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29Mar2012

Author:: Matt Gardner
Category:: News
Tags:: David Braben, Denis Dyack, GameStop, Pre-owned, Silicon Knights, Used games

Dyack: "There's Not Going To Be An Industry At All" If Used Games Market Left Unchecked

After David Braben weighed in on the used games debate, it seems that Silicon Knights' Denis Dyack is eager to get stuck in on the matter too. Dyack has argued that if current retail models persist, and the used games market continues to grow unchecked, that very soon "there's not going to be an industry" at all.

"From a consumer side, [in the last few years] we started seeing used games really come into fruition, and I believe that has caused quite a problem," said Dyack, talking to GI.biz. I would argue that used games actually increase the cost of games."

"There used to be something in games for 20 years called a tail, where say you have a game called Warcraft that would sell for 10 years. Because there are no used games, you could actually sell a game for a long time, and get recurring revenue for quite a while. Recurring revenue is very key.

"Now there is no tail. Literally, you will get most of your sales within three months of launch, which has created this really unhealthy extreme where you have to sell it really fast and then you have to do anything else to get money."

This rather echoes Braben's concerns that if a game fails to do well in its launch week, it's rather scuppered from thereon out. Dyack's concern, though, is that the pre-owned debate is receiving backlash based on assumptions of greed from the industry. However, he suggests that far from looking to screw consumers over with higher prices, the war against the pre-owned market is one of survival. Put simply, he says that used games are cannibalizing the industry, and if things continue the way they have been, there might not be an industry left very soon.

"I would argue, and I've said this before, that used games are cannibalizing the industry," he stated. "If developers and publishers don't see revenue from that, it's not a matter of hey 'we're trying to increase the price of games to consumers, and we want more,' we're just trying to survive as an industry. If used games continue the way that they are, it's going to cannibalize, there's not going to be an industry. People won't make those kinds of games. So I think that's inflated the price of games, and I think that prices would have come down if there was a longer tail, but there isn't."

The simple fact, according to Dyack, is that development costs have been spiralling too, not helped by a global recession, and a constant desire for improved aesthetics on improving technologies.

"On the top side of the triple-A, highly-funded titles, you have $100 million games, and looking towards next generation people once again are saying we're going to have development costs that are two or three times of what they were last generation. I cannot see how that economy is going to continue," he continued.

"I don't think as an industry we can afford $300 million budgets. I think some games can, don't get me wrong. For a game like Call of Duty, if they had a $100 million budget, or whatever their budget is, they can afford it. That's not the industry, that's sort of a one-off. But what is everyone else going do?"

Whatever happens, sooner rather later, that tentative relationship between retailers, publishers, and developers is going to tested.

Add a comment21 comments

Casting my memory back, games have always been expensive. You could put that down to the fact that it wasn't as big an industry as it is now, games for say the Amiga or SNES/MG used to cost me around £25-35. So when gaming became more popular, the price did not fall because budgets increased. As a consumer though the current business model works well for me I pick up games 6 months to a year after launch for a reasonable price of something between £10 and £20, this means I can buy more games. If the industry wants to keep the price static for its lifespan I can't see that being realistic not if its selling through shops.
Has anyone from the industry said what the prices would be if pre-owned games didnt exist.

That's dramatic BS. Create a good game and actually get people interested properly and you'll sell your game. Blaming preowned is nothing more than trying to shift your own shortcomings onto something else. The preowned market has existed for a hell of a long time, it's not been killing the industry. The gaming industry is doing great and will continue to thrive if the preowned market sticks around.

What you need to do is create incentives to buy a game new rather than actively combat preowned. Give people who buy it new some content, line up some dlc here and there and have new copies come with a pass to get that for free and provide the ability for people with preowned copies to purchase that content. There's many ways you can go about making people want to buy new or get some money from people who buy preowned just by giving some incentives.

When you try to combat the preowned market what you end up getting is many people who will refuse to buy that game. People oppose that in the same way that many PC gamers will refuse to buy games that have certain DRM in them. You're going to lose out on money either way. If you combat preowned, people choose not to buy. If you don't combat preowned, people will buy preowned preventing you from getting money. That leaves you with the option of not annoying gamers and finding ways to keep your game relevant.

Games that combat the preowned market in ways, PC and downloadable games in general have the issue of staying relevant after launch. It's something many developer struggle with and it's something that you have to consider and work with when it comes to the games industry these days. I'm not saying the preowned market doesn't affect things but I think he has the wrong idea by placing the blame and overreacting to what the effect or preowned games will do to the entire industry.

