At E3 in 1995, the big showdown was between Sega and Sony. Both were preparing to launch new consoles — the Saturn and the debut of the PlayStation — so the hype machine was in full swing.
The Sega Saturn was going to sell for $399 and come bundled with a copy of Virtua Fighter, a popular arcade game and the first 3D fighting game. Sega dropped a bit of a bomb by announcing that while the official launch would be in September of that year, 30,000 Saturns were going on sale early, literally as they spoke at E3 that morning, at four select retailers.
Sony’s counter to that was to have Steve Race, President of Sony Computer Entertainment America, walk up to the podium during Sony’s part of the presentation with a sheaf of papers in his hand. Race cleared his throat, set down his stack of papers, and said one thing into the microphone before walking off stage to wild applause:
Cut forward to this week. I was shocked — like mouth-agape, jaw formally dropped — to hear that Sony had decided against the elaborate DRM scheme of the Xbox One for the PS4. That’s pretty much all they really had to do, walk on stage and say “No DRM.”
I was certain that was almost a done deal and Sony would have no choice but to follow suit, because it sets up a very clear them-versus-us mentality for third-party publishers.
Never mind the hundred dollar price difference between the two machines — while that does matter to some extent, in the end, it’s all, ultimately, about the games.
Jump back to 1995 for a moment. Sony was able to take the industry lead in the first generation of the PlayStation because of their appeal not only to gamers, but to their software producing partners.
Sega’s $399 price tag did hamper the Saturn’s sales, as it was deemed a little too pricey for a consumer electronics product at the time, but their early bird strategy that would allow hardcore gamers to race out and snatch up one of the limited supply of consoles months before the official launch and hopefully serve as consumer evangelists, singing its praised and showing it off to their friends, completely backfired.
Every other retailer who wasn’t one of the quartet Sega selected to sell the early Saturns was angry with them for being left out of sales. One, Kay*Bee Toys, decided not to carry the Saturn or its games at all as a result of Sega’s perceived favoritism to its competitors.
One of Sony’s key factors in overtaking industry colossus Nintendo was that Sony was able to get game publishers firmly on their side. Not by purchasing platform-exclusive rights to their games, as is the common tactic today, but simply by making it easier for them to turn a profit on their games.
With the PlayStation’s main competitor, the N64, Nintendo was adamant about sticking with a ROM cartridge media format which was not only woefully restrictive, technology-wise, compared to the PlayStation’s CD-ROM format, but was also considerably more expensive for third-party publishers to put out N64 games.
Sony’s licensing agreement with publishers for PlayStation games was $10 per game, which included manufacturing the CD-ROM and the packaging, printing the manual, and a royalty for Sony.
By comparison, a solid-state ROM cart for the N64 which might contain the exact same software as a PlayStation version of the game cost more than $20 to manufacture the 8 MB carts ALONE, never mind other elements as packaging, manuals, and royalties to Nintendo. (By comparison, a 640 MB CD-ROM was $2 to make.)
Software publishers and game designers alike flocked to the PlayStation. Not only were PS games more profitable for the bean counters, but game designers were able to make better games with larger game worlds and actual CD-quality sound files. The most notable example of that was Final Fantasy VII.
Up until FFVII, Squaresoft and Nintendo had an unofficial partnership that kept Final Fantasy and other Square titles solely on Nintendo platforms.
Final Fantasy creator Hironobu Sakaguchi had, in his own words, always created his RPGs for Nintendo systems in a ‘backwards’ fashion, looking at the technological limitations first and then designing the game to be the best it could be around those. With the PlayStation’s CD-ROM format, for the first time Sakaguchi could worry less about what he couldn’t do and concentrate on what he could accomplish with the seventh Final Fantasy — which turned out to be one of the most endearing console games ever made, and helped establish the PlayStation brand as a force to be reckoned with.
Nintendo was not pleased, to say the least, and Nintendo president Hiroshi Yamaguchi took it personally, banning Squaresoft from producing any games for Nintendo hardware. It would take a decade, and Yamaguchi’s retirement, for that to change.
For Squaresoft, as a company, however, it was just business. Sakaguchi could make better art, but they were looking at the expense of creating that art, and they had been privately disappointed that their games were not selling as well as they thought they should, particularly in America, where the only Japanese influence Nintendo gamers seemed to want — and all Nintendo was seemed willing to formally push — was Nintendo’s own Shigeru Miyamoto.
All well and good, but how is that relevant to the Xbox One and PS4?
Sony has drawn a clear line in the sand on the subject of console DRM.
At this point in the game, Nintendo is its own private universe — while Nintendo would clearly like the Wii U to be something more appealing to the ‘core’ audience than the Wii was, they’ve got enough of their own IP to keep the console afloat, and as long as their handhelds continue to truck along, they’ll be just fine. What they do or don’t do doesn’t necessarily impact the industry as a whole because in many ways they’re no longer directly competing with Sony or Microsoft. They’re doing things their way, and they make that work for them.
