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Could Digital Rental be the new Arcade?
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Could Digital Rental be the new Arcade?
by Andy Satterthwaite on 09/12/10 09:08:00 pm   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.


Steve Jobs has said that the iTouch/iPhone is now the most popular portable games machine; certainly, the iOS scene has more games than any other platform by a huge factor.

A key reason for this, I believe, is the $0.99 price point for most games; it makes purchases an impulse decision, and allows gamers to try something a little more obscure than normal, because it’s cheap enough that even if you only play it for 5 minutes it doesn’t feel like a waste … and of course once in a while you find that app which is so great you’d willingly pay more to keep playing.

By contrast a console gaming purchase is far more deliberated; $50-$70 for a retail product is not “impulse” – even $10-$20 for a download is a significant decision for most.

Do I really want to spend that money for something I may only play for 5 minutes? Probably not.

So how can you make a $0.99 model work for console games? It’s not practical for full releases, but …

Recently TV and film companies have been working with Apple, Amazon and others to create a market for “rental” of films and TV shows. These rentals work like rentals at your regular rental store, i.e. pay a small amount, watch the DVD for a limited time, then return it or pay more.

The other day, as I was walking past a desolate arcade, it occurred to me that this “rental” model is kind of similar to how we used to pay for games in arcades. Pay $0.50, play until you run out of time (or lives) and then pay more if you want to keep going, or move on to the next game and see if you like that more. Those arcade games had serious production values; huge production & distribution costs; and yet somehow made viable business sense at $0.50 a pop.

So, why not use the same “rental” or “arcade pay-per-play” model for retail games?

What??? I can already rent any game from Blockbuster; what are you on about?

Well, while it’s true that you can rent full retail games for a tiny amount; that model is completely broken, in so many ways - as far as developers are concerned:

1)      When a player rents a game from a rental store they get it for a minimum of 24 hours, often as much as a week. That’s more than enough to finish most games (or at least play them long enough to get sick of them). Yet it’s only one “rental” payment of about $5. (Think about it - that would be like being able to play the same game in an arcade for a week, for a single payment of just “10 coins”!)

2)      Also - none of that “rental” payment goes to the developer/publisher. A rental copy counts as a “sale” when the store buys it, so that’s one copy sold, but all rental proceeds go to the store – none to the developer.

What if we changed the rental model so that it was a “digital” rental? E.g.:

1)      The player “rents” the game for $0.99. For this they get to play the game for an hour (or a set number of levels, lives, or some such).

2)      At the end of that play time, they can pay another $0.99 to keep playing, or they can buy the full game (discounted by the amount of money they’ve already paid)

This would mean:

a)      Developer/publisher get up to 70% of “rental” charges (or whatever the standard downloadable %age is at the time) – making money off every rental.

b)      Players can try many more game and just pay for what they want

Certainly I can imagine people objecting to paying like this.  But it worked for the arcades, and it’s not a big leap to see the similarities between this proposed paradigm and the very successful micro-payment strategies used in social-type games.

And, yes, there would be other side effects too, such as:

a)      Developers would bias their game development to be all about high-quality “first hour” experiences, to get players to pay more.

b)      Developers produce games that encourage repeat play – to encourage repeat pay.

c)      Developers can produce more eclectic games (‘cause there’s a greater chance players will punt $0.99 to try something obscure)

But would any of these really be a bad thing?

We have established download markets (PSN, XBLA, Steam etc.); we have proof that $0.99 payments work for games (iPhone/iTouch); and we have burgeoning markets for the concept of $0.99 rental in other media; why don’t we give it a try?

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Tadhg Kelly
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I think this is a great idea.

Jonathan Jennings
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I agree with Tadhg it sounds like a great idea to me. I don't really care to try gamefly due to the monthly fee and wait time for the game to appear in the mail. I also hate that the few times I have wanted to rent a game form my local video store it is often out of stock. this would bring me the best of both worlds. the fact that I seem to handle cash less and less as time goes on just makes this seem like that much better of an idea.

Tadhg Kelly
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I don't think I'd do it hourly is the only thing. With the Apple rental model the time per-rent is usually 24 hours, or something like that. I'd be inclined to do it that way (maybe actually rent at $1.99).

Some might say that this devalues content, and that many a gamer will thus spend 99p for the full game experience. On the other hand, this would lead to better multiplayer modes and thus much more long-term value, meanwhile many of those fast-play gamers are already taking advantage of such things as store trade-ins to burn through content anyway.

Jacob Pederson
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This is a terrible idea. The reason arcades died off (mostly) after buying hardware yourself became feasible is that players do not want gameplay designed around getting more quarters from you. Gamers tolerated the abuse only because there were few options at the time. Personally, I'd put all these quarter eating relics in the casino where they belong.

