The Manifesto on the Evils of GameTap

Gamasutra sits down with Manifesto Games co-founder Greg Costikyan to discuss how the revolution is coming along. They explore the group's business model, the retail market, and the dangers of GameTap. From the article: "They don't worry me, particularly; I'm skeptical that their business model is sustainable. But basically, my argument is that they can afford to offer so large a number of titles for a $10/month fee largely because the major publishers view older games as worthless, since they cannot be sold through conventional retail any longer, so they're willing to accept a small share of rental revenue. But I also believe that PC games, in particular, are going to move online in a big way over the next few years and will eventually disappear from game stores — PC games are responsible for just 6% of their revenues, and take up a lot more shelf space than that justifies." Mr. Costikyan further explores this last concept in a post on his site called, simply, Why GameTap is Evil.

Comments

I think he's wrong.

[thesolo]

Mr. Costikyan's assertion that software, games in particular, are not like fruit, in that they do not have an "expiration date", is flat-out wrong. I think they have a very definite shelf-life, which directly corresponds to both the platform they run on and the available hardware.

A game written for DOS should not still sell for the same price it did when it first came out. A game that only plays on a console that hasn't been sold in years should not be the original price. If one extrapolates Mr. Costikyan's comments to other industries, such as automobiles, it's akin to saying that an 82 Pontiac should be the same price now as it was then. That, despite the engine, braking system, interior pieces, safety systems, etc., all being subpar by today's standards. If you apply it to the electronics industry, it's like saying an 8086 should still cost $2000.

That's nonsense. If a game doesn't work under XP/Vista/OS X/whatever OS you run, doesn't work with your fancy new gaming controller, doesn't play on the current consoles, then why should it's value not be reduced? Sure, the gameplay itself hasn't changed, but if you can't run it, then it's intrinsic value depreciates. Whether or not that's fair to developers is another issue, but everything gets outdated. I wouldn't spend as much for a copy of Windows 3.1 as I would for a copy of XP, and it's the same thing with games.

Re:I think he's wrong.

[jevvim]

I wouldn't spend as much for a copy of Windows 3.1 as I would for a copy of XP, and it's the same thing with games.

Except with games, it's not due only to the time since release, but also due to used game sales. After a few months on the market, stores which carry used games will start to have copies at ten, maybe fifteen dollars less than new retail. The more popular the title, the smaller the discount. But the used discount is enough to start pulling sales away from the manufaturer. The per-unit incremental cost on games is low, and so the manufacturer can choose to drop the MSRP if the used game market starts pulling too many sales. The manufacturer can repeat this over and over, and each reduction will cost the used game sellers some of their profit (as the value of their used game inventory will decline).

That's why I believe manufacturers are more agressive with price cuts - it's their primary weapon against the used game market. PC games don't decline in price as fast as console games do (or my memory is just very selective). Once a title gets to "Greatest Hits" status with a $20 new MSRP, the used market seems to be pretty minimal. As the quoted article says, most people who want a game will pay $20 for it and it shows.

Hmmm Basic Economic Forces

[Anonymous Coward]

Ok I didn't finish the article because the first part has me slapping my forehead.

    "My belief is that's as it should be. The value of a game has--well, not nothing to to with its age, because, say, there's not a lot of point in buying a game that only runs under DOS today. And I'm not at all sure I'd want to buy the original Civ, at this point, either (though a great game it was); I'd want the most recent version. But in general, a game is a game, and it surely doesn't lose 80% of its value in the course of a year."

    But surely It does loes 80% of it's value. It's called supply and demand. Ok so supply of a game over the course of it's first couple years of release is relatively constant. Now since demand for a game is greater in the beggining a publisher can charge a premium price. Over time demand wanes but the supply is the same so the price must drop so people will buy it. It's a pretty simple concept. He also goes on to rant that somehow gametap is a bad model because it deprives game publishers of their due. It's providing easy access to games that are no longer is to obtain. So if a publisher gets only a small portion of the game, they aren't being shorted out of the full MRSP. Nobody is going to pay that, they are getting a small portion of money that they would never have seen. So in essence publishers are benefiting from Gametap. Of course I'm using economic princples and logic which don't make for assnine and "entertaining" blog posts.

