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Silicon Knights boss expects used games to “cannibalize” industry

Wednesday, 28th March 2012 22:26 GMT By Brenna Hillier

Dennis Dyack has said the used games market is eating away at the games industry by killing off sustained revenue from new sales.

Speaking to GamesIndustry, Dyack said games used to have a long “tail” of sales; he mentioned Warcraft as an example of a game which sold for steadily for a decade.

“Now there is no tail. Literally, you will get most of your sales within three months of launch,” he said, describing it as a “really unhealthy extreme” which relies on generating fast sales.

“And then you have to do anything else to get money,” he added.

Dyack concluded that an emphasis on short term sales had driven game prices up, which he believes will eventually prove problematic, as the big-or-bust approach is unsustainable.

“If used games continue the way that they are, it’s going to cannibalize, there’s not going to be an industry. People won’t make those kinds of games,” he said.

“On the top side of the triple-A, highly-funded titles, you have $100 million games, and looking towards next generation people once again are saying we’re going to have development costs that are two or three times of what they were last generation. I cannot see how that economy is going to continue,” he added, mentioning Call of Duty’s enormous budget as a “one-off” that other companies can’t compete with.

“It comes back to that tail I talked about, recurring revenue. We need a system with recurring revenue and that’s why I think digital distribution is going to play a big role in things to come. That’s why I am still very big on cloud computing.”

Dyack has been quite chatty of late; Silicon Knights is soon to revive its “most requested” property, and an ongoing legal battle with Epic is about to be blown wide open. Silicon Knights is best know for its work on the Legacy of Kain series, prominent flop Too Human, and cult favourite Eternal Darkness: Sanity’s Requiem.

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24 Comments

  1. absolutezero

    Dennislol

    Look no one listened to this man when his company was making good games, now that they produce utter tripe the people paying attention has just gone into minus figures.

    #1 3 years ago
  2. Old MacDonald

    Yes, we heard it the first time he said it.

    #2 3 years ago
  3. K-V-C

    i aint up to things well when it comes to games but if you buy a second hand game who takes your money the retailer like all of it or does the developer not get a lil bit aswell !!!! if the next gen consoles ban second hand games well there gonna make a big mistake most of sales are second hand arent they ???

    #3 3 years ago
  4. absolutezero

    No money at all goes to the developers or the publishers.

    No most sales are not second hand, a larger percentage is though.

    #4 3 years ago
  5. conk donk

    With new games it’s the other way round though. I don’t know how it is elsewhere in the world but with low Supermarket and online prices UK retailers are forced to sell new games at near cost or below to remain competitive. Where do you think the money to order new stock comes from?

    #5 3 years ago
  6. absolutezero

    None of them actually sell new games at competitive prices though.

    Especially not Game.

    #6 3 years ago
  7. OlderGamer

    “I don’t know how it is elsewhere in the world but with low Supermarket and online prices UK retailers are forced to sell new games at near cost or below to remain competitive.”

    In the states food is sold in supermarkets. Games are not. Most game sales come from Walmart, Gamestop, Target, Toy r Us, Best Buy and other such retailers. And the prices are manufacters recomended retail prices. Most new games sell for the same price(give or take a bit) where ever you go. Used prices very greatly.

    As for online, in the states: Ebay and Amazon type places are best bet, but most of those sales are used games. Of course your big box stores like walmart and gamestop also have online websites.

    Like it or not Mr. Dyack is right.

    When the SNES was out I could go to my local game store and buy a new copy of a game for 10 or 20usd. New releases where 40-50usd. But older games(still brand new in factory sealed shrink) could be found. That would mean revenue for the publishers. Now those games have been replaced with used copies. That means revenue for Gamestop. And just as bad is that often time(unless they have zillions of copies) the older used games are higher priced then those snes games used to be. the reason i sthat Gamestop can set the price. New games cost 60usd, therefore Gamestop wants to sell you used ones for 55usd. Old used ones vary based on supply but can easily run 35-45usd. Lots are less too, again depend on how many they have.

    There are no good guys in the games industry, no white knights in shinning armor. But I do believe that the people that develop and publish the games should be the ones making the most from their sale. Game store are a middle man bizz at most.

