No more boxed Halflife's?

[Vectrex]

Valve are possibly going to remove all boxed games and go with completely online distro. I think this is actually a good thing, shake up the publishers who think they're actually important (like what mp3's are doing to evil record companies)
http://www.gamesindustry.biz/content_page.php?aid=8492

[Coyote]

Valve are possibly going to remove all boxed games and go with completely online distro. I think this is actually a good thing, shake up the publishers who think they're actually important (like what mp3's are doing to evil record companies)
http://www.gamesindustry.biz/content_page.php?aid=8492

Well, don't forget that they ARE important. Do you think there WOULD have been a Half-Life 2 if Half-Life 1 had been distributed online only?

But I agree with your overall point. Publishers and distributors are basically a "middleman" service - getting the customer to the provider, and packaging the provider's goods so that the customer can use it. This really is a hugely valuable function. But in the past publishers (and music studios, etc) have taken advantage of technological limitations to monopolize things and make themselves emperors of the industry.

And nothing like the natives getting restless to force a Magna Carta to get signed.

[PoV]

Yeah, I've been watching this one closely too. Sure, some people don't like steam, but I'm finding this whole controversy rather entertaining.

[shiftless]

I don't like this. I'm on dialup; how am I supposed to download something like Half-Life 2?

[Hiro_Antagonist]

Publishers do a lot more than print disks and get them on store shelves. So let's not kid ourselves: What this move really says is that Valve doesn't need an external publisher anymore -- they have decided to self-publish.

Publishers' roles typically include quality control, product oversight, marketing (a massive investment in and of itself), beta programs, press handling, distribution, partnerships, and quite often, up-front funding for development. Publishers with any significant product catalog also give developers additional value by combining their products into a more singular entity with a lot of cross-pollination. (i.e., When a customer buys, say, a Strategy First game, they become far more likely to be aware of and/or buy another Strategy First title.) They offer huge value, that's why developers (usually) choose to work with them.

All this constant talk (or inferance) of 'evil publishers' has me confused. They're just businesses, and their sole purpose, like all businesses, is to give as much money back to their owners/shareholders as possible. I just don't understand why people let themselves believe that any company, especially video game publishers, somehow have a responsibility to altruistically cater to their whims.

Publishers aren't evil. Music companies aren't evil. They're just trying to make as much money as they can, LIKE ALL BUSINESSES. That's their job. If the owners/shareholders don't think that a given employee *is* making as much money as could be made, that person is fired and replaced. That's how business works, and that's how it always has under in a free market/capitalist society.

But like Coyote said, if due to emerging technologies and changing market forces, developers no longer need to work with seperate publishers to be successful with their products, then great -- they can cut out the middleman. But I guess I don't have a clear idea of how HL2 being sold through Vivendi or through Valve will have much real impact at all, other than Vectrex not being able to buy/play HL2 through his 56k modem. Most of the 'evil' things that Vivendi is accused of doing will now be things that Valve does itself to maximize revenue with their own product.

-Hiro_Antagonist

[Sillysoft]

All this constant talk (or inferance) of 'evil publishers' has me confused. They're just businesses, and their sole purpose, like all businesses, is to give as much money back to their owners/shareholders as possible.
At IGC the game lawyer (Tom Buscaglia) said something similar. He said you shouldn't think of publishers as "evil", you should think of them as if they are Ferrengi from Star Trek. Profit is the sole motive, etc. I thought that was funny and realistic at the same time. :cool:

Valve is a business also. They know how much money they make from retail and how much they make selling direct. They're going to go where they make the most money.

[Abscissa]

They're just businesses, and their sole purpose, like all businesses, is to give as much money back to their owners/shareholders as possible.
FWIW, I've always looked at businesses this way: Their primary purpose is to provide a good or service of value to their customers, and profit (including employee/owner paychecks) is merely a necessity for keeping the business going. Maybe that's not a standard agreed-upon view of businesses, but it's the way I see it anyway.

[Anthony Flack]

I bit my tongue when I read that, since I rant about this sort of thing far too much. But since you brought it up: yeah.

We often have people here stating, as if it's a simple fact, that all businesses exist solely to make as much money as they can by any means possible. Anybody who is in business is therefore absolved of all responsibility, because the law of capitalism says that you must maximise profits at all cost, and everything else is irrelevant. Almost as if it's a law of physics.

And it isn't true.

