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One of the biggest pieces of news in the gaming industry this past month involved Resident Evil: The Mercenaries 3D, a title released for Nintendo’s new 3DS handheld system. The game itself was not that unusual; at first blush, it’s just your typical “run around shooting zombies” affair. What got everyone talking (and some others very, very upset) was a feature developer Capcom put in the game, acknowledged only in small print in the game’s instruction manual: In RE: The Mercenaries 3D, once the player initially boots up the game, his/her progress is automatically recorded to the game card and cannot be deleted. Ever. Unlike in most games where you can erase your data and start over whenever you want, RE: The Mercenaries 3D records and remembers nearly everything you do, whether you want it to or not.
Why were people so upset about this? Well, some folks likened it to a DVD you could only watch once, or a book that wouldn’t let you reread certain chapters. Most everyone agreed that the feature existed solely in order to reduce the value of the game when sold back used, which would encourage gamers to pay more money to Capcom for the game new. Well, the alleged plan worked at first: Gamestop (by far the biggest retail chain in America for buying and selling new and used games) was initially incensed enough by the lack of a save-wiping feature that it refused to stock used copies of the game at all, offering zero dollars for the game in trade-in value. Problem was, gamers got upset that they were being charged full price for a retail game with no resale value, and were angry with Capcom for trying to stifle the used-games market (Capcom denied the allegations, but nobody bought their story). As a result, there were boycotts, petitions, the whole mishegoss.
Eventually this more or less blew over: soon it was discovered that the game was less like a movie and more like an old arcade-style pinball machine, meaning that it was possible to replay any part of the game to improve your high score. As a result, the anger subsided somewhat (though some were still rightly outraged about both Capcom’s coverup and the fact that the game still couldn’t wipe high scores and achievement progress). Gamestop reversed its position and started to accept used copies of RE: The Mercenaries 3D (albeit at a much lower price than normal), and Capcom publicly said that it had heard the fan outrage and was not interested in going through this ordeal again.
So now that the dust has settled, what should the big game companies have learned from this? If current trends are to believed, the answer is “nothing.” Why have game companies inspired such wrath from their fans recently? Well, the purpose of this post is to explain why Resident Evil: The Mercenaries 3D’s anti-save wiping feature created such a media firestorm, and how game companies might learn from it going forward. Game makers have been coming up with all sorts of creative ways to reduce their games’ resale value over the last few years, yet some techniques are far more likely to outrage from consumers than others (for reasons I’ll now explain).
Part 1, in which I empathize with big corporate game makers
Let me first say this to the game companies: I get you. Triple-A games cost a ton of money to make, and you want (nay, are legally obligated to your shareholders) to try to do what is in the best interest of your company. You’re dealing with a century-old legal principle called the “first sale doctrine” that says that once a copyrighted work is sold, the new owner is allowed to freely resell the work without giving you a cut of the profits.
I understand also that the videogame and software industry is particularly harmed by used game sales. In most other industries with large second-hand markets (think automobiles), a used product will almost always be of inferior, or “degraded” quality when compared to the same product new. In other words, the “used” market doesn’t usually intrude on the “new” market because the “new” stuff is new, and the used stuff is, well...
(source: Toyota Parts blog)
In the context of computer programs, however, there is basically no degradation in quality between a used program and a new one. Particularly in the context of videogames, there’s really little reason to buy a game new unless you absolutely have to have it the day it comes out. As a result, retail stores like Gamestop that buy and sell both new and used games make a killing buying back used games, wiping the save files (a process which, if the Gamestop employee actually remembers to do it, usually takes little to no effort), and giving none of the profits from the used sale to the game’s developers.
Game companies: I understand your anger. I empathize with you when you buying and selling used games “cheats” you out of money, and that retailers who sell used games are “parasites and thieves.” I’m even more or less on board when you said that used game sales present a bigger threat to the industry than outright game piracy.
Let me also preface what I’m about to say by saying that you are generally within your legal rights to build technology into your games that reduces their resale value. If you wanted to make full-priced games that self-destructed after you beat the final boss, it’d be tough for a lawyer to do anything to stop you, at least in terms of Copyright law (you might be still liable for fraud or under some consumer protection laws if your strategies are particularly jerk-ish). But if this is all about preserving your public image, then how can developers encourage consumers to buy new without causing them to revolt?
