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Study Claims Point-of-Sale Activation Could Generate Billions In Revenue

Soulskill posted more than 5 years ago | from the only-where-consumer-rage-is-a-valid-currency dept.

Movies 140

Late last year we discussed news that the Entertainment Merchants Association was pondering a plan to develop technology that requires games and movies to be "activated" when they are sold at retail outlets, primarily to reduce theft and piracy. Now, the EMA claims a study they commissioned has indicated that employing such a system for video games, DVDs, and Blu-ray products would generate an additional $6 billion in revenues each year. Critics of the idea are skeptical about the numbers, pointing out that the majority of game piracy comes from downloading PC games, which this plan won't even affect. There are other problems as well: "In order for benefit denial to work, the EMA would presumably require the three major consoles to have some sort of activation verification function to ensure that games were legally purchased. It will be interesting to see if Nintendo, Sony, and Microsoft agree to that. There is also a lucrative market for used video games to consider. After some gamers complete a title, they sell it back to the retailer. How will benefit denial handle that situation?"

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140 comments

not about piracy (5, Insightful)

timpdx (1473923) | more than 5 years ago | (#28504763)

This is about stopping used games sales, nothing more, nothing less

Re:not about piracy (5, Insightful)

eldavojohn (898314) | more than 5 years ago | (#28504829)

This is about stopping used games sales, nothing more, nothing less

No, there's more to it than that. It's also about adding an extra level of complexity to your purchase and guaranteeing that yet another thing could go wrong with your already insanely expensive purchase. If the industry is looking to profit $6 billion dollars from this move, I can almost assure you that it's going to be about $6 billion in annoyance to the consumer. For some reason treating your customer like a criminal from square one is the latest rage these days.

Re:not about piracy (1)

maxume (22995) | more than 5 years ago | (#28505005)

They are looking at $6 billion of additional revenue. The profits aren't likely to be anywhere near that.

The $6 billion is probably a decent percentage of their current revenues though, and if they figure that the system won't do much to their profit margins (who knows what they figure), it should mean more dollars for them.

Re:not about piracy (1)

FooAtWFU (699187) | more than 5 years ago | (#28505067)

Maybe the $6 billion in revenue is how much the people selling the video game companies the POS-activation scheme intend to rake in.

Re:not about piracy (4, Insightful)

NotBornYesterday (1093817) | more than 5 years ago | (#28509281)

Or maybe they'll lose $6bill in revenue when even more people get sick of their schemes and just stop buying crap.

Re:not about piracy (2, Insightful)

torkus (1133985) | more than 5 years ago | (#28509077)

It's probably very similar to the 'lost revenue' theory that's thrown at piracy I think. They're probably looking at the used video game market and counting every sale as a 'loss'. By forcing activations they eliminate that sale/market. So therefore 'of course' every used-game sale (where the creator gets $0 additional profits) would actually be a new, retail unit sale (thus generating profit).

Software/game makers are really getting out of hand. They're right behind the MAFIAA in scumbag-ness. Trying to eek out a few more sales by taking away what few things aren't yet 'illegal' in the software market.

off topic - some of the used game resellers really are getting obnoxious with their pricing. On a newly released game you're lucky to get 50% back and then they sell it for $55 instead of $60. $25 net profit on a $60 item is awfully high. I have zero sympathy for these companies and their retarded profit margins but kids (people) still should be able to borrow or sell games.

Re:not about piracy (1)

Grave (8234) | more than 5 years ago | (#28509799)

It's always been that way when it comes to the trade/resale pricing. If you don't like it, sell privately for a couple bucks more. Otherwise, you pay the price for the convenience of retail trade-in and used sales.

Re:not about piracy (2, Interesting)

hardburn (141468) | more than 5 years ago | (#28505165)

No, there's more to it than that. It's also about adding an extra level of complexity to your purchase and guaranteeing that yet another thing could go wrong with your already insanely expensive purchase.

That's not their goal. They don't specifically want to give their customers headaches, because unless they're invested in asprin manufacturing, creating headaches doesn't get them any more money.

Rather, they take a problem that's affecting their bottom line (real or perceived) and come up with a ham-fisted solution. The actual motivation is nothing more than the OP said (eliminate the used market).

Re:not about piracy (4, Insightful)

ls671 (1122017) | more than 5 years ago | (#28505245)

I for one wonders how the game industry still manage to make money. I buy all games legally in hope that they will keep on producing them.

Take Crysis for instance, I bought both releases and like anybody, after a while, I got tired of playing the AI versions of the game and moved to online "Crysis Wars" which I have been playing on-line for hours. The time spent on Crysis Wars is at least an order of magnitude greater that the time I have spent playing the AI versions and there is no recursive cost involved ! My investment has performed in a way so it might have cost me maybe on average 0.01$ an hour to play with the given product.

Have you ever coded any games ? Do you know how long it takes ? Do you know that it is impossible to release something like Crysis with only a handful of developers ?

I find that the money I gave them was a cheap price to pay ;-) Before piracy on a large scale, I could have agreed with you that some gaming companies might have charged to much for their products. This time is over, companies have to provide more competitive prices for people to actually buy the product instead of just opting for the pirated version.

Additionally, it doesn't matter what measures are put in place, there will always be cracked versions available.

Finally, I view this issue in a different way than the one about music rights for instance, because of the colossal amount of work required to release the final product :
http://slashdot.org/comments.pl?sid=1273015&cid=28371645 [slashdot.org]

Re:not about piracy (2, Insightful)

Anonymous Coward | more than 5 years ago | (#28505799)

Have you ever coded any games ? Do you know how long it takes ?

Depends on the game but not always that long. What takes longer is designing levels, artwork, playability, testing, music and all the other stuff.

Do you know that it is impossible to release something like Crysis with only a handful of developers ?

Impossible? Maybe for you. Game companies spend more time and effort these days on making it look & sound pretty than making it fun.
Music and cut scenes are not an essential part of a game. They're a way to promote games for use in shops & adverts.

