Unbranding the Sheep: The Digital Conundrum

With their latest 360 update, Microsoft has added the ability to download actual 360 titles to players’ hard drives. This is a significant step for Microsoft, who before this was only offering original XBox games and their XBLA and “Indie” game lineup to be downloaded. Unfortunately, like every step a company the size of Microsoft makes, it was awkward, clumsy, and made a mess. The prices are completely out of whack. Games go for $20 – $30, and while that sounds good, it doesn’t pass the smell test once you compare prices online to prices at places like Gamestop. I was thinking about getting Ridge Racer 6, which is a cool $20 online, until I went on Gamestop’s site and saw that it was available for $6. If the price was closer, I’d have thought about it, but for a $14 difference, I was out, even when you consider gas. Some of the other prices are foolish, such as Bioshock for $30, a game I won’t even touch for $20 (due to my SecuROM boycott).

Strange as this sounds, America didn’t get it that bad. Australia had the same update and their service sells a lot of the same games, and they got screwed on a lot of them. Their games all range from $30 to an astronomical $99.95, which evens out to $84.26 in US dollars under today’s mid-market rates. When Kotaku asked Microsoft Australia about why games like Mass Effect, which came out in 2007 and is out in America for $20 on their service, are going for a full, premium price, they responded that a lot of the reason is because of the convenience factor, their line of thinking is that because Australians are sitting on their couch downloading their games, they should be charged a higher cost.

On the other side of this equation is *deep breath* Holy Invasion of Privacy, Badman! What Did I Do To Deserve This?, an NIS release for the PSP. NIS made the curious, last minute decision to release the game as a download-only title, and in their explanation, explained that this was the best way to keep the cost down; their argument was that this decision turned a $30 niche title into a $20 niche title, something they (correctly) figured would be more palpable for their relatively small target audience.

Two different companies, with two drastically different takes on how to deal with digital distribution. To me, it shows how digital distribution is going to evolve on both sides – both with large companies and independent ones – as well as how consumers are going to be affected, and how they can impact this.

For PC gamers, digital distribution is nothing new. Between Steam, Stardock’s service, Gamer’s Gate and Blizzard’s peer-to-peer based system, we’ve been downloading our games for awhile now. For the most part, it’s worked pretty well; Steam is a great system, and though I don’t like the changes Gamer’s Gate has made, they have a quality system as well. This benefits us because on average, the price of PC games is typically lower than that of the console games we get for the 360 and PS3; The Last Remnant on Steam was released at $40 compared to $60 on the 360 (at initial release), and was helped by the fact that it was superior (read: actually playable) when compared to the 360 version. Digital distribution, it was told to us by PC companies, enabled them to send us games for less money as it cut out things like packaging, shipping, and having to deal with third party sellers (ie, Gamestop), and as a bonus, for most PC games, the downloadable content that companies have to sell for a price on XBox Live are free; as a fan of Valve games, I couldn’t imagine playing Team Fortress 2, Left 4 Dead or even Half Life on a console, and that has less to do with the keyboard/mouse vs. controller argument than you might think. Sure, you can’t trade-in digitally downloaded games, but you usually can’t trade in PC games to begin with due to piracy issues, so that’s a moot point.

Console companies are just coming around to using digital distribution, and even then, they came into it slowly. Microsoft pioneered XBox Live with the original XBox, which charged a price for a centralized place to play games against other people, as opposed to the Playstation 2’s system, which was more loosey-goosey and relied on game companies doing all the work themselves. With the advent of the current console generation, as well as greater proliferation of broadband in the everyday home, Microsoft, Sony and Nintendo started putting their toes in the digital waters, offering small arcade services to gamers. XBox Live Arcade started as a place for small, cheap games and retro titles like Pac-Man, the Playstation Network’s arcade service had small indie hits like Everyday Shooter, and Nintendo came out with the Virtual Console, featuring almost perfect copies of games from their older systems. As time went by, these companies started to see that digital distribution was working; sales numbers on XBox Live were very good, and even the Virtual Console, despite offering nothing that conventional emulators and ROMs did not, did well. Nintendo expanded their service into WiiWare, Microsoft started experimenting with larger games that went past their imposed size limits, and Sony started embracing more niche games. It worked, as each service caters to each system’s understood fanbase; the PS3’s system has niche titles that the classic, hardcore fans love, XBLA is more mainstream, and WiiWare has cheap, flimsy shit more casual fare. Sony’s even going the extra step of releasing a handheld system, the PSP Go, that supports nothing but digital fare.