    Publishers will go all digital if that is what it takes to wrestle back profits from game sales. We gamers still lose. Because unlike those snes games, the price on older digital games isn’t as likly to come down. Yes, we know Steam knocks it out of the park. But I have a hard time believing EA, Acti, or MS will lossen up the price too awful much on aging digital games(mostly likly case will be when gamex 3 launches, they will reduce the price 20% on gamex 1 and gamex 2 leading up to that launch to try and lure new buyers for gamex 3 type of things).

    I spread the blame around a bit. But mostly it falls on game stores that peddle second hand games. Really good news that games will cost even more money to make next gen! How pretty do you want it? How much do you wanna pay? I like Nintendos strategy of keeping hardware and game cost affordable.

    #7 3 years ago
  8. JB

    He mention the primary problem himself, the costs of developing new games is somewhere between 40 – 100 million$

    lol, how many games do they need to sell – just to break even financially.

    http://en.wikipedia.org/wiki/List_of_best-selling_video_games

    Perhaps the suits should look at this list and get a reality check or two, if he seriously expects most games to have a 10 year profit tail :P

    #8 3 years ago
  9. LOLshock94

    what aload of fucking shit, devs like him that complain about this are greedy cunts used games have been going since pong.

    #9 3 years ago
  10. OlderGamer

    How can anyone argue in favor of used games?

    Talk about gredy. Are you so greedy that you have to have 5-15% off of the purchase of a game? I don’t understand. Look the base line fact here is that every penny spent on used games sale is money that the people who invested in making and publishing the game won’t get.

    It would be like you going to work, doing your job, and someone else gets paid for the work you have done. What part of that makes sense?

    I don’t blame the industry one bit for trying to keep second hand sales from killing companies. Look at the new Sege headlines. How many copies of Vanquish, Bayonata, or other Sega published games were sold second hand? Cause that is lost revenue. Now people at Sega are losing their jobs, and the company is canciling projects and scaling back. Are used games fully to blame for Segas woes? No, I doubt it. But they can’t be helping either.

    You can’t, with any sense of moral fiber, come out in favor of used games. They are a giant black hole sitting in the center of the video game sales universe. And for what? So you or I can spend 55usd for a used game instead of 60usd for a new one?

    Imo, cause I don’t like to bitch w/o offering an idea on how to fix the problem, laws should be in place governing the sale of used games. Where as the publisher retains a % of each sale. That % should be in line with the % from new game sales. So if you local GameShop( https://www.youtube.com/watch?v=onEfmC6HRF4 ) floods their shelfs with preowned, the folks that invested in the game to begin with still get paid. I doubt anything like that will ever happen, esp here in the States. But it would end this subject overnight.

    #10 3 years ago
  11. mongbatstar

    @10 Actually, it’s more like expecting to get paid twice for your work. I’ve been paid on the first sale – If after a play through the customer wishes to sell their title and use that profit to purchase another game of mine then that is their prerogative.

    The assumption here is the same one make about piracy – Used sale = lost sale. That’s an over simplification.

    Besides, why has this only recently become an issue? As mentioned above, used games have been around for as long as the games themselves.

    #11 3 years ago
  12. viralshag

    Half the time I don’t think most games will ever sell enough to break even anyway, considering how much it costs to make, sell and distribute.

    I honestly don’t believe the pre-owned sales market is as much of a company killer as we’re led to believe.

    #12 3 years ago
  13. OlderGamer

    “If after a play through the customer wishes to sell their title and use that profit to purchase another game of mine then that is their prerogative.”

    This would be ok if, once the game was played and then sold the copy was no longer in circulation. But, thats not the case. And each and every used game sold is a lost sale, for the publishers.

    Its not the same as piracy, because you can not assume the pirate would pay for the game he/she is downloading for free. But with second hand games, the consumer is indeed willing to pay for the game. We aren’t ussualy talking about a new price of say 60usd and a used price of say 20usd. If the new game price is 60usd, the used copy of the same game is likly going to retail for 55usd.

    I used to manage a game store, more years back then I would like to admit. I can tell you that we often sold and resold the same copy of a game several times. I have long moved from that state and having made friends with a local gamestop store manager, I can also tell you the samething happens today.

    Trust me, it is a major problem.

    Thats why the big pubs push preorders so hard. They know they have a two month window to make money. It is also why so many are talking about cloud/streaming and digital only. It is why we have online passes. facts are there. If second hand games didn’t have such an impact, why would there be such a stink over them?

    #13 3 years ago
  14. Deacon

    I have bought many many games second hand for less than £10. I would definitely NOT have bought these games new or at full RRP. I just happen to be an opportunist.

