Joystiq interview: Bungie's Marty O'Donnell on the 'digital content crisis'
by Jason Dobson 
{ Oct 16th 2008 at 5:00PM }
Marty O'Donnell caused something of an uproar recently following controversial comments aimed at used video game sales. In particular, it was the Bungie audio director's apparent assertion that content creators and publishers "shouldn't stop receiving income from further sales" that served as the biggest sticking point; after all, why should the game industry be given special treatment beyond the initial point of sale?
Not long ago we had the opportunity to have a candid conersation with O'Donnell on this topic, during which he clarified his stance, and stated that while he doesn't feel games represent a "special category," he believes that "digital content is creating a crisis for the economic model of new and existing mediums."
"Digital copies are essentially identical to the original, and they don't 'wear out' with use," he told us, a burden that he feels is not shouldered by the gaming industry alone.
"The music and movie [industries are] not happy about used sales either," he explained. "It makes no sense to me to prevent consumers from selling or trading anything they 'own,' however we do have to at least look at the impact of the technology on how creators get compensated for providing entertainment."
"We do have to at least look at the impact of the technology on how creators get compensated for providing entertainment." |
However, used game sales have not prevented Bungie from cranking out a pair of sequels to Halo, not to mention establishing one of modern gaming's most well known brands, and O'Donnell was quick to point out that he isn't complaining about Halo's place in the pre-owned market. "I would maintain that Bungie has been pretty smart about making a product that has legs and encourages the consumer to hold onto the physical medium for a long time."
"If I was part of a team that had created a smaller, less commercially successful title," he added, "we would probably be hurt by used sales and thus might not create again." Of course, herein lies the problem faced by the game industry in what was quickly begining to look to us like its own personal Kobayashi Maru. But is it a no-win scenerio?
"Creators, publishers, and distributors should get together to come up with some smart and equitable solutions," theorized O'Donnell. "Something that consumers will be happy about, but still rewards the creator for making something that people enjoy." Simple, right? Doubtful, though this hasn't stopped the audio guru from speaking out.
"I have a problem with the "poor" brick and mortar folks who keep making a new mark-up on the same thing over and over and don't share. I have a problem with greedy publishers and for that matter greedy creators. I also have a problem with consumers who believe that because they "bought" something they have the right to copy it and distribute it themselves."
And while O'Donnell isn't shy about speaking his mind, that doesn't mean he has all the answers either. He spoke of many possible solutions to the problems he sees during our conversation, from subscriptions to defying GameStop's COO Dan DeMatteo's Magic 8-Ball and going all-digital. He even joked, suggesting "plastic that slowly deteriorates over time."
"I don't think that I have a solution that will stamp out greed or ignorance," he offered as we wrapped up our dialog.
"Like I said before, it's going to take some creative thinking by the creators and distributors to come up with equitable solutions. I'm certain that part of it will involve new habits, new models, and new technology. In the long run I believe that the cost to the consumer will go down and the share for the creator will go up. But I'm an idealist."
Reader Comments (Page 1 of 2)
Vol @ Oct 16th 2008 5:08PM
The answer to the musician's problem is that the musician also gets paid for live shows and radio play.
The answer to the publishers problem (which there isn't a problem) is the creation of legitimate DLC that people WANT. And also sequals, new consoles, etc.
Titanium_Orchid @ Oct 16th 2008 5:17PM
totally agree. One of the biggest factors in my video game purchases is how long I expect the "legs" on a game to be.
Mike @ Oct 16th 2008 5:26PM
Umm.... all but the largest acts break even on tours, and radio play doesn't net the band anything - they live and die on album sales / digital downloads. Sorry to wander off topic, but I used to work in music - and that industry does not take care of the talent at all. Most of the money stays with the record label. Not that the band makes NOTHING - but not what they should. A member of a mid sized band may only be bring home around $40k - $60k per year. You could make that managing a Target.
Vidikron @ Oct 16th 2008 5:49PM
You make it sound like managing a Target is like being a janitor or something.
Mike @ Oct 16th 2008 5:59PM
Have you been in retail management? You spend the bulk of time worrying about someone else's messes and problems, be it angry customers, disgruntled employees, or pushy suits from corporate - so yea, it is kinda like being a janitor - except the janitor deals with actual messes - not a-holes.