There's also this to think about. If your game makes most of its money in the first three months and then loses out to preowned copies of that game being circulated then perhaps that means your game is too expensive for peoples tastes and they don't place enough value on that game to pay full price for it.

I believe the preowned market does have a big impact but I believe that you can take a lot more from that to work with and figure out what you're doing wrong and how to improve rather than work against. It's almost like piracy, combating it is for the most part pointless as there will be a work around in a day, 2 weeks at the most from release and if you go to more extreme lengths then you end up punishing legitimate customers and turning away potential others. The way to combat this is to give your game value and make people want to support you.

Quite a bit there but I thought it was worth putting down. I can see both sides of this but you need to sit in that middle ground if you want to get anywhere. Sit on once side and you can't reach the other. What he wants will come in due time as consoles will inevitably go the same way as PC at some point with digital distribution taking hold and keys being used to activate games but until then, don't annoy your potential customers.

That's dramatic BS. Create a good game and actually get people interested properly and you'll sell your game. Blaming preowned is nothing more than trying to shift your own shortcomings onto something else. The preowned market has existed for a hell of a long time, it's not been killing the industry. The gaming industry is doing great and will continue to thrive if the preowned market sticks around.

What you need to do is create incentives to buy a game new rather than actively combat preowned. Give people who buy it new some content, line up some dlc here and there and have new copies come with a pass to get that for free and provide the ability for people with preowned copies to purchase that content. There's many ways you can go about making people want to buy new or get some money from people who buy preowned just by giving some incentives.

When you try to combat the preowned market what you end up getting is many people who will refuse to buy that game. People oppose that in the same way that many PC gamers will refuse to buy games that have certain DRM in them. You're going to lose out on money either way. If you combat preowned, people choose not to buy. If you don't combat preowned, people will buy preowned preventing you from getting money. That leaves you with the option of not annoying gamers and finding ways to keep your game relevant.

Games that combat the preowned market in ways, PC and downloadable games in general have the issue of staying relevant after launch. It's something many developer struggle with and it's something that you have to consider and work with when it comes to the games industry these days. I'm not saying the preowned market doesn't affect things but I think he has the wrong idea by placing the blame and overreacting to what the effect or preowned games will do to the entire industry.

There's also this to think about. If your game makes most of its money in the first three months and then loses out to preowned copies of that game being circulated then perhaps that means your game is too expensive for peoples tastes and they don't place enough value on that game to pay full price for it.

I believe the preowned market does have a big impact but I believe that you can take a lot more from that to work with and figure out what you're doing wrong and how to improve rather than work against. It's almost like piracy, combating it is for the most part pointless as there will be a work around in a day, 2 weeks at the most from release and if you go to more extreme lengths then you end up punishing legitimate customers and turning away potential others. The way to combat this is to give your game value and make people want to support you.

Quite a bit there but I thought it was worth putting down. I can see both sides of this but you need to sit in that middle ground if you want to get anywhere. Sit on once side and you can't reach the other. What he wants will come in due time as consoles will inevitably go the same way as PC at some point with digital distribution taking hold and keys being used to activate games but until then, don't annoy your potential customers.

Dear Denis,

Why don't you try competing with the pre-owned market rather than than fleecing day one consumers. A lower opening price point would convert far more gamers to buying new than waiting for the inevitable pre-owned price drop for which you'll earn the grand sum of zero...

100% of nothing is less than than 50% of something...

Foolish man is foolish.

The used games market exists because games are often far too expensive to buy new or they don't have enough longevity to them outside of yep, you guessed it, expensive downloadable content.

The used games market exists because people like YOU will it to do so. You do nothing to discourage it, other to knock out preventative measures when you should be trying to win over your fan base with value for money products, rather than punish those who might not enough disposable income.

Load of rubbish Dyack.

Look at the release stats for MW3 (much as I hate the pile of crap game).

"Within 24 hours of going on sale, the game sold 6.5 million copies in the U.S. and UK alone and grossed $400 million"

What that doesn't take in to account was that only 5 copies sold, 2 in England, 2 in US and one to someone at Sledgehammers Mum who was said to be "very proud of my little Davey". The rest of the 6.5 million copies were the first 4 passed about on the used market, really quickly.

EDIT: Rant got interuppted... so yeah, MW3.... this is STILL in the top 10 sales chart and has not been out of it since release (when was that... oh yeah, that was that LAST YEAR!).