Of course it is possible to run a business like this if you choose to. But that is an extremely simplistic view of the world. Most people aren't like that, and most businesses aren't like that. Large corporations may tend to be like that, because they are structured to work that way. Let's leave aside the issue of large corporations tearing society to pieces with the people of the world seemingly powerless to stop them, and just say that we are not large corporations. We can set up our businesses any number of ways, with any number of objectives. We'll need to make enough money to keep going of course, but beyond that there are any number of things you can choose to do.

If you really want to be an entrepeneurial terminator robot, then best follow Itsme's advice - get out of game development right now.

[Sirrus]

Also don't forget that being a middleman in this industry isn't just packaging the product and giving them to retailers. In most stores, initial retail contracts are made between both parties in which the publisher pays a pretty hefty fee upfront to even be allowed to retail with them (BestBuy/GameStop are something like 10-50k if I recall - any one have exact numbers?)

[Coyote]

We'll see if this doesn't come back to bite Valve on the butt in three years. Probably not, but it'll be entertaining to watch (from a safe distance). Who will they get to publish Half-Life 3? Or will they do it STRICTLY via online distribution, and if so, how well will it sell?

It seems to ME that they were basically getting screwed by Vivendi. Not a big surprise - Vivendi has gained that reputation.

It's all well and good to yell "Power to the people!" and "We will overcome!", and paint publishers with broad strokes as being the oppressors. When it comes to making the business arrangements, the publishers have typically been much better at their job than we have at ours, and now they are the ones holding the power we keep giving to them. But it's not a good long-term strategy to dismiss or reject publishers (or portals). That makes no more business sense than rolling over and giving away the farm for a pittance to curry a publisher's favor. There's got to be a happy medium in there.

But it's fascinating to see what is taking place here, and seeing how things shake out. It could turn into a backlash AGAINST developers, as far as I know, with publishers become evening more adamant about refusing to do business with any developer that doesn't surrender full IP rights from the outset. Who knows?

[Vectrex]

Well i'm not strictly saying that all publishers are evil, just that they arn't as important as they think they are. They dont make anything, its like an actors agent taking all the credit and money. Of course they are needed, they just dont have to be so power mongering about it and hopefully valve do well so as to snap them out of it.

[PoV]

And it's all now been resolved.

http://www.gamesindustry.biz/content_page.php?aid=8511

You can now return to your regularly sheduled program.

[Coyote]

This still doesn't change the fact that Valve has managed (extraordinarily painfully) to commoditize its publisher, rather than ther other way around.

Of course, their next deal could be much worse... who knows? I'm betting on Microsoft, actually.

[Hiro_Antagonist]

FWIW, I've always looked at businesses this way: Their primary purpose is to provide a good or service of value to their customers, and profit (including employee/owner paychecks) is merely a necessity for keeping the business going. Maybe that's not a standard agreed-upon view of businesses, but it's the way I see it anyway.
Well, we'd all love it if it were the case, but unfortunately it's not. Providing goods/services of value to customers is merely a means to an end.

I would, though, like to agree a bit with Anthony (who was actually disagreeing with me =) by saying that not *all* businesses work that way. But all publicly-owned companies do, and most privately owned company of any significant size do as well. What I said about companies being purely money-driven tends to break down when you start looking at very small companies where the original owners are still the full owners.

For example, most of us (running small gaming businesses) could make more money doing something else with our time. But we choose to make games for non-financial reasons.

But, being blunt, people like us don't make much of a difference in the world when all is said and done. We aren't the ones making games that people are buying, in general. The vast overwhelming number of business/commerce transactions in the world involve companies with more that, say, 10 or 20 employees. And as companies get bigger, they will almost always tend to migrate more towards having a purely money-centric, capitalist attitude. (There is an understandable correlation here -- bigger companies tend to have relatively non-involved investors with more and more money on the line, and those people are soley concerned about the returns on their investment. Whenever the owners are *investors*, their job is to make sure their investments are well managed.)

Not that I'm not saying this is bad -- or good, for that matter. Frankly, I find it perfectly practical and the reason the economy generally works as well as it does, but this system clearly has its drawbacks as well. All I'm saying is that is how it works, for better or worse, and burying our heads in the sand about it isn't doing us any favors. We have to understand the world we live in to be able to successfully navigate it. If we lie to ourselves about how things work, we're trying to build a successful strategy around a world that doesn't exist.

-Hiro_Antagonist

[donmc]

I bit my tongue when I read that, since I rant about this sort of thing far too much. But since you brought it up: yeah.

