Silicon Knights’ Denis Dyack: Used Game Sales ‘Cannibalizes Industry’

Published 2 years ago by

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Have you heard of Project Ten Dollar? Even if the term isn’t familiar, its implementation certainly is for most console gamers. Most triple-A console releases, including all Electronic Arts games (SSX, Mass Effect 3, etc.), the latest Sony titles (Unhcarted 3, Twisted Metal), the latest THQ games (Saints Row: The Third), the latest Warner Bros. Interactive games (Mortal Kombat, Batman: Arkham City) all include the controversial $10 Online Pass as a way to profit from used game sales.

From a consumer standpoint, used games bring affordable prices to older games but from a developer standpoint – at least, according to Silicon Knights head Denis Dyack – used games are “cannibalizing the industry.”

In chatting with GamesIndustry, Dyack discussed the topic of used games and its effect on the industry. The Silicon Knights head reiterates his desire for cloud-gaming and digital content as a way to combat used games and generate continuous revenue streams. In short, he believes used games will destroy the industry.

He explains that decades ago, game makers would continue to earn money over the long-run from games, because even as they age, players would buy into them, earning the company what he refers to as “tail” profit. He explains that nowadays, games have to earn their money in the first three months before they vanish.

“From a consumer side, [in the last few years] we started seeing used games really come into fruition, and I believe that has caused quite a problem. I would argue that used games actually increase the cost of games.”

“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.”

What Dyack doesn’t address is how used games can bring in players who otherwise wouldn’t buy their products, players who may then be inclined to purchase sequels, expansions or DLC. There’s also no mention of re-releases, whether through downloadable services mentioned below, HD collections or as we’re seeing a lot of lately, on iOS devices (see: Baldur’s Gate, Grand Theft Auto, etc.).

He also doesn’t mention that games need to be innovative or of high quality (see: his own company’s terrible X-Men: Destiny), or that money from traded in games can go towards new releases, something GameStop is quick to point out in defense:

“Remember that used video games have a residual value. Remember that GameStop generates $1.2 billion of trade credits around the world with our used games model.”

Dyack may eventually get his way regardless. Steam has become the pinnacle of digital content delivery for PC games and there’s a growing interest in digital services on the consoles, with Microsoft just recently increasing the achievements cap on XBLA titles due to their increasing size.

OnLive is cloud-gaming at its best for the current generation and if certain rumors are to be believed, both the Xbox 720 and PS4 (“Orbis”?) may not support used games.

While X-Men: Destiny was a big fat failure, and Too Human has Silicon Knights continuing their legal battle against Epic Games over the use of the Unreal 3 engine, they are working on a next-gen game for what they describe as their most popular IP, so don’t be surprised if we eventually hear word on a next-gen Eternal Darkess. Just don’t buy it used.

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Follow Rob on Twitter @rob_keyes.

Source: GamesIndustry International

TAGS: Silicon Knights

19 Comments

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  1. Haha Rob, you flatout pwned him. xDDD I mean I understand that they won’t get money from used games, that’s why they have the $10 online pass thingy. I mean it’s really not like they are LOSING something when someone buys a used game, it’s only 1 copy that goes around, not costing the devs any money to produce these copies, since it’s only 1 copy! I actually am toward the PROJECT 10 as long as new copies of the games come with the code. That way they will get their “used revenue” when they actually make GOOD enough games to make people buy the online pass. Hell, Gamespot should just make a deal with the game companies that they sell used games from, and they should just make a % cut of the used game profit to go to the devs. Easy.

  2. It’s the cost of the new games that are the problem IMO. I would but many more games if they were in the $20-$30 at $60 that’s half a months cable and internet bill. Add to that DLC and you are staring $70-$120 to experience the full content of a game. Block buster titles can sell for those high prices, but if it not all ready a hit it should be priced at 20-30. That will move games. Just my opinion from a game consumer stand point.
    Of course then resellers would sell the used games for less I suppose.

    • your entirly right my friend.

    • Agreed. I’d like to download games from xbox live for the convenience, but as things stand, the prices are simply ridiculous. Gears of War 3 is £49.99 ($80) on xbox live, whereas I can pop down the local second hand retailer and get it for £12 ($19). It’s a complete no-brainer.

    • Agreed. And a prime example of this is all of the day one DLC.

