If you're going to bill your game as being true to the spirit of the original source material, one thing you really need to accept is the likelihood that the game is not going to be true to the spirit of some modern sensibilities. The developers of this Conan RPG don't appear to understand that.

We made changes to Conan the Wanderer on a cultural consultant’s recommendations that created a more rounded and well-developed representation of the fictional cultures based on their obviously real South and East Asian counterparts. Word choices were edited throughout for tone, like removing “exotic” and “mysterious” replacing it with a better adjective to describe its people and places, so that players inhabiting eastern characters in their games aren’t just a stereotype of strange, unknown people, and placed them at the center of this book. This was an issue for us in the original version, as it often assumed to paint all eastern characters with the same brush, instead of inspiring a sense of rich societies and cultures.

The material is and always has been wholly faithful to Robert E Howard. We’re not changing anything about the setting or the world. Not a single word of REH’s text has been altered. The only adjustments are being made to the game content itself, or fiction we’ve derived and extrapolated from his works, particularly the way we discuss and present that material. 

I'm not saying there is anything intrinsically wrong with a culturally sensitive Conan, although that would arguably work much better as a parody than as a straight-faced RPG. But you can't honestly advertise the game as being Robert E. Howard's Conan. 

33 years ago, Chris Crawford explained why one should never take awards very seriously in The Journal of Computer Game Design, Volume 1, Number 5.

This is the time of year for annual awards.  The pundits gather their wits, their votes, and their courage, and they select the best products of 1987.  There’s nothing intrinsically wrong with the idea;  nowadays, so many products are released that an annual review of the best products provides needed perspective.  Sadly, though, the execution falls short of the ideal.

Consider the annual awards of MacUser magazine.  I noticed in their 1986 awards an apparent bias in favor of products that appeared late in the year.  I therefore compiled data on the products that won awards and compared it with the review dates of those products.  I then carried out a statistical test of the hypothessis that awards are given with no regard for release date.  The hypothesis was rejected at better than the .5% confidence level.  For you non-statisticians, it means that the awards were grossly biased in favor of recently released products.

Then there is the awards system sponsored by the Software Publisher’s Association.  The problem with the SPA awards arises from the fact that the software industry executives who vote for the awards don’t play many games themselves, and so they have no independent basis for making a decision.  Determined publishers will send free copies of their games to every elector to jog their memories.  It’s not quite the same thing as buying the election, but more than one publisher has mentioned to me the high cost of winning an SPA award.

I don’t mean to pick on MacUser or the SPA — they’re both solid organizations working to improve their systems.  I could have picked apart any of the awards systems.  These were the most convenient targets.  My point is that none of the various awards can stand up to close inspection.  

There is a fundamental reason why awards systems are such a mess:  there are just too many games coming out each year for any one person to make a fair determination.  Consider this:  each year, several dozen games companies release several hundred games to the marketplace.  It takes at least five hours of playtime to evaluate a game well enough to determine its worthiness for an award.  It would therefore require nearly a full-time worker just to play all the games.  Who’s got that kind of time to throw around?

The brutal truth is this: most of the people who cast votes for the “best game of the year” have played only a fraction of the hundreds of games out there.  Few of them have spent much time with the games for which they vote.  In short, it’s a crock.  Most of the electors for the Academy Awards have seen the movies for which they vote.  Most of the electors for book awards have read the books under consideration.  Is it too much to ask the same for games?  Apparently it is.

So what should we game designers do about it?  We certainly should not institute our own system of awards.  Let’s face it, we’re not much better equipped to select the best games of the year.  We probably spend more time playing games than most people, but I doubt that any of us are catholic enough in our game-playing to do justice to an annual award.

So I suppose the best we can do is behave graciously when we hear that we have received an award (or, more precisely, our publisher has received the award), thank everybody in sight, take the plaque or doodad home, mount it on the wall, and forget about it.  Lord help us all if we start taking these things seriously. 

That being said, the CGW games of the year were, for the most part, well worth playing. But then, as a former CGW contributor, I can testify that the editors, writers, and reviewers of CGW actually played the games all the way through.

This article originally appeared on The Escapist in December 2005. Fifteen years out, its predictions have held true: Game distribution has gone digital, and stores like Gamestop are reduced to the equivalent of used record stores.