Despite that, the systems have problems. Being someone that doesn’t own a PS3, I can’t really comment intimately on that system, but Aileen did mention, via the information she received from NIS, that Sony has disallowed dual releases (online + UMD) until the PSP Go comes out. Microsoft’s system, on the other hand, is rife with issues. For one, the games are getting more and more expensive. Whereas $10 used to be the high end for XBLA games, nowadays that price point consistently hits $15, as Microsoft saw that we were willing to pay $15 for Braid and figured that we were stupid enough to not notice as prices continued upward; there’s reports of $20 XBLA games in the future, too. Furthermore, there’s been reports – lead by Game Informer – that Microsoft is forcing developers to charge money for things such as map packs and XNE themes that they would rather use as promotional materials for their games (a report confirmed by Jonathan Blow, who claimed that Microsoft would not let him put a theme for Braid up for free). Plus, there’s rumblings that Microsoft, due to pressure from larger companies, have dramatically limited the amount of slots for “indie” games per year to 35, seriously discrediting developers like Jonathan Blow and The Behemoth. You know, because ‘Splosion Man and Braid take away our purchases from Sega’s piece of shit Genesis titles they keep puking out every chance they get. Nintendo isn’t exempt from criticism for WiiWare, either. For one, there’s no demos of any games (with the exception of Dr. Mario, but you have to buy the game to get those demos for your friends); you’re buying everything blind. Secondly, the interface for buying games is as bad as the VC’s interface. Finally, the games, as I’ve hinted at before, mostly suck.

The main problem with the three consoles’ download systems is that they’re controlled by corporations that, for the most part, are anywhere from somewhat evil to scaring Beelzebub shitless. Sony’s heavy-handed policy forced NIS’s hand into either watching their game rot on Gamestop’s shelves – if it got that far – or releasing it digitally and pissing off a portion of their fans. Microsoft’s policies are stifling independent companies’ innovation and giving them a catch-22: either give up on consoles and go to the PC, get backing from a larger publisher and therefore kill their profits, go to the Marketplace’s Indie Games section – which is basically the slums of Microsoft’s system offering and who’s #1 “game” does nothing but make your controller vibrate – or go forth and multiply. As for Nintendo, anyone who decides to email me or put in a comment stating that Nintendo’s a good and righteous company had better be prepared for a long winded history of their business practices of the past twenty-five years, going back to their days of forced exclusivity and intentional chip shortages to spring demand.

