The Xbox One reveal reminded me, forcibly, that Microsoft is the company behind the console. I mean, obviously, right? But between Windows 7 and Bill Gates building better condoms, I temporarily forgot about Games for Windows Live, Windows 8, and all the markedly cynical shit the Redmond company pulls as it endeavors to further erode all consumer surplus and out-EA EA.
Remember the always-online brouhaha? Well, the new Xbox doesn’t require an always-online internet connection. Except when you play a game for the first time. Or if the game company feels like pulling a Maxis and “off-loading computations to the cloud.” And just kidding, your Xbox needs an internet connection to phone home once every 24 hours or it presumably bricks itself until you do.
So how often does it check your connection? “Depends on the experience,” Harrison said.
“For single-player games that don’t require connectivity to Xbox Live, you should be able to play those without interruption should your Internet connection go down. Blu-ray movies and other downloaded entertainment should be accessible when your Internet connection may be interrupted. But the device is fundamentally designed to be expanded and extended by the Internet as many devices are today.”
Oh, how nice of them that your Blu-ray movies “should” be accessible when your internet connection is interrupted.
In return for all of these restrictions, you get to opportunity to… pay full MSRP for all your games! There are no used games for Xbox One, there are simply game disks which will prompt you to pay a “fee” of the full price of the game to play it. Remember when we thought EA eliminating the Online Pass was a gesture of contrition and good will? Surprise! It was cynical bullshit because Microsoft is handling the Online Passes now and adding them to 100% of all future Xbox games.
A lot of the Xbox Apologists have pointed at Steam in making their arguments that things are not so bad. In fact, there is talk that you may be able to sell your used games game licenses to other people on the Xbox Marketplace, in a sort of virtual GameStop setup. Okay… details? If it is true, and assuming you can set your own price, and assuming there isn’t exorbitant fees, then great! We just had to give up renting games, letting your friend borrow your games, and in the case of Steam comparisons, getting 50% discounts on brand new games released just three months ago.
I am not an Xbox customer; I neither bought any of the prior consoles nor plan to purchase this new one. But this sort of shit will affect every one of us. We already see DLC for our PC games delayed because of “Xbox exclusives.” Ports of future Microsoft games could be pulled from Steam just like EA pulled theirs, ostensively so we can have the privilege of paying more money for no conceivable consumer gain. What we see today is what we can expect more of tomorrow – not just from companies like Microsoft, but from everyone who thinks they can get away with it.
And that sucks.
A few hours after Saturday’s post, I decided: “Yep, that PS3 bundle is the way to go.” Part of the ordering process is choosing the bonus game, which I did. “Part of this bundle is out of stock.” Alright, maybe everyone is picking LittleBigPlanet 2? I tried another game, and got the same error. Finally, I refreshed the page and saw this:
Given the fact that I would have been getting five games, all of which I had a passing interest in, along with the 250gb console itself for $219, I started kicking myself for not jumping all over this thing. Why didn’t I order as soon as I saw it on Friday?
Bah. Let me check some other places to see if they offer similar price ranges…
You goddamn sons of bitches.
In the heat of my rage, I did end up laughing a bit over the fact that I was partly mad that I hadn’t thought to do this exact thing myself. These assholes aren’t even including the bonus game, which means they basically got paid $65 to take a free videogame.
But, seriously, this sort of shit is why we cannot have good things. Capitalism and free markets working as intended, sure, whatever. But can you sit there and tell me that this sort of arbitrage is anything more than nihilistic? There is zero difference in “markets” between Walmart.com and eBay, especially when the latter is being sold by a small-time retailer. I am fine with arbitrage conceptually because while the profit is essentially risk-free, it can be argued that value is actually being generated by the arbitrageurs by virtue of them moving product between markets. For example, I am fine with some local store basically buying shit online and selling it in their store at a markup, because hey, maybe I don’t want to wait for it to get mailed. Or maybe I’m not internet savvy. And so on¹.
