Tuesday, 12 October 2010
Hello
How rude of me! I got rather carried away there, let me introduce myself. My name is Quiburg and I am a games designer. I live and work in the north-west of England. I'm currently in the early stages of prototyping a top secret project for a fledgeling independent games company with a good friend of mine. It's going to be a lot of fun! I'll be using this blog as a dumping ground for my thoughts on...well, anything industry related really but hopefully I can offer something of interest as we design and create our game over the next few months.
Monday, 11 October 2010
Who gets a slice of the pre-owned pie?
Do games offer us value for money? Charging £40 (~$60) for one game is a contentious issue for frequent gamers and when we examine the fact that only a fraction of players actually complete single-player games* it’s no wonder that many consumers wish to trim spending on their favourite pastime.
So, is it even possible to measure value? Afterall, value is pretty subjective and we all know the phrase “one man’s trash is another’s treasure”. Well, let’s assume that we can measure value by calculating the hours of the entertainment something provides. Let’s also assume that entertainment is binary; either you're being entertained and therefore engaged with a medium or you're not (this is somewhat a gross simplification but for the purposes of this post humour me).
Based on these assumptions we could say that a game costing £40 and providing 10 hours of play gives an hourly entertainment value of £4. Not too bad. The average cinema ticket price here in the UK is around £6, coupled with an average run-time of 120 minutes for a summer blockbuster and you've got an hourly entertainment value of £3. Per hour it looks like cinema has more immediate value per hour but the truth is the numbers are probably closer together when you factor in costs associated with actually getting to a movie theatre in the first place. For argument's sake let's just keep things simple and keep outside factors to one side.
All right, now let's spice things up a little. The percentage of gamers who actually complete games is pretty low, conversely the amount of people who watch a movie all the way to end is pretty high! Just think back to the last movie you saw, unless it was a real rotten tomato most if not all of the audience stayed for the duration. So what happens if a player stops playing? Consider a scenario where a player only completes 50% of “Cover Shooter 3's”single player campaign. Now if we apply the same calculation (assuming that 50% is equal to 5 hours play) then we get an hourly entertainment cost of £8.
So, Timmy’s bored of “Cover Shooter 3” but really wants to try out “On Rails Shooter 2” but can’t afford to fork out another £40. Enter the pre-owned market. The pre-owned market has recently seen a surge of growth, and last year Game reported that preowned sales made up 18% of their profits for that year! These salivating prospects have lead many high-street chains to offer more shelf-space to pre-owned games than new! Of course, this has excited the interest of major publishers since none of the profits generated from pre-owned sales goes to them. In their eyes that’s money lost on their investment (see EA’s notorious “Project Ten Dollar”).
For consumer and retailer alike pre-owned is an obvious win-win; the consumer gets to part-exchange their unwanted game and the retailer gets to sell on the second-hand game and keeps all of the profit (traditionally, retailers receive slim profit from new game sales).
On the other hand it’s quite easy to empathise with the publisher – what if only one game had been sold as new but the pre-owned copy of the same game sold to ten different people? Good news for the retailer, not so great for the publisher. What if Timmy was just trading in his pre-owned games for more pre-owned games over and over again?
Neither publisher nor retailer wants to compromise here but ultimately it’s the consumer that bears the weight of the decisions being made. Thus far, publishers have sought to discourage buying pre-owned games by including single-use codes for downloadable content (that they’re valuing at $10 if you want to purchase the content from a pre-owned game). There are also a host of other options being explored, ranging from the recent legal action against pre-owned sales to shipping disks with codes that lock out parts of the game to anyone other than the original owner.
