Opinion: Those Who Cannot Remember the Past are Condemned to Repeat It

Almost three years ago, when I began telling industry friends of mine about our intent to launch a new consumer association, I got one of two reactions. The first group was fearful that this would be some kind of extremist organization for gamers and that we’d be at odds with the industry on every issue. In the second group were folks that saw the potential in working with consumers instead of excluding them. I knew that there would be issues in which the wants and needs of the business sector would be different than those of our members, but felt strongly that a centrist approach – held consistently – would win over the skeptics. The most germane, and arguably most important, issue area is on digital rights.

As we transition from a packaged goods-based business to a digitally-distributed model, ownership rights are, and will remain, the central sticking point for every party involved – from the developers to the consumers. The transition will not come quickly, nor will it occur in a short period of time. The evolution of digital distribution and its insertion into the value network represents the single most impactful event to the business model in our industry’s history. A console game disk represents a tangible value, where a digitally-distributed piece of software presently represents an intangible.

In the supply chain – the path that the product takes from inception to use (i.e. developer, publisher, manufacturer, distributor, retailer, consumer) – any new paradigm-changing event needs to be considered carefully by each stakeholder to see how its arrival and its integration will affect their respective role. The media, analysts and stockholders too are impacted by that event and as a result need to assess their positions. That is to say, if a gamer goes to the store, plucks a new AAA console game off the shelf and looks at the price thinking, “60 bucks? Ok,” then the model is stable. But if the consumer instead is prompted to buy and download that same game online and feels that the value is less tangible, then the network is (perhaps fatally) flawed until it adapts.

The price hike with the current generation of games, where we moved from $49.99 to $59.99 had little impact on the system and for a variety of known and quantifiable reasons. The product’s physical presence didn’t change, but the perceived value did. Consumers expected that the quality of the game on the disk would be drastically enhanced over the previous generation’s price points and related game quality. And for the most part that’s true... but expecting to keep a sixty-dollar sale point the same, while delivering an intangible, is sure to make consumers take pause. Worse, the likelihood that content creators will seek to move from a buy-to-own proposition to a purchase-and-rent/license at the same time, is already giving gamers ulcers.

The threat of piracy of digitally-distributed products is one reason that content owners are considering a move to the licensing model. But it’s a flawed and outdated practice outside of business-to-business use. The beginning and end of the chain are as interdependent as each other piece. And consumers' rights are naturally going to be at odds with creators' rights when there isn’t an agreed-upon delineation for where one ends and the other begins. Such has been increasingly the case with PC games and digital rights management (DRM) tools and their chilly reception by consumers.

There have been parallel industries that have faced the change from packaged to digital goods, but few if any of them handled it well or planned for it prudently. (Lookin’ at you, music industry, and thinking about George Santayana.) We, on the other hand, have an opportunity to take a step back and do the due diligence. We have robust and effective trade organizations which represent the interests of developers, publishers and of merchants. But perhaps the single biggest asset and the key differentiator with those other industries is the arrival of the customers at the table. Be it the association that I run, the Entertainment Consumers Association (ECA), or the vocal and engaged coming of age of Generations X and Y, for the first time (that I can think of, anyway) the sector has an opportunity to manage the transition with representatives from the entire value network. I’m not, of course, suggesting the metaphorical smoky back room, but an open and inclusive exchange. Let’s not squander the privilege.