This Blog Post Wants To Ask You A Question

Is a man not entitled to the sweat of his brow?


No, says the pirate: it belongs to the everyone.
No, says the used game market: we want the profit.
Well maybe, says the consumer: how much sweat are we talking here?


I rejected those answers. Instead, I chose something different. I chose the impossible.

I chose...

A new take on old sales methods.

Two questions arise with the sales of games, and they're fundamentally the same. "Is it worth the price?" and "Was it worth the price?" These two questions are what publishers must look into before putting a game onto the market, likely when the first budget for the game is being outlined.

The current gaming market is based on a pretty set pricing structure; usually with consoles games at $60, with the occasional console game coming out at $40. PC games usually start a bit lower between $30 and $50. With higher budgets, shrinking sales, and the ever-looming issue of piracy, how is a publisher to survive which still offering quality games?

Looking into the issue of piracy, one of the top reasons is the 'try before you buy'. Many games do not have demos available, and for those that do the demos usually don't represent the game well.

So here are a couple of questions:

1. How many would be willing to pay an initial low cost for a full, time-limited game on the premise that afterwards you had the option to pay more based on your own value?

or

2. How many would be willing to pay an initial low cost for a full, time-limited game on the premise that afterwards you had to pay based on a set range of amounts (+$10 more, +$15 more...)?

or maybe a bit of both.


For example, lets say you buy Modern Warfare 2 for $15; it is the full game, fully featured but is time-limited to 30 days. Once 30 days has been reached, the game no longer functions but you do have the option to pay a one-time extra amount to unlock the time-limit permanently. Would you?

Some points:

How much is this game worth?
For those that just wanted to play though the game once, the low-cost entry will hopefully be of enough value and kept someone from just pirating the game. The publisher may not see much money out of this consumer, but at least it is not money lost due to piracy.

For those that play through the game several times, what is it worth to be able to do so? The game was $15 up front, but there is more value to that game in that you want to play it more. For this consumer, there is an added value to playing through the game multiple times (usually due to a multiplayer component). From here comes the next part, let the consumer decide the value, or let the consumer choose from a set amount of values.

Based of questions above, a couple of business models already exist: shareware and the rental market. What if these two markets were to me merged? The consumer pays an upfront cost to play the full game for a time period (the rental), but at the end of that time has the option to unlock the full game for a little bit more (shareware).

Going back to the example above, Modern Warfare 2 was purchased for $15 up front and at the end of the time period the option arises: +$10 more, +$20 more, +30 more, +$XX. Any amount will unlock the game permanently, and you only need to pay it this one time. You choose the fate of the game and publisher.

There are three categories here from the publisher perspective, and it would likely follow the bell curve. Some consumers will pay the least amount of money available, no matter the quality experience or value. Most consumers would likely fall into the middle category, paying a moderate amount extra ($20, $30). Finally, the third category of people would feel that the game is worth more to them for the amount of time spent on it, and would likely give the publisher extra. Whatever category these consumers fall into though, money went to the publisher.

There are still questions to this model though. How many extra consumers would this model bring in, especially those who are on the fence with piracy? Does the bell curve (if accurate) balance out profitability? Where would this model be best placed in the market? While not having answers to all questions, the best test bed for where to implement such a system would be in the direct download market; places such as Steam.

While the numbers in the examples may not be accurate, nor the idea that consumers would fall under the bell curve, I find the premise interesting. From a publisher standpoint, more people are likely to buy into a game at a low cost entry. Even if they don't capture all of the consumers, the publisher still sees some money out of it. From a consumer standpoint, the saying 'vote with your wallet' holds more direct weight. The consumer would be able to pay for a game based on what they feel is it's value. Games with more effort behind them will get a better following of consumers who will be more likely to spend more on them. How much sweat would this model be worth?


tl;dr
Piracy hurts, how to cope? Would a merging of the rental and shareware business models work?

22 Comments
23 Comments
Posted by Eelcire

Is a man not entitled to the sweat of his brow?


No, says the pirate: it belongs to the everyone.
No, says the used game market: we want the profit.
Well maybe, says the consumer: how much sweat are we talking here?


I rejected those answers. Instead, I chose something different. I chose the impossible.

I chose...

A new take on old sales methods.

Two questions arise with the sales of games, and they're fundamentally the same. "Is it worth the price?" and "Was it worth the price?" These two questions are what publishers must look into before putting a game onto the market, likely when the first budget for the game is being outlined.

The current gaming market is based on a pretty set pricing structure; usually with consoles games at $60, with the occasional console game coming out at $40. PC games usually start a bit lower between $30 and $50. With higher budgets, shrinking sales, and the ever-looming issue of piracy, how is a publisher to survive which still offering quality games?

Looking into the issue of piracy, one of the top reasons is the 'try before you buy'. Many games do not have demos available, and for those that do the demos usually don't represent the game well.

So here are a couple of questions:

1. How many would be willing to pay an initial low cost for a full, time-limited game on the premise that afterwards you had the option to pay more based on your own value?

or

2. How many would be willing to pay an initial low cost for a full, time-limited game on the premise that afterwards you had to pay based on a set range of amounts (+$10 more, +$15 more...)?

or maybe a bit of both.


For example, lets say you buy Modern Warfare 2 for $15; it is the full game, fully featured but is time-limited to 30 days. Once 30 days has been reached, the game no longer functions but you do have the option to pay a one-time extra amount to unlock the time-limit permanently. Would you?

Some points:

How much is this game worth?
For those that just wanted to play though the game once, the low-cost entry will hopefully be of enough value and kept someone from just pirating the game. The publisher may not see much money out of this consumer, but at least it is not money lost due to piracy.