What's fascinating is that publishers and developers know that a large portion of gamers never complete their games, yet surely a bored gamer is more likely to trade the game sooner after its initial high-street release – a period which we know yields the highest volume of sales, as marketing presence is at its highest level. An interesting by-product is that many developers tend to focus quality near the opening hours of their games and it’s become something of a meme in the developer community: “oh it doesn’t matter, no-one completes games anymore” which I’ve often heard uttered with increasing seriousness. Perhaps the general attitude is becoming more about keeping consumers entertained for the week or so after launch so they’ll be less likely to trade the game in during the ‘launch window’. This is something of a subjective attitude and I can only say it’s true from personal experience (I find many games to be a real repetitive grind as they near their finale, of course this isn’t true of all games – Uncharted 2 saves some its best set-pieces for last and there are a whole host of games that increase their longevity by offering up superb multiplayer experiences such as the Halo and Modern Warfare series).
The next year will likely see a resolution to these issues in some form or another. Publishers are increasingly certain that the current business model for retail is unsustainable, especially in the face of rising development costs and economic uncertainty. Retailers face a similar dilemma; they can’t survive by selling new games alone – it’s telling that Game (the UK’s largest specialist games store) has closed down a number of its stores around the country with future downsizing planned, even large multi-media chain HMV and supermarket Tesco want a slice of the pre-owned pie.
So what options do publishers and retailers have, surely there’s a compromise? Well, there are a number of ways to meet in the middle that could satisfy both publisher’s and retailer’s needs, for example, retailers could impose an embargo on trade-ins for a set period following a game’s release, publishers could sell games to retailers for less (perhaps in return for trade-in embargos), retailers could agree to give a percentage of pre-owned sales to publishers or retailers could simply increase the RRP of new games (most likely crippling them in their battle with online sales). The easiest to manage would be for retailers to share pre-owned profits, thus alleviating further needs for the publisher to restrict usage rights on consumers.
The question is: is it fair? Regardless, the law currently states that consumers can sell on their games after purchasing them – but with publishers pursuing action against pre-owned sales more aggressively the retailers may find they have no choice but to comply!
The other problem retailers’ face are digital downloads. Digital downloads have increased in popularity over the past couple of years but according to recent studies aren’t yet a threat to retail models. However the advent of live streaming services such as OnLive could challenge traditional pricing structures.
Which leads us nicely back to the topic of value for money. When you pay £40 for a triple-A title, what you’re actually paying for is the potential to be entertained for however many hours. What if you could pay only for what you actually played, rather than what you could play? With a live streaming service there’s no reason this model couldn’t be implemented, what’s more it could prompt developers to create a more consistent experience for the duration of a game’s playtime, rather than saving all the good stuff for the beginning. It’s an interesting concept but surely if it was profitable the MMO studios would have adopted it? Well, the truth is MMO’s rely on their customers playing for extended periods of time –psychologically, paying $10 a month is far different than paying to play per hour: the basic thinking is that after paying the upfront fee of $10, you’re going to want to maximise the amount of playtime you get from that (a small part of what makes MMO’s so addictive). If you pay per hour then you’re more likely to stop. If the average American gamer spends 13 hours a week playing, then $10 per month equates to roughly 0.19 cents per hour. Not much, but you’d probably be watching the clock a lot more if you felt like you were on a timer. It could be argued that you can apply the same logic to paying per hour for a triple-A single player experience. Perhaps one solution would be to have a maximum payment roof for a particular title, say £40. I guess the real problem with this pricing structure is that it simply goes against the exploratory nature of gameplay – if there was a challenge you couldn’t overcome in the game you’d get frustrated because it would effectively be costing you more money, any hope of players exploring the game world at their own pace would likely be ruined. Perhaps this is a little far fetched, an easier model to manage may be a similar approach to episodic content delivery as seen in last year’s Fable 2 re-release over Xbox Live, where the game is free to play up to a certain point and then charges per ‘chunk’ of gameplay.
Anyway, I don’t want to get into pricing structures in this post. The perception of value is totally subjective and the current retail pricing model operates on the assumption that the disk contains the potential for multiple hours of entertainment. When consumers buy a game it’s their decision if they don’t want to play it anymore and the sooner publishers embrace this rather than fight it the better it’ll be for all parties involved, especially the consumer.