Mostly though, it's a lot more mundane than being a rock star - that's why I made the comparison.
Geist @ Oct 17th 2008 1:59AM
Analogies mean nothing if you're copying the data before giving re-selling it. That much is illegal, technically. Yeah, it's retarded for an artist to sell one copy then have 100 people enjoy it. It also shouldn't happen.
When a person sells an Xbox game, he or she can no longer enjoy it. It's the same way with selling any used object. The difference with digital content is that some people break the law and copy the content before reselling it.
Note: This is not an argument against piracy. The two are sooorta the same, but not quite.
Tim @ Oct 17th 2008 6:16PM
Mike, to follow up on your slightly off-topic comment about musicians...
As a member of an internationally touring band for several years, your statements are actually opposite of the truth. Record sales are what the labels CAN recoup, so the bands see very little of this. Publishing royalties (ie, radio play and licensing) is where MOST of the money for bands comes from. Touring can go either way depending on the size of the band/production costs. There's a fine line between taking in nothing and making serious money on tour.
But it's a ridiculous notion that it's ok for artists not to get paid for album sales b/c they have other revenue streams to fall back on. It's merely the way we can survive right now. Musicians should be paid for their work spending months making a record, just as they should get paid for the months they spend on tour.
Unfortunately piracy and the incredibly inept ability for the industry to adapt to the new digital model has dealt a very solid blow to album revenue for the labels (and thus the artists).
Jason Harris @ Oct 20th 2008 10:57AM
@Mike : You're absolutely wrong on how bands make money and you've got it backwards. Hardly any bands ever see a dime off of records sales, and most of them come out of it OWING the record label money. Touring and merchandise sales are the only way they make any money at all.
Now with learnin': http://archive.salon.com/tech/feature/2000/06/14/love/print.html
Vol @ Oct 16th 2008 5:09PM
"I don't think that I have a solution that will stamp out greed or ignorance,"
That is your greed, pal, that needs to be stamped out.
Darkhand @ Oct 16th 2008 5:10PM
Did you write this right Jason?
"publishers "shouldn't stop receiving income from further sales" that served as the biggest sticking point; after all, why should the game industry be given special treatment beyond the initial point of sale?"
It's a mixed sentence. Since game companies would be the ONLY industry to have this sort of treatment.
Travis @ Oct 16th 2008 5:11PM
pirating games is so PS1...
get a job and buy games, losers
jimmygotsmack @ Oct 16th 2008 5:23PM
"ARGH"
The actual consoles do a good well against pirating. Not great, since there still tons of way to do it, but its difficult enough to keep most consumers from attempting to try it. However, consoles like the psp and ds are far more simple to "hack" that both companies have attempted several lawsuits against pirates.
The3rdNuisance @ Oct 16th 2008 5:31PM
Way to read the article. The majority is about used game sales. So, games that people DO pay for, but the devs and publishers get squat.
Also, since you say pirating games is so PS1, I assume you're old enough to reasonably obtain a job, unlike the 11-14 year olds that do most of the pirating because they can't.
Travis @ Oct 16th 2008 6:45PM
"I have a problem with the "poor" brick and mortar folks who keep making a new mark-up on the same thing over and over and don't share. I have a problem with greedy publishers and for that matter greedy creators. I also have a problem with consumers who believe that because they "bought" something they have the right to copy it and distribute it themselves."
i was commenting on that bit, asshat
The3rdNuisance @ Oct 16th 2008 7:30PM
Ah, okay then. Couldn't tell what you were refering to because its well within the realm of possibility that someone read the title, and decided to make a comment at pirates.
Eitherway, thanks for justifying your comment, restores a bit of hope in humanity.
jimmygotsmack @ Oct 16th 2008 7:58PM
and I went on from what he said about pirates, but I don't think you where talking to me anyway.
Mr.Ironic @ Oct 16th 2008 9:07PM
Wasn't it hacked PS2s that actually sold the PS2?