Valve: 190+ employees
id Software: 105 employees

Not so many when you consider testers, marketing and all the other crap they add into games these days.

If games cost $10-20 each instead of 40-60 more people would buy them and they might actually keep them rather than selling them on
ebay/craigslist to get enough money for the next game. The price of games is far too high when you consider most are designed with
about 40 hours of gameplay in mind. When Valve's reduced Left4Dead they saw massive increases in sales (bigger than the original release).

                * 10% sale = 35% increase in sales (real dollars, not units shipped)
                * 25% sale = 245% increase in sales
                * 50% sale = 320% increase in sales
                * 75% sale = 1470% increase in sales

Re:not about piracy (2, Informative)

ls671 (1122017) | more than 5 years ago | (#28506331)

> Impossible? Maybe for you. Game companies spend more time and effort these days on making it
> look & sound pretty than making it fun.
> Music and cut scenes are not an essential part of a game. They're a way to promote games for use
> in shops & adverts.

I totally agree, try the demo before buying. Heck ! If there is no demo, try the pirated version !

  > * 10% sale = 35% increase in sales (real dollars, not units shipped)
  > * 25% sale = 245% increase in sales
  > * 50% sale = 320% increase in sales
  > * 75% sale = 1470% increase in sales

I totally agree again, didn't I write :
"This time is over, companies have to provide more competitive prices for people to actually buy the product instead of just opting for the pirated version."

Now for a little sarcasm, I wrote a few games just by myself and this gives me an idea of the effort required to write a game like Crysis. I am still not sure they are making money with it. They probably won't without re-using the engine for other games...

Re:not about piracy (1)

torkus (1133985) | more than 5 years ago | (#28509273)

"They probably won't without re-using the engine for other games..."

And that's important to keep in mind. 3D engines are very often re-used (well, usually the good ones).

One bigger point you miss - much more time and money goes into artwork, cut-scenes, and so on (i.e. the pretty stuff) than actually coding the engine. Some of this work is done by graphic artists, some by people with mixed creative skills (someone had to create all the data points for the world map in fallout 3).

Re:not about piracy (1)

cgenman (325138) | more than 5 years ago | (#28508899)

Unless you're on a multi-year project (and you might be, considering the anonymous posting), coding does take a long time. I'd guess that an average project these days takes minimum 50 people over the course of a year and a half, with some on yearly cycles and others on that 5+ year "when it's ready" burn. And, of course, some developers get to have 200+ people on a title simultaneously. So yes, 20 million budgets are pretty common these days for a mainstream release, with 100 million budgets probably not far away.

That having been said, the one thing that Valve has over a lot of other people is online distribution. When you sell into Target, they have some pretty fixed costs with retail, store workers, distribution, manufacturing, etc. Assuming a total fixed cost for them of 40 dollars per title, the difference in profit from a 45 dollar or a 55 dollar title is quite staggering. After Sony experimentally dropped the price on Crash 1 by 10 dollars one Christmas ten years ago, and it outsold Crash 2, every manufacturer has had a greatest hits / cheapey / etc line. Sony even had a line at 10 dollars before returning back to 20.

The pressures of retail keeps an interesting balance there. As I mentioned, sony found the 10 dollar price point too low to be worth using. This could be because of perception of value, this could be because those games were terrible, this could be because retailers simply didn't want to stock cheap games, or that the margins were so small at 10$ that it just wasn't worth it. But everyone is experimenting with multiple pricepoints at retail, and what the optimal one is. And, unfortunately, the optimum ones aren't necessarily the ones that you would like or think.

As we make the switch to online distribution of games, I think we'll see more of a downward pressure on the overall pricing scheme. Games *can* be cheaper, shorter, and more intense, because the style of distribution permits it. Also, everyone who logs into steam can see a sale, whereas a 75% off sale at Target will only net the people who wandered into Target that day.

Re:not about piracy (1)

stonewallred (1465497) | more than 5 years ago | (#28507085)

Oh, well another reason to pirate the games, rather than buy them.

Re:not about piracy (1)

TubeSteak (669689) | more than 5 years ago | (#28508599)

No, there's more to it than that. It's also about adding an extra level of complexity to your purchase and guaranteeing that yet another thing could go wrong with your already insanely expensive purchase.

No offense, but point of sale activation is pretty much bulletproof by now.
Between gift cards and cell phone minutes, almost all the SNAFUs have been worked out of the system.

Re:not about piracy (1, Insightful)

Anonymous Coward | more than 5 years ago | (#28504861)

Except that this doesn't have anything to do with used game sales unless your "used" games fell off a truck somewhere. Once the disc's activated it's activated, and that's that.

Re:not about piracy (1, Interesting)

Anonymous Coward | more than 5 years ago | (#28505111)

Except that this doesn't have anything to do with used game sales unless your "used" games fell off a truck somewhere. Once the disc's activated it's activated, and that's that.

Unless the activation is tied to your (mandatory) account, like Steam [steampowered.com] .

It must require an internet connection for activation anyway, otherwise how does this differ from an activation code included in the box?

Can't play it offline? Tough.

Re:not about piracy (0)

Anonymous Coward | more than 5 years ago | (#28505253)

Yeah, unless it's tied to an account. Which it isn't. RTFA.

Re:not about piracy (1, Interesting)

Anonymous Coward | more than 5 years ago | (#28505441)

Yeah, unless it's tied to an account. Which it isn't. RTFA.

Yeah, I RTFA. It doesn't specifically say anything about not being tied to an account either.

And since you must connect to the internet to activate the game anyway, then that's the next logical step.

Otherwise, you didn't answer the question of how this differs from an activation code included in the box.

Remember, regardless of what they say, the whole purpose of this "activation" scheme is to kill the used game market.