For those that play through the game several times, what is it worth to be able to do so? The game was $15 up front, but there is more value to that game in that you want to play it more. For this consumer, there is an added value to playing through the game multiple times (usually due to a multiplayer component). From here comes the next part, let the consumer decide the value, or let the consumer choose from a set amount of values.

Based of questions above, a couple of business models already exist: shareware and the rental market. What if these two markets were to me merged? The consumer pays an upfront cost to play the full game for a time period (the rental), but at the end of that time has the option to unlock the full game for a little bit more (shareware).

Going back to the example above, Modern Warfare 2 was purchased for $15 up front and at the end of the time period the option arises: +$10 more, +$20 more, +30 more, +$XX. Any amount will unlock the game permanently, and you only need to pay it this one time. You choose the fate of the game and publisher.

There are three categories here from the publisher perspective, and it would likely follow the bell curve. Some consumers will pay the least amount of money available, no matter the quality experience or value. Most consumers would likely fall into the middle category, paying a moderate amount extra ($20, $30). Finally, the third category of people would feel that the game is worth more to them for the amount of time spent on it, and would likely give the publisher extra. Whatever category these consumers fall into though, money went to the publisher.

There are still questions to this model though. How many extra consumers would this model bring in, especially those who are on the fence with piracy? Does the bell curve (if accurate) balance out profitability? Where would this model be best placed in the market? While not having answers to all questions, the best test bed for where to implement such a system would be in the direct download market; places such as Steam.

While the numbers in the examples may not be accurate, nor the idea that consumers would fall under the bell curve, I find the premise interesting. From a publisher standpoint, more people are likely to buy into a game at a low cost entry. Even if they don't capture all of the consumers, the publisher still sees some money out of it. From a consumer standpoint, the saying 'vote with your wallet' holds more direct weight. The consumer would be able to pay for a game based on what they feel is it's value. Games with more effort behind them will get a better following of consumers who will be more likely to spend more on them. How much sweat would this model be worth?


tl;dr
Piracy hurts, how to cope? Would a merging of the rental and shareware business models work?

Posted by Sparky_Buzzsaw

Interesting question, but if I buy something, I want the complete rights to own that thing.  DRM protection isn't ideal, but at least I still maintain a full physical copy for as long as I like and can (generally) request more installs if necessary.

It's a hard topic to throw out reasonable answers.  I enjoy used game shops, and given my budget, I try to buy used if it's reasonably cheaper than a new copy.  I don't and will never endorse piracy, so that's right out.  Frankly, I think the game publishers need to man up and take the hits when it comes to used games.  Gamers will still have to purchase something new to sell it back used, and if they can't exist on those initial new game sales, they need to look at their budgets and decide how to create great games without ridiculous amounts of money being involved. 

Moderator
Posted by TheKidNixon

I think the problem is for those completely entrenched pirates, any price is too high; the mentality is quite literally "If I can get this for free, why should I pay anything?" Now I understand that this portion of the population will never be won over until you open up the gates, literally. There is nothing you can do to stop them, DRM or otherwise.

This is why the PSP is suffering so much. So many people have hacked/cracked PSPs and they have no real incentive to go out and buy the games they can download in literally minutes. I think that if PSP moved completely to digital distribution, it would help slow down that process, but the problem is also indemic because there are also internal pirates; when you have Sims 3 leaking three weeks early, someone within that company is passing that code along to someone else. So this is a community that has infested the industry from the inside, and until you give them ease of use at the price point they demand (IE: free) there's nothing that is going to deter them from stealing your content.

I also feel the need to point out that this method of yours is almost identical to the way Gamefly more or less functions: I pay X fee a month to have a certain amount of gaming made available to me, and if I want to keep that game indefinetely and get the next item that I'm interested in my queue, I just pay a small additional charge for the box and right to keep that game. Of course the other problem is, with a service like that, I don't know how much of the initial charge would be going back to developers.

Edited by Eelcire
@TheKidNixon:

Well, I would imagine a certain percentage of piracy is just that: 'the games are too much' and 'try before you buy'. This is the market I was looking into. Gamefly is a part of the rental market still, just like blockbuster. The consumer pays the inital cost to get the game (rental), but then chooses if they want to pay to unlock the game (shareware). The differnce being the consumer, and not the publisher or retailer, chooses how much extra they will pay to unlock the time limitation. Empowering the consumer will give them more say in games and market direction; more consumers will opt-in at a lower cost of entry and from there publishers can guage how well (or poorly) recieved their game is received.
Posted by The_A_Drain

I'm just gonna link the other thread, my comments there are equally as valid here and i'm not cut/pasting them as they lose some context.

http://www.giantbomb.com/forums/general-discussion/30/the-great-video-game-taboo-piracy/246945/

Bottom line is this will not work, and even if it did no publisher is going to invest in this scheme, it's guaranteed not to make a profit and the scheme itself even costs money to setup and maintain. They lose less money by simply letting people pirate the game, theres no evidence to suggest the people pirating under the guise of "games are too expensive(which as I outlined is bullshit)" or "try before I buy" will even be interested in this, as Nixon rightly stated, any entry fee above being free is too much for them.

Again as I outlined in the other thread, companies would be better spending there money on consumer friendly DRM projects like Goo and the upcoming DS software which should hopefully cut down on R4 and other cart based piracy while being undetected by regular consumers.

Edited by Eelcire

Firstly, why won't it work? Where are you pulling your information from? Do you work in the industry? The rental market works. The shareware market worked in the past. I have merely merged the two concepts together into a new idea. And if you read my reply to TheKidNixon, my model wouldn't employ a fee, as it is not a rental based service. Secondly, there is more than one solution to the problem, and more than one solution will be needed. Your examples are but one approach, my ideas are another. If you read my entire blog, you would see how this could be beneficial to both the consumer and publisher.