A Pissed-off English Gamer @ Oct 17th 2008 10:08AM
Once a game has been distributed to retailers that's all of the effort out of the publisher and the devs. When a person goes into a game shop with a game they'd like to sell on, where does the publisher or the dev come in? Do they touch-up the disc? No, they do nothing; the only people who put in any effort here are the retailers and consumers. There is nothing but greed in saying devs and publishers deserve more money for those sales, nothing but greed.
DangerMouse @ Oct 16th 2008 5:14PM
"Something that consumers will be happy about, but still rewards the creator for making something that people enjoy."
Dropping new game prices back down to $50 would be a good start.
VicViper09 @ Oct 16th 2008 7:05PM
Yeah maybe used games wouldn't be so tempting if they weren't HALF THE PRICE as some new games. If they lowered to price of new games to $50 or $40 then maybe I would pay 10 extra bucks for a shiny box or non-scuffed disc. But at $30 bucks for a good game, slightly used, its the same content. Why not? In GayStops case, they've already opened the "new' game, and handled the disc, I mean wtf, I thought new meant BRAND NEW NEVER BEEN TOUCHED!!.
EdZ @ Oct 16th 2008 5:19PM
He seems to be mixing used/second-hand sales, piracy, and copyright infringement all into one big lump, mad making a complete hash out of it.
bobartig @ Oct 16th 2008 8:15PM
He is mainly talking about second hand game sales, which are 1) HIGHLY Profitable, and 2) Cut deeply into 1st party profits.
GameStop has grown and grown, consolidated, expanded and acquired based on its shrewd strategy of buying up used games and reselling them.
The only solution is to compete with GameStop and GameTap for a piece of their pies. Eat their pies, or shrink their slices.
DLC is one way of doing this by making the player take a further investment in the game that cannot easily be transferred.
One-Time bonus codes are another way by effectively neutering any future purchasers of the product.
Digital Distribution also works by increasing the barrier to reselling or renting.
Continual added value is another strategy, by offering new game modes, or a compelling online experience that will deter people from selling the discs, thus staving off the used market.
More radical strategies could include publisher buy-back program, whereby (for instance) EA will buy back your copy of Madden XX for $30, then resell it themselves. Its a huge hassle and would be an entirely different business model, but it would eat the hell out of GameStop's pie.
I do not think he is conflating piracy with the second hand market in the way that you think. He is using the music store as an extreme example (the same CD being sold a million times) to demonstrate legitimate reselling that hurts the media producers directly.
Mr.Ironic @ Oct 16th 2008 10:47PM
@ bobartig
"More radical strategies could include publisher buy-back program, whereby (for instance) EA will buy back your copy of Madden XX for $30, then resell it themselves."
Or, like, EA could just BUY gamesstop.
FlashbackX01 @ Oct 16th 2008 5:26PM
So, according to Marty's plan. If someone sells a used car part of the profits need to go to GM, Toyota or whoever manufactured the vehicle?
Rususeruru @ Oct 16th 2008 5:33PM
Why do you think there are "certified pre-owned" programs?
Rususeruru @ Oct 16th 2008 5:28PM
So start proactively offering incentive to the big used game sellers like an early day to start selling or a lower price say $45 instead of $60 and ask in return that for 6 months or so they pay you 3-5 dollars for each copy they resell of the game for oh 3-6 months or circumvent the process by moving further away from physical mediums either way don't expect the consumer to agree to pay you residual. Just offer something that will help the used game seller's business model out and don't expect them to want to help your business model.
Doug @ Oct 16th 2008 5:33PM
Hey Marty, what's your address... we'll send you a check!
Brian @ Oct 17th 2008 2:53PM
Heres a though @ the turn of the next console cycle. Make all games sell through download and drop there purchase price from the ridiculous 60 dollar & up to say 39.00 and 49.00 dollars. Thats the one and only thing Sony has done right with the PS3 the download and price point on Warhawk, Socom & Wipeout. That ends used game sells right there pissed of game creators unite & then all grow silent at once. :)
TomCo @ Oct 16th 2008 5:39PM
The top picture is an XtraVision, how odd.
jimmygotsmack @ Oct 16th 2008 5:40PM
Buying pre-owned games is pretty bad for them, but what about renting from blockbuster. He doesn't even mention that. I think that would hurt about the same, if not more. Then again getting X amount of sales because blockbuster just have to have your game on their shelves is pretty nice too, but after a few rentals, it adds up.
