games market

Opinion: New EU ruling forcing Steam & co. to allow re-sale, may be bad for games market

What happened?

The EU has just recently ruled that Steam and other, similar distributors, including console vendor’s online shops, must allow players to re-sell games they bought and played on the platform. Since this is a topic that I have spent some time thinking about, and all of a sudden it became relevant, here are my thoughts.

I must preface this by stating the obvious: I am biased - I am a game developer myself and hope to sell my game Puzzle Pelago and more in the future - on Steam. So with that out of the way, let’s go!

The Difference Between Physical and Digital Goods

Upon months ago seeing people complain in comments sections that they can’t re-sell Steam games (or on other platforms), because they used to be allowed to do that with physical copies, I started wondering why I felt that those cannot at all be compared, as so many other stated.

The main reason is, of course, that physical goods and digital goods are fundamentally different. Physical goods

  • Take up space

  • Degrade over time

  • Must be physically shipped

All of those factors mean that there is a limit to the efficiency with how you can re-sell a used game. The degrading means I can no longer take full price, the taking up of space means I cannot own an infinite number of them without paying for storage somehow, and the cost of logistics means that exchanging the game will always cost me - whether somebody travel to me to pick it up, or I send it via mail. This is likely also the reason the games market was OK despite re-sale of physical copies. Lots of people just want the new thing, even if it costs a little more.

For digital goods, none of this applies! If allowed, we could exchange goods

  • At no storage cost at all

  • With no degradation at all

  • By transferring them across the globe in microseconds.

In addition, most games, like movies, and much more even than music, are consumption goods. When you are done with the game, you are most likely done with the game for good. It’s a bit like cake. Except you should never ever re-sell a cake after you have eaten it - please!

What Does This Mean?

Who knows? Such matters are hard to predict because it all comes down how the new legal requirements of “re-selling" are enforced and what remedies are implemented. So, let us consider one possible scenario, in which Steam and co must offer a services, where for example Steam lets you generate a game-key, in exchange for no longer being able to play said game - you now own the key, which you can re-sell, and somebody else can activate to own the game and play it.

What stops people then from setting up a P2P licence exchange? Just like Napster did for music back in the day, but without shitty ISDN connections, and you only had to transfer a short code - and it was all legal! “Offering Dark Souls 2, looking for Assassin’s Creed 3”

Within the framework of such a system, users could exchange games, with nobody paying each other, because why would they? The used goods are indistinguishable from the new thing, and if players are not using the old, used games any more… Lets all trade!

And just like this, we could see publishers and developers cut out of a big chunk of revenue. If we are being pessimistic (yeah yeah, I might be), this chunk could even be so large that developers and publishers, as well as the platforms themselves, will have to rethink how they monetise. Because if selling games does not yield enough revenue anymore, what will?

  • Renting - it’s like buying the thing, for less, and not being allowed to keep it.

  • Free-2-Play - most PC gamers were happy that F2P was not as dominant on their market as it is on mobile.

  • Subscriptions - like Spotify, or Apple Arcade. Could be an option, but is disadvantageous for smaller developers who did not get into one of those, and we do not yet know how much revenue this can yield.

Thinking as a consumer, I don’t like any of these options over just simply owning the game. Renting may turn me off from enjoying games for an extended period because it gets more expensive over time. I have unfortunately not encountered too many F2P games that I enjoyed, because mostly I feel like I’m doing chores for the publisher rather than playing a game. And for subscriptions, I really don’t know. This could work, in theory, and will come down to - again - how its implemented, how developers get paid, etc.

Of course, one can argue that a lot of people will know about the problems and buy the game still, to support developers. But while that’s nice, most people won’t.

So let us hope that this is not at all what is going to happen, that I am totally off with my predictions, and what was I thinking LOL!?!? Or that the ruling will be changed, or successfully challenged.

Let me know what you think this means below in the comments!