Online Passes - Point/Counterpoint

By Rebecca Smith, 7 years ago
This week's opinion piece takes a different format this week. Online passes have always been a controversial topic, with the TrueAchievements community firmly divided in opinion. Two Newshounds, Suyomizzle and osubluejacket, take the two different sides this week and will present a discussion on this subject. Sit back and enjoy the debate, and be ready to let us know your opinions on the subject in both the comments and the poll that will be going live later today.

“Anti-Online Pass” Introductory Statement from Suyomizzle

With the advent of online gaming and downloadable content, various ways for publishers to "combat used gaming sales" have been employed to incentivize buying games new with the aim of increasing their profit margins. We have pre-order exclusive DLC and first-time buyer content separate from what would reasonably be considered to be part of the main game (as seen in Dragon Age: Origins and a few other titles... a strategy which unfortunately seems to have vanished).

The method in question here, however, is what we've called the "online pass". What differentiates the "online pass" from these other incentives is the fact that it essentially bars the player from accessing a portion of a game without a packaged-in online code. Generally the portion of the game that is rendered inaccessible is the competitive online portion; however, these online passes have expanded to disallow players access to what was previously known to be, and could be reasonably considered, a part of the full single-player game, as was the case in I believe both types of online passes, whether they disallow access to multiplayer or single player elements, are at best problematic and at worst insidious short-sighted money grabs.

“Pro-Online Pass” Introductory Statement from osubluejacket

The internet likes to bitch. Of this fact, I am certain. I’ve been on this planet for 30 years and can say with a reasonable degree of certainty that, if you gave everyone on the internet a dollar, the internet would complain that it’s not a Euro. Online passes are the latest thing that the internet likes to bitch about, and why? Because the internet doesn’t understand the way business works and how it affects them.

This week, Joystiq ran a story that highlighted a recent study from market analysis firm NewZoo. According to this study, used games make up 23% of sales in the United States and 20% in Europe. While those numbers do represent a minority of sales, they still represent a good chunk of sales. According to the ESA, gamers spent $15.9 billion dollars on games across all platforms in 2010… that’s “billion”… with a “B”. Doing the math, you’ll find that equates to developers/publishers missing out on over 3.6 billion dollars in the United States… that’s not chump change. If I were running the business, I’d be taking steps to prevent that loss, too, which is why an online pass exists.

In essence, an online pass is a deterrent against buying a used copy of the game. The reason for this is that developers and publisher do not see one red cent from the purchase of a used title. Now some law scholars (and even courts) have ruled that, while it's well within a developer/publisher’s right to prohibit the sale of used games, they have NOT outlawed them. Instead, they’ve taken the step that, in theory, should keep everyone happy. The Online Pass does NOT “break a game”. It puts a small portion of it behind a barrier that is lifted with a one-time-use code in new games. With that being the case, you can STILL buy the game used and have a good experience with it, and, if you REALLY like that used game and want to unlock that small portion of content, you can kick $10 back to the developer/publisher (remember, you didn’t pay them anything for that game) and have the full, unlocked experience… of course, you can avoid this whole rigmarole by simply buying a new copy.

I believe that Online Passes are the best compromise that can be made at this time. It allows gamers to get a game at a lower price point while still incorporating a vehicle for developers/publishers to see a small influx of revenue where they would otherwise see none.


The key questions when examining the "online pass" strategy is if it is good for the gaming industry, moral, and legal. I believe the answer is no on all counts, based on adverse effects to the gaming economy, lack of moral relevancy of publishers to the profits of developers' intellectual properties, and online passes flying in the face of first-sale doctrine.


Before I take on the assertions that online passes, in general, are bad for the industry, I’d like to nip the first-sale doctrine issue in the bud right here. While a few courts have weighed in on both sides of this issue, in 2009, the Federal Court of Appeals for the 9th Circuit (whose decisions are usually considered persuasive and followed by other courts throughout the country) has ruled that first-sale doctrine does not apply to games, because software companies are not selling the game, but rather, selling a license. In essence, when you purchase a game, you are purchasing a license to play the game but not the game itself. This is further substantiated by the End User Licensing Agreement that is included in every game that is sold for modern consoles. As a result of this, publishers are well within their rights to restrict the resale of used games.

With that in mind, I won’t go so far as to say that we should outlaw the sale of used games, but I feel that, like it or not, developers and publishers are well within their rights to use various methods of an online pass.


Speaking to the impact that online passes have on the gaming industry, one may reasonably assume that this strategy could have a benefit. After all, what could be better than developers having more money to make more games? But this assumption overlooks some key elements to what I will call herein the "gaming economy" which make the online pass strategy incredibly short sighted.

Essentially making every game $60, and tanking the resale value of those games, has a drastic impact on the spending power of gamers. While publishers argue that used game sales are of no benefit to them, and vocal developers asserting that someone buying the game used might as well pirate it, overlooks the fact that the money someone gains by selling a used game could be, and often times is, spent on a new game. While this is hardly an empirically established point, anecdotally I would suggest that if a statistic were derived to show how many new games are bought with funds (or store credit) gained from a used game sale, that statistic would be pretty high. A higher economic barrier to entry and the loss of resale power means less people will be buying, selling, and playing games.


