Xbox One and PS4 DRM debate is costlier than it appears

Are the days of used-game outlets like GameStop numbered? Time (and announcements at E3) will tell.

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Are the days of used-game outlets like GameStop numbered? Time (and announcements at E3) will tell.

To hear tell of it, you'd think the reveals of the Xbox One last week and the Playstation 4 three months prior were utter disasters.

What are they going to be? Gaming systems? Digital media managers? high-definition TV tuners? All of the above? If you listen to how Redditors and hardcore gamers describe it, both will be one thing above all others: The sounders of the death knell for the used game market.

There have been concerns about this before, most recently when the Playstation Vita handheld was released, but now there's actual cause for concern. Reports are rife with rumors both Sony and Microsoft are gearing up special digital rights management protocols that will prevent owners of the new machines from playing used games without at least first purchasing a special license from the hardware makers.

Fears are this encoding will either prevent playing used or borrowed games altogether, will kill the used game market, be prohibitively expensive, or be some combination of the three. In truth, there is as of yet no proof any such DRM measures will be taken.

Microsoft PR handlers have deliberately refrained from providing specifics since launch, and Sony also has couched any talk of DRM in a lack of any definitive measures, despite both systems being readied for release only a few short months in the future. This is potentially because while it sounds like a good idea to both hardware and software makers to maximize profits, the used-game megafranchise GameStop would fight it to the death. Along with making millions with its exorbitant prices on used games, GameStop's stranglehold on exclusive downloadable content and special features for AAA titles means it makes a killing on new software sales, as well.

Forbes reports that even as industry sales decline overall, GameStop's sales have declined at a much slower rate (all new software sales are down 25 percent, but only 12 percent at GameStop stores). More importantly, nearly half of all Xbox 360 and Playstation 3 software sales are through the franchise, and only 30 percent of GameStop's business is in used sales.

Add in the fact there are some 30 million people enrolled in the company's PowerUp, Megacard, EB World and GameStop Plus programs throughout the U.S., Europe and Australia, according to Forbes, and it doesn't take a mathematician to realize the gaming industry is in quite the codependent relationship. Adding a manufacturer licensing fee on top of GameStop's often unpalatable used prices would have a chilling effect on those sales, and therefore could keep people out of GameStops to buy new tentpole releases. Neither side wants that.

Throw in speculation that the new machines could top $600 with bells and whistles added, and the long-held industry model of giving away the razor to sell the blades would no longer apply. With a DRM fee, gaming could become too expensive for its core audience — not only kids and single men in their 20s, but also the affluent late-30somethings now busy paying for their children's pursuits instead of their own.

There is an argument to be had that used games rob software makers of deserved profits, but not any more than car companies, the music industry or the RV market lose out in their respective fields through pre-owned sales. Even the most diehard used-software gamers will shell out $60 for a big title once in a while.

Interestingly, Hollywood's own DRM fight has shifted to focus on squeezing licensing fees out of streaming services and video rental services. You're paying a fee to get that movie from RedBox or Netflix or Amazon Prime, but it's in the fine print. It may only be the fear of a visible $10 or $20 premium being slapped on a used game that has gamers trembling.

Perhaps the focus should be more on game prices and the entertainment value they hold instead of making people pay further for what has traditionally been a bargain way to play. Titles have been $50 to $60 since the NES. In the face of new releases skewing to digital downloads, is it time to make a baseline price $30? We can likely afford to talk about that.

Joshua Gillin writes about video games and entertainment news for tbt*. Feel free to challenge his opinions at jgillin@tampabay.com.

Xbox One and PS4 DRM debate is costlier than it appears 05/30/13 [Last modified: Thursday, May 30, 2013 5:00pm]

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