Re:not about piracy (2, Insightful)

Pinky's Brain (1158667) | more than 5 years ago | (#28508013)

Except we don't believe that's what they are actually planning, to be able to really "unlock" a disc it has to either be part writeable (it has to work with existing drives) with the last bit being written at the counter, or has to come with a dongle. These are just not a realistic solution. So we assume that they will actually unlock the disc ID by sending it to gestapo headquarters, which will then let you perform online activation at home on your console ... which may or may not tie the software to your machine (depending on the whim of the developer).

It's almost certainly an online activation scheme and not an actual physical unlock.

Re:not about piracy (0, Redundant)

Joce640k (829181) | more than 5 years ago | (#28504879)

Yep.

Re:not about piracy (0, Funny)

Anonymous Coward | more than 5 years ago | (#28505007)

You are probably correct.

The revenue lost to game aftermarket is huge.

For example, I bought a sleep numbers bed because I like to rock my girlfriend's tight pussy on a bed you could bounce a quarter off of, but I prefer to sleep on a very soft, downy mattress once I'm done with the bitch. Problem solved.

Re:not about piracy (4, Funny)

Ifni (545998) | more than 5 years ago | (#28505853)

You could have just deflated her a little when you were done. It would have provided a softer sleep surface without the additional expense.

Re:not about piracy (1)

clang_jangle (975789) | more than 5 years ago | (#28505047)

In fact by further inconveniencing their customers such a scheme would likely increase what they like to call "piracy".

Yup (1)

goldcd (587052) | more than 5 years ago | (#28505343)

The official PC market is 'similar' to this already. You get a code printed on the manual, and then when you install the game you 'activate' your code online.
That code is now used and it is tied to you.
The reason why you now never see any 2nd hand PC games in shops, is if you walk in with a physical game, with the manual, with the code - precisely as how it came - there's no way the poor guy in the shop can know if when he resells the game it'll work.
So they just drop the PC section and the console section gets just a little bit bigger.

Re:Yup (1)

TheMuon (1424531) | more than 5 years ago | (#28506415)

What games is this true for? I play PC games exclusively and I cannot recall ever having to do such a thing.

I think you are referring to CD keys. There is no online activation. Its a check before installing to determine if you have a valid serial key to go along with the disc. If it is a game with multiplayer this acts as a fairly effective anti piracy mechanism since they can detect if 2 people with the same CD key are trying to access the multiplayer through their servers at the same time. If you are playing single player or multiplayer via LAN or unofficial servers then it does nothing to stop piracy.

The reason you can't resell PC games is because there is nothing to guarentee that you've uninstalled the game from your PC or that you haven't made a copy. Unlike with consoles, not having the disc is no hinderence for a PC gamer to still play the game.

Re:Yup (1)

XcepticZP (1331217) | more than 5 years ago | (#28509005)

I don't know what rock you've been living under these past few years. But most games these days don't even allow single player without some sort of online activation.

Then you have all of Valve's games. They don't allow you single player without online activation and a full update of the game.

It is a damned shame that they have done this to PC gaming. I can not describe how my blood boils everytime I see a buy used console game or rent used console game section somewhere. Most console games are just as easy to copy these days as are PC games, so I just don't see the logic!!

Re:not about piracy (1)

SurenPala (1587109) | more than 5 years ago | (#28505825)

If they do this I will stop buying games and simply start pirating them. They will have lost me as a customer forever.

Re:not about piracy (3, Interesting)

MemoryDragon (544441) | more than 5 years ago | (#28505869)

Problem is that the game prices are so high that preventing used sales, might effect new game sales hugely in a negative way!
Simply if you cannot sell the game anymore you think twice even buying it new. I am rather sure it will backfire big time!

Re:not about piracy (0)

Anonymous Coward | more than 5 years ago | (#28506061)

its also to stop you from bringing your games over to your friends house to play it with them. Fuck this study, they just bent the results to find what they want.

Re:not about piracy (0)

Anonymous Coward | more than 5 years ago | (#28506175)

If the plan is just to 'activate' the game one time, at the point of sale, I can't see how this would directly effect the used game market.

Once the media is activated, it's activated, right? Does the activation process at the POS know exactly what console you are planning to play the game on, and from which IP? How cumbersome of a process would that be?

Unless the console manufacturers start registering unique game id's with unique console id's, then disallowing non-registered pairs to be played, (similar to iTunes model) there would be no direct effect on used media sales. This will certainly happen as games are increasingly distributed digitally, but that would seem to be another matter entirely.

Re:not about piracy (2, Insightful)

cgenman (325138) | more than 5 years ago | (#28508785)

Sony (PSP Go), Nintendo (DSi), and Microsoft (360 downloads of retail games) are all working on download services for their AAA titles. Considering the margins they make on downloaded titles, I'd be surprised if they weren't about stopping all retail game sales.

an additional six billion? (4, Insightful)

heptapod (243146) | more than 5 years ago | (#28504789)

You know, they could make an additional six billion by creating games people actually want to play in the first place.

Just nonsense (4, Informative)

faragon (789704) | more than 5 years ago | (#28504797)

And what about the sales lost because of annoying the *customer*? Greedy idiots.

Re:Just nonsense (4, Insightful)

peipas (809350) | more than 5 years ago | (#28506031)

It's true, all these measures do is make the product available through copyright infringement better than that if you give them your money.

Re:Just nonsense (1)

An anonymous Frank (559486) | more than 5 years ago | (#28507131)

are there any stats on this?

I completely stopped buying CDs after almost purchasing protected ones three times, yet where are the numbers showing the (negative) imoact of such measures on sales?

Re:Just nonsense (3, Insightful)

nurb432 (527695) | more than 5 years ago | (#28507379)

They will just lump those into the piracy bucket and whine more.

Won't Bother (4, Insightful)

hardburn (141468) | more than 5 years ago | (#28504815)

There is also a lucrative market for used video games to consider. After some gamers complete a title, they sell it back to the retailer. How will benefit denial handle that situation?"