I think we can agree that, yes, when a gamer (for the sake of this contextual argument, I shall call him “Jim”) sells a game back, they are (most-likely) using the acquired funds to purchase another game. The assumption that the game they purchase is new is just that… an assumption and one that predominant retailers of used-games are unwilling to shed any light on, but, from firsthand experience, I can tell you the lads and lasses at GameStop always recommend a used game when making a purchase. Furthermore, let’s assume that “Jim” buys a new game - that’s great for everyone, but what happened to the titles that “Jim” sold back? They get marked up 75-200% above what he got paid for them and put back on the market at a minimal discount over a new title. That 75-200% profit margin goes straight to the bottom line of the retailer and not to anyone affiliated with the creation or production of the game. How can that possibly be “right”?

The second point about the higher economic barrier to entry is also borderline laughable. Consider the fact that games have not gone up in price in almost ten years, while development costs have skyrocketed. Can you think of any other service or product that has (universally) stayed the same price or gone down in the past ten years while its production costs have gone up? It just doesn’t happen. While I hesitate to say that $60 per game is “cheap”, it certainly could be worse given today’s economic turmoil.

Finally, a thrifty gamer can (more often than not) find deals on new games if they take an hour to shop around. Here on TrueAchievements we run a weekly story on where to find the best deals in gaming and often cover special one-day sales that discount games cheaper than used. On top of that, there are several other sites dedicated to finding you the best deals on the web, or in brick-and-mortar stores. While I don’t begrudge anyone trying to save a buck, there are smart, socially-conscious ways to do it that are easier than one might think.


Moving away from the consumer, there's an even larger consideration in play here about how online passes impact dedicated gaming retailers. Many cities in the United States and Europe most likely have a locally owned and operated video game specialty store that provides invaluable competition to giants like Gamestop. While Gamestop and other big-box video game specialty stores have struck up the occasional deal to provide used purchasers with online passes, local stores don't have that kind of pull. Video game specialty stores, whether they're corporate or locally owned, make a majority of their money from used game sales. Without the used game market intact, game stores can't afford to stock niche games and foster an environment for creative but risky titles to succeed. Eliminating used game sales by depreciating the resale value of games makes it difficult for specialty game stores to exist at all, without some type of agreement with the publisher to provide online passes with used copies of the game, which only corporate stores can offer. The elimination of mom and pop gaming specialty stores would be a tragedy and inevitably result in less risky and creative games having a chance to sell at resale. Non-gaming specialty stores never stock them, and corporate stores with no competition could simply do whatever they wanted.


I hate to say it, but I live in a major, metropolitan market and have never seen one of these locally owned and operated video game stores, let alone one that carries niche titles, but can tell you that there’s three GameStops within six miles of my house. Furthermore, the niche titles that these stores might import are niche for a reason, be it quality, region, marketing support, or the white noise that is often the video game industry.

In fact, a case can be made that niche titles are the reason why gamers should be in favor of an online pass. Let me explain as briefly as possible.

Most big publishers tie their financial expectations to a handful of big-name releases (your Call of Duty/Elder Scrolls/Grand Theft Auto/Assassin’s Creed/Madden/etc.). These big games are often times the ones that have these online passes attached to them, mainly to convince gamers to buy a new copy. The profits from these new sales/passes go back to the developer or publisher who can then use that money to fund the development of “higher-risk” niche titles (like Mirror's Edge or Metro 2033 for example). While some may disagree, I think we can all agree that publishers and developers aren’t going to take risks without money to back them up.

Conclusion from Suyomizzle

While publishers may think online passes are the way to go to make more money, online passes are anti-consumer when taking into consideration that most games employing online passes would have sold millions upon millions of copies anyway, and don't need the additional revenue provided by online passes to ensure the survival of the franchise or company. These publishers are in many ways cutting off the foot to spite the hand in an effort to increase their profit margins. But, if every mom and pop game store folded and every independent developer went bankrupt, these games that use online passes would be the ones being stocked in non-gaming specialty stores and getting sold anyway, so they don't have to deal with the adverse consequences of their actions to the gaming industry and the gaming economy. We do.

Conclusion from osubluejacket

Again, publishers and developers have a right to be concerned about depreciated revenue due to used game sales and, in the long haul, so should gamers. If these companies stop making money, cuts will start to happen, maybe not to the mega-super-triple A titles and their developers, but to the smaller studios, the ones that need publishers to support them even if their first title doesn’t sell well. As those cuts get deeper, gamers will start to see developers/publishers push an increase in yearly releases and knockoffs of top-selling games.

While gamers might lambast publishers for attempting to make money, they fail to realize that, while some of this money does go to bottom lines/shareholders, it also gets put into MORE games and incentivizes developers with bonuses. The money earned from used game sales? That goes to GameStop’s bottom line and, if anyone is putting these “mom and pop” stores out of business, it’s GameStop.

In the end, however, it’s all about choice. The facts are irrefutable. Publishers and developers are going to continue to put Online Pass in games until it fails… and it hasn’t and probably won’t because they’re not putting it in the “take-it-or-leave-it” titles, they’re putting them in the titles that sell, because these publishers need to make money on them to stem the losses from riskier titles that won’t see profit. It’s up to gamers to decide what’s more important; saving five dollars on a used title and paying ten for the online pass, or buying a new title, saving five dollars, and making sure that their hard-earned money goes back to the people who worked so hard to earn it.

The opinions and statements expressed in this article are solely those of the authors, Suyomizzle and osubluejacket .

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Rebecca Smith
Written by Rebecca Smith
Rebecca is the Newshound Manager at TrueGaming Network. She has been contributing articles since 2010, especially those that involve intimidatingly long lists. When not writing news, she works in an independent game shop so that she can spend all day talking about games too. She'll occasionally go outside.