The used game business works like this: A gamer shows up at Gamestop with a few games he’s tired of and wants to trade in. Gamestop offers him a lowball price – well lower than what he’d get if he sold his games on eBay, just high enough to keep him in the store – and since he’s already there and wants the cash, he accepts it. More than likely, since he’s a gamer in a game store with cash in hand, he spends the cash on something else, maybe something secondhand that he can pick up for $20. Meanwhile, Gamestop marks up and sells the used games it just bought for three times what it paid for them.

 

Gamestop executives describe this as a “margin growth” business – because they make a much higher profit margin on the sale of every used game than they do on the comparable sale of a new game. And in the highly competitive retail trade, margins matter. How much?

 

“Used games are keeping the entire ship afloat,” a vice-president of marketing for Electronics Boutique tells me. “EB and Gamestop make basically no money from new product.”   

 

No money from new product? But everybody knows the retailers are the real profiteers of the interactive entertainment industry, brutally extracting marketing development funds and ruthlessly returning product in the name of the all-mighty dollar.

 

Right?

 

The Savagery of Sellthrough

Throughout most of the entertainment and media industry, when publishers want to make sure first-run entertainment sells in droves to the public, they charge what’s called “sellthrough prices” – and for virtually every form of media, including books, movies, and music, that price is between $15 and $25. You can get the brand-new Feast for Crows hardcover for $16.80, the Star Wars: Revenge of the Sith DVD for $17.98, and Madonna’s Confessions on a Dance Floor for $18.98.

 

But you have to pay $49.99 for Perfect Dark Zero, or any other new release video game. In comparison to its closest substitutes from other industries, video gaming isn’t priced to sell through.

 

And yet selling through is the one thing a video game must do. Video games suffer from the shortest shelf life of any media. You can walk into a record store and buy CDs from the 60s, 70s, 80s, and today. You can visit Barnes & Noble and pick up books written in the middle ages. You can buy movies made in the black and white era. But you would be hard pressed to find a Gamestop selling more than a handful of games older than a couple years, and the vast majority of shelf space will be for titles releases in the last six months.

 

 

Facing this short shelf life, game publishers have strategically adopted a tiered pricing model. The start the games off at the highest price point they can – right now that’s $49.99 – and they extract as much money as possible from the avid, got-to-have-it-now consumer. They then drop the price to hit the next tier of consumers and keep moving units.

 

The tiered pricing model works well for the publishers, and if they can convince enough consumers to buy at the $49.99, it works really well. Think Halo 2. It’s great for big box retailers like Wal-Mart, too. Wal-Mart only takes a title that is a proven seller, and any title that doesn’t sell gets dropped instantly. Wal-Mart doesn’t care if it has the biggest inventory of games, or covers every genre of game. It just sells the big hits.

 

For specialty retailers like Gamestop, the tiered pricing model sucks. Gamestop can’t compete on price with the likes of Wal-Mart so to differentiate itself Gamestop has to take risks on unproven new product, and keep a wider inventory of older product. But unlike music and book sellers like B&N, Gamestop has no evergreen products that it can reliably keep on the shelves. So its inventory management is a constant struggle, with price points continuously adjusted, and product constantly moved around the store depending on its age. Gamestop ultimately suffers because its shelf space is devoted to games that are, by definition, less popular and lower priced than what Wal-Mart stocks.

 

So, imagine you’re running Gamestop. Imagine you owe $36 wholesale for $50 games, leaving around $14 profit. And imagine you owe $12 wholesale for $20 games, leaving around $6 profit per sale. Obviously you’d like to sell more $50 games than $20 games, and so you’re going to organize your storefront to push the hot new product as much as possible. But to differentiate your business, you have to keep that broad catalogue of older, cheaper games around – otherwise you’re not offering anything different than Wal-Mart or Best Buy.

 

Now imagine that with used games, you only pay $3 for your $20 games. Suddenly you make more money from a $20 game then you do from that $50 copy of Perfect Dark Zero. This is the solution to all your problems. You can offer a wider inventory, stock older games, and even still profit! Set the prices right and you can even manage to do trade-in and resale of brand new games for really big profits.

 

Got that? Good. Now you understand why Gamestop is transforming itself, right before your eyes, from a specialty boutique into a secondhand store.