Part 2, in which I explain the secret to all of this
The secret to keeping your customers happy and eager to buy new is very simple and can be summed up in two words: fulfilling expectations. Gamers have a lot of expectations and assumptions they make about what they will be receiving when they pay money for your game. Some of these expectations are arbitrary and purely emotional, whereas other ones are rooted in decades of industry practice. Assuming you’re not willing to reduce the price of your new game to fit people’s new expectations of its value, your goal as a game company is to reduce consumer surprise when a new anti-resale tactic is introduced, and keep your fans willing to pay full price for your game new.
Another key theoretical piece that I will keep returning to is the distinction between games as a product or as a service. On one hand, games are like products in that they are fixed, tangible objects that contain information, sort of like books. On the other hand, modern games with their increasing emphasis on online play and interconnection between players are steadily becoming more of a “service.” Playing online requires having constant access to the game company’s server (see what they did there?), which allows users to share information with one another in the interest of furthering the game. It’s no surprise then that the actual, physical software required to run online-only games such as World of Warcraft costs very little (or nothing) to take home and install – the creators of World of Warcraft make their money instead by charging monthly subscription fees for the use of their service.
Above: Obligatory WoW addiction reference (source: South Park wiki)
What you’ll discover is that given the shift in industry practice over the last few years, consumers expect different things from a game that displays itself as a product as opposed to a game that presents itself as a service. As a general thesis, gamers are much more comfortable accepting anti-resale mechanisms (even highly effective ones) if they are tied to the game’s content as a service rather than its content as a product. After all, people expect to be able to re-sell products: rarely do people expect to be able to resell access to specialized, unique services.
Part 3, in which I list various methods of anti-resale tactics and how they could be brought more in line with consumer expectations
· Limited installs of software through DRM
What is it? DRM, or Digital Rights Management, technically refers to any tactic that is designed to control the rights of a consumer after purchasing a product/service. However, in the gaming context, the term DRM is shorthand for secondary software that gets installed on your computer alongside the program’s files when you first pop in the disc. DRM can serve many functions, but in the context of games these mini-programs are usually designed to connect to a remote server and monitor how many times you’ve installed the game. In these situations, the DRM automatically prevents re-installation of the game on any computer once the installation limit is reached. Other types of DRM have required a constant internet connection with an authentication server in order to run a game.
DRM was originally promoted as a way to prevent the infringing copying of computer software. It’s been incorporated in some fashion within a variety of physical media types, including some commercial DVDs. However, its efficacy is still often questioned, and many people still characterize it as a sort of evil corporate “virus” or Trojan horse, which sits malignantly on your computer watching your every move and can’t be removed even if the program files are uninstalled.
How effective is it at curbing resale? Regardless of how you feel about DRM as an anti-piracy measure, there is no question that the many different types of DRM effectively killed the PC/Mac used game market. Citing limited-install DRMs and the threat of being sold pirated copies, Gamestop categorically refused to buy back PC/Mac games around the time when it merged with EB Games in 2005. Such was the kiss of death for PC gaming at retail – most Gamestop stores rarely stock used or new PC/Mac games. Only very recently has Gamestop begun to start concerning itself with PC/Mac sales at all, and they certainly don’t look like they’ll be accepting trade-ins of PC/Mac software anytime soon.
How can it be brought more in line with consumer expectations? Fans were particularly incensed when game companies were not upfront about the invasive and un-removable DRM used in their games. Consumers brought a class-action lawsuit against EA for DRM in its game Spore; they also retaliated against the company by hacking the program and removing the DRM themselves, making Spore the most illegally pirated game of all time.
By now, modern consumers no longer expect to be able to resell their PC/Mac games. That said, consumers that purchase games do expect never to be frustrated by DRM measures. Users also don’t expect their computer’s guts to be affected by a game they choose to install. When a game surreptitiously burrows so deep into their computer’s hard drive that there is a risk (however small) that legitimate purchasers will be burdened with technical glitches, it enrages even people whose computers aren’t actually affected. As for games that require a constant internet connection to play, fans have been quick to boycott and protest these measures, complaining (rightly, if you ask me) that they represent both an invasion of privacy and an impracticable solution to the problem: with always-on DRM, you cannot play the game without an internet connection, and if your connection stutters for an instant your game will stop, even if you are a legitimate purchaser.
Above: Splinter Cell: Conviction's connection interrupted screen, as documented by an legitimate (and angry) purchaser
Ubisoft, a company known for implementing harsh DRM, received a lot of criticism for requiring a constant internet connection for the PC version of its game Assassin’s Creed II. Responding to fan outcry, the feature was sacked in the sequel Assassin’s Creed: Brotherhood; yet, in a recent interview a Ubisoft representative declared its always-on connection a “success,” at least as far as curbing piracy was concerned. Needless to say, fan reaction to Ubisoft’s statement was negative.
