and RAM, and the way PC gaming technology works, you'll need to upgrade more often than every 5 years.

Anyways, I'm gonna go play some NHL 09 and listen to the Bombcast. Time to celebrate a hard-fought Sharks' win!