 

Biting the Hand

It’s a transformation fraught with peril. In adopting used games as the solution to the inexorable logic of the new game retail business, Gamestop is alienating its customers, infuriating its suppliers, and arming its competitors. 

Let’s start with customer. As a specialty retailer, Gamestop has long catered to the enthusiast. The enthusiasts’ desires are simple. He wants to be able to buy new games for a reasonable price. If the games are good, he wants to keep them. If the games are worth playing but not worth keeping, he wants to be able to trade them in. And if the games are bad, he wants to be able to return them and get new ones. 

Unfortunately, today’s retail marketplace offers no way to return bad games and limited value on trade-ins. Barnes & Noble will give you store credit for opened music and DVDs if you have a receipt, but Gamestop will just offer to buy an opened game from you for a few bucks – even though they’re going to turn around and sell it for $30… 

When used game sales were a minor aspect of the Gamestop business, it was easy for regular customers to overlook the trade-in to sale price ratios; no big deal. But as every consumer purchase is presented as a potential money-saving used game purchase, those consumers have a constant reminder of exactly how much a used game is going for – and, by comparison, how little the consumer gets on trade-in.  

Hardcore gamers are nothing if not web-savvy, and eBay is out there as a viable alternative to trading in.  Exposés on the economics of trade-ins have already begun to erect the virtual equivalent of “Keep Out” signs on Gamestop. As consumers become more informed, Gamestop will either have to increase its trade-in values, or watch its inventory supplies of desirable used games plummet. 

An even more pressing problem comes from Gamestop’s suppliers, the video game publishers. The relationship between game publisher and game retailer ranges from Détente to Cold War, with continuous low intensity conflict over “price protection,” “marketing development funds,” and “return rate.” Used game sales threaten to make the Cold War heat up – because publishers see no revenues at all from the sale of used games. 

Is it really worth fighting over? It’s interesting to note that both Activision and Electronic Arts are reporting that fourth-quarter revenues will fall well below expectations due to unexpectedly low sales. Meanwhile, Gamestop has announced “strong margin contributions supporting forecasted earnings” because “used video game sales growth continues to solidly meet our goals.” 

And so the war drums have started beating. In an interview with Computer and Video Games, Mark Rein of Epic Games was blunt: 

“If you walk into EB in the US, they try and sell you a second hand version of a game before a new one. I think that's bad. It would be fine if they share that revenue with us. They can also be marketing partners with us as well. We can have an official refurbished games policy. That's the problem. Those resold games use server resources, tech support. The majority of guys calling up saying "I don't have my serial number", I'm sure a lot of those are resold. It costs us money. Those customers think they paid for it, and they're entitled to support. The reality is we didn't get paid. They didn't pay us.”

Of course, Gamestop doesn’t have to.

“It is 100% legal to re-sell video games. The publishers have no leg to stand on,” explains Jason Schultz, staff attorney at the Electronic Frontier Foundation. Because of the First Sale doctrine, publishers have no legal right to get paid for used games, anymore than book publishers get paid from secondhand bookstores, or music companies from used record sales. This won’t stop them from finding another way to strike back at Gamestop, however.

Even as the publishers make war-plans, Best Buy and Blockbuster have joined the fray. Most Blockbuster stores now not only rent video games, they buy and sell used games, too, usually offering significantly better trade-in values and charging less. Blockbuster is largely ignored in discussion of game retail, but it needs to find a new business as TV on demand catches on, and looks willing to fight hard for games revenues.

Best Buy is still testing a pilot program for used games, but industry insiders seem to expect it to go forward. As a big box retailer, Best Buy isn’t suffering from the tiered pricing model the way Gamestop is, and it can accept lower margins on used games. And if Best Buy succeeds with used games, Target, Wal-Mart, and the rest might follow. 

What does it all mean?

 

The New Model

Gamestop’s margins in the used game business are almost certain to erode, as consumers seek alternatives, whether peer-to-peer like eBay, or from competitors such as Blockbuster and Best Buy.

At the same time, the uneasy alliance of retailer and publisher that has long dominated the interactive entertainment industry will crumble. This, in turn, will open the way for publishers to aggressively embrace digital distribution. Up until now, the publisher’s fear of channel conflict with retail has obstructed their adoption digital distribution. By “striking the first blow,” retailers open themselves up to a digital distribution counterstrike.