While I don't trade / sell used games that often, it does mean you can take a risk on buying games you have never heard of before as if it is crap you can trade it in. What will happen if you can't do this is games will only ever be a sequel of a sequel and we will only ever play Call of Duty titles for the rest of eternity.

Last edited by DivideByZero, Mar. 29, 2012 at 14:17

hang on the other day video games were more lucrative than movie's or music in this country...

http://www.dealspwn.com/report-videogames-lucrative-movies-uk-year-97685

?!?

Home taping is killing music... don't forget that too!

Home taping is killing music... don't forget that too!

classic.

Most of my reading on this has the consumer totally against this, if this is the case, is the industry taking no notice of that? the fact that it is very unpopular.

I'm wondering if there are parallels with the movie industry, will we end up been told that if you go see a movie in the cinema you get extra scenes, different ending lol

Back to serious mode, there have been a lot of studio closures in the past few years but are we led to believe this is due to the preowned market or is it just bad business practice, unreal expectations, budget overspend. Gaming industry sadly has become like the other big industries music and film, they will do whatever it takes to ensure we spend the maximum amount and get nothing at face value.

Take 3 games.

Trine, Bulletstorm and MW3.

Which one is going to fail?

Will it be

a) Trine, the little indie game

b) Bulletstorm, the fun game by a medium - large company

c) mw3, the massive budgeted AAA title from a major gamehouse.

Well, Trine is cheap and inventive and fun, so that will do well. MW3 will sell really well even if it is a bad game.... that leaves Bulletstorm... a new IP, average game by a now average once great company... it was bound to fail.

Used games did not ruin this game, it was ruined before release. It was bound to happen. Delaspwn reported on the struggle in the middle... this is it. This is the cause and upsetting your customers wont fix it.

Last edited by DivideByZero, Mar. 29, 2012 at 15:33

If the second hand games market is such a lucrative cash leach, how come Game & Gamestation are up **** creek?

Used games aren't new. Nothing changed in the last 10 years so any publisher/game studio knows what they are dealing with and should set their business model taking into account all the features of the market.

Where were you shopping for your Amiga games, gunnx, Harrods?

The most I ever remember forking out was £16 for Monkey Island 2.

My average spend must have been less than a fiver.

Spectrum games were cheap enough for me and my brother to somehow amass a collection of over 500 games on our 50p/week each pocket money

I think that preowned has only become such a problem this time around because of the length of time between console releases. There are so many discs out there in the wild.

At the peak of this generation I was buying at least one console game a week, now for over a year I've bought less than one a month. I have too many games in my collection that I haven't played, there are older AAA titles I don't own that I haven't yet played. So much so that I couldn't care less about whatever hyped new release is around the corner.

The manufacturers were naive to think this gen could last significantly longer, the tech is up to it but they didn't consider this software saturation. To get people buying new games a new console is needed, yesterday.

I think that preowned has only become such a problem this time around because of the length of time between console releases. There are so many discs out there in the wild.

At the peak of this generation I was buying at least one console game a week, now for over a year I've bought less than one a month. I have too many games in my collection that I haven't played, there are older AAA titles I don't own that I haven't yet played. So much so that I couldn't care less about whatever hyped new release is around the corner.

The manufacturers were naive to think this gen could last significantly longer, the tech is up to it but they didn't consider this software saturation. To get people buying new games a new console is needed, yesterday.

Don't agree at all, there couldn't be a worse time to develop/release a new wave of hardware.

Console manufacturers have known for some time that the business model of a dedicated home gaming console is fundamentally flawed. And I think the next gen could possibly be the last.

The real problem is that big publishers and manufacturers have decided instead to bury their heads in the sand over issues such as pricing, timing of releases, second-hand games, etc.

Take the Christmas release rush, I realise that it's peak season for buying games but really some weeks in November saw the simultaneous release of 3 or AAA titles on both Xbox 360 and PS3. With the economic climate in the big markets (US, Japan, EU) being as it is gamers are less willing to fork out 120 quid on those 3 games when they know a week or two later, following the release of yet more AAA titles, they can get the game for much cheaper or even pre-owned and that's before the crazy trade-in deal we saw last year.

Think of Game and HMV's strategy just before Christmas, I picked up Batman Arkham City, played the game sold the online code on ebay then traded in the game (+a fiver) a week later for Battlefield 3 (I think)+again sold the online code - I then played that game (to be honest I wasn't that interested but I wanted it to get the 5 pound trade-in for Skyrim the week later) and so on and so on. Net result I played all the big releases during the biggest season and yet the net cost to myself was less than 50 quid.