Rususeruru @ Oct 16th 2008 6:55PM
I know blockbuster pays royalties to the movie studios, I'm sure something similar has been worked out with game studios.
Knight Marquise @ Oct 16th 2008 5:40PM
"Digital copies are essentially identical to the original, and they don't 'wear out' with use," he told us, a burden that he feels is not shouldered by the gaming industry alone."
Marty is a greedy bastard. My truck also lasts one helluva lot longer then any "legs" on a video game, and I don't have to pay Chryster squat if I choose to resell =my= investment.
I wonder how the hell books and libraries have made it so long without Marty and his amazing business acumen. He's simply greedy.
343 Guilty Fart @ Oct 16th 2008 5:47PM
Wait, your truck analogy makes no sense. You can't make a near perfect duplicate of your truck like you can with music.
And it's hard to say that he's being greedy. If you were in a business where your hard earned work could easily be copied and distributed by others, you'd be pissed too when you see your work up on fileshare sites.
Vidikron @ Oct 16th 2008 5:51PM
"Digital copies are essentially identical to the original, and they don't 'wear out' with use," he told us, a burden that he feels is not shouldered by the gaming industry alone."
Umm... digital copies on physical media do indeed wear out. I'm sure most people that rent or buy used games have experienced locks and/or DDEs due to the media being scratched or whatnot.
Also, this guy's examples are pretty bad. For example, he talks about a musician's CD being resold 100 times. What he fails to mention is that technically the 99 previous owners can no longer enjoy the music (unless the copied, which makes them pirates). That's what happens when you sell something. What any content creator should strive for is to make it good enough that people don't want to sell it.
flanker22 @ Oct 16th 2008 5:47PM
I don't have a problem with ppl reselling a their games after all it is yours. I do have a problem with retailers like gamestop reselling games making a larger profit than the developers themselves. Gamestop and other used game retailers should have to pay tribute to the original developers. However this is kind of a difficult subject there is no way to incorperate this sort of thing. In the end retailers wins and the developers lose and consumers lose. Consumers lose bc the high prices of new games are needed to offset used game sales.
VicViper09 @ Oct 16th 2008 7:19PM
Yea, i hear ya. Its not like when people resell there games at GayStop there making a profit, unless its a stolen game. U can't even sell back a good game and get a used game of the same caliber. U sell back a brand new opened GTAIV for $35, but u can't get a game of the same caliber. And then they'd turn it right around and sell is for $49.99 (just a guess). What sense does that make.
SKI @ Oct 17th 2008 8:33AM
It makes complete sense from a business standpoint. A lot of the games that they by from you for $35 won't sell for $50 or $55 and so they hold them for years. Some of those games won't be sold until they are down to $10. They have been playing with the amount they pay and the amount they sell for for years. This is the best way for them to make any money.
John @ Oct 17th 2008 11:17AM
Gamestop should be free to run their business how they want.
I hate the place, but if people didn't buy shit there they'd go out of business.
And quit calling it Gaystop, you sound like an asshole and will get banned for posting stuff like that.
Nick Bell @ Oct 16th 2008 5:55PM
His music example is complete bullcrap. Music CDs are bought and sold used just like video games. The music industry, as far as I know, is not up in arms about it. Neither is the movie industry with used DVDs. Nor any other industry were things are bought and sold used. The computer game companies need to quite complaining and start selling better/cheaper games, so we don't wait for used copies.
aristokrat @ Oct 16th 2008 8:11PM
I would say that resale is a much bigger part of the video game retail business than any other digital medium, due to the much higher cost. When a CD only costs $10-15 new, you don't stand to save a lot of money on a used copy, nor do you stand to make a lot of money selling it back either. Same with DVD's to a lesser extent. But games have a high enough price point that the market for used games is much more viable (see GameStop's large percentage of revenues that rely on used games) and many games (even great ones like BioShock) have limited replayability. In contrast to the vaporous piracy argument, used games are indeed lost sales.