These two forces – used game sales and digital distribution – will have strange and conflicting impacts on consumers. A flourishing used game market will drive prices lower. The higher the price of new games, the more likely the consumer is to buy it used for less.  But the more the used game market flourishes, the more publishers will race to adapt digital distribution. With digital distribution, publishers can prevent re-sale and used game trade, both legally and technologically.

“You are already seeing with XBOx Live and Valve and these ties online, they are trying to use the online hook as a way to enforce their business model. You’re going to see more of a trend towards that,” says the EFF’s Schultz. ““It’s part of an overall battle that’s going on in all the content industries.”

Here’s what’s likely to emerge as the new business model: Publishers will release new titles exclusively in digital format at a premium price.  Big box retailers will carry the most popular titles in physical form at a sellthrough price point. There’ll be little margin left in used game sales, but it’ll survive with pricing similar to your local Blockbuster’s secondhand DVDs.

And as for Gamestop? If you want to know what’s in store, head over to your local college and find the students’ favorite used record store. There’s not a 100% profit margin in sight.

To those of you who also didn’t have girlfriends in high school, the Gelatinous Cube will ring a bell as a horrific creature from the D&D Monsters Manual.  A merciless mass of unfeeling jello, it would absorb hapless adventurers and other critters in its translucent corpulence, feeding off their poor souls for eternity.  You didn’t want to stumble upon one without proper gear and a fully rested party.

I’m presently writing this post from a vantage point inside the equivalent of a Gelatinous Cube of the Game Dev universe: a major mobile game developer whose name most industry followers would immediately recognize as a “AAA” outfit.  I’m in a synch-up meeting, after which I’m headed over to an All-Hands, followed by a staff meeting, before an important steering committee update.  I will barely have time to finish my TPS reports before the day is through.  I’ve come to realize I stopped making games a while ago, having shown sufficient aptitude at that function to be promoted out of that responsibility.  Yet, as I write this, I can only smile, because I resigned today.  The exit door is illuminated, its UI now active with the all-important mouseover effect.

In all future posts, I will be referring to my former employer as “GC Games.”  It’s a company that typifies modern, large-scale mobile game development:  its modus operandi is to absorb talented game makers and studios in its formless maw, and through a period of slow and agonizing digestion, which incidentally extracts and excretes all passion and original thought, meld the new materia unto itself.  The result is, if nothing else, consistency.  While its base stats are imposing, this abominable creature does have several weaknesses, chief among them essentially zero Dex or Int -- its maneuverings to garner market share are usually too little, too late, and uninspired.  In time, I will help you understand this beast of the gaming industry, as one day you may encounter one as well, or perhaps even find yourself as I did:  ensnared inside.

As a Product Manager with 10+ years in mobile game development at two such top-tier developers, I will share what I can with you, my fellow adventurers, with the intention to help you make the games you want to make, and ensure that they become sustainable businesses.  I will share some key insights, and answer common questions I’ve been asked over the years, such as:

• What does it really take (talent, time, resources) to build and ship a modern mobile (i.e., Unity) game in XYZ genre?

• Ok so I’ve built an amazing, groundbreaking game.  How do I get the five million users I need to pay back my rich uncle?

• What exactly do you do as a Project Manager?  Oh, you said Product Manager?  WTF is that?  Do you write code?

• What do I need to measure about my games, how do I track those things, and how I do manage my game toward better metrics?

• What is ROI-based feature roadmapping?

• How do you approach A/B testing?  As a PM, do you really believe it’s necessary to “test everything”? (Spoiler: I don’t.)

• What’s up with all those clickbait game ads I see everywhere?

• You said you’ve escaped from the Gelatinous Cube.  What will you be doing now?

I’m glad you asked.  I’ve partnered with a brilliant game designer and friend to build a mobile game studio that’s predicated on (a) making high quality, fun mobile games and (b) building them the way we want to, with whom we want to. Corporate Cancer is our executive handbook.  

As we develop our fledgling game studio, I’ll also bring you along on that journey, so that you might learn from our legion mistakes and occasional successes.  From time to time you may need to steer me right, too.

Until next time.

-- [UnnamedWarrior]