It won't handle that situation, because it's exactly the one they're really trying to stop. Illicit copying on consoles is a lot more difficult than PCs; it's always possible, but you're cutting out a big chunk of the potential copying going on if it requires a soldering iron to get it done. Publishers can afford to completely ignore illicit copying on consoles.

However, they can use "piracy" as a rallying cry to put in measures to kill the used game market.

Silly question. (2, Insightful)

schon (31600) | more than 5 years ago | (#28504821)

There is also a lucrative market for used video games to consider. After some gamers complete a title, they sell it back to the retailer. How will benefit denial handle that situation?

Simple: it will not be allowed.

You *really* think that they'd all the used market to exist if they had a choice?

Read this [bruceongames.com] for an idea of what the game publishers think about the used market. (Yes, the guy is an obvious shill.)

The big problem with these numbers (4, Insightful)

GodfatherofSoul (174979) | more than 5 years ago | (#28504823)

How can you ever know how many pirates would ever purchase your product? I do think that piracy is hurting these companies, but they can't keep making the assumption that there's a goldmine of potential customers out there if only they figure out a way to make acquiring their products even more difficult. I'm pissed off enough with the way my HDMI connections constantly flake out or introduce annoying delays into my home theater setup. Now, how are people like my Luddite parents going to react to yet another hurdle? Content providers need to do some serious soul searching to see how many people they're deterring as opposed to the numbers they think they'll draw in from the shadows.

Re:The big problem with these numbers (0)

Anonymous Coward | more than 5 years ago | (#28506013)

I've somewhat lost my interest in games already due to this. When i buy a game i want to be able to:
1) play it right away, without hassle
2) without it installing lots of little apps fucking up my system
3) get rid of it when i lose my interest in it

Software is not the same as property, as there is no exclusivity to it. We've established that it should be *seen* as property to be able to turn it into a commodity. It's already a stretch. If they start selling it as IP, they'll lose my purse for good.

Another link in a long chain. (3, Insightful)

InMSWeAntitrust (994158) | more than 5 years ago | (#28504831)

"In order for benefit denial to work, the EMA would presumably require the three major consoles to have some sort of activation verification function to ensure that games were legally purchased.

Correct me if I'm wrong, but isn't that what they already do? I remember the original Xbox had a challenge response function signed with 2048bit RSA specifically designed to verify if the game was legitimate (regardless of homebrew implications). I fail to see how this generates anything except another spot for something to go wrong (ever have the cashier forget to give you change? Now have him forget to activate your $60 game).

Honestly, the best thing to combat piracy is to release better quality games. I'm looking at you EA (a.k.a. carbon copy gaming).

Re:Another link in a long chain. (1)

Nerdfest (867930) | more than 5 years ago | (#28505073)

They did code signing, as does the current xbox, and the PS3 as well, I believe. Something like they're talking about would require you to have online connectivity to play a game, at least at startup.

Re:Another link in a long chain. (1)

InMSWeAntitrust (994158) | more than 5 years ago | (#28505179)

No, they're talking about activating the game at the point of sale, probably in addition to all the arcane DRM techniques they use.

Re:Another link in a long chain. (1)

mrfaithful (1212510) | more than 5 years ago | (#28505641)

No, they're talking about activating the game at the point of sale, probably in addition to all the arcane DRM techniques they use.

And how would your console determine it has been activated? By going online.

Re:Another link in a long chain. (1)

Nerdfest (867930) | more than 5 years ago | (#28507113)

The alternative would be actually updating the media with an activation code. If the code is not there, it will not play. I would think this is really only of value to them if they record the personal details of the person who bought the game I'm not sure I'd be willing to give them mine.

Re:Another link in a long chain. (1)

colk99 (315674) | more than 5 years ago | (#28508741)

Great so now console gaming is going to get securerom with full online activation awesome just what I always wanted

Re:Another link in a long chain. (1)

assassinator42 (844848) | more than 5 years ago | (#28507763)

I can't find a clear answer as to what percentage of 360 owners have never connected to Live, but this [teamxbox.com] suggests that it's around a third. I highly doubt they'd suddenly prevent one third of their userbase from playing games and dealing with those who buy the game anyway but can't play them just to stop piracy.
And I don't see anyway this would be even possible with DVDs.

Re:Another link in a long chain. (1)

tepples (727027) | more than 5 years ago | (#28509865)

Something like they're talking about would require you to have online connectivity to play a game, at least at startup.

This has been the case for Final Fantasy XI, Phantasy Star Online, and other console MMORPGs since day one, and it has been the case for PC games that use Steam since day one.

Re:Another link in a long chain. (1)

bertoelcon (1557907) | more than 5 years ago | (#28508617)

Even the NES had a chip that determined if it was a real game or not, so the legitimate game test is not a new one by far.

Crazy.. (2, Insightful)

spire3661 (1038968) | more than 5 years ago | (#28504835)

These people really are insane. They wont be happy until they can charge us every time an IP protected thought crosses our brain. The idea that IP is charged 'per brain' as it were, is slowly coming to be. No more sharing with friends, that would be illegal!

Re:Crazy.. (1)

gzipped_tar (1151931) | more than 5 years ago | (#28504937)

charged 'per brain'

and soon it will become 'per brain per second'

they assume (2, Informative)

branboom (1082615) | more than 5 years ago | (#28504845)

We would start buying the games again ahahha.

are they kicking up the security another notch? (0)

Anonymous Coward | more than 5 years ago | (#28504887)

obligatory bam

it's just going to create a lot more overhead for the publishing companies, drive legid users already up in arms about draconic measures even more UP IN ARMS
for the tiny amount of people who quit because they can't be arsed anymore to keep up with latest crackin/copying techniques

This solves nothing until ... (4, Insightful)

c0d3g33k (102699) | more than 5 years ago | (#28504921)

... they figure out a way around the "I won't buy it" problem. The sales lost to "I won't buy it" and "I don't know you exist" and "I'm not really interested in your game" and "How much? You have got to be kidding" and "No, I won't buy you that game - you just had your birthday and Christmas is 5 months away" and "I really need to pay the rent - I can't buy that game right now" and "I'll just take a walk instead" and "Wow - that sounds like a great book - I'll buy that instead of that game" vastly outnumber the number of sales lost to piracy. Give people a reason to buy the game, and they will do so, should they be so inclined. Give people more reasons not to buy the game and they will gladly comply as well.

