Published as part of our sister-site GamesIndustry.biz' widely-read weekly newsletter, the GamesIndustry.biz Editorial is a weekly dissection of one of the issues weighing on the minds of the people at the top of the games business. It appears on Eurogamer after it goes out to GI.biz newsletter subscribers.
What does the concept of "ownership" mean to consumers? On the surface, that's a fairly abstract, philosophical kind of question - but it's also a question which strikes to the heart of the ongoing debate about the future of games distribution.
Our most common system is, by and large, ownership based. Consumers pay a flat fee to buy a game - the product is the physical media itself, and as with any other physical product, owning it brings certain rights. Consumers can sell it on, or lend it to friends. They can play the game whenever they want, at no extra cost. They can actually display the product on their shelves, an often overlooked factor which is extremely important to many consumers, especially the over 30 age group.
There are essentially three systems which are being proposed as replacements. The subscription model, as used by most MMOs, can happily tie in with the concept of owning physical products, but removes the ability to sell the game. You can sell the physical media, but the purchaser can't use it to create an account in the game.
The digital distribution model eliminates physical media and resale rights entirely, but retains the concept of ownership in the broad sense - you purchase, not rent, the license to the game. Finally, the live streaming system proposed by (arguably technically questionable) projects like OnLive basically removes the concept of ownership entirely.
More than any technical challenges - or any particular desires on the part of games publishers - it's this fundamental difference in the approach to ownership which will, I believe, determine the eventual roles of each of these new forms of distribution.
Different market segments have different approaches to ownership. I don't think it's going to be possible to wean the planet's self-identifying "gamer" demographic - which could encompass up to 200 million people - off the desire for ownership. It will be equally difficult to wrest ownership from the hands of people with collecting, hoarding mentalities - which accounts for a pretty significant chunk of the entire human race.
For other groups, however, it's far more natural for entertainment to be transient and streamed, rather than being permanent and owned. People who watch TV or listen to radio in preference to buying DVD box sets or albums, or people who rent rather than buying their videos, are an obvious market for less ownership-focused approaches.
In a simple world, then, a publisher would choose the right kind of distribution and revenue model for each product based on its demographic appeal. To some extent, this already happens - one could argue that the distinction between web games, which are inherently a streamed service, and boxed games, which are an owned product, reflects exactly that balance.
We do not, however, live in a simple world. The reality is that no consumer sits exactly in one demographic group or another. Even today, media consumers all demonstrate a bewildering variety of purchasing behaviour.
Most consumers buy some things outright - usually DVDs, albums and boxed games - but also happily consume streamed media in the form of TV or radio, rent some other media and pay subscriptions for media like magazines, newspapers and MMOGs. They make choices on which ways to access each of those media depending on perceived value, the desire for ownership and a host of other factors which constantly shift about.
One could argue that recent years have seen one particularly noticeable shift among those factors - a general movement away from the importance of ownership. Consumers have become more accustomed to media products being digital, not physical, and more accepting of previously unpopular ideas like owning a non-transferable license or account, rather than a product which can be resold. Rental systems and subscription based services have been in the ascendant.
This tide, however, could turn. Consumers on the whole are gradually becoming more aware of digital rights, and the real consequences of handing such a huge degree of control to corporations. Burned badly by often ill-conceived services such as subscription music stores or DRM video providers who shut down their authentication servers when the cashflow dries up, consumers with digital rights nightmare stories are gradually pushing public opinion in exactly the opposite direction to the general media industry consensus.
That push will easily be enough to kill some services. The most restrictive or abusively designed services, those which entirely rob consumers of a sense of ownership or which simply aim to increase revenue without providing a corresponding increase in value, will not succeed - no matter how appealing they may seem to publishers. The experiences of both the music and movie businesses have shown that even business models with wide industry support can fail badly if consumers start to get cold feet over restrictive conditions or unappealing financial terms.
Those industries are, slowly but surely, starting to understand that the only way to keep consumers on board is to focus on creating services which consumers love, rather than services which executives love.
In some cases, whole industries are effectively dragged kicking and screaming into this reality - witness Apple's relentless bullying of music companies into accepting high-quality, DRM-free distribution on the iTunes Music Store, when the music firms themselves far prefer music services with restrictive DRM and monthly subscription fees. The subscription services are a wet dream for an industry whose bottom line has been heavily dependent on getting consumers to pay repeatedly for the same content - the downside, however, is that most consumers hate them, in part because they take away any concept of owning or collecting music.
Services like iTunes, and indeed like Steam and the various download services on consoles, generally occupy a middle ground which the majority of consumers find quite comfortable. It's a lot easier to take the leap from physical products to digital products when the concept of ownership is retained and the restrictions on what you can do are relatively light.
At present, these services still lack the ability to lend or resell your products, which is likely to keep the physical product market (and, sadly, the piracy scene) fairly healthy for many years, but it's clear that these services are the comfort zone for most game consumers right now.
There is undoubtedly room in the market for more radical business and distribution models - but rather than rushing in headlong at the prospect of cultivating new revenue streams, the industry would do well to remember that the desire to own things is basic human nature, and no amount of boardroom wishful thinking will change that.
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