The issues of piracy-prevention and resale-prevention are often inextricably and confusingly linked, with each legitimate anti-piracy measure also serving to destroy resale value. While DRM successfully destroyed the market for used PC/Mac games, it also destroyed much of the game companies’ reputations in the process.
· Pure digital distribution
What is it? Simply put, digital distribution involves connecting to the internet and downloading content directly to your hard drive. Once you pay the game company (or a digital reseller), you get full access to the game, containing some form of mild DRM usually in the form of online authentication so that the game cannot be copied or redistributed (without resorting to illegal hacking, anyway). The Xbox Live Arcade, PlayStation Network, Facebook games, iTunes’ App Store and most notably Valve’s Steam client on PC/Mac all use the digital distribution model.
How effective is it at curbing resale? While purporting to represent the future of gaming, digital distribution is also the most direct way game companies have found to undercut the used game market. When you download games directly to your machine to play on a single account, there is nothing there to practically resell. The DRM is designed to limit the game to a single account; you can’t distribute a digitally downloaded game without making an illegally infringing copy. The only way you might legally resell a digitally distributed game back at retail would be to rip out your entire hard drive with the files on it: obviously, not so practical. You might also take after a few clever entrepreneurs who sold their Steam account login information on eBay, but that would mean losing access to all your other games tied to the account (you’d also be in clear violation of Steam’s End User License Agreement, but more on those later).
How can it be brought more in line with consumer expectations? Despite the fact that digitally distributed games are impossible to resell, digital distribution is becoming surprisingly popular. Nobody buys a game through Steam and expects to be able to resell it. Why? Because the technology does so many unexpectedly good things for consumers, it makes up for (or perhaps distracts from) the system’s anti-resale mechanisms.
For one, digitally distributed games are usually much cheaper than they are at retail - sometimes up to 85% off. (This partially due to the fact that the digital distributors don’t need to pay for packaging or give any profits to retailers like Gamestop.) Also, consumers expect to have to leave the house and wait in line to purchase the latest new game; digital distribution removes a decades-old hassle. Lastly, under the Steam service, gamers can play their new game on any computer simply by logging into their Steam account and re-downloading all their game files (including their save data) from the Steam server. These new features have re-written many customer expectations.
Digital distribution, because of its status as a new, fancy online-centric technology, has done a really good job of rebranding itself as a service rather than a product. Digital distribution clients are almost all free-to-use programs that also offer community features and online play at no extra charge. As a result, consumers don’t mind the anti-resale DRM in these programs as much as they do for games sold as products at retail. The DRM in digitally distributed programs is necessary to make the distribution service work; therefore it is not contrary to user expectations.
· “Project Ten Dollar” and the Online Pass
What is it? A sort of hybrid, the Online Pass represents the most recent attempt by the old-fashioned physical media industry to reduce the value of used games while appeasing fans. With the Online Pass, a consumer buys a physical game new at retail and part of the content on the disc is initially missing. Usually the withheld content consists of non-essential items or tools for the user’s in-game avatar, but sometimes the withheld content includes optional story segments or online multiplayer features. Included in the game’s packaging is a code that will add the missing content, but the code can only be entered once. If the game is purchased used, the new user can only add the missing content by purchasing a new code.
Above: The popular detective game L.A. Noire contained both additional cases and unique items for those who reserved the game prior to its release
How effective is it at curbing resale? EA has led the charge on the Online Pass system, but the jury’s still out on whether the system is actually encouraging people to buy new. However, the fact that Sony has adopted a similar Online Pass system (theirs is called the PSN Pass) seems to suggest that the tactic is working.
How can it be brought more in line with consumer expectations? The main problem fans have with the Online Pass system, apart from the fact that it’s a pain in the butt to enter in a lengthy authorization code, is that generally, withholding content from “finished” games and releasing it as downloadable content (DLC) feels like a scam.
It seems as though the psychological distinction between what is considered a scam and what is acceptable comes down (again) to whether or not the content being withheld is part of the game’s product or part of the game’s service. When the content withheld from the player is designed purely as part of the single-player experience (in-game items, optional story missions, playable characters), it feels more like a piece of the product that has been withheld, like a scene of a movie you have to pay extra to see. On the other hand, it’s easier to justify charging extra for an online multiplayer feature (like new maps or modes) because online multiplayer is usually seen as part of a game’s dynamically changing service.