Re:This solves nothing until ... (1)

Nautical Insanity (1190003) | more than 5 years ago | (#28505049)

Well that's why EA is planning to debut their brand-new "Mental Protection System" that will fix the problem of sales lost to people who don't want their games. Don't worry, it has no adverse side effects, should be easy to uninstall, and will be completely bug-free.

Re:This solves nothing until ... (3, Interesting)

zmnatz (1502127) | more than 5 years ago | (#28505447)

There's that term again. "Reason to buy." Why would a publisher want to do that? Isn't it better to make the game, then complain about being entitled to money without providing any reason. Clearly, treating all your customers as criminals is the answer.

Yes, instead of treating the people who legitimately buy things as what they are, Paying customers who as the saying goes, "are always right", let's just the assume the people who are buying the thing are the ones that are going to pirate it. That makes perfect sense.

History Shows ... (1)

Nerdfest (867930) | more than 5 years ago | (#28504931)

History shows that MS may be in favour of this judging by the way they seem to have bowed to big media and crippled the Zune's wireless functionality. The device would have been awesome had that been implemented in a non-crippled way. It goes without saying that this is right up Sony's alley, and it's surprising they haven't tried it themselves. I'm not sure how Nintendo would come in on something like this. I've heard people don't even have the homebrew channel disabled when they get a Wii back from repair, and Nintendo does carry a lot of market weight these days.

Out-of-warranty Wii repairs (1)

tepples (727027) | more than 5 years ago | (#28509921)

I've heard people don't even have the homebrew channel disabled when they get a Wii back from repair

And I've read anecdotes to the contrary [hackmii.com] . People sending in a Wii console out-of-warranty to replace a broken disc drive (should be about $75 if that) are charged for essentially a new console because Nintendo detected a "Softwarehack".

How will this work for people who don't have high (3, Insightful)

Joe The Dragon (967727) | more than 5 years ago | (#28504939)

How will this work for people who don't have high speed internet? None of today DVDs, Blu-ray players, xboxs, ps3 have dial up and for some people that is all they can get.
will they have to use usb keys that act as Dongles?

Big retailers won't stand for it (5, Insightful)

Animats (122034) | more than 5 years ago | (#28504941)

The big retailers won't stand for the slowdown at checkout this would cause. Various schemes like this have been proposed before, and Wal-Mart isn't interested.

If everybody who wants activation at checkout, from cell phones to gift cards to videos, gets together and standardizes on a system, maybe.

Re:Big retailers won't stand for it (3, Interesting)

hemp (36945) | more than 5 years ago | (#28505975)

This is currently how pre-paid cell phone cards and lottery tickets are sold.

You buy the card, for example a $20 Virgin Mobile card at Target, and during the checkout process, the cashier takes your money and scans the card. The number from the card is sent to Virgin as "enabled". This allows Target and Virgin to not worry about anyone stealing a rack full of phone cards as only "enabled" cards are allowed to be used to add minutes to your cell phone.

Then their losses will be from somethinng else... (0)

Anonymous Coward | more than 5 years ago | (#28504993)

Me walking away, disinterested in their attempts to lock me into a bad deal.

Complicated has failed in the past (0)

Anonymous Coward | more than 5 years ago | (#28504995)

Looks like an industry needs a history lesson. http://en.wikipedia.org/wiki/DIVX_(Digital_Video_Express)

All on the retailer (1)

failedlogic (627314) | more than 5 years ago | (#28505099)

The pressure is being put on the retailer. As a condition of selling the media, the retailer must agree to activating it.

Customer has a bad experience with the activation? No problem, blame the retailer.

No more right of first sale (5, Insightful)

woboyle (1044168) | more than 5 years ago | (#28505325)

This is just another example how big media is trying to circumvent the right of first sale. They would prefer that you aren't purchasing the product, but rather a non-transferable license to use the product. This effort must be thwarted at all costs, or pretty soon we won't be able to "own" anything...

Re:No more right of first sale (1)

peipas (809350) | more than 5 years ago | (#28506089)

They don't want you to have a license either, or they'd be willing to replace your damaged media. When you buy a CD you quite simply aren't buying...anything.

Re:No more right of first sale (1)

woboyle (1044168) | more than 5 years ago | (#28506297)

Caveat Emptor! And the labels are wondering why we aren't buying into their dren! They deserve to go out of business. I used to purchase over $1000 USD / year in CDs, but any more the only CDs I purchase are directly from the artists at their concerts or workshops.

Re:No more right of first sale (1)

Doctor_Jest (688315) | more than 5 years ago | (#28509695)

Exactly. They want to eliminate the right of first sale, selling licenses only, but do not want the burden of replacing media, and support of the license that they enjoy now as "you bought it, now give us $20 for a replacement disc". It's getting pretty stupid, and soon even the die-hards will abandon the whole thing because of the incessant inconvenience of being a "valued customer." Both Gamestop and eBay will suffer if the games lose their first sale... and with giants like Best Buy and Amazon going after the used market... perhaps there will be more pushback from the retail community than we anticipate. Here's to hoping. :)

The value of things (4, Insightful)

erroneus (253617) | more than 5 years ago | (#28505339)

I realize my perspective on what the value of something is might be a little strange, but I hold that it is quite logical.

