EA's $15 Million in 'Online Pass' Revenue Isn't 'Dramatic', but It Isn't a Failure

Illustration for article titled EAs $15 Million in Online Pass Revenue Isnt Dramatic, but It Isnt a Failure

In comments yesterday, Electronic Arts' chief financial officer suggested that Online Pass—the program under which gamers who pick up a used copy of an EA Sports game typically shell out another $10 to EA if they want to activate multiplayer for it—has netted the company in the realm of $10 to $15 million since it was introduced in June 2010. That's a paltry sum to a publisher that size, but it doesn't mean the program's a failure.

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For starters, it's basically pure profit—"found money" as CFO Eric Brown calls it. But as I suggested yesterday, after a year under the program, Online Pass has probably done much to condition gamers to go ahead and buy a retail copy, even if its discounted, rather than pick up a used one.

That's because it takes a hell of a long time to get a used title down to where it's a bargain even with the $10 Online Pass hit. The oldest game under the program, Tiger Woods PGA Tour 11 is $27 used at GameStop. The oldest game not superseded (or about to be) by another entry this year, EA Sports MMA is $18, and that series is effectively on hiatus. That's off-the-shelf, of course these titles are cheaper through resellers on half.com or Glyde, but the point is that waiting for value time means waiting for an out-of-date title.

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So if the Online Pass is more of a deterrent than a product, that's fine. EA Sports doesn't even want you to buy it. "Season Ticket" holders get a 20 percent deal on downloadable content, but the Online Pass isn't eligible for the discount. Sure, "Season Ticket" holders are likely to buy new anyway, but the message is clear. EA wants its $10 if you're buying used.

Bottom line, you can forget about Online Pass going away if it doesn't make EA much money. That sucker is here to stay.

EA Details Strong Digital Growth, Sims Social Numbers[Gamasutra]


You can contact Owen Good, the author of this post, at owen@kotaku.com. You can also find him on Twitter, Facebook, and lurking around our #tips page.

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DISCUSSION

noobiablos
noobiablos

Ok, **** it. I was just going to individually reply to people, but **** it. I can't believe posting my wall of text will actually be the easier route to addressing this.

I've said it before, I'm saying it now, and I will keep on saying it every damn time this topic comes up.

USED GAMES DO NOT HURT THE INDUSTRY. Get ready for big read.

Every time I see these blatant DRM practices, I'm just going to reply with this. I keep this saved in a word file so all I need to do is simply copy & paste it. I may not be able to change much on my own by being a single person standing up against this kind of bullshit, but I'll be damned if I'm not going to go down kicking and screaming as violently and loudly as I can trying to get people to pay attention to what I have to say on this particular issue.

Here it is; Why used games DON'T hurt the industry.

Used game sales cannot increase unless New game sales increase.

By the very nature of used games sales, it's impossible for them to increase without new game sales increasing, which basically makes every single thing you listed backwards.

Further proof can be seen by simply looking at the state of the industry; Publishers and developers are making more money, MORE games are being made, game quality is on the rise (DLC and DRM practices not withstanding), and we already know for a FACT that we have new consoles coming.

The industry keeps growing then and how it has largely been unaffected by the current economic conditions?

[www.commercialalert.org]

[www.industrygamers.com]

[www.bgr.com]

A lot of the scenarios I see are quite frankly is crap and only work if there is 1 game in the system, which we all know is completely bunk.

1. They don't account for the fact that people trade in used games to buy new games. Shocking I know, but people buy both (and there's a reason I'll get too down below)

2. They don't account for the fact that people are NOT buying the same used games as the ones someone else just traded in.

3. They don't account for the fact that Gamestop's business growth equates to industry growth.

4. There is a reason that Pubs/Devs don't get money for sales after the 1st; They aren't even expecting it in the first place because of the First Sale Doctrine. They are not entitled to anything after that, and they know it.

5. They don't account for word of mouth, and by cutting out used game sales all together, you kill of a TON of free advertising.

6. They don't account for the time of purchase at all.

7. DLC exists. Devs can still make plenty of money off of microtransactions. If the people that buy used games don't buy the DLC, then quite frankly the Pubs/Devs aren't missing out on anything from this customer and they were never going to make any real money off of them.

8. And again, those used games HAVE to come from somewhere. It is simply IMPOSSIBLE for used games sales to grow without more used games, and it's IMPOSSIBLE for used games to exist without NEW game sales.

I could go on and on about why this reasoning has absolutely no backbone at all. You "Used games are evil!!" preachers really need to start thinking more creatively about what's really happening in front of your eyes.

Grocery stores don't make any money off of milk, bread and peanut butter, but they still sell them. This is because they place them strategically in the store so you see a bunch of other items and pick something else up. They know you're already going grocery shopping so why not pick up a little something extra that's on sale while you're going to pick up a jug of milk.

The same thing applies to game stores or ANY retail store. They are set up to make you look around. Just check out the store the next time you go to a Gamestop and take note of where they put the new games and the used games, where they put put the separate console games, etc, etc. You may not buy that New game the same day you buy the used game, but you might pick it up next time. Or what if you get a good deal on some used games and use that money you save to buy a new game?

Look at how certain Auto companies have separate lines of cars; luxury cars and functional cars. They sell the functional vehicles at very little profit for themselves, but they make an absolute killing on their luxury cars. As backwards as this sounds, think of New games as the functional cars and used games as the luxury cars.

And you know what else? NONE of you "Used games are EVIL" people have actually PROVED that used game sales hurt anything. You give a broken cycles based on 1 game being in circulation (which don't even get me started on all of the screwy changes in product value that leads too), and have done nothing to dispute how the industry has still been growing even though "used games sales are bad".

The industry is growing and doing great on it's own. Overly restrictive DRM is just going to kill things. Do we want to see the console part of the industry go through the phase that PC gaming went through?