    Therefore, IMO, it’s not fair to say that a used game sale is always a sale lost for the dev/pub.

    I also love to have a nice collection of games sitting on my shelves. As such I wouldn’t dream of ‘trading in’ any of my games (especially for the measly sums offered).

    This whole business of someone buying a £49.99 game day 1 and then trading it in a week later to the same retailer and receive 90% of that money back (or trading against another new release for £5 or something) seems to me to contribute a lot toward today’s whitewash of used games. Retail stores such as GAME were all over this kind of ‘incentive’, and that’s part of the reason I’m glad they’re gone.

    SOLUTION: Just give the god damn developers (and I suppose the publishers too) their cut – however small – and however many times is necessary.

    I can’t wait for things to go digital-only so fucktards like Dyack can stop using this shit as an excuse that their game didn’t sell enough.

    #14 3 years ago
  15. viralshag

    @13, The misconception I think people have is that EVERY pre-owned or traded game is then sold. Which is why I don’t think it’s as big a problem as they make out.

    A lot of the time I honestly feel like the pre-owned stink is created to push additional products such as online passes and such.

    If they start to regulate pre-owned sales then they will have to regulate private person to person sales as well as game lending to friends.

    #15 3 years ago
  16. absolutezero

    Game lending is the innocent bystander in all of this.

    Used games cause more damage than piracy.

    #16 3 years ago
  17. viralshag

    @16, It’s not exactly a bystander. It’s pretty much the same thing: a game changing hands without the publisher or developer getting any money from the new person playing it.

    The only difference is retailers make money from other people’s used games.

    #17 3 years ago
  18. Phoenixblight

    @15

    Gamestop makes 1 BILLION dollars from the used game market and that is 1 billion that goes straight to their pocket and the publisher and dev doesn’t see a red cent. Thats why publishers and devs do not like it.

    #18 3 years ago
  19. OlderGamer

    Huge difference viral.

    Borrowing doesn’t carry the intent to spend money.

    Clearly when a gamer buys a used game they intended to pay for the product. And instead of the devs/pubs getting paid for their product, in steps a game store to intercept that transaction and keep the money for themselves. I have seen stores refuse to buy new product, instead opting to fill the need for future sales with circulating used copies.

    Hell I have seen stores taking pre-orders on preowned copies(gamestop.com).

    Thats lost sales, no way to justify anything else.

    Renting is different because the store must buy special liscenced copies. Same is true with something like Netflix, when they stream. There are limited and timed liscencing involved.

    I believe the industry would be happy to pick its battles. Ie: no need to worry about borrowing between friends. It is a small slice next to giant international retailers making billions collectivly on used games sales. Trust me, letting my brother borrow a copy of my game is no biggie. Me buying 90% of my games used is a major problem.

    #19 3 years ago
  20. viralshag

    So if there wasn’t a used game market, do you honestly think the devs and pubs would be splitting that 1 billion between them? It’s an unrealistic expectation.

    If a game sold a million copies, I just find it hard to believe that there’s an additional half a million sales out there just waiting for a cheaper pre-owned price.

    If I’m wrong I’m wrong, and I will accept that but up to this point I have not seen any real hard evidence that it’s pre-owned sales and not just poor sales vs costs that are causing problems for developers and publishers.

    If someone can point me to the facts, I will happily hold up my hands and say I was wrong.

    #20 3 years ago
  21. Phoenixblight

    @20

    Look at Deadspace it had sold 1.4 million units but there were 3 million+ people with achievements for the game that is a lot of used game, rent, borrowed. This is what the publishers are trying to mitigate.

    http://www.escapistmagazine.com/news/view/91487-EA-Happy-With-Dead-Space-Sales

    #21 3 years ago
  22. viralshag

    @21, Ok yeah, and then the flip side to that would be the fact that Dead Space 2 sales nearly doubled the first. And some of that could be contributed to people playing used copies of the first game, liking it, and then going out and buying the second game new.

    And I can’t really take an article titled “EA “Happy” With Dead Space Sales” as proof that it’s a problem…

    #22 3 years ago
  23. Phoenixblight

    @22

    Really? Well it doesn’t matter what you think the publishers are pushing Online pass, Day1 DLC and eventually will go full digital then places like Gamestop won’t matter.

    #23 3 years ago
  24. viralshag

    Well at least you found some good proof that online passes and day one DLC is necessary to curb the real “problem”…

    #24 3 years ago

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