*UPDATED - After some digging around I've actually found some figures to back this up: The graph shows the most popular 360 games from 2008 and charts the average percent completion rate of around 14000 players using specific campaign related achievements. It's showing that around 52% of players completed the single-player portion of the games listed.
So, is it even possible to measure value? Afterall, value is pretty subjective and we all know the phrase “one man’s trash is another’s treasure”. Well, let’s assume that we can measure value by calculating the hours of the entertainment something provides. Let’s also assume that entertainment is binary; either you're being entertained and therefore engaged with a medium or you're not (this is somewhat a gross simplification but for the purposes of this post humour me).
Based on these assumptions we could say that a game costing £40 and providing 10 hours of play gives an hourly entertainment value of £4. Not too bad. The average cinema ticket price here in the UK is around £6, coupled with an average run-time of 120 minutes for a summer blockbuster and you've got an hourly entertainment value of £3. Per hour it looks like cinema has more immediate value per hour but the truth is the numbers are probably closer together when you factor in costs associated with actually getting to a movie theatre in the first place. For argument's sake let's just keep things simple and keep outside factors to one side.
All right, now let's spice things up a little. The percentage of gamers who actually complete games is pretty low, conversely the amount of people who watch a movie all the way to end is pretty high! Just think back to the last movie you saw, unless it was a real rotten tomato most if not all of the audience stayed for the duration. So what happens if a player stops playing? Consider a scenario where a player only completes 50% of “Cover Shooter 3's”single player campaign. Now if we apply the same calculation (assuming that 50% is equal to 5 hours play) then we get an hourly entertainment cost of £8.
So, Timmy’s bored of “Cover Shooter 3” but really wants to try out “On Rails Shooter 2” but can’t afford to fork out another £40. Enter the pre-owned market. The pre-owned market has recently seen a surge of growth, and last year Game reported that preowned sales made up 18% of their profits for that year! These salivating prospects have lead many high-street chains to offer more shelf-space to pre-owned games than new! Of course, this has excited the interest of major publishers since none of the profits generated from pre-owned sales goes to them. In their eyes that’s money lost on their investment (see EA’s notorious “Project Ten Dollar”).
For consumer and retailer alike pre-owned is an obvious win-win; the consumer gets to part-exchange their unwanted game and the retailer gets to sell on the second-hand game and keeps all of the profit (traditionally, retailers receive slim profit from new game sales).
On the other hand it’s quite easy to empathise with the publisher – what if only one game had been sold as new but the pre-owned copy of the same game sold to ten different people? Good news for the retailer, not so great for the publisher. What if Timmy was just trading in his pre-owned games for more pre-owned games over and over again?
Neither publisher nor retailer wants to compromise here but ultimately it’s the consumer that bears the weight of the decisions being made. Thus far, publishers have sought to discourage buying pre-owned games by including single-use codes for downloadable content (that they’re valuing at $10 if you want to purchase the content from a pre-owned game). There are also a host of other options being explored, ranging from the recent legal action against pre-owned sales to shipping disks with codes that lock out parts of the game to anyone other than the original owner.
What's fascinating is that publishers and developers know that a large portion of gamers never complete their games, yet surely a bored gamer is more likely to trade the game sooner after its initial high-street release – a period which we know yields the highest volume of sales, as marketing presence is at its highest level. An interesting by-product is that many developers tend to focus quality near the opening hours of their games and it’s become something of a meme in the developer community: “oh it doesn’t matter, no-one completes games anymore” which I’ve often heard uttered with increasing seriousness. Perhaps the general attitude is becoming more about keeping consumers entertained for the week or so after launch so they’ll be less likely to trade the game in during the ‘launch window’. This is something of a subjective attitude and I can only say it’s true from personal experience (I find many games to be a real repetitive grind as they near their finale, of course this isn’t true of all games – Uncharted 2 saves some its best set-pieces for last and there are a whole host of games that increase their longevity by offering up superb multiplayer experiences such as the Halo and Modern Warfare series).