If that's what is happening in a relatively wealthy market like the UK, well you can imagine what's happening elsewhere.

A more well thought out/planned release schedule would be a great start for most publishers yet due to some bizarre masochistic shareholder pressure to sell during the Christmas season it seems unlikely.

If a game can stand stand on its own two feet sales-wise, think GTA, Mass Effect, etc then it makes sense to stagger releases throughout the year to maximise sales/minimise competition. Hopefully more publishers will realise this and we'll see an end to the awful off-season where very few games are released.

Pricing is yet another issue, most games launch with completely unrealistic RRPs, one reason why mobile gaming is so popular is the pricing strategy (of most anyway). People are prepared to give new ips a chance at a couple of quid, likewise for some PSN/XBLA titles, people have shown they're willing to give games a chance at 10 or 12 quid. Yet some publishers think that just because they're releasing the title as a physical product in the shop, it should automatically come with a 40 quid price tag, hence it bombs. Think of some of the abominations in this generation: Pure Football, Bodycount, etc. All were massive commercial failures that only a week or so after release were down to ten quid or so anyway.

I think that publishers/manufacturers need to be very careful with how they proceed regarding the second-hand market too, I think many regulators would take a very dim view of some of the proposals that have been leaked/raised. It would be far better to price digital releases accordingly and thus eliminating the need for a used-games market (and associated distribution/manufacturing costs - and GAME, etc). There is no justification whatsoever for the pricing of full game downloads on PSN/XBLA - 50 quid for FIFA 2012, Assassin's Creed Revelations, FIFA Street, etc.

It seems an irony that as the gaming market has boomed, attracting more and more customers, it seems to be as difficult as ever to make money.

[quote]I think that preowned has only become such a problem this time around because of the length of time between console releases. There are so many discs out there in the wild.

At the peak of this generation I was buying at least one console game a week, now for over a year I've bought less than one a month. I have too many games in my collection that I haven't played, there are older AAA titles I don't own that I haven't yet played. So much so that I couldn't care less about whatever hyped new release is around the corner.

The manufacturers were naive to think this gen could last significantly longer, the tech is up to it but they didn't consider this software saturation. To get people buying new games a new console is needed, yesterday.[/quote]

Don't agree at all, there couldn't be a worse time to develop/release a new wave of hardware.

Console manufacturers have known for some time that the business model of a dedicated home gaming console is fundamentally flawed. And I think the next gen could possibly be the last.

The real problem is that big publishers and manufacturers have decided instead to bury their heads in the sand over issues such as pricing, timing of releases, second-hand games, etc.

Take the Christmas release rush, I realise that it's peak season for buying games but really some weeks in November saw the simultaneous release of 3 or AAA titles on both Xbox 360 and PS3. With the economic climate in the big markets (US, Japan, EU) being as it is gamers are less willing to fork out 120 quid on those 3 games when they know a week or two later, following the release of yet more AAA titles, they can get the game for much cheaper or even pre-owned and that's before the crazy trade-in deal we saw last year.

Think of Game and HMV's strategy just before Christmas, I picked up Batman Arkham City, played the game sold the online code on ebay then traded in the game (+a fiver) a week later for Battlefield 3 (I think)+again sold the online code - I then played that game (to be honest I wasn't that interested but I wanted it to get the 5 pound trade-in for Skyrim the week later) and so on and so on. Net result I played all the big releases during the biggest season and yet the net cost to myself was less than 50 quid.

If that's what is happening in a relatively wealthy market like the UK, well you can imagine what's happening elsewhere.

A more well thought out/planned release schedule would be a great start for most publishers yet due to some bizarre masochistic shareholder pressure to sell during the Christmas season it seems unlikely.

If a game can stand stand on its own two feet sales-wise, think GTA, Mass Effect, etc then it makes sense to stagger releases throughout the year to maximise sales/minimise competition. Hopefully more publishers will realise this and we'll see an end to the awful off-season where very few games are released.

Pricing is yet another issue, most games launch with completely unrealistic RRPs, one reason why mobile gaming is so popular is the pricing strategy (of most anyway). People are prepared to give new ips a chance at a couple of quid, likewise for some PSN/XBLA titles, people have shown they're willing to give games a chance at 10 or 12 quid. Yet some publishers think that just because they're releasing the title as a physical product in the shop, it should automatically come with a 40 quid price tag, hence it bombs. Think of some of the abominations in this generation: Pure Football, Bodycount, etc. All were massive commercial failures that only a week or so after release were down to ten quid or so anyway.