Of course I have no details or numbers to back up my claims, I'm just bored at work. I have taken ideas that have worked, and employed them in a new way.

Edited by The_A_Drain
@Eelcire:

Well, firstly shareware was free. You didn't pay anything up front, and you still had to approach the normal channels and purchase the game no different to walking into a shop and buying it. Shareware is just a term, it is essentially no different from a demo.

The rental market is not run or payed for by the publishers, so it does not cost publishers any money, whereas a scheme like this would run a company up a lot of money in admin fees and awareness campaigning costs(You cant roll something like this out without substantial awareness, especially something as odd as "Pay me for an overpriced, rental, then give me some more money if you want, and i'll give you the game" Unless there is a clear benefit, consumers are going to be incredibly wary, even if you can find a clear benefit, you still need to spend cash on making sure people are aware of that, and how the service works, otherwise you get all sorts of confusion, angry customers, possibly even class action law suits.). So it increases the amount of money going in, for no foreseeable return.

If you are giving the consumer the ability to pay whatever he wants, you have to then assume you are going to get nothing, assuming anything more would be foolhardy and baseless. There is no way you can run a profit forecast on what are essentially donations. And without a solid method of gauging return, investors are going to turn you down in a heartbeat. Investors are already notoriously nitpicky with videogames to begin with because they are such huge financial risks.

Even if you manage to get the service off the ground, the rental market still beats you in cost for the legitimate consumer, and the pirate will still steal the game. In fact, unless you spend money on decent DRM (which as noted above, is the way forward on it's own, without all this wrapped around it) pirates and hackers are just going to bust your time constraint anyway and ship out pirate copies of the game to other pirates.

I don't work in the industry, but I study the industry (all facets, art, programming, writing, business, are all modules on my course) at university, and 3 of my lecturers I guarantee you would not even stop to laugh at this idea, they'd simply chuck the piece of paper in the trash. Of my 3 lecturers, one is an industry artist of 30 years experience, one is a business expert of 40-something years experience (hasn't always worked in games, and has occupied several different positions at major companies, most of which in legal department or budgeting) and the other guy has worked everything from programmer, through artist, to hardware designer, producer and everything else in the spectrum, he worked for Argonout games and was a key developer on the SNES Super FX Chip and even helped co-develop Star Fox. So believe me, while I know absolutely zilch compared to these guys, i've paid attention and I know a fair chunk of what i'm talking about.
Edited by Eelcire
@The_A_Drain:

Thank you for explaining yourself and your background. Though I would question any 'expert' that would laugh and throw away ideas (some of the most profitable ideas and concepts were laughed at; Wii?). Also, I did mention that Steam would be a good test bed for such a service, as much of the backend is already in place; only the pricing and buying structure would need to be altered. And no new business proposition is going to be a sucess overnight; it does take time and money. Remeber the old saying, it takes money to make money.

You give the consumer partial abilitiy to pay what they want, and you're right in that you assume they pay as little as possible. This I thought through as well by having an inital cost plus a minimum secondary cost (though the consumer would also have the abiltiy to pay more if they desire, which some would). If the initial cost is low enough, then a certain percentage of would-be pirates may opt to go that route instead. Pay a low cost, beat the game, move on. Of course the publisher would not profit from these sales, but they are at least legit sales and maybe the next game will fare better results from them. Not to mention this form of business would rely on some form of DRM, which is another part of the solution. Finally, I am fully aware that piracy will not end. There will always be those who won't pay anything, no matter the value.

Bare in mind that variations of this very model are being tested right now in other industries. So to just discount it altogether would also be foolhardy and baseless. Thanks again though, you have given me some new insight.
Edited by The_A_Drain
@Eelcire:

You're still not addressing the main problem.

Pirates will continue to pirate regardless of the entry cost, and even if you were to lure a small percentage of them away, you then have to deal with the legitimate comsumer complaint that a rental is much cheaper. If these people won't even pay for a rental, what makes you think they are going to pay 15 bucks for what is, essentially, a rental?

And no, no payment scheme similar to this is being used in any industry, to my knowledge, that is comparable to videogames. Outside of a few small bands and record publishers who are quite happy to make just about enough money to survive. And more power to them. Sure, you get this kind of thing with rental carpet cleaners etc, but those kinds of businesses dont have to deal with the contents of there warehouses mysteriously vanishing into the ether through a torrent.

Even with an initial cost, and a minimum secondary cost, you'd be looking at those being at least $5 (to compete with rentals, otherwise people are just going to do that insteat) and then $45, otherwise the publisher does not profit at all, and if they are potentially not profiting from each copy sold, then it's simply never going to happen. Nobody is going to front the money for a non-charity project that isn't going to make any money outside of indie developers.

Besides, offering a rental service like that is potentially even more damaging to the publisher, what happens when the game is only a few hours long and not very good? Oh sure, maybe they should be punished for making a bad game (arguable) but they lose a huge chunk of peripheral sales based on movie licenses, or impulse purchases. Also given that this would essentially be a service and not a straight up transaction, there would be laws in place governing how you can go about this sort of thing ( my knowledge is very sketchy here ) and afaik, once you setup that initial, and following minimal cost it becomes difficult to change it, perhaps even impossible. So you further damage your potential to make money as you make it difficult for yourself to lower the cost of the game to sell a few more copies.