Remember, no one likes feeling like they have been ripped off. Evidence of intentionally withheld single-player content from the game’s code can really tarnish a company’s reputation – if the “exclusive” portion of the product is already included on the disc, then locking it away for some users and not others only serves as a completely arbitrary and discriminatory business tactic. Functionally, there’s almost no difference between storing the content on the disc and unlocking it via code versus storing the content on a remote service and downloading it onto your machine. Emotionally, however, there’s a huge difference. The fighting game Marvel v. Capcom 3 (published by Capcom, makers of Resident Evil: The Mercenaries 3D as well) experienced exactly this type of scandal when hackers found evidence of fighters on the disc that were fully playable at time of launch but intentionally locked away with the intention of being sold as post-release, “premium” DLC.
Above: a screenshot of the hacked retail version of Marvel v. Capcom 3, showing the nearly-completed “premium” fighter Jill Valentine made accessible without the use of the paid DLC. Needless to say, fans weren’t happy. This is what happens when you arbitrarily withhold a part of your product in order to get more money from consumers...
On the other side of things, Warner Brothers’ remake of the fighting game Mortal Kombat required users to input a one-time use token to access all of a game’s online services. The system wasn’t without criticism, as the privilege of online play has historically been free (or at least included with one’s regular online subscription). Still, fan outrage was significantly more muted: the Online Pass in Mortal Kombat was widely seen as a comparatively fair quid pro quo. Less resale value offered for used games seems like a fair compromise in exchange for today’s modern and robust online services.
The lesson here is that if a developer is going to withhold anything at all for used purchasers, they’re better off withholding services, not parts of the product. Services, even if they comprise a substantial portion of a game, are easier to justify paying extra for.
· Restrictive End User License Agreements (EULAs)
What is it? A bunch of lawyers draft up a contract that pops up right before a user first opens his/her program. “End User License Agreement,” it says, and the user doesn’t get to start the program unless he/she clicks “I Agree.” The agreement (which as you know, hardly anybody ever reads) contains a provision that explains that despite paying for the program, the purchaser is not actually the program’s owner – he/she is merely a “licensee,” using the software with the express and conditional permission of the software developers. If the user doesn’t like this arrangement, he/she must send the product back to the developers. Under the most restrictive EULAs, if the user tries to resell the software, he/she is not only in breach of contract, but is also committing copyright infringement, because he/she is trying to use the material outside the bounds of his/her license.
Above: Sounds less like a license and more like a rental, if you ask me (source: Ars Technica)
How effective is it at curbing resale? Admittedly, End User License Agreements (“EULA”) that explicitly prohibit resale are fairly rare in the field of retail videogames (mostly because nobody thinks they can get away with it), although they are growing in prevalence in the realm of digital distribution and PC/Mac software. The question now is whether a court will enforce such an agreement.
Unfortunately as of time of writing, the answer seems to be “yes.” In Vernor v. Autodesk, the plaintiff Vernor resold a box containing Autodesk’s AutoCAD program on eBay, against the terms of AutoCAD’s EULA (which prohibited all resale). The District Court ruled that Vernor had the right to do resell AutoCAD under the first sale doctrine; the Ninth Circuit reversed. PK, along with the Electronic Frontier Foundation and other groups such as the U.C. Berkeley School of Information, petitioned the Supreme Court for certiorari on this issue as amici this past June: read our petition here.
How can it brought more in line with consumer expectations? Imagine if you bought a car from a dealership, and then turned the ignition key only to find the car doesn’t start unless you sign an additional contract agreeing that “you don’t actually own this car and are only licensed to drive it on certain roads within the United States.” That’s what a restrictive EULA feels like.
Despite being potentially unenforceable, overly restrictive EULAs are one of the dirtiest and most underhanded ways to go about controlling users’ actions once a piece of software has been bought and paid for. Nobody expects that when they go to Best Buy and pay for a piece of software that they are merely paying for the right to receive a conditional license to use the software data. Fancy semantic turns of phrase are one thing, but when you take a piece of software (especially when that software contains no online services) and twist the language of a contract until an “owner” becomes a “license,” you are using the language of the legal system as a weapon against consumers. Consumers won’t stand for this kind of manipulation, and frankly, neither should our legal system.
Part 4, in which I wrap this all up
There are a number of ways developers can make money and prevent loss of profits due to resale without resorting to snaring users through arbitrary in-game DRM or adhesionary contracts filled with legalese. While there is clearly a balance to be struck between the interests of software developers, consumers, and used game chains, it’s never smart to use technology to discriminate against your consumers. What you’re doing may not necessarily be illegal, but trust me - it never turns out well.