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20 May 2010
I recently received an XBOX live message from Bmac, a regular reader of my columns. His comment was about how much he enjoyed my piece about how this years football games are shaping up, but he was surprised that I didn't mention anything about EA's very controversial "EA Online Pass" announcement. It bears explaining that when I wrote that article, I had finished it several days before the announcement, and hadn't got around to posting it. So the content of that article was written at a time before this major announcement, even though its posting came shortly after.
However, I will use this article to give my thoughts on the EA Online Pass.
Quite simply, I think it is a terrible decision for both EA and any other game publishers that might do the same thing. However, before I get into the reasons why, lets review what the EA Online Pass really is for those who don't truly grasp what is going on. Basically, anybody who buys a new EA game off the shelf will get the "Online Pass" for that specific game at no additional charge. The pass opens up things like "Online Franchise" and all the other modes of play that we have already come to expect from our sports games. That "code" that comes with the game will enable one XBOX 360 with a online pass registered profile to play with all of the features of the game. To be honest, the "EA Online Pass" changes very little for the person who buys all their games new. It will just require code input.
However, what it means for those who buy that same game used is that they will have to pay a set fee to enable those same modes of play on the used disc. (The number being kicked around per game is $10) Why is this being done? Obviously, revenue is the big thing, but EA is particularly jealous of the used market profits being made off of chains like Gamestop who deal in used games. EA wants a piece of that pie.
Gamestop will have to respond in kind by lowering it's pricing on the used EA games to compensate for that fact that features will be locked out and the user will have to pay $10 additional dollars if they want all those features "re-enabled".  I have to admit, I don't feel too bad for Gamestop. Gamestop has been HEAVILY gouging customers in the used market for far too long. Taking in relatively new used games for $20 and reselling for $54 has always been preposterous at best. Gamestop is going to have to adjust for a $10 per game hit. (My guess, Gamestop will be selling the games for $15 under the new game pricing instead of the usual $5.) Again, I shed no tears for Gamestop's dip in profit margin.
But unfortunately the new EA Online Pass doesn't just hurt Gamestop. Any gamer who wants to sell (or give) one of his used games to a friend will be effected. The new user of the disc will have to buy his own $10 EA Pass to re-enable the features on the disc. The whole idea is idiotic.
Some may disagree, but this is yet another self-induced PR nightmare from a company famous for self-induced PR nightmares. Even the corporate spin on the announcement seemed like a bad joke even as written by EA's professional PR department. The poor SOBs from EA (most notably the CEO) who were called on by the media to explain the EA Online Pass sounded like cats who just wrongly ate someone's pet canary and had no excuse for doing so.
The spin begins with the idea that EA is losing revenue due to people buying used games. No, EA was never entitled to used game revenue. Nor was any publisher. The game was purchased by an end user who merely wanted to sell it. If anything, EA is simply jealous of a given revenue stream, but completely not entitled to it.
The idea of locking out core game features on a second hand disc requires a bit of an anlogy for some to grasp where I'm coming from on this. It is important to note that I am someone who does not share the "anti-corporate" feelign that so many claim during this recession. Corporations hire. People need hired. The market is what it is. I am a staunch capitalist, and some would say to a fault. However, I feel the logistics of the EA online pass effect certain liberties of ownership of a legally purchased commodity. The precedent this sets is enormous...and bad.
Let me explain.
Lets say a buddy of mine offers me $5000 for my used 2005 Ford Focus. I sell the car to him, yet because the keyholder changed hands, Ford is requiring him pay 1/6th of the original purchase price of the car directly to Ford, in order to re-enable the air conditioning, power locks, radio, and trunk latch, which were disabled (by Ford) when I handed him the keys.
Similarly, is an artist entitled to a percentage of the sale of their work if the original buyer of their work opts to sell the same piece of art to another person at a later date? Hell no. The artist was paid during the initial sale for the value of the work. He/she is not entitled to profits from further resale. However this is the essential crux of what EA is trying to claim.
Sounds like crap. Smells like crap. And indeed it is crap.
The very fact that EA feels entitled to a used market revenue stream is quite telling as it pertains to the megalomaniacal history of EA's rather unpopular-with-gamers CEO John Riccitiello. Riccitiello is countering by indicating that gamers can expect more from their core new game purchase with the Online Pass. For his sake, he better make sure that extra downloadable content for a given game is free to those who have the Online Pass enabled for that game, or else there will be even more hell to pay from gamers.  Strangely, this was his response to why he felt EA needed to go this route when interviewed on May 11th.
"We think it's a great idea. We think it will build our business, and we think it's a positive consumer experience. Invariably, the consumer is getting a boat load more content to experience than they otherwise would."- John Riccitiello
(Note, he doesn't say HOW skimming $10 each off of used sales would somehow give "more content to experience"..)
"We used to literally pull our teams off of a game within four to six weeks pre-ship and they'd go work on something else because the game was done. our teams are being held in place up through and beyond ship to continue to create content to entertain the consumer with the franchise the like best." - John Riccitiello
Okay, but what about this deal guarantees that EA still won't do the same thing? What about this deal guarantees "more content" to the new game buyer? What are the tangible, measurable deliverables that the customer gets with the advent of the EA Online Pass, other than second hand game owners being $10 poorer in order to enable then locked-out standard features on a game disc that has simply changed hands?
Absolutely nothing.
At the end of the day, this is a huge cash-grab for EA, who is now using the deliberate limiting of features on a software product to invade a revenue stream that it should feel no sense of entitlement to be involved with in the first place. They've tried this move before with the past two NBA Live games where the updated "daily rosters" were part of the game with the initial registry of the product, but if the game changed hands, the person using the disc would have to pay $10 to re-enable the feature. However, those same NBA Live games still had no online season/online franchise like their competition has had for the past 5 plus years. (So much for the idea of this business model somehow equating to more content for the customer, Mr. Riccitiello!)
And, to make matters worse, that other major game publisher who has a PR disaster of a CEO with a PhD. in "Dumbassitude" (Activision CEO Bobby Kotick) allegedly thinks that Riccitiello and EA are onto something good with this horrid idea.
So it looks like both EA and Activision will continue their ugly "race to the bottom" in terms of consumer friendly/consumer concsious game publishing.
But at the end of the day, my used Ford Focus analogy holds, and my re-selling art analogy holds. The manufacturer/artist is not entitled to profits from a second-hand sale of their work after already taking the revenue from the initial sale. One can only hope that 2K Sports, EA's competitor as it pertains to basketball titles and a few other sports, does not follow this idiotic path.
And when it is all said and done, this EA Online Pass can be thought of as nothing more than a steamy pile of corporate excrement for the consumer. A bad idea at a bad time from a very bad CEO.  And who knows what this means for online game renter GameFly.
Lets hope we might see some legal challenges to this business practice going forward.
article by Scott Hemphill
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