In my opinion, the idea of the arcade is still a valuable one, they just didn't adapt to the changing climate. The selling point of an arcade is not the games; it's the games plus the social atmosphere. If the arcades had adapted to a more South Korean LAN cafe business model, I think they could have made a go of it.

Tadhg Kelly
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The reason that arcade died was Street Fighter 2 coming to the 16-bit consoles. That was the moment when it shifted, because it enabled thousands of hours of play for less. It's as simple as that.

By the same token, videogames cannot continue to keep their constrained-supply model going forever. It is already starting to crumble via a death-by-a-thousand-cuts. It was the same sort thinking that led music companies to try and prolong the CD and protect it, but all that happened is that the customers went elsewhere.

Online offers massive distribution possibilities, but not at the same price point as retail. Just as it's ridiculous to consider an ebook at the same price as a print model as the future, it's ridiculous to consider an online gaming market that will preserve the same prices as retail. Like it or not, the tides is turning and the industry must change with it.

That's why I think 24-hour cheap rental is a great idea. It caters to the extent of how the customer wants to play, while at the same time allowing for the big production costs that developers and publishers feel they must live up to to attract interest.

The proof of the pudding is in the tasting of course, but I would not be surprised to see at least one major publisher trying something like this in 12-24 months time.

Jonathan Jennings
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not to mention the redbox is already experimenting with renting games in nevada and another location. If that rental service takes off like it did with films I think game rentals straight from console marketplaces would be the only possible competitors.

Prash Nelson-Smythe
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Short term game renting would be fantastic. Just like watching a tv show once for a small amount of money roughly equivalent to the ad revenue it would have generated on TV. Companies are starting to offer it now and it's so convenient. I believe that only convenience will reduce piracy and this is convenient!

I wouldn't mind the opportunity to have a game where you to pay once you lose all your lives. That would be interesting... I don't think it really becomes gambling until you get the chance to win money too (I believe there was an online FPS that did this once).

Andy Satterthwaite
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One of the key things in my blog is that the current rental store model (including Blockbuster, Redbox, Gamefly etc.) give almost no money to developers. The rental copy is a one-time-sale, which gives royalty - but each subsequent rental gives nothing.

Changing to a download rental changes that. Changing the rental period from 24hours down to an hour (or some other mechanic) and dropping the cost accordingly also sees increased revenue (and increased choice for the same outlay for the customer).

As for Jacob Pederson's point: Buying full retail games should always be an option. My rental suggestion includes a try-before-you-buy element, as any cash spent on rental gets refunded as part of a full-game purchase (spend $5 on renting for 5 hours, spend $5 less when you buy the full game etc.) - can't see the downside to that myself (from a consumer point of view).

Only real downside, perhaps, is that overly hyped games that people buy on day-1, but then only play for a little bit ('cause they don't really like them) may miss out on the full retail sales ... but that said, currently these games are the ones that go straight back in to the market as "used" games (which the devs get no money from anyway, so no big loss in the long term)

Jake Akemann
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From the consumer point-of-view, the discount off the full price based on the trial is a great idea. I missed that point while reading the article the first time, but really that's the make-it-or-break-it for me.

Overly hyped games that don't deliver would certainly suffer, but really, do we sympathize with massively marketed games that promise lots of features/gameplay and don't follow suit? If anything, this style of marketing would raise the bar on game development.

Alistair Doulin
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I totally agree with the discount off full price being one of the biggest selling points. I also see the reason many big publishers won't take this up (or will only allow it after the first few months of sales) is precisely because hit driven games don't fit this style.

Great idea Andy

Hayden Dawson
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There are plenty of other games that would be poor fits for the style as well. Most RPGs are too big of a time investment to get much out of bits and pieces. And I'm not sure the customer is going to buy into having to pay for their demos. The recent test with the preview of Dead Rising 2 had its share of detractors.

It just seems that so many of the ideas being floated here as of late are asking customers to drastically change habits. That's a hard sell if the customer is made to feel these choices are being made for them rather than by them.

Rick Kolesar
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I like the idea. While many games today would be hard to fit into this model, I could see future games built around this that would not only strive financially, but be welcomed to gamers.

One dark side of this would be the end of free demos. Why give out a chunk of the game when interested players could spend twenty-five cents to a dollar to play the first level of a game?

Robert Green
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The paid prequel to Dead Rising 2 (and its success) is already a start down that road.

The main problem I see with the idea of downloadable renting games is bandwidth. Unless the game is either small (say, under a gig) or designed from the ground up for streaming, you're potentially looking at having to download many gigabytes just to try a game for an hour, which is definitely out of the question for large parts of the world.

One of the main attractions of the itunes model is that so many games are under 10MB, making them not just an impulse buy, but also something you don't have to worry about bandwidth-wise or in terms of time - you can be playing a game minutes after the download starts.