I don't buy diamonds primarily because of the blood and scandal associated with them, but also because of the resale value problem. "Used diamonds" sell for SIGNIFICANTLY less than "New diamonds." Why is that? The real and true value of diamonds must be closer to that of used diamonds than that of new. I also don't buy "new cars" for the same reason. There is a huge loss in price between the two states of new and used and it's not equal to or less than the value of the use I get from it in my opinion. Therefore new cars represent a big waste of money and is a bad investment... same as diamonds.

How does this reflect on the topic? Simple. This "activated at POS" notion serves only to limit or kill the resale potential for a single title. They seek to control not only the copyright, but also the access to the media. And without the possibility of being able to resell the games or music or movies one has purchased, you are looking at an even greater disparity between the first sale price and the resale value. When they decide a title is no longer available or eligible for activation, the owner's purchase becomes completely worthless. (And let's say a game activation was tied to an XBOX Live or similar account system and for whatever reason, the XBOX Live account is no longer available and the same person needs to create another account... will he be able to take his game activations over to the new account? I DOUBT IT. This could mean the loss of several hundred or possibly more than thousands of dollars of first owner cost at the discretion of the policy of the hosts of the accounts used to manage activations.) This is a step worse than the "DRM nightmares" that people have encountered when DRM content providers shut down servers or their servers fail or their data is somehow lost or corrupted resulting in the loss of access to content that the user legally paid for.

This is yet another way in which the public domain becomes a casualty of the greed of copyrighted content owners. We seriously need to crank up the volume when it comes to expressing the loss of the public domain to legislators. Large parts of our history and culture have been lost forever already due to the way copyright is abusing the public's good faith. (Yes, I said good faith because MOST consumers don't infringe on copyrights... MOST don't have a clue as to how they can even do it.)

Re:The value of things (2, Interesting)

Lonewolf666 (259450) | more than 5 years ago | (#28506597)

I agree, and from a purely financial point of view the calculation is actually easy:

If you used to resell your games after a few weeks at half price (just an example), you would get to play them "effectively" at half of the first sale price for a while. Adjust this number for your actual buying and selling habits.

Enter activation, and lets make the worst case assumption that your console will break someday and the games won't run on the replacement console/next model. Now you also get to play the games "for a while", but at full first sale price.

Consequence:
If you as user don't want to pay more for your games, you'll have to switch to buying only older games that are no longer in the full price category. This also means that the publisher makes the sale half a year (or more) later.
I wonder how the industry will like it if people do that ;-)

Re:The value of things (3, Insightful)

Kaboom13 (235759) | more than 5 years ago | (#28507227)

There is some factors into the price difference between new an used cars other then perception. A diamond, after, does not age, any defects are readily visible to a jeweler that knows what he is doing etc. A car has hundreds of different factors that affect it's condition and life. A new car is in a more or less known state ("lemons" that are defective from the factory aside). A used car, even if it is only just a few years old, has an unknown history. How well the car was maintained by the previous owner, any possible accidents that could have caused hidden damage, a long history of service problems, etc. There's a lack of information. What you do know, is the previous owner sold the car for a reason. That reason could be mundane, like they got a raise or new position and wanted a better car, they moved or can no longer afford it, or it could be because the car is a piece of shit and they are tired of it. Even a skilled mechanic cannot fully access the state of the car without a lot of expensive labor costs. Information has value, and there is more information about the new car then the used car, so that in part accounts for the difference in value when you drive it off the lot. There are of course other factors, a big one being the "cool" factor, the fact noone else's smelly butt has been in your drivers seat, warranties, etc.

Re:The value of things (2, Funny)

erroneus (253617) | more than 5 years ago | (#28507311)

All that sounds great. But when you buy a car and sell it even 6 months later, you will not get a "new car" price from it. There is a generally accepted drop in value the moment you drive it off the lot. Hrm... gives me an idea for the next time I feel like jacking around with a car salesman -- ask them about that value drop and then ask them to discount the price of the car by that much so that I don't have to suffer a loss immediately after buying it. From the moment you buy a new car, you are "upside down."

Re:The value of things (1)

blankinthefill (665181) | more than 5 years ago | (#28508735)

Actually, that price drop does make sense in the context of the GPs post. You don't know the history of that car over the 6 months from when it drove off the lot. They way I've had it told to me is thus: Why would someone buy a new car, then turn around and sell it six months later? Sure, they could just be upgrading, or downgrading, or whatever... but 6 months is a really short time to do that in. Many people worry that a car sold that quickly after coming off the lot is being sold because it is a lemon. It doesn't make it a lemon, of course, it could be something else, but perception is everything. That is one of the biggest reasons that people I've talked to have been wary of buying used cars that are too new. Of course, as you move away from the date that you drove off the lot, the car also gets more use and has a higher chance of developing problems, and the unknown history it has also increases. This is why the car will not increase in price one the fears that the car is a lemon start to abate. And of course, as you move farther out, you begin to run into warranty issues (which are, imo, a HUGE part of what you're paying for with most cars), which end up just depressing the value of the car further. Anyways, my point is that it may seem odd that cars drop like that, but once you delve a little deeper it does make sense... and it also means that you CAN get cars well below their actual value if you buy cars that are nearly new, especially if you have the knowledge (or the money) to make sure that the car ISN'T being sold because its trash.

Re:The value of things (1)

Jiro (131519) | more than 5 years ago | (#28509571)

The reason that used cars sell for less is economics: On the average, people preferentially sell cars that are causing problems, so a used car is more likely to have problems than an average car of that age. The market takes that into consideration. This is why an almost new car sells for so much less than a new car: the mileage isn't that different, but the fact that the used car is on the market at all indicates a greater likelihood of having problems.

