Sony’s “No Used Games” Patent

The PSP Go! Here's a metaphor Sony prepared earlier...

There are many problems at Sony and I’m all for hearing how the company wants to set out to rectify those problems, however as understanding as I am of the challenge that the brand faces in the wake of poor sales and financial uncertainty, becoming inherently anti-consumer seems like the final nail in the coffin…

 

NeoGAF found some interesting documents about Sony’s recent patent filing adventures.

Basically, a file has been found that would allow an RFID ID stamped onto new discs to track its usage history, and theoretically restrict it to one console which possibly has its own ID, creating a unique “lock”. Technically, this is rather clever (and also a rather obvious way of going about it, I can’t really believe this has passed them over for so long!) but of course, the PS Vita is also technically very clever. It doesn’t make it any less popular on the market, and it’s on this point that Sony fall down.

You see, it’s no secret Sony are in some deep financial trouble. I totally appreciate that considering these losses and the need to claw back market share, Sony need to find new and exciting ways of making money and getting people to buy their machines. Ideally, you’d want to inspire the consumer market into buying your machine but so far, it would appear Sony Japan have come to the conclusion that cutting off second-hand sales is the only way they can profit from a new console. And I think we should be questioning the wisdom of this.

Sony really did need to ask themselves questions over the way things have gone over the past few years, but perhaps this demonstrates pinning the blame for their financial woes on the consumer, rather than trying to figure out why the Sony name has been struggling to sell in the market. On the subject of the PlayStation 3 – poor PR and insults aimed at your consumer base, coupled with an unattractive high launch price at retail and a system that has been restrictively holding back third-party ports might have something to do with it, as might their choice to excessively spend a fortune on making Blu-ray the industry standard for HD Media, an expenditure that indeed might have won them the war but look around at the market. Blu-ray still doesn’t have the lions share of the market, which is a problem as digital sales and streaming have snuck up and become a real threat to the Blu-ray’s market ambitions.

If you look very closely at Sony, it’s not hard to see why it’s been bleeding so much money over the last few years – their reckless spend spend spend attitude without any of the sensible precautions never could survive when the global economy began to hit the brakes in 2007. However, banning second-hand sales and patenting a means to force ad-breaks into games is not going to get them out of the very deep hole that they are in because it’s inherently anti-consumer, it punishes the honest consumer rather than being thankful for their patronage. I mentioned in my last article that companies often miss the point when they look at figures that don’t tell a story – Sony’s losses do tell a story, one of financial mismanagement and being too eager to loss lead, never wondering where that lost money might be made back. It just seems Sony might be blaming us, the consumers, for this, and it’s really not our fault. If Sony is seen to be blaming us for its own problems, it’s probably too late to do anything to save it.

Likewise, Sony must keep retailers on-side and unfortunately retailers have been selling second-hand titles for some time. Now, admittedly, I’m no fan of big chain stores that price a second-hand game £5 under its normal retail value, I think that is also anti-consumer and abusing the market share that you have in order to make obscene profits. However, they are still a necessary device in the world today, and Sony might find that far from the consumer rebellion being their greatest threat, it will be the retail rebellion that sinks their plans. Following the news today, GameStop found their share price fall by just over 6%. Sony found retailers refusing to stock the PSP Go! if you remember, because Sony’s plan with the Go! was to cut retailers out of a large part of their own business. Attempting to cripple second-hand sales of games so they can’t make any actual money on your machine, or relatively little money, will likely see a similarly volatile retail sector reaction. If your business plan is to make retailers lose money, then they will tell you to take a concrete walk off the nearest pier – they need to make money to survive, after all.

Psp Go!

You’d think this would have been a lesson worth learning, no?

Of course, patents aren’t always designed for use – they’re often pre-empting the future, and that’s never an easy task to be taking on. However, Sony’s Adventures in Patent Land do have modern-day impacts, as the industry looks to its rivals exam papers to see what they are writing hoping no-one notices, and the financial market reacts – as in the GameStop case – to any hint of a new machine invariably having an impact on the income revenue to a chain of stores. At a time when Sony needs retailers to be pushing its content more than ever before, cutting off this important branch or even attempting to hint you will be cutting it off can have dire consequences for your retail relationship. And yes, Sony have been here before. You’d think by this point that they might have learned it isn’t a brilliant idea to be spiting the retail stores just because they might sell used game copies. Second hand sales, as a figure, shouldn’t be their concern. It should be making as much money as you can, and unfortunately that might mean letting retail outlets do their thing so they push your brand more, rather than trying to restrict what they can sell of yours leading to them not bothering at all.

When the Nintendo Wii-U is selling okay and Microsoft has its new X-Box ready to unveil, it seems frankly barking mad to me that Sony can allow such news to leak long before any real technical demonstration of their new hardware as it inherently paints Sony as ‘the bad guys’. They aren’t, but Sony are coming off as desperate and weak and in the run-up to E3, that weakness is going to be blood in the water, with Nintendo likely set to reveal its hard-hitting franchises and Microsoft poised to reveal its own new hardware (and possibly a new Halo game). Sony will walk into their conference broken men, and in front of millions of consumers watching on TV and online, will have to try and explain themselves – or not, but that might also incur their wrath as the suggestion would be you’re inherently shying from the bad news. And that will vilify the company further – it’s almost as if no lessons were learned in the run-up to the PS3 Launch!

The timing therefore is terrible, the market impact devastating and will inherently push consumers away, rather than draw them in. I’m sure that all games companies would love to tackle second hand games sales in some way, of course they would, but the ramifications would just be too great to push it right now – and with digital sales on the increase, the idea of second-hand sales may one day simply rectify itself. Sony are working on a problem that inevitably comes with its own solution, with the way the market is headed, with how we might buy games in the future and how more and more are buying their games now. If people buy a game digitally, they can’t really sell it on, and that’s more profits for the developer and Sony/Microsoft/Nintendo than a physical copy at a retail store. Sony’s biggest challenge, the one it should be focused on entirely, is making sure that it gets its digital strategy right – because if it can do that, consumers will flock to it. If they buy more digital games, that is more revenue for Sony than they could ever have imagined. Keeping prices reasonable (or even slightly cheaper than retail – someone eventually is going to have to do it, and since Sony are so terribly happy to annoy the retail sector, this might be the time to do it…), keeping content flowing, keeping old content up and usable and reasonably priced as well as making sure there’s a solid network foundation there. If the future is digital, someone eventually will have to concede that keeping digital more expensive just to keep retailers on side simply isn’t going to work.

Sony are arguably in the best position right now to actually instigate this revolutionary change, but instead it’s more focused on killing the retailers through their second-hand sales, and that’s a little too obvious. It’s coming at them with a chainsaw from the front, rather than creeping up behind them with a butchers knife. In the process, the frontal assault will turn away consumers who consider Sony violent and anti-social, possibly sociopathic, rather than find themselves charmed and wooed by the company equivalent of Dexter.

Sony might be headed for the same end-game goal, but it’s taking an unnecessarily destructive road in the process. It desperately needs to tread that fine line between wanting everyone to help, and yet also knowing it needs to have a tight control on its own content and concepts.

I hope it works out, because I’d be sad to see the PlayStation be no more than a footnote on a marble slab.

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