We often have people here stating, as if it's a simple fact, that all businesses exist solely to make as much money as they can by any means possible. Anybody who is in business is therefore absolved of all responsibility, because the law of capitalism says that you must maximise profits at all cost, and everything else is irrelevant. Almost as if it's a law of physics.

And it isn't true.

Of course it is possible to run a business like this if you choose to. But that is an extremely simplistic view of the world. Most people aren't like that, and most businesses aren't like that. Large corporations may tend to be like that, because they are structured to work that way. Let's leave aside the issue of large corporations tearing society to pieces with the people of the world seemingly powerless to stop them, and just say that we are not large corporations. We can set up our businesses any number of ways, with any number of objectives. We'll need to make enough money to keep going of course, but beyond that there are any number of things you can choose to do.


ding ding ding...

It's true that business -- especially big businesses -- aren't evil. That answer is overly simplistic. The Adam Smith quote from The Wealth of Nations sums it up well:


It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.

It is the end-goal of a company to turn a profit. I don't think anyone here disputes that. The problem is in how companies tend toward that goal. I've owned a number of businesses, and years ago i had a business in the automotive industry. I dealt with all makes/models of cars, and it was very surprising over the quality differences among american, japanese, and german cars.

The problem i see with many companies (especially amercian ones) is that they are often very short-sighted when it comes to customers. It's not nearly as much about building a quality product or customer loyalty as it is about trying to extract the maximum number of dollars from consumers' pockets today. I'll give you some examples.

Internal combustion engines like those found in cars generally have either belts or chains that connect the crankshaft to the camshafts. For many years GM used a steel chain with a steel crankshaft sprocket. For the camshaft sprocket, they used an aluminum gear with plastic-covered teeth (seriously i'm not making this up). According to official GM PR the sprocket was made of aluminum+plastic to reduce noise.

What happens is that the steel chain and the steel crankshaft sprocket last the life of the vehicle. The aluminum/plastic sprocket, however, fails (almost without exception) anywhere from 100,000 to 150,000 miles. The funny thing is the replacement chain/sprocket set (all of them) are made of steel. No aluminum and no plastic. Counter to GM's claim about noise, the replacement parts are no louder than the originals. A strong case can be made that GM designed the sprockets to fail intentionally. They figured by producing cars that were designed to fail, they would be able to sell more cars. This was a predominate mindset of the US auto industry from the 60s right up through the 80s.

The above business practice fits in well with Adam Smith's quote. It ignores an important point however. It's one of building long-term loyal customers. This is one lesson that many companies (especially big american ones) have time and again failed to learn.

In 1970, the japanese car manufaturers had basically 0% marketshare in the US. US auto makers totally dominated the market. Beginning with the Opec oil crisis in the early 70s, japanese makers began to gain a foothold. Even after gas prices fell rapidly in the 80s, japanese makers continued to gain marketshare. Today, japanese cars account for a full 30% of all US auto sales. Just this week GM/Ford bonds were downgraded to "junk" status.

Beyond the initial gas savings issue that compelled americans to buy japanese cars were the realization that japanese cars were, on average, better engineered and better built. The japanese weren't out to fill their pockets with US dollars that day. They were looking much more long term to build loyal customers. This trend continues today and while japanese car makers enjoy record profits and strong balance sheets (excluding mitsubishi which is struggling), US auto makers are drowning in red ink and continue to lose marketshare especially to the japanese.

At one point in the 80s dodge (a division of chrysler corp.) entered a joint venture with mitsubishi to build a car. The car was designed and built at the same plant, but marketed under two names. Dodge sold their version of the car under the "dodge stealth" name, and mitsubishi called it the "mitsubishi 3000". Again these were the same cars. The only major difference was the name on the outside of the car -- actually there were very minor cosmetic differences in the cars, but most consumers would not likely notice them.

I remember seeing then head of Chrysler corporation, Lee Iacocca, on TV back in the late 80s. He was lamenting about how Americans were buying the mistubishi 3000 in far greater numbers than the dodge stealth. He was actually blaming americans for not buying the dodge version of the car. I couldn't believe his arrogance at belittling american consumers. He argued that since they were the same car that americans should buy the US version. What he failed to recognize was that americans were sick and tired of buying cars -- from US automakers -- that were poorly designed, poorly built, and designed to break.

