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Reselling your digital games will soon be a reality, but what does that mean?

May 11,2018 15:18

In real life, RPG guru Brian Fargo ranks a star-12 in the silver-tongued persuasion attribute. On stage at a recent games business event, he crooned to an avid audience on the Next Big Thing in gaming. Fargo is best known for founding Interplay and ...


In real life, RPG guru Brian Fargo ranks a star-12 in the silver-tongued persuasion attribute. On stage at a recent games business event, he crooned to an avid audience on the Next Big Thing in gaming.
Fargo is best known for founding Interplay and InXile, companies that brought us role-playing series like Wasteland and The Bard’s Tale. His love of games, in which chat and personality play a big part, will come as no surprise to anyone who has spent time with him. He loves to talk, most especially about whatever it is he’s obsessing over at the moment.
Right now, his big thing is blockchain, a decentralized ledger and the technology behind Bitcoin and other cryptocurrencies, with (so far) unhackable security. “I’ve drunk the Kool Aid,” he told his audience at GamesBeat last month. But it’s not the tech itself that animates Fargo. It’s the potential to track digital transactions. For him, blockchain is the key to something gamers could really use: resale of digital games.
Fargo’s new thing is called Robot Cache, announced at the beginning of this year, and due to be launched by the end of the year. In the simplest possible terms, it’s like Steam, except you get to resell the games you buy. It operates using a mixture of cash, cryptocurrencies and in-store credits. So far, Fargo has managed to persuade a small number of publishers to get on board, including 505 Games, Paradox and THQ Nordic. More are promised.

Robot Cache’s mascot, as shown in its recent White Paper
Many of us have spent years funding our games collections by selling used boxed games, either to pals or to retailers, in exchange for credit or cash. More than half of GameStop’s retail business is based on used games. Traditional game retailers use the same system that works for every other durable, shareable product in the world, from books to automobiles.
So, any system in which I can accrue value from my old games has to be a good thing, right? I have a lot of games in my digital collections that I no longer play. And not being much of a collector, I’d love to magic them away in exchange for cash or game tokens.
But there’s an enormous anchor tied to this concept, hefty enough to sink the whole exercise: The publishers still own the games. Digital games can’t be stuffed into a bag and hauled down to Main Street. They are lumps of code that are owned and controlled by the publishers of the games, and their retail partners. The code cannot be sold on, at least, not legally, without the publisher’s permission.

You get 25 percent of the sale price
If you decide to sell your copy of Bingo Bloggins 4 for $10, the publisher of Bingo Bloggins 4 (let’s just call them GreedyCorp) has to be signed up to Robot Cache, and must be hunky dory about the whole deal.
Let’s say GreedyCorp is wonderfully into the idea of used games. So, you sell the game. You get 25 percent of the sale price. The publisher gets 70 percent. Robot Cache takes its standard five percent.
Already, you might be thinking, “This blows, I’m only getting $2.50 for something that is demonstrably worth $10.” We all know that feeling of getting far less for our games than we think they’re worth. And this seems even worse than GameStop on a bad day.
But to take a more Pollyanna view, you don’t really “own” the game. It’s money you wouldn’t otherwise have had. You can spend it on another game, which can, in turn, be sold on. You are playing more games for less money.
Meanwhile, the publisher and the retailer, are being paid twice, for the same game. Hurrah. Let the Wall Street bells ring pecuniary peals of joy.

A mock-up of Robot Cache’s front page
But, wait. The publisher isn’t called GreedyCorp for nothing. It employs clever devils called accountants. And they twig onto a flaw. They are only getting 70 percent for the used game, instead of the higher margin of 95 percent they get from the new game. And because the “used” game is a bag of code that is in exactly the same form as the new game, this counts, surely, as a potential loss. The accountants don’t want you buying the “used” game, when you ought to be buying the exact same “new” game. And at GreedyCorp, accountants generally get what they want.
So, the publisher can control when games can be sold secondhand, and might decided to wait until a product is effectively dead, or almost worthless.
On the other hand, the publisher might view used game sales as such a fresh source of revenue. It might run promotional campaigns that raise used game consumer margins from 25 percent to 50 percent, in much the same way these companies drastically reduce the price of certain games in sales, or even give them away for short periods of time.
Either way, it’s clear that this system is a long way away from whatever you’re doing right now with boxed games. In that situation, the publisher has almost zero control. Under Robot Cache’s plan, the publishers have almost all the control.

Can the consumer come out of this, without being stiffed?
I put these objections to Lee Jacobson, CEO of Robot Cache, to see if there was any chance the consumer might come through this without being stiffed by publishers.
“We are the first to admit that this is an experiment,” he said. “I suspect it will play out in ways we can’t fully appreciate yet but do believe new models will emerge. It’s important to remember that while reselling physical games is normal, it’s a big concept to allow resale of digital PC games and it requires the owner’s [the publisher’s] approval. We believe this has big potential to change the paradigm of digital ownership.”
He offers some potential scenarios, one in which users trade their margins for games they want to play.
“We will have an area of the site, a bazaar of sorts, in which people can buy digital PC games from each other,” Jacobson said. “In this area, gamers can post digital PC games they’d like to buy and list the digital PC games they’d like to sell. For example, a person could post that they would like to sell their Darkest Dungeon and that they are looking to buy Cuphead. This gives an effective 25 percent discount to both people. We fully expect gamers to cooperate with each other to save money.”
This is how it’s all supposed to workRobot CacheSellers and buyers could negotiate terms, leaving aside the rock-solid retailer-publisher margins, in order to trade favors. This creates a marketplace that would otherwise have not existed, in the straight “new” game marketplace. Jacobson also predicted that well-known social media influencers might accrue value to their own brands by opening up marketplaces where games are sold and bought. It might even become a streaming event.
What he’s saying is that this is not so much a digital version of selling games to GameStop, as an opportunity to try something that might lead to unexpected places. One element of Robot Cache allows players to opt into a cryptocurrency mining market via the site, and use the proceeds to convert into into credit units (called “Iron”).
According to Robot Cache’s white paper, which outlines the site’s missions: “The Robot Cache client will have a real-time tracker that allows gamers to see just how much Iron they will be rewarded for their mining. If you want to find a large group with high performance video graphics cards, then look no further than the PC video game community.”

Robot Cache is taking a much smaller margin than other digital retailers
Perhaps the biggest potential agent for change is Robot Cache’s margins. While most digital retailers take a cut of about 30 percent, Robot Cache is only taking five percent. I asked Jacobson how this could be, unless, (perish the thought) the current online retailers are gouging customers and suppliers?
“There is a lot of margin in the 30 percent that other platforms charge,” he said. “We have the ability to get revenue from other sources, such as ads and mining.
“Giving gamers the ability to make a minimum 25 percent commission is effectively passing on some of that savings. We believe that developers will use that extra margin in their pricing. As we’ve seen in the past few years, outside of AAA titles, game prices are competing with a huge amount of downward pressure. If developers are able to get 25 percent extra margin, they have way more room to pass that onto the consumer and still make enough profit to continue making games.”
We’ll keep an eye on this, as it emerges in the months ahead. A key component is going to be the reactions of large publishers, as well as early consumer tests. In Fargo’s talk, we spoke a lot about the need to tweak dials, in order to find the right balance. Ultimately, it’s all going to come down to the numbers, but they’re always going to favor the parties in control, which is the publishers.

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