With ‘blockbuster’ video games such as Grand Theft Auto IV having a production budget of $100 Million back in 2008, and the average game now costing $20 – 30 Million to make, publishers have been scrambling to find ways to keep profits rolling in. They were able to raise game prices for the PS3 and XBOX360 to $60 from $50, but that only somewhat mitigates the issue. The latest idea – EA Games “Project 10 Dollars”. Read on for more details.

Aside from the fact that production costs have been rising exponentially over the years, there is fierce competition between consoles – and there are more active gaming platforms than ever before. Also, piracy is always an issue, but has been dealt with to an extent by the different platforms. The last bastion of sales-loss for publishers? Used game sales.

Publishers HATE GameStop’s used game program, and are not too fond of game trading sites such as Goozex. Why? The same reason publishers railed against Amazon featuring used copies of paper books alongside new copies – publishers get a cut of new sales, but not second-hand sales.

And to be clear, GameStop’s used game business is their largest source of profits. For example, on a game like Mass Effect 2, they might pay EA $55 for a new copy that they sell for $60, for a net profit of $5. But when a gamer wants to trade it back, they are given $25 – 30, and the store simply turns around and resells the exact same game for $55, thereby netting $25-30 in profits!

The publishers believe that every used sale or trade is a lost potential new sale. (of course, this is the same flawed logic the music industry used to estimate the ‘billions’ in lost revenue due to piracy). So what are they to do?

People who play PC or Mac games have seen an example of one way to deal with the issue: Digital Download. Game sites such as Steam sell digital copies of games, and will allow you to install and uninstall the game an unlimited amount of times on unlimited computers, but it is all handled through your ‘account’. And once a game is attached to your account, it cannot be removed or sold or traded. Period.

But for disc-based media it is a trickier situation. On the PC you have activation-based systems where you have to enter loads of data, things are tied to accounts, and so on. It is possible that over time games will be locked to a gamer’s PSN or XBOX Live account, but for now that isn’t happening.

From the article:

EA’s solution is what CEO John Riccitiello calls “Project Ten Dollar.” The goal of Project Ten Dollar is to encourage new game sales by providing free DLC that used game purchasers would have to pay ten dollars to gain access to. As part of that effort, EA announced that all Fiscal 2011 titles will feature online content.

The result: day-one DLC for titles like Battlefield: Bad Company 2 as well as Mass Effect 2 and future EA releases such as Medal of Honor.

Project Ten Dollar is a trend that will reward new game buyers while punishing used gamer purchasers. And while EA is the first to implement such a strategy it seems likely that, in the very near future, every publisher will follow suit.

So what EA is doing is rewarding gamers for buying new games by including single-use codes for DLC (downloadable content) with every new copy that lock to the user’s EA Online account. The first game with something like this was Dragon Age: Origins, where every new Standard or Deluxe copy came with the ‘Stone Prisoner’ DLC, which sold separately for $7.

Mass Effect goes further – the Cerberus Network DLC is $10, and is required to add any additional DLC. So even if you wanted a later DLC that only cost $5, you’d first have to pay $10.

I have tried to find an analogy – the closest I came up with is something like buying a book and having the cover & binding tied to your DNA, and if you gave it to someone else the binding and cover would disappear unless they paid $10. It isn’t a great analogy, since with both Dragon Age and Mass Effect 2 there was actual in-game content that was provided … sort of like a book with an extra chapter providing background for a side character that is unconnected to the main story.

Anyway, the trend has started, and given that Dragon Age has sold nearly 4 million copies and Mass Effect will also soon reach mass quantities of sales, it seems that consumers are willing to accept the new trend. However, there is also indication – but nothing concrete – that these two games are fetching lower trade-in prices at GameStop to offset the cost consumers will need to pay to get the added DLC.

So what do you think about all of this?

Source: TerminalGamer