I see what you're getting at here, I really do. But it's just not going to work for the videogames industry, publishers have to compete with rentals, piracy and the second hand market as it is, trying to muscle in on rentals with a weird, convoluted scheme like this is just pointless, they might as well simply offer a damned rental service and chuck in a $5 off coupon if you buy the game within a week of purchase. Much simpler, potentially legally much less dangerous, and you dont have to be dissapointed when you fail to convert hordes of marauding pirates.

Edit: And to my knowledge, nobody but stuck up fanboys and graphics whores laughed at the Wii. Educated people have been saying that conventional controllers scare non-gamers for years, and it was plain to see from the moment they first announced the thing that it was one of the best business decisions ever made. Especially when you consider how bitterly sony and MS were going to be fighting over the rest of us traditional gamers. This idea is nothing comparable to the Wii not for a second.
Posted by Eelcire

Ah yes, while I'm aware that pirates will be pirates, I did overlook the fact that they don't even buy into rental so it would be difficult to convert them over at a higher point of entry. The publishers are caught between legit consumers and piracy. I refuse to buy PC games with restrictive DRM so that is a lost sale; I also refuse to buy the same console as I already own just to play an imported game, another lost sale.

I wouldn't exactly call Radiohead and NIN small bands, and there are others that have and are expeirmenting with similar models with mixed results. But I concede, you have brought up enough points that at least for the intermediate future other solutions will be necessary in the videogames industry. For now, charity-based payment will stick with indie developers.

Posted by The_A_Drain
@Eelcire:

I'll rephrase, I didn't mean small bands sorry, my mistake. They are huge bands, ones that have enough money to live off even if nobody pays, and their entire entourage consists of maybe, 10 or 15 people to make an album, whereas videogame development teams are anywhere between 2 people and 300 people.

Restrictive PC DRM, and import restrictions are imo a seperate issue.

Anyhow, as I outlined above, developers are starting to realise that DRM just gets in the way of legit consumers. And as a matter of interest, once it is doing that, it's already irrelevant because the sole purpose of DRM is to stop zero day leaks (when the game goes gold, but before it's out for people to buy) in hopes of catching impatient people with a sale when the game isn't cracked before it's released, and with the aim of giving pirates a hard time breaking it. But developers have now realised (some of them) that this is not the way forward, so we're seeing The Simes 3, and other major titles being shipped without DRM now.

In addition to that, companies are engineering consumer friendly DRM like Goo. I mean, you hate restrictive DRM but how would you feel about Goo? Instead of tying itself to your current hardware setup, you register the game to your email address, and once youve done that you can install on as many computers as you like. Then to sell the game, you simply unregister it (which makes all the installs unplayable, but still uninstallable) or if you change your mind, just register it to your email again. Very flexible and a form of DRM I truly welcome. It combats both the "restrictive DRM" argument, and the "resaleability" argument.

As for import restrictions, there is only a vague justification for that, it's because they are too lazy to release in all territories at once and don't want to lose sales from other territories because they bought import games.
Now, imo, that's a complete bullshit reason, I don't mind if the game finally makes it's way to my country, but I do mind when I cannot play games like Namco X Capcom and Shin Megami Tensei NINE because of it. Even the PS3 in Europe is effectively region locked, sure you can import them, but one of the biggest import stockists around (PlayAsia) will not ship licensed Sony products to Europe under threat of legal action. I don't like region locking no sir, and am against it 100% as a form of DRM and as a form of product control. There are tons of Japanese games I want to play across a wide numbers of consoles, and a handfull of NTSC games I want to play because they will never hit Europe (Xenosaga 1 and 3, as well as Devil Summoner 2)
Posted by ahoodedfigure

I like the idea, but it depends upon the game.  Some games, no matter how big, can be beaten in a short amount of time, with no real return on playing them again.  These are often the story-driven ones that don't pad things out, the short but sweet games that are sort of like an event more than an interactive experience.  I don't see gamemakers of those types of games participating, because they're destined to lose money either way.

I also think that piracy is a mindset, which often means that no matter what the cost they're usually not going to bother doing it.  I'd bet that even if it was a penny people would often balk because people are lazy and don't want to go through the hassle of payment when they can just immediately download the thing and start playing.  Sounds absurd but I've known people like that in my life.

You might want to decrease the time limit for most games, not sure how short, maybe a week, with game makers having the right to increase or even decrease that amount. 

Some shareware games already use the model you described, but with the first thing being free but time-limited full game.  A person would try it and then steal it if they wanted it.  Asking them to pay up front may mean they just steal it early. 

One of the reasons I don't game as often as I should is that I don't steal these games.  If games were like this, I think it would appeal to someone like me who sort of feels left out of the gaming boom, as I could in a sense rent a game for a time to see if it was good, then keep the ones I wanted to keep. 

The architecture of this, too, would tempt thieves.   A full game that is time locked can be unlocked through clever cracking.  A cracked game can also be distributed.  It gets down to how functional and sophisticated the protection software is before someone finds a universal solution. 

As far as the bell curve, I think it will depend on the game, consumer response to the concept as well as the game, and the company's willingness to stick through a period of non-profitability, which in this market is often difficult because people are into the immediate response, the immediate payoff, and not willing to wait for long-term results.

Posted by The_A_Drain
@ahoodedfigure:

You obviously don't know how games are funded?

Games are already a long term investment, an investor gives the developer the cash to develop the game, and 1 to 2 years later, the game hits the shelves, then 6 months later the game has sold most of it's shipment and you can start counting the beans. That's a minimum (absolutely minimum) of 18 months to see a return, that's not a horrendously long term venture in business terms, but it's hardly an immidiate payoff, and the long term results of an experiment like this would be no profit, not more profit.
Posted by ahoodedfigure
@The_A_Drain:

"Obviously?"  Are you just being contentious?