Re:Bad Business Model?

[AKAImBatman]

Online delivery is the future. How that happens and the pricing model that dominates is what he's worried about. If it's the GameTap model, then developers aren't going to have a viable market for older games because users are going to be used to the gametap pricing model.

The part I think he misses with his fruity analogies, is that room may exist in the market for BOTH models to coexist peacefully. The subtle flaw in his logic is where he manages to simultaneously argue that old games still have value, yet DOS games aren't as valuable because they're difficult to run. Both statements are true, but they create a huge divide between the 'old' and the 'new'.

No studio in their right mind is going to spend hundreds of thousands of dollars to update a DOS game for a re-release. The most they're going to do is a straight-up port that they can cram in a shovelware collection. If they can shortcut this cost with an emulator, all the better. The down side to this method is that the product doesn't hold the same market value it once did. For example, Doom II can't directly compete for the same dollar that Doom III competes for.

This means that it's actually in a publisher's interest to promote these games as "classic". This removes them from direct competition with the new titles, and allows the studio to make more money rather than siphoning sales from their new product lines. So when push comes to shove, I don't think the online retailers will have anything to worry about from Gametap. The only way that Gametap could pose any sort of threat is if the Indies put out games in the vein of those from 10 or 20 years ago, rather than producing games that compete in the current market.

Re:End of stores.

[voice_of_all_reason]

You are forgetting that if the company folds, gets bought out, or just decides not to support that product any longer, you're flat-out fucked.

Re:End of stores.

[aesiamun]

Hopefully by the time off the shelf software ceases to exist, dial up internet services will be no more. I fail to see why people still choose dial up, especially when it's as much if not more than something like DSL Extreme which is $12.95 for the first year.

If it's because broadband isn't available, that will change too broadband becomes more ubiquitous and less expensive. You don't need more than 5 Mb/s to download something in less time than it takes to get in the car, drive to the store, find the software and drive back home...

Re:End of stores.

[Ravenscall]

Well, whenever I download anything I want to hold on to, I burn it to CD or DVD and write any registration info on it in indelible marker. That way if my hard drive crashes and something is wrong with my backup, I can just reinstall it.

So, like I said, it is the same problem with boxware, but I would be out less money usually.

Suspicious numbers

[Spazmania]

I look at it and say, "It's a 50MB installer. If I have a conversion rate of 1%, I've got 5 gigs of data traffic, which costs me a buck, per sale. At ten bucks, that's a big chunk of my margin."

A buck a sale for the download sounds suspicious. Lets take a closer look.

First, I assume they're hosted in a data center some where and have purchased the cheapest commercial bandwidth available (Cogent: $10/mbps). They could be hosted with MCI ($350/mbps) but I doubt it.

Now, that $10/mbps is based on the "95th percentile measurement." That works just like taking a median except you take it at 95% instead of 50%. We can't assume that their cost would be the cost of transmitting files at a fixed rate continuously 24 hours a day but we can get a rough estimate by assuming they transmit at a flat rate 12 hours a day. That'll be accurate plus or minus 50% and in a few moments you'll see why plus or minus 50% is damn near nothing.

So, they have to send 5 gigabytes to make a sale. That's suspicious too but I'll come back to that. 5 gigabytes = 40 gigabits plus about 10% overhead is 44 gbits. Divide by 30 days in a month, 12 hours a day, 60 minutes an hour, 60 seconds per minute. 0.033 mbps. Times $10 per mbps is 33 cents. Add 50% for our error estimate and you're talking half a buck.

5 gigabytes is suspicious too. With this supposed 50 mb installer, you're saying they have to let 100 folks download the game to make 1 sale.

First, why would download the installer to someone who hadn't paid you? Okay, maybe you want to give them some demo levels to get them hooked. Fair enough.

Second, do you seriously think that 99 people are going to wait through a 50 meg download for an obsolete game and then walk away for every 1 person that actually buys it? Bull! The folks who don't intend to buy it will get the cracked version off bittorrent. The conversion rate on the web site will be 10% or better and the price of bandwidth keeps dropping. Now you're talking around 5 cents per sale and falling.