However, Microsoft is playing the role of trying to be sympathetic to game publishers and giving them the option of being able to capitalize on pre-owned sales, as well as restrict how many users can play a game for free without paying for it. Whether or not game publishers take advantage of this option is up to them, but it’s there, and had DRM been across the board with both platforms, you can bet nearly every publisher would’ve used it.
Consumers may have griped, but without a choice, they’d just have to accept it, and the added hit to their wallets, as part of the new paradigm.
With Sony taking DRM off the table with the PS4, that strategy is blown all to hell, and consumers are cheering. Xbox partners can still attempt to make the DRM work for them, and in the case of platform-exclusives, it will, because the only choice for consumers is to go along with the DRM or not play the game at all.
While the PS4 being a cheaper, more-friendly alternative wins them many points with us, Sony can run the risk of alienating their partners in the long run. This is going to be a huge x-factor that will take months post-launch, perhaps a year or more, to determine how it shakes out.
Support Xbox One, and publishers can maybe cut losses from pre-owned sales and unchecked game sharing. Support Sony and . . . well, no restrictions, no way to capitalize from rentals, aftermarket sales, trading between consumers. It would be very easy for MS to start convincing game publishers they should put their games exclusively on Xbox One, and flash them a little cash up front to sweeten the deal.
A DRM-free PS4 isn’t going to be a great value if there’s not a wide variety of games to play on it. Sony can try to ensure that doesn’t happen with first-party offerings, but . . .
I’m against DRM the way it’s been presented to us in the form of the Xbox One, however I do believe there should and could be some sort of middle ground to help game publishers reap some of the benefits from rentals and aftermarket, pre-owned sales. The easiest and most convient way to accomplish this would’ve been to get Gamestop, Redbox, GameFly, etc. to agree to give a percentage of each rental or sale to the game publisher.
No DRM needed, it would all have been taken care of at the cash register-slash-kiosk without the consumer being even aware of it, and would not require anyone to leap through broadband required hoops.
No, it’s not a perfect solution, and still wouldn’t stop person-to-person sales on eBay, or people trading games amongst each other, but there is such a thing as fair use and let’s be honest, you can’t catch every drip from the ceiling in a single bucket. The larger broken-pipe deluges coming from huge corporate sources like Gamestop, Redbox, GameFly — those would be worth going after.
But without the law to force the renters and resellers to share what they reap with the IP holders . . . well, we end up with what we have now, which is a potential minefield for both publishers and the platform holders, because I’m not sure that a DRM and non-DRM system can co-exist well in the long run.
Sony and Microsoft could’ve brokered that deal with Gamestop, Redbox, etc., working together with the major publishers, and it could’ve started to take effect immediately, not only with next-gen games but existing ones.
But that would require Sony and MS to work together to improve the industry instead of trying to summarily destroy one another and drive the other out of the market.
Most consumers, given the choice and without a strong brand preference, are likely to support the cheaper, easier option, but the fact that DRM exists in the first place allows some behind-the-scenes leverage to happen. The industry of console game development and publishing is an extremely volatile one — take a look at publishers’ year-to-year financial statements and you’ll see a wildly swinging pendulum between profit and loss, with the losses often being more than enough to offset a couple of good years.
In the past decade, we’ve seen far more publishing houses go out of business, or merge with former competitors to give them a better chance, than we’ve seen new players emerge on the field, which is a clear sign that something is innately wrong with the core financial models.
And at the heart of it may be the hardware manufacture’s insistence of starting over with a zero install base with expensive new machines every few years, forcing game developers to sweep all their expensive tools and knowledge off their desks and start from scratch — all of this in a marketplace that is already difficult to turn a consistent profit in.
DRM is only a stopgap solution to a bigger problem that’s going to need addressed, and it’s that this constant technological arms race of bigger and better, of short-term gains over long-term strategies, isn’t working.
If any other entertainment media — publishing, film, music — forced their audience and their content creators into strict five year cycles where upgrades were forced upon them, where all new tools and processes had to be developed not as needed or as demanded, but at an arbitrary start point of a new ‘generation’ and then forcing the previous generation into obsolescence, and then subsidized that as normal the cost of doing business, they’d have failed long ago.
Videogames have been an aberration, the exception to the rule where it has worked well enough to get by, but there’s a lot of apple carts here that are just on the verge of tipping over, and trying to split the audience between those who are okay with DRM and those who aren’t isn’t helping.
Sony gets a round of fist-pumps and cheering from the userbase, but at what point are they going to stop going for an all-in to kill the Xbox — and let’s face it, this *is* the best chance they’ve had in a decade to dent Microsoft — to acknowlegde that while that is all well and good for them, it still doesn’t level the playing field for publishers, who are now stuck between draconian and consumer-unfriendly and same old, same old?
The problem is deeper and more fundamental that pre-owned games, and while Sony should be commended for the risk they’re taking, it’s still distracting from the real issues of making console games a more affordable and attractive product for the consumer, and that those who make them can continue to make them.
New consoles, DRM-free or not, are far more part of the problem than the fix, and both sides are guilty of that one.
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