      Looking at you Mass Effect 3.

    • You also forgot that these 60.00 games are also getting shorter and shorter it seems.

      Take Mass Effect 3 as a prime example. It only takes 25-30 hrs to complete it which seems utterly ridiculous when compared with a game like Skyrim that boasts upwards of 300 hrs of game play for the same price. Even that is a bit misleading though because the base quests in Skyrim can be completed in the same amount of time as Mass Effect 3.

      I remember games of this type used to take hundreds of hours just to complete the base game so i have to wonder are they catering to the ADD crowd and think there is no market for a long playing game or is it about the development time? (or a combination of both)

    • I agree Kailen, Just used Redbox to rent the new Resident Evil game and can say there is no way that game should sell for $60..more like $10 maybe $15..Campaign was way way to short..They keep making games like that for $60 bucks and I will still use Gamefly and buy the $20 and not feel sorry that game developers aren’t getting a cut off the 2nd sell or rental

    • Games are expensive, most aren’t worth the $60. I do believe higher quality games should release cheaper. Ever think that in 2002 there were people just like you complaining that $50 was too much? I don’t remember seeing DLC back then.

      $20-$30 is too much for some games I’d like to try, so where does one draw the line? How does one decide where prices should be?

      • “I do believe higher quality games should release cheaper”

        Sorry I’m half sleep, I meant lower quality games should release cheaper.

  3. What drives me crazy is this belief by the industry (and not just in the gaming industry but media industries in general) that these numbers are representing a pure ‘loss’ to the developers and publishers. 1000 used copies of a title does not translate to 1000 copies of ‘lost’ sales at retail pricing. Most consumers will pick up a used title that they may have some curiosity about based solely on the price of the used title and not the title itself.

    I have many times bought up a few used games based on the price and a minor curiosity about the title but if I was railroaded to pay full retail pricing, I would never have bought the title in the first place. That is not a loss as that sale never would have occured in the first place, however if there is additional content for that title, I will and have payed extra for that content if it interests me.

    A prime example for me would be Fallout Vegas. I had no intention of purchasing this for the PS3 due to the widespread bug issues and horrible porting to the console… However a friend offered me his copy for $10. How can I go wrong for ten bucks? Sure enough, I get into the game and find myself purchasing all of the DLCs for $50+ish. Yes they miss out on the initial purchase (which I wouldn’t have made anyways) but still brought in the $50 for the add-on content.) So to consider that example as a ‘loss’ is disingenuous.

    I understand their viewpoint but they need to make some smarter moves than simply restricting used game play. Consumers see that as a heavy handed move and simply walk away. I myself do prefer cloud gaming. It’s easier, I don’t mess with discs and so forth. I’ve purchased many titles over the networks but I’ve also skipped over many titles that I did have a interest in due to the sheer price of the retail version. Focus on end retail pricing and networked distribution and you’ll find you’ll willingly bring consumers to you, trying to strong arm set end retail prices out of folks is only going to turn many away.

    Those are my thoughts at least.

    • Exactly.

      The games I buy used I wouldn’t buy otherwise. I do it to fill out my collection and maybe, if I ever have time (I won’t) I could play them.

  4. I hate reading these because they make me so.. furious. Clearly, when he discusses how full priced games over the long run will make things cheaper, he has never met or seen the actions of one Bobby Kotick. Does this guy actually think that Activision Blizzard would sell Diablo 3 for 30$ or any other AAA title for less? No, they wouldn’t. And that’s besides the point that they would essentially be cutting out a large portion of their bottom line pocket by doing this. I truly hope that Microsoft and Sony don’t listen to these “experts” and not allow used games because frankly someone will find a way to do something for cheaper. If publishers think that pirating games is bad now, just wait until you shoehorn your typical honest gamer into a position where they have go all or nothing with cost, because to me, I’ll go with nothing.

    • I agree with you 100%. In all honesty if the new consoles don’t support used games i’m probably not going to purchase one simply because it’ll strain my budget too much. What Microsoft and Sony don’t seem to realize is that there’s many, MANY, others who feel this way so if they take this course of action, they’d better not complain when sales are extremely low.