These guys though? Fuck those guys. Stores are posting deals to encourage more shoppers to show up, and what they get instead are opportunistic leeches extracting other peoples’ consumer surplus while adding nothing. These are concert ticket scalpers buying thousands of tickets, artificially creating the scarcity they prey upon to the detriment of all parties.
And what really sucks for me personally? I am not going to be able to look at any sort of lesser PS3 deal without a jaundiced eye. Future deals will be contrasted with a $219 possibility and likely be found wanting. Just like with the Steam Autumn Sale going on right now, if I somehow miss a 75% deal during its window, I am not ever buying that game until it is back on a similar discount. It may not be entirely logical, but it is the way things work for me.
Moral of the story: Jump on these sort of deals immediately. Worst case scenario: eBay.
[Fake Edit] As I pulled into the Best Buy parking lot on Sunday to pick up my $180 32″ TV and $20 MoP expansion (uh oh), I noticed there was a Walmart right next door. Went in to get some groceries, walked out with the $199 (!) aforementioned Infamous/Uncharted PS3 bundle (cheaper because no bonus game). My “normal” Walmart didn’t have any, but this one had at least four. I was sorely tempted to go “I’ll take all of them,” but internet bravado rarely transfers into real life. Plus, I was already feeling worried I was going to get ‘jacked on my way to the car by carrying around a 32″ TV and PS3, let alone several.
¹ It did occur to me that I did a lot of this sort of thing in MMO AHs, i.e. “flipping.” However, I would argue that I was still providing a service insofar that the original seller was desiring a quick liquidation and nothing else. Or maybe it is the same thing in the abstract. Then again, the person who ends up buying my flipped good never knows how much I bought it for, which is the source of a lot of my ire right now.
As you may or may not be aware, there was a minor kerfuffle surrounding Kingdoms of Amalur: Reckoning. The gist is that Amalur is an EA-published single-player RPG with an Online Pass that unlocks Day 1 DLC, which is like a triple-word score on the Scrabble board of controversy. The thread on the forums ballooned to 48 pages of indignation, Curt Schilling (CEO and some baseball guy) responded in an eminently reasonable manner, and now the thread is about three times as big.
The irony in all of this is that this particular incident is not that big a deal. However, it touches on so many things that ARE a big deal, that it becomes something that should be a big deal. Specifically, the demonization of used game sales, which has came up before in an unfortunate Penny Arcade post back in August 2010. Later on in the Amalur thread, Curt Schilling laid out the issue:
Herein is the dilema no one wants to talk about right? We CANNOT in ANY WAY cater to people that buy used games exclusively right? We see ZERO revenue. Now as a consumer you may care nothing about that, and that is absolutely your right and we respect that.
However we are a business, we have 400 people, every single one of them is awesome, but I just can’t get them to work for free, so we need to make money to pay them, to make more awesome games.
Now the issue is the straddler, there are people like me, never ever bought a used game in my life, or pirated one, and never will, and people that ONLY buy used because they don’t have the means to buy new or whatever, but they have their reasons, agree with them or not it’s not relevent.
The straddler does both, he buys new and used, he turns in used to buy new, and that new game could be ours right? How do we handle that? How does the industry handle that? Industry? That’s the huge challenge.
I want to talk to the executives out at EA and other game companies for a moment. Are you guys listening? Get ready to write this down:
A used game sale is a guaranteed new game sale at a lower price point.
Don’t you see? These people are ready and willing to give you money, and YOU ARE NOT LETTING THEM. No one is buying used games because used is better; used games are universally worse, with possibly scratched disks, missing manuals, missing cases, and so on.¹ No one is buying used games to specifically deny money to the developers; otherwise they would simply pirate it. People buy used games because they are otherwise being priced out of the market (which includes people who don’t feel a game is worth full MSRP).
I understand it’s EA or whoever’s right to set their merchandize at whatever price point they like. I have doubts that $59.99 is the precise intersection of Demand and Supply, but whatever. My point here is that used game sales is literal demand that is being filled by other people expressly because you refuse to accept any less than an arbitrary amount. The idea of Online Passes is to get something back from the secondary market, right? Instead of selling $10 Online Passes, how about, I dunno, dropping the price of the game by $10?