For their arrogance and short-sightedness (not to mention their cynical view of US consumers) they are now paying the price. Dwindling marketshare, junk bond status, and GMs recent 1.1billion dollar quartly loss are loss are the ramifications for such business practices. Sadly companies in other markets fails to learn from these mistakes.

There is a very similar situation in the music and even the games industries. For years recording companies conspired to keep CD prices above a certain level. http://www.usatoday.com/life/music/news/2002-09-30-cd-settlement_x.htm They had for years viewed consumers as their personal piggy banks by willingly engaging in monopolistic behavior to increase profits. Again this is a very short-sighted view of consumers. Before napster, record labels were more than happy to overcharge consumers.

Customers can see through this behavior, and as soon as music piracy was easy and practial, consumers went to it in droves. Of course the labels cried foul, but they have only themselves to blame. Had they operated in a competitive fashion (instead of colluding among themselves) prices would have been lower and the reasons for people to pirate -- from both an economic standpoint, and a pissed off one -- would have been much lower. I'm not saying that piracy wouldn't happen. It always will, but when companies use thinly veiled tactics to defraud customers you better watch out.

Customers have similar negative views about game publishers (and to a lesser extent retailers). That $50 you spend for the current AAA title at bestbuy only puts about $5 into the developers pockets. The publisher and the retailer get the other 90%. SOE, EA, and Vivendi do not have good reputations for being innovative, coming up with great new original games, or giving good value to consumers. This is of their own doing. It's not surprising then that many consumers see them (and other companies) as evil.

The motivation for consumers -- and especially developers -- to bypass the retail distribution channel is great. The distribution cost for delivering a game to a consumer over the internet instead of a retailer is significantly lower. Server costs and bandwidth costs for the developer are falling all the time. Also, the availability of brandband connections in the US is growing, the cost of broadband is falling, and the speeds of broadband connections is increasing. All this leads to an ever stronger argument for online distribution. True there are still people on dialup that simply cannot download a game with gigs of content, but there are also people still trying to play games on pentium 2s and such. At some point you have to make a break from old technology and move forward. This is exactly what valve is doing.

In other countries, such as south korea, the predominate distribution model is the internet, not brick and mortar stores. Yes they have higher broadband penetration than the US, and yes their average broadband connections speeds are higher, but we are catching up.

Hiro made a good point above about some of the other service publishers and retailers offer to game developers. I'm not trying to gloss over those facts. I am saying, however, that there is alot of consolidation in the publishing part of the distribution puzzle, and the those players are not well loved by devs or gamers. I don't like markets where there are only a few competitors because it greatly increases the possibility of price fixing and collusion. The viability of internet distribution is increasing everyday. I think valve is showing their leadership in the market by embracing it. This bodes well for other developers. As more devs bypass the traditional retail channel in favor of online distribution, it will force retailers/publishers to be more competitive. At the end of the day this is good for both devs and consumers.

don

[Anthony Flack]

A truly excellent post. And it also illustrated what I was trying to get at when I said that sometimes a non-profitable product is still good for a company, too.

On that note, I feel like saying something about the Dreamcast. Because I love my Dreamcast(s). After the 32X and Saturn fiascos, Sega's reputation and finances were in ruins. So they pooled together the last of their resources and tried to make the most beautiful, fantastic game system in the world. The system that did everything right.

And yes, in a way, they failed. They just didn't have enough money left to beat Sony. By the end of its short run, the Dreamcast still hadn't quite managed to make back its $600 million development costs. But on the other hand, it is a beautifully designed machine, perhaps the most lovingly-designed console we will ever see. And it has an incredibly high proportion of terrific games. Of course, it's a tough world out there, and having a great product just isn't enough when your competitor has unlimited resources. But it redeemed Sega's reputation, and it meant that they could bow out of hardware manufacturing on a high note instead of a sour one.

Yes, they lost money. But it was still a great achievement, and it meant that the tarnished Sega name was worth something again. So this is one way that a non-profitable product can still be of value to a company.

[Vectrex]

yes Sega not producing hardware was a terrible day for games. Sega vs Nintendo was perfect as they covered different types of games perfectly, whereas PS vs XBox is pointless as they are practically the same. Nintendo will always have gamers respect I think (Microsoft has always tried to buy it, but they refuse). They are the only ones left who truely care about quality and innovation.

ps Have you noticed that a few years back on TV it was normal to hear kids say 'I'm playing Nintendo' for a generic term for playing games? But now it's 'playing playstation' or 'xbox' and way more adults use the term, coinincidence?