Q: How do you see downloadable content evolving over the next few years?As I've said before, Epic doesn't make money on a used sale because they've already made money on that sale, the first sale. Ownership has transferred.
Michael Capps: I'm not sure how big it is here [in Europe], but the secondary market is a huge issue in the United States. Our primary retailer makes the majority of its money off of secondary sales, and so you're starting to see games taking proactive steps toward that by... if you buy the retail version you get the unlock code.
I've talked to some developers who are saying "If you want to fight the final boss you go online and pay USD 20, but if you bought the retail version you got it for free". We don't make any money when someone rents it, and we don't make any money when someone buys it used -- way more than twice as many people played Gears than bought it...
But you don't see libraries (where you can get content for free! Imagine that!) tanking the book publishing industry. The film industry is making money hand over fist despite the existence of Blockbuster and Netflix. Why does the gaming industry believe that it's in a unique situation?
Ah, here's why:
Q: Do you see an enemy in this equation? Is it the retailer, or the purchaser of second-hand games?Piracy, the ultimate scapegoat. Yeah, people who would never have bought your product in the first place are costing you sales. All those lost sales from people who wouldn't ever buy games.
Michael Capps: I'd hate to say my players are my enemies - that doesn't make any sense! But we certainly have a rule at Epic that we don't buy any used games - sure as hell you're not going to be recognised as an Epic artist going in and buying used videogames - because this is how we make our money and how all our friends in the industry make money.
I think a little bit of it is education so people realise that the reason there's no PC market right now is piracy. I mean, Crytek just put out some numbers saying the ratio was 20:1 on Crysis, for pirated to non-pirated use. So guess what? That's why there's no Gears of War 2 on PC, because there's no market, because copying killed it - and that's gruesome to a company like ours that's been in the PC market for so long.
We're trying to fix it, there's a new alliance of companies trying to make PC gaming work again. But if people are playing games without buying them, then the games aren't going to keep coming.
The PC gaming market isn't in decline because of piracy, in fact, I'm unaware of any hard evidence that shows that the PC gaming market is in decline at all. Games still sell millions of copies, copy-protection or not. What will kill the PC gaming industry is shit like the president of Epic Games floating around the idea that developers should charge used game buyers extra money just to be able to finish their games. This kind of behavior is blatantly anti-consumer, and people will react negatively to that kind of treatment by not purchasing any of your games.
What we're seeing from Epic is a content publisher's dream-- to have ultimate control over how copies of their distributed content are used. Before digital content, these publishers had little they could do regarding the secondhand market. But the gaming industry is inherently digital. It's software; code. They have the ability to easily include schemes like this because of the nature of their medium. I'm not surprised that Epic Games (and lets not forget EA) is attacking the secondhand market for games; however, that doesn't make their intentions any less of an assault on people's expectations about what they can do with their purchased content.
[UPDATE]: Soren Johnson, game designer and programmer, offers several insightful observations on this topic.
Tom Chick, games journalist, mused on this topic as well:
Without any segue or distinction, Capps conflates renting games with pirating them. He goes straight from "buying used games" to "PC games are dead because of piracy." Amazing. [emphasis in original]