The next year will likely see a resolution to these issues in some form or another. Publishers are increasingly certain that the current business model for retail is unsustainable, especially in the face of rising development costs and economic uncertainty. Retailers face a similar dilemma; they can’t survive by selling new games alone – it’s telling that Game (the UK’s largest specialist games store) has closed down a number of its stores around the country with future downsizing planned, even large multi-media chain HMV and supermarket Tesco want a slice of the pre-owned pie.
So what options do publishers and retailers have, surely there’s a compromise? Well, there are a number of ways to meet in the middle that could satisfy both publisher’s and retailer’s needs, for example, retailers could impose an embargo on trade-ins for a set period following a game’s release, publishers could sell games to retailers for less (perhaps in return for trade-in embargos), retailers could agree to give a percentage of pre-owned sales to publishers or retailers could simply increase the RRP of new games (most likely crippling them in their battle with online sales). The easiest to manage would be for retailers to share pre-owned profits, thus alleviating further needs for the publisher to restrict usage rights on consumers.
The question is: is it fair? Regardless, the law currently states that consumers can sell on their games after purchasing them – but with publishers pursuing action against pre-owned sales more aggressively the retailers may find they have no choice but to comply!
The other problem retailers’ face are digital downloads. Digital downloads have increased in popularity over the past couple of years but according to recent studies aren’t yet a threat to retail models. However the advent of live streaming services such as OnLive could challenge traditional pricing structures.
Which leads us nicely back to the topic of value for money. When you pay £40 for a triple-A title, what you’re actually paying for is the potential to be entertained for however many hours. What if you could pay only for what you actually played, rather than what you could play? With a live streaming service there’s no reason this model couldn’t be implemented, what’s more it could prompt developers to create a more consistent experience for the duration of a game’s playtime, rather than saving all the good stuff for the beginning. It’s an interesting concept but surely if it was profitable the MMO studios would have adopted it? Well, the truth is MMO’s rely on their customers playing for extended periods of time –psychologically, paying $10 a month is far different than paying to play per hour: the basic thinking is that after paying the upfront fee of $10, you’re going to want to maximise the amount of playtime you get from that (a small part of what makes MMO’s so addictive). If you pay per hour then you’re more likely to stop. If the average American gamer spends 13 hours a week playing, then $10 per month equates to roughly 0.19 cents per hour. Not much, but you’d probably be watching the clock a lot more if you felt like you were on a timer. It could be argued that you can apply the same logic to paying per hour for a triple-A single player experience. Perhaps one solution would be to have a maximum payment roof for a particular title, say £40. I guess the real problem with this pricing structure is that it simply goes against the exploratory nature of gameplay – if there was a challenge you couldn’t overcome in the game you’d get frustrated because it would effectively be costing you more money, any hope of players exploring the game world at their own pace would likely be ruined. Perhaps this is a little far fetched, an easier model to manage may be a similar approach to episodic content delivery as seen in last year’s Fable 2 re-release over Xbox Live, where the game is free to play up to a certain point and then charges per ‘chunk’ of gameplay.
Anyway, I don’t want to get into pricing structures in this post. The perception of value is totally subjective and the current retail pricing model operates on the assumption that the disk contains the potential for multiple hours of entertainment. When consumers buy a game it’s their decision if they don’t want to play it anymore and the sooner publishers embrace this rather than fight it the better it’ll be for all parties involved, especially the consumer.
*UPDATED - After some digging around I've actually found some figures to back this up: The graph shows the most popular 360 games from 2008 and charts the average percent completion rate of around 14000 players using specific campaign related achievements. It's showing that around 52% of players completed the single-player portion of the games listed.
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