It wont stop at restricting online play. These things have a way of expanding and changing for the worst. Just wait, we're going to be buying a disc for $60 in the future that comes with a unlock key for both the single player and multiplayer campaign. People that buy used games will simply be driven out of the industry, or made to wait even longer. It simply slows things down.

if Gamestop's business grows, they can open more stores. If they open more stores, they sell more games. More game sales is more money for the devs/puplishers. This is why Redbox has been doing so well. Places like Walmart and McDonalds are just all over the place, so Redbox get's more coverage when they expand. It's mutually beneficial.

Bad management, longer than necessary development cycles, and bad marketing will hurt more than a used game being sold. Some times these companies just get bought out and some divisions are closed down to reallocate resources. And then of course the product could have just been bad. None of that is the fault of used games being sold though, and they are not reasons for these DRM practices.

Server costs are already accounted for DURING development. It's a part of the budget from the get go dude. Do you think they just going to online support blind or something without having any idea of what it's going to cost in the first place? All of these factors are already accounted for in the game budget. Plus DLC already brings in extra revenue (more than enough to cover whatever pittance is needed for server cost).

And either way, Used game sales don't put ANY extra strain on servers.

Person A keeps the game plays 10 hours in a week

Person B plays game 2.5 hours and trades it in. He NO LONGER HAS THE GAME so he cannot use the servers. Used Game buyer buys the traded in game and plays for 7.5 hours for the rest of the week.....that's still only 10 hours of use.

You could possibly argue that the person buying the used game could play more than the person playing the new game, but that's unrealistic because the really hardcore fans are going to buy the game day one and play it constantly anyway. The new game buyer is sucking up more server usage (which is getting cheaper and cheaper every year by the way).

You cannot play a game online if you don't have the game in your possession.

One argument I've seen is that it's a "buy new incentive". Buy New incentives are also different from locking content and punishing people that don't buy your game new. Used game buyers can contribute a great deal to the. The reason I compare Pre-order DLC/On disc DLC and passes to DRM are because in effect they lower the value of the product after the initial purchase. THIS is the biggest problem. If the product is going to be worth less after I pick it up, I'm much less inclined to pay more money for it.

Another thing I see a lot of is "People buy used games for $55". Gamestop's adjusted prices aren't what makes used game sales attractive though, its all of the in store bonuses they give; edge card/rewards card, B2G1F, trade in X games get X bonus, etc, etc. They don't actually think people are going to buy the game for the flat $55. They know people like to save money, so that have a ton of deals.

If Devs/Publishers want to get more people to buy games new then they need to offer something extra; like a T-Shirt, a Keychain, or some other physical bonus. Offer something like a free T-Shirt for people that pre-order or other things like that. They don't need to lock content on the disc and punish used game buyers for "hurting" their bottom line (which they don't).

The ultimate problem I have is that they aren't going to make any more money or hurt Gamestop buy fighting used game sales; They are ultimately only going to hurt the consumer and themselves because these practices are devaluing the product.

If they want to make money off of used games, they need to implement a system of micro-transactions that will allow ALL gamers to contribute; something like "paying for convenience", like getting a weapon early for $1, or having a permanent EXP bonus for $2 or something like that.

If used games are such a big part of the market, then expand into that market. Take advantage of it and make money off of it in ways that DON'T punish the people in that market.

I don't think a lot of people actually realize HOW the gears turn in most industries. Business to Consumer transactions are only a small part of the bigger picture. Most of the money is in Business to Business transactions.

The Devs/publishers don't make any money from us no matter WHAT game we buy. New or used doesn't matter. They get their money from Gamestop (and other retailers) who buys the games based on the number of pre-orders. This already give a gauge to measure the demand for the product. Punishing used game buyers doesn't do jack crap because they aren't taken into account during the Pre-order process, therefore they have no effect on the demand for the game when it comes out.

These separate pieces of the industry don't just divi up the money made from a game sale; Developers are paid by the Publishers to make the games. Publishers sell the games to the retailers. Retailers sell the games to us. Then you also get into things like royalties, licensing fees, DLC and what not. Most of what happens in the industry is done between the separate businesses (this goes for basically everything aside from something like Ebay). Our part in the process is relatively small.

And here's a free argument for why piracy doesn't hurt things since people seem to love to make the comparison (Oh yeah, I'm going there too).

Number 1, you can't even prove those people play the game at all. Secondly, a lot of the people that pirate do it simply because they can. They wouldn't have bought the product in the first place so really no money was missed out on.

On the contrary, I think devs could use piracy to their advantage if they were smart. Offer a free game on torrent sites and use it as a way to advertise other games they sell. It's worked before with books, movies and music, so why not video games?

No one is willing to take the common sense approach though, or they aren't in a position of power to make it so. Would you swim against the current of a river or do you go with it and use it's flow to your advantage?

This guy used Piracy to his advantage; he gave one book away for free and saw the sales for his other books increase.

[www.thedailybeast.com]

This guy also used it to gain exposure

[torrentfreak.com]

Paramount released "The Tunnel" on torrent sites this year.

[www.electronista.com]

Look at where DRM has taken PC gaming; Legitimate buyers get screwed over and the pirates/money thieves that were supposed to be stopped by these DRM measures circumvented them every time and now PC gaming has the most ridiculous piracy rate ever because all of the legit buyers have been driven away because they weren't able to play their game freely.

The only people that are affected by this crap DRM are the real paying consumers. These Devs/Publishers need a business model overhaul, not restrictive DRM that doesn't actually do anything.

Stop supporting these terrible practices. What we are going to end up with is basically a self fulfilling prophecy if they continue. THIS is why PC gaming was left in shambles; DRM scared the legit buyers away, and pirates just kept on pirating.