The Erosion of Ownership | 10 Years Ago This Month

The games industry moves pretty fast, and there's a tendency for all involved to look constantly to what's next without so much worrying about what came before. That said, even an industry so entrenched in the now can learn from its past.

So to refresh our collective memory and perhaps offer some perspective on our field's history, GamesIndustry.biz runs this monthly feature highlighting happenings in gaming from exactly a decade ago.

Next-gen locking out used games?

Last month we talked about the Mass Effect 3 ending controversy and the harmful trends we've seen as a result of companies giving players creative ownership of games. This month we're going to be talking about how that's pretty much the only form of ownership players have over the games they play now.

In April of 2012, the next-generation of consoles loomed large. At that point, the Xbox 360 had been out for nearly seven years and its successor hadn't even been announced yet. The PS3 was going on six years, and its follow-up was similarly unannounced. Given we only went four years between the launch of the Xbox and the Xbox 360, people were ready for something new.

Nintendo had at least shown off the Wii U, although with reports that the system wouldn't even be able to keep up with the Xbox 360 and PS3, it seemed like we would have to wait for Sony and Microsoft to show off the "real" next generation of gaming hardware.

The problem was Sony and Microsoft hadn't yet said anything about their next-gen systems, which were still a year-and-a-half away from launch. However, we were starting to get some early insider reports about them with some alarming details.

In late March, Kotaku reported on the PlayStation 4 (codenamed Orbis) and offered a few concerning details for players. For one, Sony would be breaking its history of backward compatibility, as Orbis wouldn't play PS3 games. But probably the bigger issue was that it was designed to prevent people from playing second-hand games on the system. Each game sold would be locked to a single PSN account, and any other account that tried to play the disc would be given a trial version of some sort with a prompt to pay to unlock the full game.

Days later, VG247 reported on the next Xbox (codenamed Durango), saying it would require a constant internet connection for always-online DRM, which many took as a sign that Microsoft was also looking to lock out the used game market.

These were big changes to the status quo, so of course there were concerns. We called it "the nuclear option" in an editorial while pointing out the delicate PR and marketing dance that would be required. And of course, some in the industry cheered the move. Veteran developer Richard Brown wrote a counterpoint to our editorial championing the idea of locking out used games, blaming the second-hand market for developers tacking on unnecessary multiplayer modes, for mid-tier publishers dying out, and for indie studios closing.

Journalist Chris Morris freelanced an editorial for us laying out six reasons Sony and Microsoft wouldn't block used games. Most of the reasons hold up very well, but the last one is worth focusing on here: they could just "let nature take its course." By 2012, it should have been clear to everyone that digital distribution was the future of the industry. And digital distribution was already gaining wide acceptance with no expectation of being able to resell a game or trade it in. Why kick the hornet's nest that is the fanbase by imposing a restriction on something that is going away anyway?

Analysts likewise expressed significant concerns about blocking used games. DFC Intelligence's David Cole told us "customers would rebel." Wedbush's Michael Pachter told us none of the big three console manufacturers "are stupid enough to do this unilaterally" and none of them "are evil enough to do it together."

Pachter's comments are especially interesting, because he was absolutely right that the platform holders weren't evil enough to collude on blocking used games as policy. Whether or not they would try to do it unilaterally is a mater of some debate, as we would discover the next year when Microsoft announced the Xbox One.

Microsoft's Xbox One unveiling was disastrous for a bunch of reasons, but one of the big ones was the decision not to address the always-online DRM elephant in the room. Microsoft didn't mention it at all in its presentation, leaving it to individual outlets to ask about in interviews around the big show. And when outlets did ask about it, Microsoft didn't have a clear and coherent message to put out there.

When we asked Xbox's UK marketing director if the system would block used games, we were told it "will support the trading and re-selling of used games," but how that would work hadn't yet been figured out. So clearly, something was changing from the status quo. We were also told that the console wouldn't be always online, which was technically accurate. But we weren't told it would need to check in with Microsoft servers every 24 hours or be unable to play games, which again was a significant departure from the norm and seems like the kind of thing worth mentioning.

At the same time, Microsoft corporate VP Phil Harrison was telling outlets something else entirely.

"The bits [of a game] that are on the disc, I can give to anybody else, but if we both want to play it at the same time, we both have to own it. That's no different to how discs operate today," Harrison told Eurogamer. "I can come to your house and I can put the disc into your machine and I can sign in as me and we can play the game."

No different to how discs work today, except that he went on to explain that "At the end of the play session, when I take my disc home - or even if I leave it with you - if you want to continue to play that game [on your profile] then you have to pay for it. The bits are already on your hard drive, so it's just a question of going to our [online] store and buying the game, and then it's instantly available to play."

The garbled messaging around a fundamental change to the established video game ownership model work took something that was likely to be a controversial change anyway and doomed it from the start. It also gave Sony an easy win at that year's E3, turning the news that PS4 would not have used game restrictions into a thundering NBA Jam-style monster dunk right in the Xbox One's face. Microsoft had gifted Sony a "unique selling point" that was actually common to every major game console ever released to that point.