I think that publishers/manufacturers need to be very careful with how they proceed regarding the second-hand market too, I think many regulators would take a very dim view of some of the proposals that have been leaked/raised. It would be far better to price digital releases accordingly and thus eliminating the need for a used-games market (and associated distribution/manufacturing costs - and GAME, etc). There is no justification whatsoever for the pricing of full game downloads on PSN/XBLA - 50 quid for FIFA 2012, Assassin's Creed Revelations, FIFA Street, etc.

It seems an irony that as the gaming market has boomed, attracting more and more customers, it seems to be as difficult as ever to make money.

Where were you shopping for your Amiga games, gunnx, Harrods?

The most I ever remember forking out was £16 for Monkey Island 2.

My average spend must have been less than a fiver.

Spectrum games were cheap enough for me and my brother to somehow amass a collection of over 500 games on our 50p/week each pocket money

I was thinking the same thing and SNES games were usually between 35-50 quid! The most expensive Amiga title i ever bought was dreamweb which i bought on release and at full price!(a first for me)as after playing the demo I was hooked. It was 34.99. That hurt. Me n my bro played it for 72hrs straight without breaks till we were done lol. Totally worth it!

Where were you shopping for your Amiga games, gunnx, Harrods?

The most I ever remember forking out was £16 for Monkey Island 2.

My average spend must have been less than a fiver.

Spectrum games were cheap enough for me and my brother to somehow amass a collection of over 500 games on our 50p/week each pocket money

At the end of Amiga days I remember getting bargains but the games definitely were expensive on release, I've still got some games with the price stickers on them and the magazines showing the prices. And you have to remember that back in the 90s £30 for a game for a kid was an incredible amount of money, you really could only afford to buy a few a year, I ended doing what I assume most people did and swapped with friends. A combo of being young and games being "harder" meant that you invested a lot of time in one game, I don't remember ever buying a new game and finishing it on the same day after a 5-6 hour session, which seems a common thing now.

The most I ever remember forking out was £16 for Monkey Island 2.

I still have my box and I don't take price stickers off, so I can check exactly how much I paid for some of my Amiga games.

But games have been about the £40 RRP for years and years... SNES onwards... SNES we really bad... a game with a memory mod was like £65 or something... can't remember which one... maybe Donkey Kong or something (I never had a SNES).

I think the next gen could possibly be the last.

Great, if that is so then anyone who is a real gamer will leave console gaming and go to PC gaming to keep up with graphical advancements.

Once games look like Final Fantasy The Spirit Within during gameplay then I may agree with you on this, but we are nowwhere near that.

Even if the graphics stay the same as they are now, better hardware would simply mean more FPS and less jerky movement (none of this 30fps rubbish).

If you release the PS4 and all the games are coded the same, BUT you have 64xAA and 16xAF and it runs at 1080p / 60FPS without dropping a frame then that is a massive step forwards.

Also, there are already loads and loads of plans to get a higher res TV... as and when that does come out (and it will) gaming will simply need to support that too. That will need extra power.

To say that gaming has reached the end of it's possibilities is very short sighted and we would still be playing pong if people all thought like this.

Last edited by DivideByZero, Mar. 30, 2012 at 09:55

The most I ever remember forking out was £16 for Monkey Island 2.

I still have my box and I don't take price stickers off, so I can check exactly how much I paid for some of my Amiga games.

But games have been about the £40 RRP for years and years... SNES onwards... SNES we really bad... a game with a memory mod was like £65 or something... can't remember which one... maybe Donkey Kong or something (I never had a SNES).

SNES games were mad prices, it was cheaper for me to buy the us converter then buy import games than it was to get uk releases!!!

The real problem is that big publishers and manufacturers have decided instead to bury their heads in the sand over issues such as pricing, timing of releases, second-hand games, etc.

^This

Pre-owned isn't the problem. It's a symptom of the problem. The problem is people not buying new. Inflexible pricing models, a foolish desire to charge top dollar for digital items, a lack of consumer trust thanks to Day 1/On disc DLC, and as you say massive saturation around November.

I thought Square took quite an interesting risk last year with Deus Ex, releasing so close to convention season, but it worked. The hype generated by E3 and GC ran straight into its August release. EA have started to use late-Feb/March to push big titles, as have Namco, but it's not enough. Gamers like games all year round, even in summer.

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