gamesindustry.biz
Daily Update
25/05/2006

It was with a sense of déjà vu that we witnessed reports surfacing earlier this week claiming that Sony is going to kill off the used software market on the PlayStation 3 through some ill-defined, but undoubtedly fiendish, manoeuvre which would not only make it technologically impossible to play games that have been bought second hand, but would make it illegal to resell them. One or the other, anyway; perhaps even both.

The déjà vu is only to be expected. We have been here before - as recently as last November, when a mildly exasperated-sounding denial from Sony Computer Entertainment Europe put paid to similar rumours by stating categorically that PlayStation 3 games will not be locked to any individual machine.

The fact that this week's story, which has been equally strongly decried as utterly false, has circulated so far and wide since it first appeared on Games Radar yesterday is an indication of just how strong feeling would be about such a move. Second hand software makes videogames accessible to many consumers who would not buy into the industry's products at full price; it funds the full price purchases of those who sell their old games second hand; and it is by far the most profitable aspect of the business for many high street specialist retailers.

We don't doubt that top executives at Sony feel like they've just died a little bit inside every time they see how much profit firms like GAME and GameStop make from selling second hand software - in fact, videogames firms have even lobbied, unsuccessfully, for the practice to be made illegal in Japan. They would love nothing more than to have the second hand software market shut down - but even the executives of top media companies have to accept, whether it's with good grace or not, that not all your fantasies will come true. At least, not yet.

After all, the barriers to running this kind of restrictive rights management on game software are absolutely immense at present. The technological hurdles alone are huge; most solutions either require a unique code on each game disk, or for every console to be connected to the Internet, or any one of a number of other unlikely factors. Allowing consumers to play their legitimately purchased games on new consoles that they buy (a major factor given Sony's history of poor build quality and easily-knackered systems) suddenly becomes a major headache. No longer can you lend a game to a friend. Your kids can't bring their games to their cousin's house and play them on their system. The whole console software model, in other words, is fundamentally broken.

Now consider the legislative hurdles; this entire venture is founded on the assumption that Sony will be able to sell you a license for the software which is worded such that the actual disks that the software comes on still belong to Sony, and the license cannot be passed on to another consumer. In some countries, that'll probably pass muster - but in a number of other countries, the first company to try and pull that particularly unpleasant trick on consumers is likely to receive an unpleasant legal surprise. Even in countries where it's fine to do this according to current law, governments are likely to take a dim view of such antics - bear in mind that the European Union was at one point keen on the idea of legislating against DVD region coding, which is a relatively innocuous slice of corporate evil by comparison with the system being suggested here.

Sony is a company driven by profit, as every company is, but it's not a stupid company - whatever mouthy hacks may claim based on its E3 pricing announcement - and it recognises that these barriers exist. Moreover, it undoubtedly recognises that for the first time in a decade, it has a real fight on its hands over the next five years, and even if it was possible to implement DRM in this manner on its games, being the only console on the market which doesn't have a second hand bin at retail would be a mortal blow to its hopes in the space.

Besides, Sony knows that time is on its side. Half-Life 2 is a rare sight in bargain bins, not because everyone loves their copy so much that they don't want to sell it, but because Valve's Steam delivery system largely precludes second hand sales - not deliberately, as such, but simply because doing a second hand sale of a largely digital product is a much more fraught process than simply handing over a disc. The same is true, to some extent, even of games on the original Xbox - I can sell you my Project Gotham Racing 2 game, but I can't sell you the additional content I unlocked for it on Xbox Live. The second hand model is already faltering in this area.

Over the next five to seven years, that transition will continue. The PC second hand market is already suffering as subscription-based and digitally distributed games become more popular; the console second hand market, equally, will be crushed as digital content distribution, subscription based gaming and other such new revenue models become prevalent. Where is the value in selling you my copy of SingStar PS3, if all of the tracks I've bought online remain on my PlayStation HUB account rather than on yours?

Every sign we've seen from Sony so far suggests that the giant company knows and understands this factor. It only needs to play the waiting game, and watch as the industry evolves away from the packaged goods model which encourages second hand resale. Is this necessarily good for consumers? No, frankly; without careful moderation to ensure that such systems exist without a heavy burden of corporate control and profiteering, it's just as awful for consumers as it is for retail. For now, however, Sony and its ilk can afford to wait.

Implementing this style of restrictive DRM on PS3 right now would be suicidal for Sony, a company which is already betting the farm on a number of risky gambles with this system. It's no exaggeration to say that if Sony implemented such a system, and was not followed into the breach by Microsoft and Nintendo, the firm would face a tough struggle for its very existence in the home console and media spaces over the next five years, and that fact is surely not lost on the firm's key strategic minds. Besides - why risk the future of PlayStation in order to drive a knife into the heart the used-software business, when the end for that business is already in sight?

We cannot pretend to know what exactly Sony is thinking, but we can base conclusions on our own logic and on conversations within the industry. For Sony to do as Games Radar are suggesting is madness; and whatever traits Sony may have demonstrated in this industry to date, madness is not yet one of them.