Microsoft backtracked on Xbox One's used game restrictions a week later.

A decade and another generation of consoles down the line, we still don't have always-online consoles that lock out used games, and that's largely a function of messaging. Microsoft was attempting to redefine the concept of ownership of a video game to its own benefit, but that wasn't what got it in trouble. What got it in trouble was that it failed to convince customers that the redefinition would benefit them sufficiently to justify the change.

Because if you look at the idea of digital ownership today, it has largely moved closer to where Microsoft wanted it to be anyway, and many of the key steps have been taken with little backlash.

The most popular form of gaming worldwide -- mobile -- is 100% digital distribution and the games overwhelmingly requiring an online connection. Microsoft and Sony have released (second-hand proof) disc-less versions of their next-gen consoles without controversy because they offer a cheaper entry point for cost-conscious users and those who prefer physical media still have the option to buy systems with disc drives.

Game Pass and the revamped PlayStation Plus are leaning on subscription-based access to games, further chipping away at the previous paradigm of paying once for a game and being able to play it forever or sell it on. GameStop doesn't even report how much it makes from used game sales anymore because the once-key metric for the specialty retailer was shrinking and executives probably knew it was never going to look especially healthy again given the industry's evolution.

But even if people aren't grabbing pitchforks to protest each and every injury to the idea of owning games, they still intuitively understand it's dying by a thousand cuts. That's one reason why the blockchain crowd is able to pitch NFTs as a form of ownership in games, even if it's demonstrably false in any way that matters. People are now so accustomed to games as an ethereal experience reliant on the good graces of digital landlords that the idea of having some kind of concrete dominion over any aspect of it has become novel.

Undue drama over on-disc DLC

As another example of how the messaging and perception of ownership outweigh the reality, we can look to the tempest in a teapot that was on-disc DLC. April of 2012 wasn't the first time fans were outraged to learn that the physical media they bought already included post-release DLC that would be sold separately, but it was perhaps the time of the loudest backlash to the practice.

Capcom released Street Fighter X Tekken in March with plans to sell an extra 14 characters for the game as downloadable content over the rest of the year. But when hackers discovered all the data for those fighters shipped on the disc, dozens of fans lodged complaints against the company with the Better Business Bureau.

It didn't matter that the publisher was upfront and clear about what users would have access to when they bought the game, or that it was efficient to ensure every player had the DLC data for playing online against anyone who had purchased the characters.

"There is effectively no distinction between the DLC being 'locked' behind the disc and available for unlocking at a later date, or being available through a full download at a later date, other than delivery mechanism," Capcom said in its response to the BBB complaints. Unconvinced, the BBB downgraded the publisher's rating from an A+ to a B.

Capcom responded the next month by caving completely because the efficiency of distributing the content on the disc was more than offset by the ill will and bad press, saying, "[We] have begun the process of re-evaluating how such additional game content is delivered in the future."

The on-disc DLC backlash being driven by a desire for ownership is ironic. If you buy the disc, the logic goes, you shouldn't have to pay extra for stuff that's already on the disc. But as Capcom's response showed, publishers were never going to stop selling additional content piecemeal. They would just make sure that the extra content you want won't exist on your physical copy, and you'll be forced to spend the time and bandwidth to download it in addition to the actual asking price. And instead of the content being owned in the form of bits on a disc in your possession, it will be stored on a digital storefront's servers, and when the plug is inevitably pulled on those, it will simply cease to be available except as permitted for those who already purchased and downloaded it.

Ownership in games was headed this way for a while, but it still stings to see consumers usher it along with their attempts to preserve it.

Good Call, Bad Call

BAD CALL: Tekken series producer Katushiro Harada responded to the furor around on-disc DLC, saying, "Tekken has never had DLC before and charged for it. This isn't really directed at Capcom. I have always said this, but I see the characters and their move sets as chess pieces. They are essential items necessary in the game, and we would never sell any of those individually."

A decade later, Harada's Tekken 7 is probably the most successful installment in series history, with 8 million copies sold, four seasons of downloadable content, and 15 additional fighters/chess pieces sold individually.

BAD CALL: Epic designer Cliff Bleszinski, who called on-disc DLC "an unfortunate reality" of the business, then suggested downloadable distribution -- the thing that enabled the abundance of add-ons and microtransactions consumers had such a problem with -- would also cure it.

"If we can get to fully downloadable games, then you can just buy a $30 horror game and just have it, and that stuff will thankfully go away," he said.

We did eventually get fully downloadable $30 horror games, but mysteriously enough, it did not help.

BAD CALL: Despite its enthusiasm to impose a digital future with the upcoming Xbox One, Microsoft was clearly nervous about alienating retail partners, with Xbox Live UK product manager Pav Bhardwaj insisting the company would continue to have digital releases of its games lag their physical counterparts by roughly six months, saying, "That's where our focus has always been and will remain that way for the foreseeable future."