  5. I completely agree with the prospect of say a deal between used game retailers and the gaming companies. Why not yield the companies that created the game a small percentage of the used game sale. The retailers will still make a profit, as would the gaming company. I personally buy both used and new games. For the series I love and will support with every title (ex. Assassin’s Creed) I will purchase if not pre-order on day one. Whereas if a game comes out that I’m not sure of I will wait and see if any of my friends purchase it, see how they like it and possibly as well give it a try for myself. If I like the game I’ll surely purchase it full price no problem. The gray area for me is if I see a prospective game and no one I know has it, why would I want to pay full price for a game I’m not sure of and will possibly hate. A good example of this for myself was the Mass Effect series; I had only heard of it from Gameinformer (the first one)and from friends – some bad, mostly good – I was only into pure FPS or old school turn-based RPG not this newfangled hybrid. One of my friends let me borrow the first one awhile after ME2 came out and I instantly loved it, I have since purchased used copies of 1 and 2 and a new one of 3 (I liked most of the ending btw, except the stranding of the crew). Now if I purchase a used game and I LOVE it I will most definitely purchase DLC to further my enjoyment of that game or series until the next one is to come out. The way I see it is, if they stop compatibility with used games they will cut out a big portion of gamers that are like me, and will as Zickened just pointed out, INCREASE pirating. Companies can do all they want to try and prevent pirating, but someone somewhere WILL figure out a way to get through any measures they implement.

    Easiest fix is definitely the percentage deals, continue DLCs (at decent prices), and I see no problem with the 10.00 online pass thing [as long as you can purchase them from say, the USED GAME STORES] these days I’m very hesitant of any online credit card use on account of all the malicious hackers that have been hitting the game companies (e.g. SONY).

    All in all, if the next gen consoles pull that s***, I’m most likely not even going to buy one and will stick with buying used games for my current console or finally grow up and stop gaming (though the grow up part is unlikely).

  6. I know this is off topic but since there is no general game topic section I hope you will forgive me……..

    Just an FYI…….Warhammer 40k: Dark Millennium Online is being restructured from an MMO into a single player game with some multi-player capabilities. As a result of this 117 people have been laid off from related studios.

    SR might want to run an article about it. ;)

  7. I bought Assassins Creed: Brotherhood, pre ordered at full price. Then my two year old snapped the disc in half… You’d better believe I picked up a used copy after that. If they really want to cut out used games, they’d better make sure that the games are alot cheaper, and that EVERY game that comes out is avaliable at all times. I’ve had to get many games second hand simply because they couldn’t be found anywhere else. In a way, I kind of hope used games cannibalize the industry… it’ll force them to start coming up with new ideas instead of just relying on shiny new tech and gimmicks.

  8. I just found some receipts from funco land and other retailers of games from the 80 and early ninety’s i was having my mom pay 50 – 60 and sometimes 75 bucks for games back then and they went from a cartridge to disc. that would have made them cheaper. HA MORE MONEY FOR HIS POCKET there from that change. Everyone hates the prices of games right now. Also alot of GAMERS DONT HAVE JOBS IN THIS MARKET RIGHT NOW. And im not talking about the 18-25 age group im talking about 18-40 age group. What are they going to buy a new game at 60 or used games at 30-40. He doesnt care about anyone other then himself and his pockets or his company. Screw the people that actually buy the games. The ones that can afford to pay these prices and then on top of it the DAY 1 DLC. that makes games 70 to 80 bucks. Heck look at tiger 13 100 bucks for a game with a 11 pack of courses on day 1. This is a sad state of gaming affairs from up high if people cant understand what the real world is like.

  9. That’s probably why Steam is so cheap or has tons of specials with titles. I like that titles on PSVita are $5 cheaper for the digital copy. Maybe they could try the digital distribution for a while and put their money where their mouth is, drop those prices. Cause games on PSN and XBL sure as hell ain’t showing us that digital is better.

  10. The bottum line is if you make a good game, it will sell. you shouldn’t have to pay an extra 10$ just to get the games full experience. And you shouldn’t have to pay 60$ for a game that sucks. I pre-ordered Batman Arkham City collectors edition for 100 and paid 25$ in dlc. Thats 125$ bucks for 1 game so don’t tell me your losing money. Other then that I buy the sports games(baseball, basketball, football, hockey) new every yr. Any
    other game Ive got has been used. I only buy other games
    because there cheap. If they want to ban used games id be fine
    with just the sports games. But im not gonna pay full price for something im only mildly interested in

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