What specific point in my post are you addressing?  What size game company are you talking about (or do you assume they're all the same size, with the same investment model)?  Why are Chinatown Wars and Mad World considered to have disappointing sales figures when the bean counters have barely had time to count?  Initial sales figures are a preamble to continued sales, at least to people who are big enough to catch larger sales trends, and who tend to invest more money in a product that could have been pushed through on less of an initial investment.  I'd guess that that isn't necessarily valid, but sometimes classics take time to catch on that's measured in years, not months, and with consoles switching over all the time, this means it gets pretty bleak, especially for those who issued their software late in a platform's life.

And as far as it not being profitable, are you assuming there would be no appreciable volume increase in sales with the lower price?

If you read a bit closer I made points similar to the ones you did, too.
Posted by The_A_Drain
@ahoodedfigure said:
"@The_A_Drain: "Obviously?"  Are you just being contentious?What specific point in my post are you addressing?  What size game company are you talking about (or do you assume they're all the same size, with the same investment model)?  Why are Chinatown Wars and Mad World considered to have disappointing sales figures when the bean counters have barely had time to count?  Initial sales figures are a preamble to continued sales, at least to people who are big enough to catch larger sales trends, and who tend to invest more money in a product that could have been pushed through on less of an initial investment.  I'd guess that that isn't necessarily valid, but sometimes classics take time to catch on that's measured in years, not months, and with consoles switching over all the time, this means it gets pretty bleak, especially for those who issued their software late in a platform's life.And as far as it not being profitable, are you assuming there would be no appreciable volume increase in sales with the lower price?If you read a bit closer I made points similar to the ones you did, too."
The specific point i'm addressing is the notion that if a company is willing to stick through a period of non-profit, they will see a sharp return, it's just ridiculous.

Also, the reason you get articles and posts about companies being 'dissapointed' or 'happy' with day one/week one sales is because these companies have forecasts, and expectations with which they can match up the actual sales, and if they aren't meeting those expectations then they tend to be quite vocal about it. But you can't actually know how much money you've made from a game until you've sold (nearly) all of the printed copies (as you have to keep reducing them in price until you sell them all)

As for classics taking time to catch on, generally when a game becomes a 'classic' (which is not a viable option for the huge majority of companies to depend on) regardless of how well it sells initially, it's no longer available and any purchases are resales or old stock and not anything the original manufacturer sees money from. Unless they choose to make a re-release. At which point, if a game has become a classic, a re-release is free money and a publisher would be stupid not to do it. The majority of games make the large majority of there sales within 6 months and after that peter out and die, if the developer doesn't make his money within this period, chances are he's not going to make a lot after that. Partly due to how long the game remains in the spotlight before something shiny and new drags consumers away, and partly because publishers themselves drop a product after a certain time to make room for another. After around 6 months, unless the game is selling amazingly well (We're talking Halo, Gears of war etc) then they start dropping the price and shifting the leftover stock.

And yes, I am assuming there would be no appreciable volume increase in sales due to the lower price, because it isn't a lower price. This system being proposed is nothing but a disguised rental, or a pay-for demo. If the whole product were to be reduced in price to $15 or so, then yeah you'd see a heck of an increase in sales, enough to make a similar profit? Who knows, probably not given that discs actually cost about $27 to put out in the first place. But yeah, companies have experimented with selling budget priced games before, 360 Katamari for example sold for half price, SFIV sold for £30 in the UK, and there have been other budget titles.

I still uphold that a far more viable solution to this, would be for publishers to muscle in on the rental market. You let customers rent your games for the standard, competitive price of a rental, but give them a discount coupon equal to the price of the rental (or a little more) provided they purchase within a limited time frame. That way you avoid potential legal issues, customer confusion, you make money from straight up rentals instead of having to implement some weird system involving time locks (in addition to standard forms of DRM that would be present) and you don't have to faff about hoping to god that the market loves your product and enough not to return them all after the $15 rental (which i'm still convinced nobody will actually buy into) because if they return them all, you, as a publisher and investor, are completely fucked. You then have to attempt to shift them all through normal channels, which you might as well have done in the first place.

I'm all open to new and inventive sales ideas, but this idea doesn't even seem to know what it is, let alone how it's going to make a profit or sustain it's business model beyond one or two failed experiments. But with a few tweakes, as I said, you can have publishers muscling in on the rental market quite happily.
Posted by JJWeatherman

I'm sorry but those first two sentences were just too much.   :P

I wanted to be the guy that comes into a meaningful thread and posts crap without reading the post. Looks like a lot of people responded with lengthy posts though. Sorry, this won't happen again.

Edited by PenguinDust

95% of the time, people will choose to pay the least amount that they can to receive a satisfying experience.  If you ask people to pay a limited amount up front for a full play-through then don't expect many to pay anymore than that.  The few that do will then choose to pay whatever is the cheapest they can to unlock the additional content (multiplayer?) that they want.  Of course, what if all you want is the multiplayer, are you going to ask those people to pay more even though they have no plans on enjoying the single-player.  If so then your proposal that consumers pay for the value they receive goes out the window. 

In a sense, what you propose exisits already, though.  People buy MMOs from retailers for $40 and then pay $15 a month to keep their content updated and unlocked.  I'm not advocating subscription services for Modern Warfare, but it does fall along your the same line of reasoning somewhat. 

I think people get angry when you ask them to pay for stuff already on the disc.  When DLC is just a code that you download off XBL to unlock more content already on the disc, they feel cheated by the company.  It's better to dole out the game in chunks like EA does with the Sims series.  Allow players to buy the framework of the game then ask them to buy the walls, windows, doors, etc over time until they have a full house...a full game.  But a publisher can't offer everything at once, because the gamer will ask "why can't I have it all now for the same low price if it's all done?"

