Thursday, October 8, 2009

Thinking Digitally

So I was listening to the latest Player One Podcast this morning, and...what? You don't listen to the Player One Podcast? You should. They are some entertaining dudes. Anyway...

There's been a lot of discussion about the PSPgo and the continuing proliferation of digital content, and the guys on the show were talking about it. Though there are lots of upsides to digital-only content (fluidity, futuristic, no physical media), they pointed out some significant downsides as well, especially for consumers (fewer price drops, no resales, no physical media).

This got me to thinking about something -- wouldn't it be possible to do virtual resales of games? Let's say I purchase a game from the Sony store day-and-date for $40 and download it to my PSP go. What I've really done is purchased a license to play that game on my hardware. What would prevent me from reselling that license to another customer later for a reduced cost? And what would prevent Sony (the licensor) from building a storefront to facilitate this transaction and taking a bounty from the sale? Oh shit, GameStop is suddenly even more scaredy than before! Seriously, has this occurred to anyone else? Is there a reason it wouldn't work? Think about it:

- A game comes out on X/X/XX date and is only available digitally at full price.
- Some amount of time after release (determined by demand) players can sell their license to someone else for a % of the original cost (determined by licensor), and pay a commission to the licensor via the storefront that manages the transaction. The game is no longer playable on the original license holder's hardware.
- The resold license cannot be sold again, or it can be sold again at an even lower percentage of return. (Thus keeping demand for "new" games higher while still offering a lower price point for players who want to wait to play a title.)

I have no idea if this makes sense or not. (I suspect that it does not make sense somewhere, or someone would already be doing it.) But there's definitely something attractive here to game publishers: They could set their own resale prices! And reclaim some of the money that the GameStops of the world are making on the secondary market! (Sony, btw, has a history of doing this: they have attempted to grab a piece of the RMT market by allowing EQ and EQII players to purchase items with Station Cash on their website. Basically a microtransaction model.)

But back to the digital downloads. We ask, couldn't the game manufacturer simply lower the price of the game over time and probably make the same money? (Essentially what they are doing now?) Sure, but it's already been noted that digital downloads are classically overpriced and almost never go on sale. (Seriously, why the hell would you buy something like Prey for $20 on demand when you can buy it used in a store for five bucks?) How much money are publishers leaving on the table? Something is obviously broken...the marketplace does not seem to have the same sway over digital downloads as it does over physical copies. Maybe this will change as more consumers migrate online? Who knows. All I know is, from a consumer standpoint, if I knew I could later resell a digital copy of a game, I'd be much more likely to buy it. And I'm somebody who almost never resells games.

2 comments:

Nathan said...

I think that while the idea of reselling is interesting, it would probably involve opening too many legal doors that would just end up causing headaches for the licensor. Currently, all they need is a clause stating that for the license to transfer you need their approval, and they are effectively blocking all transfer. They also have no precedent showing that transfer has ever, or will ever be allowed.

While they still would be able to maintain approval for transfers, I think the precedent set by allowing one transfer might open them up to more trouble than they are willing to deal with.

My guess, because I agree they need some way to make money off of old games, is either price reduction, or inclusion of out dated games in bundles of older games, or bundled with newer software.

Matt said...

Hmmm. Well, as always, it probably comes down to money. If the publishers can make more money by allowing digital transfer of software licenses, they will probably do it. Right now, no one can afford to piss of the traditional retailers, since they provide so much revenue. But as time goes on, those retailers will have less and less power, and I expect we will see a shift in how the publishers license their content digitally.