Maybe the Online Pass thing makes them more money. If a game is resold ten times, that is potentially $100, right? But if that game was resold for $40 ten times, that means EA could have sold TEN NEW COPIES AT $40. Gamestop could sell used copies at $35, sure, and maybe no game company one wants to get into such a race to the bottom. But at that point, I would hope that EA and friends would get on the right side of incentives instead of the wrong.
Because here’s the thing: this is all about the continual erosion of Consumer Surplus. When you buy a brand new game for $59.99, the ability for you to sell that game to Gamestop for $20 when you are done with it is Consumer Surplus. It is value, whether you explicitly exercise it or not. We can imagine a world where used games somehow don’t exist in any form.² In such a world, you have LOST $20 worth of value and have likely received NOTHING in return – probably LESS than nothing, if the mechanism that prevented used games inconveniences legitimate customers the same way DRM harms actual customers. This is the reason DLC (especially Day 1 DLC) is troubling, the reason Cash Shops are troubling, the reason being forced to go online and register offline, single-player RPGs is troubling: all of these things are signs of Consumer Surplus extraction.
Remember back, say, 20 years ago? When a game company only received greater profit by ensuring they put out quality products? Those days are long gone. It is no longer about generating more sales, but from extracting more dollars from the sales that ARE made. Whoever came up with the phrase “value-added services” is a goddamn Doublespeak genius. Instead of simply getting those extra costume options, we pay for them. Instead of getting free map packs, we pay for them. Instead of being able to earn Sparkleponies and Disco Lions, we pay for them. This incentivizes game designers to have us pay more for less, instead of pay less for more.
The Kingdoms of Amalur controversy is not that big a deal in the scheme of things. Indeed, when you put it in the context of pre-order bonuses and Collector’s Edition items, it’s hard to see 38 Studios “giving away” DLC as particularly nefarious. Lesser evil is still evil though, and I can’t help but wonder whether in a different age those seven quests would have been included in the game, or in a free patch later on. Or as a poster in the Amalur thread said:
Is it just me or does that PR statement just admit that they develope DLC at the same one as the game, or in non moron speak, the game you’re paying 60 bucks for is having parts removed so you could buy then later.
AHow incredibly fucking nice of them to give Us the entire game up front, oh wait, they just admired to holding that back.. What else did they pull out? What other content did they strip from the title to bilk us for later?
Looks like $20-30 GOTY edition it is.why would I pay full price when I can’t trust or believe I’ll actually get the full….Fucking…. Game?
¹ Remember when games came with cloth maps and game posters? I still have the two game posters that came packaged in the FF6 box. Those sure as hell didn’t show up with your used game copy.
² Just look at Steam: no used game sales. Of course, you should also look at Steam because they are on the right side of consumer incentives. In return for DRM and no resale of games, we get hassle-free DRM, truly ludicrous sales (consumer surplus!), automatic game updates, amazingly fast downloads, integrated community, and the ability to manage a library of titles without worrying about CDs or CD keys. Compare that to the typical ham-fisted Ubisoft or EA implementation of DRM.
Are you someone who almost never engages in microtransactions, has no real issue with people that do, but nevertheless feel like you are losing something whenever a game company starts to embrace them? Do you get the sensation that the purchasing power of your money is decreasing the longer a game goes on, seemingly for no real reason? Do you think cash shops are just plain wrong but have difficulty expressing it in words? The good news is I finally remembered the name of the economic concept behind the sensation: consumer surplus. The bad news is… so have game companies.
Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price they do pay. If a consumer would be willing to pay more than the current asking price, then they are getting more benefit from the purchased product than they spent to buy it. An example of a good with generally high consumer surplus is drinking water. People would pay very high prices for drinking water, as they need it to survive. The difference in the price that they would pay, if they had to, and the amount that they pay now is their consumer surplus. Note that the utility of the first few liters of drinking water is very high (as it prevents death), so the first few liters would likely have more consumer surplus than subsequent liters.
The description is pretty self-explanatory, but I think the graph is a bit more useful.
And why not, here is a Greek college professor talking about it.