As for the piracy point, I can't quite recall the name of the band (Radiohead? Nine Inch Nails?...maybe both?) who offered their new album online for whatever you wanted to pay for it, although there was a suggested price.  And still, even though it was free on the site, people still pirated it off torrent and rapid-share style sites. 

Posted by ahoodedfigure
@The_A_Drain:

When did I ever say a company would expect sharp return?  I'm talking about an expected initial sales.  I agree that it's irrational to expect a full picture from initial sales, but with companies making future plans, they will, as fallible human beings, often make plans (and adjust their amount of employees) based on projected sales figures, which take into account initial sales. 

Also, since every company's investment, development time, and liquidity is different, the model provided is too static to reflect the variation of developers and publishers.  Some are big, or small, enough to be able to develop a game quickly, often based on existing, successful properties or engines, throwing off a single investment-development-distribution-sales arc.

I did have re-release in mind when I was talking about a secondary increase in gross income, alongside expansions (that can also be repackages as new editions or classic editions).

The model as proposed sounds like a person who is willing to put in the time might be able to complete the game in the given rental period, so it's a de-facto lower price for them (one could argue, though, that it's tantamount to gambling because you don't know whether or not you will beat it within the fixed rental period).  You say it's a disguised rental, but rentals only yield a sale of one copy to the given rental agent, with the agent profiting on all subsequent rentals, while renting directly from the company allows the company to see the money instead.  One of the problems companies have had with rentals is that it's as if they're selling one copy to an entire community, especially communities that generally couldn't afford a full purchase but aren't willing or sophisticated enough to pirate the software.  Nintendo tried to fight renters because of this lost revenue more than a decade ago, if I recall correctly (and pretty much failed to stop them).  An alternate rental system might allow for companies to see more of this profit.

Both your idea and Eelcire's seem to be alternatives to the current rental system, so it seems that maybe that's a potential focus of this discussion.  I'm all for inventive sales ideas myself, but I don't see the point in denegrating an idea before it's had a chance to fail.  Success of an idea sometimes comes directly from how an idea is sold to consumers, too.  Some ideas have succeeded against odds just because other entrepeneurs were willing to step up when the initial backers were trounced.  I prefer just letting people try things rather than pretend that the market is 100% predictable; that's what makes a free market invigorating.  You can't really know how consumers will react until they do, even if it seems likely to fall apart.

Your rental idea is a lot similar, though perhaps less involved, but what are the details of your alternate plan?  From what I've gathered it would be a more competitive rental price paid directly to the publisher.  How would the product be distributed?  As with Eelcire's idea, would it be a complete product?  What happens after the week (or however long) rental time is up?  Can this rental time be extended?

How do all of these ideas compare to On Live (which is entering into open beta)? 

Out of general curiosity, how often does anyone involved in this discussion rent games, or participate in shareware programs, or know people who do? I've bought one shareware game in the past two years, and haven't rented in half a decade (due to lack of availability). 
Posted by The_A_Drain
@ahoodedfigure:

I rent quite regularly (or used to, and mainly films but some games) and the price is ridiculously cheap, (and even cheaper in the US) to the point where someone would literally scoff at paying $15 for a rental, even if it meant they got $15 off the retail price if they decided to purchase. Most one off rentals are around $4 - 8 for anywhere between overnight and a week, and subsription based models allow you to keep the game as long as you please.

We can't really compare to OnLive at the moment as they don't have a cemented payment structure outlined yet to my knowldge, but my assumption is a similar rental model to that of current subscription based rental outlets (you pay a monthly fee, and you keep the rented games as long as you like, how many you can have depends on how much you pay)

Shareware is just a fancy term for a demo, it doesn't line up to rentals or any of these ideas directly. Shareware programs are literally demos. You don't pay any money for them at all.

The major problem with this model is that previous budget games have more or less proven that lower price point does not necessarily increase sales by a significant amount, as you say the market is volatile and nobody knows how well a particular product is going to sell. But there is no direct correlation between budget price and increased sales. So there is also no reason to assume that a much reduced price would increase sales, especially something like what is being proposed (which as I pointed out, unless the cost is upped dramatically from that initially proposed, wouldn't even profit per disc, let alone on the overall project)

The standpoint that i'm coming from this at is that for publishers (i'm talking mid to huge here, smaller ones and independant game developers can afford to take crazy risks and either fail or succeed, but anyone above the size of Atlus has more to lose experimenting like this than they could possibly gain) it makes more sense to attempt to compete on the rental market than it does for them to try and stop piracy.

After all, this whole discussion seems to be born out of trying to find a method of stopping piracy, and as we all seem to be in agreement on now, a system like this will not stop piracy, or even deter it, which is pretty much proven by the mere fact the rental market exists alongside piracy. Pirates obviously don't want to rent games for a cheap price, so why would they want to rent them for a more expensive price? They won't, they'll just steal them.

In my mind, it's a far more logical idea for publishers to simply setup a rental service that houses all of their games, in the exact same way gamefly, blockbuster, and other online rental services work, but provide the consumer an incentive for using it rather than sticking with the current rental models. That incentive could be cheat codes, discounts, early access to games or features, whatever.

Another possible method would be that of microtransactions, foregoing this convoluted system in favor of simply selling the game dirt cheap and then making return on microtransactions. This works very well for free to play MMOs and online based games (single or multiplayer) because they dont have to worry about distributing physical discs so every penny earned (almost) goes to the publisher/developer. This is working incredibly well for people like Aeria games, so much so in fact Turbine is switching to the free-to-play model for Dungeons and Dragons Online: Stormreach.