Going back to my original comparison, the two cases I mentioned regarding Microsoft and NIS show basically what each company thinks of its customers. In Microsoft’s case, that answer is “not a whole hell of a lot”. Their thinking is that if we’re going to be downloading games from our houses, presumably in our underwear with our hands placed inside our drawers, Al Bundy-like, we should pay for that privilege, and be thankful for our Microsoft overlords for gracing us with such a wonderful way to purchase three year old games that are almost literally overflowing off of Gamestop’s shelves. Seriously, if I were to bring in a copy of Fight Night Round 3 to trade in at Gamestop, the clerk could probably immediately recite the trade-in price to me from memory before deciding that life wasn’t worth living anymore and blowing his brains out. Naturally, Microsoft conveniently mentions – both here and in Australia – that this is a new, outstanding way to find older games that “might not be available” in retail outlets anymore, and that gamers will “always going to be able to find the game they want to play”, but they conveniently forget to mention that they’re cutting out the price of printing and shipping the game, as well as dealing with middlemen like Gamestop and FYE, and that they’re only paying for half of the bandwidth involved in the download. In short, they’re taking a game, putting it up, charging MORE than they would otherwise, taking in the difference as pure, 100% profit, and assuming we’re not going to get it. Oh, they’re giving us an option to use our credit card instead of Microsoft Points for this, but keeping the points on XBLA games. Oh boy, it’s nice for Microsoft to decide we don’t need their Magical Microsoft Moon Money for bigger games, but for everything else, we can go back to having a queue of points sitting around because we don’t want to purchase pictures. As for NIS, they’re a company with a small, dedicated but niche following; they don’t really have the power to take on a company like Sony or Microsoft. They made their decision based on their options, and decided that the game was better served being sold digitally for $20 while keeping their profit margins intact. Their other choice was forcing a $30 sale of a physical copy, which would mean they’d have to get places to carry it. Gamestop has a horrible history of not carrying niche games until a month after their release, and there’s no guarantee that they’d even take preorders for the game. So instead of forcing that issue, they picked the best option, and lopped $10 off the game to boot.

The difference in how these companies handle their customers can be summed up thusly:

NIS: “Hey, we can release this digitally! Let’s take the savings we made and pass them onto our customers! They will be thankful!”

Microsoft: “Hey, we can release this digitally! Let’s charge more, call it a convenience tax, and reap in pure profit! Our customers are too stupid to know the difference!”

The problem is that it’s the larger companies, at least with console gamers, that call the shots. It’s obvious that larger publishers regard the smaller, more nimble companies with disdain, and would suck them up or run them out of business if they could, lest they get larger and pose a threat; that’s Economics 101. However, it’s partially up to consumers to dictate the terms of these deals. “Money talks” is also Economics 101; if the XBox On Demand games don’t sell, Microsoft will have to change their pricing policy. If the PSP Go bombs – which I believe it will, as it’s silly to sell a PSP system that can’t play any of your current PSP games – Sony will eventually have to take notice, or continue to bleed money. Bigger companies can afford to make more mistakes than the little guys, but not for long, and while gamers are at least more intelligent about digital downloads than they’re being given credit for – most people I talk to state that they’re not wild about not having a physical disc that they can use, move and trade at will – I don’t believe they fully appreciate all the details involved in this business, such as the fact that the three biggest “name” games on the On Demand service – Bioshock, Mass Effect and Oblivion – take up 17.3GB combined in hard drive space, before saves and DLC (the expansions) are taken into account. Considering the fact that Microsoft’s 120GB hard drives are $150, that space adds up in a hurry. Again, it’s up to consumers to speak with their wallets to force Microsoft, with their next system, to take Sony’s approach to hard disk management, where that same $150 buys you a 500GB, 7200RPM drive that’s PS3 compatible, AND leaves you $30 to spare for a cheap game.

Digital distribution is coming a long way as a legitimate medium for game companies to bring games to the players. With publishers deriding the profits that Gamestop brings in for their used games – profits that are never seen by the publishers – digital distribution is a legitimate way to cut out the middleman and score points for convenience as well. However, this can go one of two ways: it can either be consumer friendly, like how NIS and Valve do it, or it can be overpriced and obtrusive, the way Microsoft is doing it. I don’t really feel there’s going to be a happy medium, and it’s up to us – the gamers, and consumers of the product – to be educated enough to ensure that the bigger companies are kept in check, which in turn keeps our prices down and maintains a majority of our rights as product owners.



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2 responses to “Unbranding the Sheep: The Digital Conundrum”

  1. Aaron Sirois Avatar

    Tell me about it. I’ve been trying to find C.O.R.E., a DS FPS. Its published by Graffiti game and Gamestop wouldn’t let me pre-order it, nor do they have it in stock yet. Pisses me off.

  2. r4 ds Avatar

    Your information is very useful for my XBox 360. It is a good console to play games. We can get more enjoyment to play games in this console.

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