I would mock Microsoft for having the Xbox One launch the next year with same-day digital and physical releases for AAA games, but if the company couldn't anticipate the backlash its original Xbox One plans would receive, maybe its "foreseeable future" just doesn't extend that far out. (It's still weird though. Even Nintendo figured out this online best practice before Microsoft. Nintendo!)

GOOD CALL: "If you look at Xbox Live now and look at Xbox Live four years ago, it's night and day... It will be no different for us, when we're talking two years from now... We're going to look at Elite and go 'Wow, that has no resemblance to what it was at launch.'" - Jamie Berger, VP of Digital at Activision, talks about the Call of Duty subscription service's early struggles and growth.

Call of Duty Elite didn't actually exist two years later, which meets the "no resemblance to what it was at launch" criteria and makes this a Good Call.

BAD CALL: PiperJaffray analyst Michael Olson pointed to November's Call of Duty: Modern Warfare 3 only finishing eighth in the March NPD charts as evidence that hit games would start experiencing shorter shelf lives. (For comparison, 2010's Black Ops finished in fifth place in the March 2011 charts.)

"We believe big name titles are no longer able to sustain 'fat tails,'" Olson said. "This 'thinning tail' phenomenon is driven by 1) casual gamers leaving the market, 2) a steeper pre-sale and up-front curve, and 3) cannibalization from the pre-owned market."

No shade on Olson for thinking a Call of Duty dip was evidence of something bigger -- we've all been there -- but if anything, the story of AAA games over the past decade has been one of longer tails than ever before

The NPD's full-year chart for 2011 had a top 10 with just two games from prior years: Call of Duty: Black Ops (sixth place) and Just Dance 2 (ninth), both 2010 releases.

The NPD's full-year chart for 2021 had three games from prior years in the top 10 and eight in the top 20. 2020's Call of Duty Black Ops: Cold War was the second best-selling game of 2021. 2017's Mario Kart 8 Deluxe was the seventh best-selling game. The 2020 chart also featured long tails like Minecraft (2011), Super Smash Bros. Ultimate (2018), and Mortal Kombat 11 (2019).

And because Take-Two's digital sales stopped being counted in the NPD chart, that doesn't include Grand Theft Auto 5, which debuted in 2013, has shipped 160 million copies worldwide, and continues to add to that total by about five million each quarter.

BAD CALL: With Google launching its own AR Google Glass glasses in April of 2012, Valve's Michael Abrash made some big predictions on wearable computing, saying, "The logical endpoint is computing everywhere, all the time -- that is, wearable computing -- and I have no doubt that 20 years from now that will be standard, probably through glasses or contacts, but for all I know through some kind of more direct neural connection.

"I'm pretty confident that platform shift will happen a lot sooner than 20 years -- almost certainly within 10, but quite likely as little as three to five, because the key areas (input, processing/power/size, and output) that need to evolve to enable wearable computing are shaping up nicely, although there's a lot still to be figured out."

Here we are 10 years later and the height of wearable computing is basically Fitbits and Apple Watches, not exactly the jetpacks we were promised. Google Glass and Magic Leap have pivoted to focus on enterprise customers rather than consumers, AR is still spinning its wheels outside of Pokémon Go, and as for direct neural connections, a Physicians Committee for Responsible Medicine lawsuit filed against Elon Musk's Neuralink in February found the company's records on development of brain chip implants "reveal that monkeys had their brains mutilated in shoddy experiments and were left to suffer and die."

Musk hopes to launch trials in human subjects next year, but there's no need for alarm because it's not like he would ever roll out unproven technology if it could possibly harm people, right?

BAD CALL: GameStop saw the advent of Steam and the almost exclusively digital future of PC gaming and concluded that it needed to massively expand its retail stores' PC game section.

BAD CALL: Ubisoft's Chris Early looked at the unhealthy state of gaming fandom in 2012 -- which we talked about in last month's column -- and thought it would be a great thing to have people intertwine their identity with commercial gaming products even further.

"Not everybody is going to paint their house or put a Ghost Recon logo on their garage door, but shouldn't some people who want to engage at that level be able to do that? That's the experience we're trying to create, and we're trying to let people consume how they want to... The more someone can engage with something, the more loyal they can become. It's not that we're trying to force people into that, it's that we're giving them that option."

BAD CALL: When asked if THQ's recent decision to double-down on core titles and online games would pay off, Take-Two CEO Strauss Zelnick responded, "Quality really, really, really matters. THQ has had some good games, but their quality levels aren't even remotely ... the quality hasn't measured up. Strategy didn't work and the execution was bad. To put it another way: the food was no good and the portions were small... THQ won't be around in six months."

THQ would have the last laugh; it lasted another eight months before declaring bankruptcy.