This method has been attempted once to my knowledge on consoles, with Beautiful Katamari for Xbox 360. The game was put out at half price, and additional content was sold through the marketplace. To my knowledge this failed miserably, but the system itself is much more viable than the one being proposed in the OP. It relies on the customers support yes, but they have still purchased the initial product for a fair price and everybody knows where they stand.

The other problem with the time based solution is that, this is fine for downloadable products and rental software, but for hard-copy disc based products you either need to have the console connected to the internet (and the console itself to have software to deal with this, given they are closed platforms any and all data has to go through MS/Ninty/Sony software first, so the console itself would need to be fitted with some method of recognizing these time limited games) or you'd need a dongle, which, are illegal. (A dongle in the traditional sense is a seperate product needed to activate another product, so for example, an NES game that comes with a special key shaped object, and only works when the key is inserted into the cartridge) you could get around this with a password system instead, but as with PC games, these codes would be broken easily enough.

It's just too much of a struggle to implement on anything other than PCs or downloadable (PSN, XBLA, etc) games. If publishers want more money, they need to find another route, and likewise if they want to stop piracy, this is not the way to go about it all it will do is waste money and bring DRM hassle the PC crowd is so vocal about to the console crowd as well.

Edited by ahoodedfigure

Regarding budget pricing, it seems initial budget pricing is taken as a statement about the quality of the game by some consumers.  It seems that in order to impress upon consumers that they're getting a full product for an altered, below-industry-standard price, there needs to be some sort of statement.  This would be unprecedented, but I think it might increase the profile of a budget priced game with some.  Personally the price doesn't reflect the quality of the game at all, but some higher end people with a budget (or habit) already allotted for games are willing to pay higher-end prices for games they see as premium or prestige purchases, where the cost points directly toward their satisfaction behind the purchase.

When bigger name games that come from reliable franchises alter their pricing or distribution, it's got a greater chance, though I'd never argue a guarantee, that this might cause a shift in the industry.  I can imagine that offering a plan alongside a Halo property (meaning one where you play master chief, as any deviation from the formula is likely to scare people off) is less risky than for a new title which happens to have good buzz or a promising pedigree.  They of course have more to lose, though, should their program or consumer reaction be disastrous.

Unfortunately I do agree that piracy is not likely to decrease significantly, although I would say it might decrease marginally.  I think most pirates don't care about cost, as I said in my initial post.

Setting up a distribution service like Gamefly would require substantial infrastructure, but at least it's a practiced rental model.  Currently, since Gamefly is a distributor, though, and not a games producer, I wonder if alienating current retailers would be to the publisher's advantage or detriment.  If a publisher offers direct rental, then distributors, renters, and retailers who benefit from the publisher's matierals takes a decrease in profit.  Online ordering and direct distribution in general has taken a huge chunk of local retail sales in other industries.  If these are developed in tandem, with users being given a choice, they will often choose the cheaper and more convenient. 

This may just be the wave of the future, with retailers slowly congealing or going out of business (as new online models continue to be tested on the market), while still maintaining a niche market due to consumers needing information and expertise that they don't find online.  But I wonder about the tradition behind going to a gamestore as opposed to buying products online, if a lack of that might cause problems down the road for the games industry, since it's often children that are the most impressed with hands-on demonstrations and in-person products, and the games industry is all about getting them while they're young. 

If in direct competition with current rental models, they would have to contend with Gamefly's very tolerant return policy, and local stores' flexibilty and low overhead (since they would likely be centralized, at least to start).  With a physical product, enforcement of breach of rental contracts, too, would be taxing if they weren't going to be as tolerant as Gamefly, while having a timing device built into the software doesn't sound very different than the initial proposition, if that's what you mean by rental software.

From a personal standpoint I'm a bit wary of microtransactions, as I feel that sometimes it dilutes gameplay.  There are some definite models for success with specific examples, but I hope that the industry doesn't move completely in that direction, as I can see this dilution actually affecting user reaction to games.  But yes, that's a vialble business alternative in some cases.

Apropos of this discussion, is there any data on the result of Ubisoft's Prince of Persia being released without DRM protection?

Posted by The_A_Drain
@ahoodedfigure:

I've not seen any results yet.

And my arguments against the time constrained software were aimed at the OP, the rental model I suggested in place of the OPs idea is just that, a standard rental model just like any other, but run directly by the publisher as that way they can cut in on some of the profits as currently, rental stores do not pay a premium license like they used to for VHS's, they simply go out and buy the game direct from the distributor like any other store, and then potentially make lots of money from the single copy. I neither agree nor disagree that that money should go to the publisher/developer instead, I have no opinion personally. But my argument is that the way I see things, there is more money in snatching customers from other rental outlets than there is in attempting to convert pirates, or confusing customers with some weird time rental scheme that would need expensive software modifications and the same infastructure setup as a standard rental service. My argument is that you might as well simply setup a regular rental service that everybody already knows how to use, but give customers extra incentive to use it (such as a discount coupon off the price of the actual game, which produces the same result as the OP's suggestion without the huge risk)

But I suspect that companies will instead be making money off services like OnLive, or beleive that consumers are too firmly entrenched in current rental services. The other downside is that you cannot offer a full variety of games, only the ones you publish, so despite the incentives, consumers might still be (or believe they are) better off with a traditional blockbuster or gamefly style service (I must admit I dont know the specifics of gamefly, it's not available here)

Not only that, but don't services like Metaboli already offer a similar product to what the OP described? Time based rentals, followed by a full purchase if you so wish (although they charge full price)? And in those situations, the benefit only outweighs the cost because the people in charge havn't invested in the production of the game itself, simply a fee (which in comparison is tiny) to license them to be able to distribute the game.

