Sony Orbis, the End of Used Games, & a Price War

So, the internet is afire again after Kotaku’s recent post showing some details from an unnamed source on the upcoming Sony console, which is currently being referred to as “Orbis.”

Aside from some hardware details, the crux of what’s got everyone talking is the fact that Sony may be introducing some rather nasty new DRM mechanics. Sadly but unsurprisingly, reports suggest that there will be no backwards compatibility for PS3 games whatsoever. This is no shock, given that Sony went as far as to remove the ability to play PS2 games on PS3s after the first generation so that they could sell the games to you again on the PSN.

The second (and considerably more controversial) possibility that came up concerns a used-games restriction, where Blu-ray discs would tie themselves to a specific PSN account on first use. If this is in fact the case, the effect will be massive – especially in light of rumors that the next Xbox (codenamed “Durango”) may be going the same route.

First and foremost, if two of the three next-gen consoles end up locking out used games, the second-hand games industry would obviously take a massive blow, if not be immediately destroyed. Sony and Microsoft’s console users would also do well to enjoy the perks of game rental while they can, because it seems that, too, is on its way out. Gamers using these upcoming consoles will even give away the right to simply lend and borrow games between friends.

By incorporating automated restrictions like this, the console giants are inviting players to buy into the disposal of their legal rights (in the United States at least). The customer’s right to sell, lend, or give away copyrighted material is referred to as the right of first sale, or first-sale doctrine, and it’s been around since 1908.

This law is good for many reasons, but one of its most important functions in gaming is that it preserves older titles (and thus, the medium’s history) by keeping them in circulation. “New” (that is, unused) games don’t realistically stick around for that long on shelves after release; fresh titles come in and take their place continuously. Without the option to purchase preplayed games, most players will be presented with few options beyond new releases – at least in a retail sense.

$ony and M$ (pardon me) will inevitably pick up the slack there by selling digital copies of any game gone past retail on PSN and XBLA.

Regardless, I had hoped that Sony would go for the People’s Choice response to rumors that Durango would be blocking used games, and counter by offering gamers a restriction-free environment. Michael Patcher, a financial analyst from Wedbush Morgan Securities suggested the same in an interview with GameIndustry.biz, “… if one [blocks used games] and the others don’t, the one who does will see a loss of market share.”

But would they?

By eliminating used-game trading from the market, publishers are able to secure a significantly bigger chunk of the revenue that their games generate, particularly over time. In turn, they then have the facility to aggressively drive prices down in an effort to gain an edge over the competition.

If Sony’s publishers were to forgo this option, they wouldn’t stand a chance at competing in the inevitable price war ahead. Let’s hope that war pays off for consumers in the end.