April 2, 2012 - 02:39 AM | Scott Michaud
I start to wonder how people got so successful at business with such a short-sighted mindset.
When I arrived home tonight I cautiously browsed the tech news as I often do. Many complain about April Fools being difficult for journalists due to the plausibility of certain pranks conflicting with the fact checking process. In my travels I came across an editorial from Don Reisinger about the ethics of used game sales. While it is marginally possible to have been an early joke, the sentiments contained in the post are too common in the industry.
Piracy and used game sales are sore spots for an industry of companies who believe you either make a sale or you lose a sale. The truth of the matter is that you should be thankful that your product was not flat-out ignored and attempt to derive as much value from that relationship as possible.
First they came for my used copy of Mechwarrior 3...
Used game sales have been mostly extinct on the PC platform since the wonderful invention of recorded product keys. Users have flocked to the consoles to retain the second sale and have often berated the PC platform for it. As consoles move closer and closer to denying used sales I wonder where they will flock to next. Perhaps maybe they should instead demand that the publisher accept used sales?
For a publisher, a used game sold is a new user of your product. Your retail partner gained extra revenue and brought users closer to your other products which might be first-sale. The user might purchase DLC, sequels, spin-offs, sister-titles, expansion packs, merchandise, and franchise tie-ins as a result of that used game. The user will probably end up playing more video games altogether than they otherwise would. Do you really wish to give up all of that value by indulging in how you feel ripped off by your own paying customers? Also, what about the first sale customer who sold their game to make up the used sale?
They are your customers -- and they are always right. Shut up and take my money when you can.
October 5, 2011 - 09:52 PM | Scott Michaud
Matt Ployhar of Intel recently wrote in their blog their thoughts about Eurogamer’s piracy and secondary sales editorial. Piracy and Secondary Sales are hot-button issues with publishers these days as many publishers are looking for ways to maximize revenue; we will discuss that in just a second. Talking to many people of the general public over the last few years it seems as though there are two dominant camps of ideology: piracy is alright because I am not hurting anyone; and people are getting screwed and pirates should not be allowed to enjoy the content. Humorously enough, plotting that sample space statistically would yield an overlapping Venn diagram. Personally, I believe that both sides are wrong.
I’d sing “Stuck in the Middle with You” but… copyrights; also, this is a text-only article. And I’m not.
Piracy and Secondary Sales are difficult concepts to fully grasp as information transactions have sharp analogues to material value without actually having any. The most obvious application of this concept is that theft is impossible: a copy is a copy and not a move. Publishers make the analogy to physical goods which can be stolen and this fight perpetuates ad-infinitum. Secondary sales are where these arguments break down, however: publishers actually desire for their products to be consumable. The entire entertainment industry is constructed around the concept of consumable entertainment. This leads into the true issue with information content revenue: control.
There is an intuitive link between control and revenue: if you increase your control over your market than you will increase your revenue. That is a dangerous untruth. Assume that you add a DRM that limits your customer’s ability to pirate your product as stated in Intel Blog and Eurogamer: did you make the pirated product more appealing than the official one? Have you cut off potential buyers? Did you increase development and maintenance costs for yourself? How will future product sales be affected? Assume that you remove the ability for your market to purchase second-hand: how are you distribution partners affected? How will future product sales be affected? Would those people ultimately learn how to pirate your content if they do not entirely ignore it?
Warning: Anti-Piracy methods may lead to loss in revenue beyond $250,000
The danger in this untruth is that intuition often takes over and these failures are attributed to a lack of control rather than a superabundance of it. This arms race quickly escalates the non-issue to government legislation which is not even remotely focused on the fundamental problem. Perhaps try a little of what Monty Python and Steve Lieber already have? Intelligently release some control and let your market reward you. Conversely, a customer who cannot pay for your services for one reason or another -- will not -- at a fault of none other than your personal business practices.