Nick Bell @ Oct 16th 2008 8:44PM
If high prices are the reasons games are resold, the solution is to lower prices. If games came out for $40 instead of $60, that would go a long way toward decreasing used sale. Personally there are very few games that I think are worth full price. I generally wait for lower prices. If a used copy reaches my price point first, I'll buy that. Video game company need to change with not try to force the markett their way.
aristokrat @ Oct 17th 2008 1:12PM
I agree completely, which is why I use GameFly. Unfortunately, the price point is something of spiraling issue. As game dev costs rise, so must revenues, so they increase price. Yet people are less willing to buy at that price, meaning decreased revenue, so then they raise prices again, and so on. It seems like they are probably past the peak of the Laffer Curve, but I'm sure most of the people setting game prices have never heard of that.
Negativecool @ Oct 16th 2008 5:57PM
I think his idea is the single most ridiculous plan heard since Krazy Ken finally stepped down.
I can't imagine what people would think if the auto industry decided to continually profit off of used car sales.
I can't imagine how much profit this pinhead is talking about considering I KNOW i've purchased games that have seen six or seven different owners.
In short, fuck HIS ignorant greed.
BigD145 @ Oct 16th 2008 5:58PM
I have this coin from the Byzantine Empire that I want to sell. Is there someone from that late empire that I can give a kickback to? What about this Mona Lisa? Who do I pay the kickback to?
In all seriousness, this guy is basically wanting consumers to ask, "Who do I have to blow to get raped around here?"
Muu @ Oct 16th 2008 6:04PM
It's funny that this issue is brought up, as it's the EXACT same compromise that was attempted to be made in Japan by retailers before developers sued, and subsequently lost, a court battle to prevent used game sales in Japan. The power balance is different over there between publishers and retailers, yes, but it still paved the path to the continuation of a vast system where most of the profits are made selling used games.
Chris Stockman @ Oct 16th 2008 6:15PM
Why does Marty's solution piss you (THE CONSUMER) off so much?
What he says makes a LOT of sense when you actually sit back and think about it.
Let's look at the movie industry for a bit. When a movie comes out the studios (aka the publishers) makes a cut off of every ticket sold. When it goes to DVD they make a cut off every disc sold. When it gets rented out they make a cut of the profits from the video store. When you buy a movie off iTunes they get a cut.
What we're asking for is simple and fair. When a used copy gets sold we (as in the industry) want a cut off the profits (which, right now, 100% to the retail store). Gamestop, Gamecrazy, etc are making a KILLING off used games. Thats why they constantly hound you guys when you just WALK in.
We're not saying BAN used game sales. We're saying WE should get a cut off a sale. There is no argument here. This is fair.
bVork @ Oct 16th 2008 7:16PM
Explain to me why publishers should get a cut of used book sales or library fines.
Chris Stockman @ Oct 16th 2008 7:22PM
Library fines? No. The Library is a free service and should be exempt. If Libraries charged to "rent" out their books than yea book publishers should absolutely receive a cut.
As for used book sales? Ideally, retail stores should give book publishers a kickback from used book sales. Fair is fair, right? Who says they don't already?
VicViper09 @ Oct 16th 2008 7:34PM
What ur saying is true, but does play into the greed that everyone is talking about. You can't pay tickets to a video game, but they make a cut of brand new games sold, they make a cut of downloads downloaded, they might even make a cut off of rentals, it depends on where it is. But movie companies dont make a profit on used dvds sold, and thats why video companies dont either. Remember that used game can be sold between individuals, such as online selling, do the companies want a cut of that to? Here a question for ya, buddy. How come the US government can tax other people for however much money they make selling stuff online.
bVork @ Oct 16th 2008 7:42PM
Used book stores do not give kickbacks to publishers. The first-sale doctrine protects this sort of resale.
But getting back to the whole game issue, the problem with kickbacks or anything else is that in order for a game to be sold used, somebody had to have made the choice to sell it or trade it. In short, somebody decided that your content was not worth owning. That's the problem with O'Donnell's argument about a store re-selling a CD to 100 people. That means 99 people decided that the CD was not worth owning.
The best way to rectify this is to not whine about how publishers deserve a cut of used game sales, but create games that are worth owning. Whether it's through a good multiplayer component, a ton of optional activities in the game, or a story or gameplay idea so compelling that it's worth replaying, the onus is on the developers to ensure that people do not discard their game.