Denis Dyack: Used games will “cannibalize” the video game industry
Silicon Knights head argues that games could be cheaper if used games are stopped.
The opinionated Silicon Knights head Denis Dyack has jumped in to support Microsoft and Sony in their supposed pursual against used games. He spoke with GamesIndustry soon after Kotaku broke news that Sony’s next PlayStation, Orbis, will feature an anti-used game system, much like what Microsoft plans to do with its new Xbox machine, Durango.
In his interview, Dyack argues that used games, other than being a major deterrent to potential profits for a publisher, will also make video games more expensive to own as games no longer have the benefit of a “long tail” of sales.
“Because there are no used games, you could actually sell a game for a long time, and get recurring revenue for quite a while. Recurring revenue is very key. Now there is no tail. Literally, you will get most of your sales within three months of launch, which has created this really unhealthy extreme where you have to sell it really fast and then you have to do anything else to get money,” he said.
Of course, making games is a hard and expensive process. Each part, even minute things, require a significant investment that publisher have take in order to sell games. From their perspective, a used game sale means no business – the pre-owned customer might as well be a pirate. However, if used games are curbed, what guarantees that, that pre-owned customer, who now can no longer purchase games at a price he can afford, will come back as a proper, full-price paying customer? What if he doesn’t? Wouldn’t it be even worse to stop that customer from playing a developer’s game if he could potentially be an actual customer in the future as a result of being impressed by that developer’s work?
Dyack believes that could be curtailed if games became cheaper – which it will, he says, once used games stops inflating development costs.
“I would argue, and I’ve said this before, that used games are cannibalizing the industry. If developers and publishers don’t see revenue from that, it’s not a matter of hey ‘we’re trying to increase the price of games to consumers, and we want more,’ we’re just trying to survive as an industry. If used games continue the way that they are, it’s going to cannibalize, there’s not going to be an industry. People won’t make those kinds of games. So I think that’s inflated the price of games, and I think that prices would have come down if there was a longer tail, but there isn’t,” he added.
One could argue back with the case of Steam. Developers do not have to worry about used game sales on that platform since games are locked to a particular account. Yet, games still sell at $60, a slightly larger margin than the accepted, and steadily declining norm, of $40 as PC games do not entail royalties to the multiple platform manufacturers. Why then, haven’t PC games become cheaper? Why then, have developers not tried to make a point that the absence of used game sales could in turn benefit customers?