An End To Second-Hand Games With Next-Generation Consoles?

Gareth Barry

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Sony Prepared To Align With Publishers At Consumers Expense

Are Sony and Microsoft prepared to align with publishers interests at the expense of we, the consumer? While the discovery of another curious videogames patent doesn’t usually invite a huge amount of attention, considering that the majority of documents unearthed contain bizarre peripherals and unmarketable devices destined to remain at prototype stage. But a recent patent filed by Sony has caused something of a stir once again highlighting perhaps the most contentious issue in the industry today, second-hand game sales.

Revealed in the document, the document is watermarked so it can’t be embedded here, Sony’s PlayStation division has been developing technology that has the potential to block the use of second-hand games running on Sony’s next-generation PlayStation 4 console and beyond. The concept heavily utilises near field communication (NFC), the type used in modern bankcards, which can associate a disc with a user’s account, thereby preventing the software from running on other machines. “When the game is to be played, the reproduction device conveys the disc ID and a player ID to the use permission tag,” the patent document details. “The use permission tag stores the terms of use of the game and determines whether a combination of the disc ID and the player ID conveyed from the reproduction device fulfills the terms of use or not.”

While there’s no confirmation on whether Sony will actually implement restrictions that can, as the patent states, “suppress” second-hand game sales, the discovery of the document caused hurt among the retail sector. American retailer GameStop, the sole remaining dedicated videogame retailer in the Irish market, suffered a 7 per cent drop in share price immediately following the the news, stressing just how vital the sales of second-hand games are to the current bricks and mortar retail space and the damaging repercussions such an ominous proposal could create. It could even represent the final nail in the coffin for, the late Irish, now solely UK based retailer GAME, which could not be reached for comment.

GameStop Stock Analysis & Investing (courtesy of trefis.com):

But despite initial concerns that Sony’s actions represent an attempt to stamp out the sale of used games indefinitely, other applications for the technology might be less cause for concern. One logical implementation would be as an alternative to the much derided Online Pass. Such pragmatic pondering hasn’t prevented industry analysts from weighing in on the subject, with Wedbush’s Michael Pachter suggesting, via an interview with eurogamer.net, that Sony’s move could spell trouble for the company’s fortunes, comparing the patent to the anti-piracy bill Stop Online Piracy Act (SOPA). “If Sony puts the technology into the next PlayStation and any publishers attempt to limit the playing of [second-hand] games, I expect the consumer backlash to be similar,” he says. “Sony would be materially hurt if its console blocked [second-hand] and competitor consoles from Microsoft and Nintendo did not.”

This is perhaps the most sobering point among the fiery backlash that has emerged since the news broke. While publishers continue to minimise the impact of second-hand sales by installing preventative measures, such as the aforementioned Online Pass, any console manufacturer looking to inhibit second-hand games software functionality would suffer a disadvantage to its more open competitors. Indeed, Pachter casts doubt on whether Sony would make such a bold move at this stage. “I don’t think this will end up happening,” he told eurogamer.net. “[I] think that Sony is too smart to follow through.”

There’s also another possibility to consider. As the industry continues to flirt coyly with digital distribution, it has been suggested that Sony’s own PlayStation Store could offer second-hand trading between users. Its not such a far fetched notion, given that a recent EU ruling, as reported by eurogamer.net, has cleared the muddied waters of digital ownership. In-short both rulings declare that you own the product you download and have the right to do what you want with it.

But, alas, we’re a long way from that future yet and it doesn’t look like Sony will risk their next-generation, PlayStation 4, alienating gamers. “Sony is on record as saying that it has no desire to limit consumer choice,” analyst Michael Pachter states in his report on the patent. “While this statement was made by a senior official of the company who might be overruled by his superiors, we believe that a unilateral decision by Sony to limit the ability to play [second-hand] games is unfriendly to consumers.”

Perhaps its best to not look at the patent as a means to finally crush the second-hand market into non-existence, but a step towards a way in which both developers and consumers can equally reap the benefits of second-hand games sales. The digital platform is evolving as we know it and its only a matter of time before the industry switches to an all digital future, albeit, perhaps not with the next iteration of console hardware. Could we see Sony’s PlayStation 4 promoting second-hand sales through its own store? Unlikely. But its important to remember that while its easy to believe that publishers consider second-hand buyers as murderers, killing the industry, first-hand videogame sales continue to thrive. The games industry was, according to a recent report by forbes.com, worth $31.6 billion in 2006, $41.7 billion in 2007, $54 billion in 2008, $60.4 billion in 2009, $62.7 billion in 2010, $65 billion in 2011, $67 billion in 2012 and is predicted to reach $82 billion by the end of 2017.

If rumours are to be believed that Sony’s PlayStation 4 and Microsoft’s next XBOX are due to be released this coming holiday, its hopefully unlikely that any investment in preventative technology focused on the second-hand games market will be created to jeopardise both Sony’s and Microsoft’s stake in the marketplace. If we’re wrong I foresee many a court case and lost consumers at the videogame industries expense, something Sony, Microsoft and Nintendo can ill afford when faced with the challenge now presented by Apple and Android powered devices and consoles.

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Gareth Barry

  • Merrill

    Very interesting post. It’s probably because of the fact that a few games dominate the market, and they can all be bought and downloaded online. Here’s an interesting graphic on the “rise of the virtual world” and the driving forces behind new age video games: http://www.onlinegamedesignschools.org/esports/