Many people are wary of microtransactions, for many different reasons which is why I stated that only certain types and genres of game can really support them, but I feel personally that developers and publishers are much better off going about there business as normal, but instead concentrating on what they are currently working on, DLC. It's still in it's infancy now, sure, but eventually they will be the same size and quality as expansion packs we used to see for PC games, and I believe that by enhancing a players experience with one game (and putting the DLC out as cheap as you can, even if all it does it break even) that you slowly beign to gain consumers for life. I feel that instead of lashing out, or trying crazy experiments, or constantly upping DRM (or conversely throwing their arms up and abandoning it) larger publishers should be working towards keeping there customers happy, after all that's what determins whether or not a customer will return to you, their experience with your company and it's products.

Once we get past the initial hump of "This should have been in the game in the first place" (which regardless of how someone feels about it, is a bullshit, consumer kneejerk reaction, very rarely does content get deliberately pulled from a game in order to be used as DLC (happened with Tomb Raider though) more often than not, it is developed in tandem with the game under a seperate budget, which makes it, whether people want to accept that or not, a seperate product) and the initial, sparse offerings of questionabel pricing and quality (Horse Armor, and Fallout 3 DLC for example) we will eventually begin to see meaningfull expansions as decent prices that consumers will accept and will help build brand loyalty (Halo: ODST for example, and the Oblivion expansions). I feel that is what publishers should be focusing on, it also allows them to make more cash later down the line with things like GOTY releases and re-releases including expansions/DLC. These re-releases are a more viable dependancy once you've built up a good degree of consumer loyalty.

I honestly feel that a system such as the one proposed by the OP is totally the opposite way of dealing with any such problem that is percieved to exist (I honestly feel that 90% of piracy cannot be 'dealt with' as they will either continue to steal games, or stop playing games altogether, they wont pay for them) instead people should focus on giving consumers a reason to give a shit and a reason to pay a decent asking price (And with current development costs, $60 is a very reasonable price, and the Wii with it's lower development costs, enjoys a lower RRP price) whereas currently, the consumer doesn't care that it cost X million to make Terminator Salvation, because it's a pile of shit and at 4 hours (then your avg consumer will ditch the game) length, that's something like 15 bucks an hour. Which is horrendously expensive. Developers need to plan better, develop smarter and more efficiently, and need to offer consumers a product they actually want to buy.
Posted by ahoodedfigure

If you're curious how gamefly works, read this and bear in mind that you can keep the physical games as long as you want:

Gamefly Help Page

So, rental models vary quite substantially from place to place, and to me there really isn't a standard that I'm fully aware of and compare things to.  Some libraries actually loan out games, or have games in-house where people can play them for free (or a monthly fee if you have libraries like that).

I'm not familiar with Metaboli, so I couldn't really comment on that.

I'm curious to see if OnLive could succeed, as that's something I might actually invest in, assuming I'm in the right place and have met their tech-specs.

Edited by The_A_Drain
@ahoodedfigure:

Ahh yeah, Gamefly looks pretty much exactly the same to the rental place we have here called LoveFilm (which also does games) they send you the disc, and you keep it as long as you like.

Rental models do vary from place to place, but the basic principle is always the same, you pay money, usually not a lot, and you play a game for a short period of time before returning it. This makes cash because the initial investment per disc for the company is something like $32, the reason a system like this wouldn't work for a publisher (in the way the OP suggests) is because they aren't simply buying in the discs, they are producing the game and then pressing the discs themselves. Say for example that a game costs you $6 million to produce, not stupidly high, not particularly low budget either. Now, assuming the figures I posted earlier (things go up or down, but those are a good gauge) you're looking at making $27ish per disc sold at $60. To recoup that 6 mill, you have to sell 222,223 copies of the game, and that's just breaking even, forget profit. Whereas a rental place only has to rent the game 3 or 4 times and it can start making profit. If the publisher took the OP's method, and we for example, assume for now that people buy into it, and pay an assumed amount of $15 initially, then lets give a fake average (that in my opinion is high) of a $25 donation afterward, thats $40 per disc, which means they are only making $7 per disc. Which means instead of selling 222,223 copies in the normal fashion, they have to sell 857,143 copies just to break even. And that's utterly insane. I honestly don't think anyone, anywhere could think that a model like this could increase sales by 400%, that's just utterly insane. And that's assuming a pretty generous donation by the customer (which as I stated, I think is bonkers high, you let people choose and they will choose to pay the minimum) and in addition to that the system is competing with rentals which will be much cheaper than the initial 15 bucks payment. Not to mention it takes a lot longer to get your investment back, and the initial investment is going to have to be large as, assuming you even think you could profit from the system, you have to print 4x as many discs to begin with.

Not to mention that, the above scenario assumes everyone who rents the game buys it. If they don't, you have to go another round (and this time the discs are second hand remember, so legally you can't even sell it as a new product, which might have potential legal issues for the entire system, not to mention pissing off the consumer and reducing the chances of a sale, let alone a profitable one)

I just think it's utterly insane. It would be much cheaper, much less risk, and potentially even beneficial to building brand loyalty if publishers just rented their own games like metaboli/gamefly do, but offered incentives such as discounts, cheat codes, etc to differentiate themselves from the regular rental market.

Metaboli works the same way as these rental services, except you download the games and install them, and they will work so long as you have an active subscription. The same way many people (including myself) are assuming OnLive will work. The only difference is that you don't have to wait for downloads, and you can play them right on your TV from the get go without any technical knowledge. (not that it takes much knowledge to play PC games on a nice HD TV) and that you will (presumably) have the option to purchase games permanently as well.