Re:The value of things (1)

erroneus (253617) | more than 5 years ago | (#28509829)

But very little explains the IMMEDIATE drop in price once someone takes ownership of a vehicle whether it is actually used or not...even when the "used" car has full factory warranty just as if it were new.

piracy (2, Interesting)

Anonymous Coward | more than 5 years ago | (#28505375)

I used to pirate stuff when I was a kid because I didn't have the money. Now that I'm an adult with a moderately decent job, I purchase everything legitimately. If this happens, I'll pirate again, but this time based on principle.

Resale market (3, Insightful)

taustin (171655) | more than 5 years ago | (#28505411)

There is also a lucrative market for used video games to consider. After some gamers complete a title, they sell it back to the retailer. How will benefit denial handle that situation?"

If I understand their reasoning correctly, that's part of the piracy they're trying to stop.

That's the useful part about calling coypright infringement piracy instead of copyright infringement: It has no real meaning, so it means whatever they want it to mean.

Last time I checked... (1)

kylerowens (1555499) | more than 5 years ago | (#28505417)

DVD players didn't have internet access. How exactly do they plan to implement such a ridiculous idea.

Re:Last time I checked... (0)

Anonymous Coward | more than 5 years ago | (#28505615)

It's obvious, they'll make possession of a DVD player without internet access a criminal offence.

I bet the pirate version doesn't have that problem (0)

Anonymous Coward | more than 5 years ago | (#28505455)

Just like pirated DVDs don't have long unskippable ads at the beginning...

Aftermarket, schmaftermarket (0)

Anonymous Coward | more than 5 years ago | (#28505485)

"After some gamers complete a title, they sell it back to the retailer. How will benefit denial handle that situation?" Why, it won't, of course. Isn't that convenient? Publishers never liked the "first sale" doctrine, but there's nothing they can do about it, from a purely legal point of view. So, a technical "solution" it is.

It's about killing the Pre-release (4, Insightful)

Amphetam1ne (1042020) | more than 5 years ago | (#28505507)

It's about stopping the pirates from getting the game much earlier than it's retail release date. Some studies have indicated that there is a good 10% extra to be had if you manage to have your 1st 3 days of release without a pirate version available. People who might have bought, but went for a pirate copy instead because they couldn't be bothered to drive into town for example. Most of the pre-release pirate games come from retail, where games may have been shipped to store anything up to 2 weeks before the street date. Employee's of games stores who have ties to scene release groups will purchase or borrow a pre-release game, upload it to the group who will crack it if necessary and then upload it to a private FTP where they hope to win points for being the 1st group to release. From there the game will be disseminated via the usual channels like torrents, usenet, rapidshare (aparently much to the disaproval of The Scene, who just do this to see who can get there 1st). Basicly for years the carefully craftd release scheduals and marketing plans of huge media companies have been screwed up by a bunch of teenagers having an e-penis waving contest. It's nothing new though, it's been happening for 20+ years and has it's roots in dial-up BBS'. There's a scene for virtually everything, not just games. Albums, singles, vinyl DJ promo's, DVD, Blu-ray, PC Apps, Mac apps, Music Production sample packs, they all have their own scene and their own set of groups that are fighting to be the 1st to get a pirate copy on the internet. This is where piracy comes from, not terrorism, not organised crime, just a bunch of teens playing a game against each other.

On the subject of the used market, publishers will be shooting themselves in the feet if they want to go ahead with killing the used market. It's estimated that a substantial number of new game buyers partially fund their games buying through trading in their old titles. So the loss of the used market will more than likely have a negative effect on new sales close to the value of
I think that peple need to realize that there is simply not an infinite amount of money in the ecconomy and that somwhere you reach a point where no more sales can be made until more cash flows back to the pockets of your customers. However, if you keep the money moving around fast enough, it can seem like there's an infinite amount of it.

Re:It's about killing the Pre-release (1)

Rogerborg (306625) | more than 5 years ago | (#28505567)

How's it going to stop that? The same guys who crack all the existing DRM cruft in games will just crack this DRM as well.

Re:It's about killing the Pre-release (3, Informative)

Amphetam1ne (1042020) | more than 5 years ago | (#28505951)

I believe there has been talk in the past of not including a main game executable on the disk and only copies that have been activated at checkout will be able to download it. Obviously this doesn't account for things like review copies, beta leaks, etc.

Re:It's about killing the Pre-release (1)

mochan_s (536939) | more than 5 years ago | (#28508983)

The PS3 DRM hasn't been cracked yet. The XBox360 DRM hasn't been technically cracked also. There is a circumvention to play retail games but not a crack of the DRM like the original XBox.

Re:It's about killing the Pre-release (1)

mochan_s (536939) | more than 5 years ago | (#28509003)

Basicly for years the carefully craftd release scheduals and marketing plans of huge media companies have been screwed up by a bunch of teenagers having an e-penis waving contest.

The solution has been simple.

XBox has an e-penis system called achievements. If you play a game before a release date, you can get banned and your e-penis tucked away by Microsoft. So, even if people download the data before the pre-release date, they don't dare to play it before the release date which can coincide with the marketing.

Movies WTF? (1)

future assassin (639396) | more than 5 years ago | (#28505751)

Seriously the moment I have to give out my personal info and spend 5 min at the check out to activate a MOVIE is the day I stop buying ANY entertainment and that includes going to watch movies at the movie theater. Just like I haven't bought any new music cd's for years although I love hitting up pawn shops and flea markets for dirt cheap music.

It's just slave talk. (1)

iCantSpell (1162581) | more than 5 years ago | (#28506017)

Every once in a while some greedy bald guy in a suit will have coffee with his buddies to talk about restricting content for profit, and this is one of those ideas.

Activating dvds, games, and anything else on a disc is absolutely impossible. Not every single hardware maker in the world is going to raise the cost of production to apply this crap to there devices.

Now lets look at some more facts. Not everyone has internet, you would have to replace or have seperate hardware for the "activated" media, and most people will partake in the acts that this move is trying to prevent.