Do you want some videogame examples? Think back to multiplayer Diablo 2 and Warcraft 3. When I bought Diablo 2, it was because I wanted a quality dungeon-crawler experience similar to Diablo 1 – that there was an entire multiplayer experience attached was pure consumer surplus for me. Same with thing with Warcraft 3. Would I have paid an extra $5 for access to multiplayer? Probably. That $5 that I would have paid but did not have to amounted to Blizzard “leaving money on the table.”* Non-game examples includes Netflix Streaming, where you can access hundreds of movies at any time for $7.99. In spite of the “controversy” surrounding them raising prices of dual streaming/DVD plans, I think it is rather obvious that most Netflix customers would actually pay $10, $15, or even $20 a month for the service, especially since Movies On Demand-style services can cost upwards of $4.99 per movie.
The entire premise of microtransactions is dividing your content into smaller chunks to (re)capture and monetize every ounce of consumer surplus. While it is true that overall the game and it’s various monetized components are still worth buying – it falls within the bounds of the Demand Curve, which by definition means you value the game more than the money used to purchase it – it is equally true that literal value has been extracted from you. In other words, microtransactions remove value from games by reducing your consumer surplus.
Now, there may be the open question of whether the sort of microtransactions Blizzard is doing “counts” as consumer surplus mining. If Blizzard could/did not charge $25 for a mount, for example, would they have made the mounts at all? Would Blizzard have never made the Mobile Armory and/or the premium RealID grouping features if those did not tack on an extra subscription fee? I think they might not have developed those features and mounts, but that is more of an issue with the lack of credible competition** Blizzard faces than anything else. Indeed, competition generally engenders the greatest amount “value-added” consumer surplus since direct price wars are untenable. Then again, I might also bring up the Red Queen argument in that, much like raiding content, Blizzard has to continually be moving forward to maintain its present position. The artists that made and animated the Disco Lion would have been working on something either way, so if not adding that mount in as a PvE/PvP reward of some type, the effort might have been directed into a Titan or Diablo 3 model instead (increasing consumer surplus in those games).
In any case, I find the F2P and microtransaction model somewhat disturbing, yet inevitable. It obviously has the power to save games that would not exist otherwise (e.g. LotRO, APB, etc), and thereby opens the possibility of radical innovation in the types of games we play. Similarly, the rise of Steam and iTunes (and Facebook for that matter) as content delivery services makes indie games/music possible that could not exist in a typical retail box store. That said, the existence of that hitherto unexploited consumer surplus also leads to worse games, like Tiny Tower***. Meanwhile, instead of growing the industry, we have the major players pumping out sequals and squeezing the blood from what rocks are left instead of, well, mining for new rocks. This same phenominom is going on in the movie industry, with parallels like making movies 3D not because that adds value, but because A) they get to charge more, and B) it makes the movies nearly impossible to pirate.
The way I see it, the more game companies fall over themselves trying to monetize every corner of our consumer surplus, the less they fall over themselves giving us quality entertainment. Eventually, there will be some break-point beyond which lies an Era of Subsistence Gaming where we get exactly what we pay for and not one whit more. And those will be very bleak times indeed.
*Except Blizzard did not actually “leave any money on the table,” since that implies there was no value to Blizzard for giving consumer surplus. As we all know, it is the exact opposite: we as players give that value back to Blizzard in the form of brand loyalty and positive word-of-mouth recommendations. Part of that comes from the (historic) quality and polish of their games, but the feeling that we are getting more plays a non-zero part in the calculus.
**Blah, blah, Rift, LotRO, etc. Rift peaked at 600k subs and is now hovering around ~480k. LotRO peaked at 560k and is now at 360k. If you add both Rift and LotRO numbers at their peak, and then multiplied that by two, WoW would still have had more players than that in just North America… in 2008. Lost subs are lost subs, but I bet the Disco Lion made more money in the opening day it was released to cover a year’s worth of lost subs.
***Worse as in psychologically designed to exploit your nucleus accumbens, and essentially disprove the economic theory of rational consumers single-handedly.