You know... (2, Funny)

Runefox (905204) | more than 5 years ago | (#28506053)

I've said it before and I'll say it again: The only real thing that needs to happen to completely lock down physical media on consoles is for a small portion of the disc to be writeable, and require retailers to write that with a specialized burner on purchase, containing all pertinent information including console serial number, date of purchase, place of purchase, etc etc. Encode/burn it in a way otherwise unreadable by normal players (like the Dreamcast's GD-ROM format, which was, to grossly over-simplify, more or less an inversion of the expected TOC with the data written backwards), give the console(s) in question the ability to read and require that track via firmware, and you have a completely locked-down, no-resale system that's directly tied to your console and your console alone. Charge an extra 50% per disc for "unlocked" versions to be used solely at video rental stores, perhaps with a re-writeable layer containing a date string to lock the game once the due-back date arrives.

Sure, it'd cost an arm and a leg and the soul of your first-born son, but who cares? You're saving yourself from PIRATES. Plus, you get all the benefits of the online distribution racket, too - Your friend wants to play? They need to get their own copy! You lost your disc? Buy another one, just like people who lost their accounts do! Console broke? Well, buy a new one and buy all your games again! Best of all, no pesky internet connection required to verify the license. That's a plus for the consumer!

Sure, you might be able to get around it, but good luck with that.

Entertainment MERCHANTS, not Publishers (2, Interesting)

Swanktastic (109747) | more than 5 years ago | (#28506367)

This study was published by the Entertainment Merchants Association, which is a trade group for the retailers who sell and rent games. The members are companies like Toys R Us, Blockbuster, Target, etc. All the posts here read like the publishers are the ones sponsoring this study- eg this is the publishers trying to kill used sales.

I'm not convinced that is the motivation given that the merchants are the primary beneficiaries of used sales. For merchants, in store theft is a huge issue, and I imagine it was a primary motivation for at least starting this study on POS activation.

These guys are looking to a future where downloaded games reduce the need for physical retailers, and I'm sure they are scrambling to ensure their place in the world through whatever means necessary- including some dumb ideas like POS activation.

They can do whatever they like... (0)

Anonymous Coward | more than 5 years ago | (#28507349)

I stopped buying *new* games years ago. I have to worry about what "capitalistic malware infestation" the new PC games come with. Combine this with the shitty quality of newer games (Deus Ex Invisible War vs. Deus Ex) (Unreal 2 vs. Unreal) and its easy to see how the games of ten years ago were *so* much better. At least I have twelve years of great classic games to play. I miss games like Sin, Thief, DX, Unreal and Quake.

I also blame the XBOX for destroying two of my favorite franchises (Thief and DX). Everyone loves tiny environments and muddy textures. The future is sloppy ports of games that are unoptimized and cator to the lowest contender in terms of hardware and player IQ.

Make it too hard to be legal (1)

nurb432 (527695) | more than 5 years ago | (#28507369)

And more people will go the illegal route.

Yes! (1)

Weezul (52464) | more than 5 years ago | (#28508117)

Console games are the bane of computing! Any innovation that drastically reduces the console game market, moving those people to netbooks and set top boxes is a massive boon for humanity!

generate ? (1)

bug1 (96678) | more than 5 years ago | (#28508125)

Would generate an additional $6 billion in revenues for media corporations each year

or

Would consume an additional $6 billion in revenues from consumers each year

Re:generate ? (and what are They trying to stop?) (0)

Anonymous Coward | more than 5 years ago | (#28508531)

Greetings and Salutations....

Would generate an additional $6 billion in revenues for media corporations each year

or

Would consume an additional $6 billion in revenues from consumers each year

One thing that jumps out at me, when I look at these numbers is that, according to THIS source:

http://www.emarketer.com/Reports/All/Gaming_mar06.aspx

the gaming software sales world wide is in the $30 billion area. However, It is unclear to me how this suggested change would be applied on
a world-wide basis. In the USA, according to THIS link:

http://www.emarketer.com/Reports/All/Gaming_mar06.aspx

the sales are in the $6.2 billion area.

Now...are they claiming that 50% of the games running on consoles and PCs out there are stolen? That seems a tad high to me, especially since
one DOES need media of some sort to run on a console.

Also, in passing...the articles I read seemed to be focused more on the problems of physical theft from the stores, not downloading copies from the Net.
It would be very hard to attach a dye tag, or a large, lockable container, that would have to be physically removed by a clerk, to a downloaded file. However, if their GOAL is to start forcing consumers to purchase NOTHING but physical copies of the games, this might work.

Stopping shoplifting is one thing. Attempting to lock consumers into HAVING to buy the game from one source, with no competition is doomed to failure (look at IBM's example).

regards
dave mundt

Nonspecific as to whom (0)

Anonymous Coward | more than 5 years ago | (#28508679)

Generate $6 billion in revenue for *whom*?
I'm guessing it isn't the game creators.
Maybe the company selling this product?

In related news... (2, Interesting)

Ender77 (551980) | more than 5 years ago | (#28509767)

...Piracy jumps 8000% after plan is implemented. Seriously, this was tried with the DRM securvirus fiasco, people like me REFUSED to buy anything that had it on it, and drove everybody to get the pirated version. Not only that, people went to every site that had reviews of the games and nuked the reviews which hurt sales even more. EA finally relented and seems to have learned their lesson and not put any securcrap on their latest games (besides CD check). Go ahead and put this on your games/movies/others, they will learn soon enough what happens when a company gets too greedy the moment they do.

This is about the DRM vendors. (0)

Anonymous Coward | more than 5 years ago | (#28509881)

I don't think this is about a problem with piracy. Or stopping used games sales. This is about digital rights vendors trying to sell a product. They need studies like this to make their pitch to software developers.

Managing expectations? (0)

Anonymous Coward | more than 5 years ago | (#28509903)

Perhaps this is another ploy to manage peoples' expectations. If the latest iteration is so outrageous, then it makes the established practice (DRM) seem like a cuddly teddy bear.

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