InstantAction CEO Louis Castle has accused retailers like GameStop (which recently acquired social gaming site Kongregate) and Walmart of thievery, citing their promotion of second-hand stock using publisher-provided display stands.
“I still love making big traditional games that make a lot of money, and I want to think about different ways we can keep making those games,” said Castle, who co-founded Command & Conquer creator Westwood Studios and was formerly vice president of creative development at EA. “As it is, I think we’re heading for disasters in the retail space if we aren’t there already.”
We interviewed Castle for our preview of InstantAction's new Facebook music game Instant Jam, and asked him about his attitude to game retailers.
"[Retailers] take a game from somebody for ten bucks and then turn around and sell it for $30," he says, "and they don't give any of that $20 back to the original copyright holder. Something would be OK, but zero is not OK...Gamers can survive without retailers, but they can't without people making games. I just don't think the retailer has a higher order of right to survive than the people who make the content."
But Castle recognises the value of retail stores, and thinks that publishers and retailers should work more closely together.
"I would be happy to co-host our stuff on the GameStop or Walmart page, or whatever," he explains. "Let's be clear, this is about bricks and mortar retailers who sell secondhand games...I believe customers will go into a store where the people know the products, and pay more because of that - they will pay for that service."
Castle made the original accusation during his keynote speech at Develop this year. Below is the full Q&A from our subsequent interview.
Louis Castle Q&A
You accused Walmart and GameStop of thievery, do you stand by this statement?
They are, they're thieves. They're parasites and thieves. Because they don't let the publisher participate in the used games business. They take all the money. They take a game from somebody for ten bucks and then turn around and sell it for $30, and they don't give any of that $20 back to the original copyright holder. Something would be OK, but zero is not OK.
What can publishers do about this?
There's nothing they can do about it. Legally, the retailers are within their rights to do it. I'm not saying they're doing anything illegal. But just because you can legally steal doesn't mean it's not stealing. Gambling is statistically theft - people know they're going to be stolen from.
I was heckled by a guy who said he was from Gamestop who said, "You seem to hate retail." He was trying to make the case that if lots of people get exposed to the game then it's good for the publishers - I'm not sure I understand that. If we make something like woollen blankets and we start eating the sheep, pretty soon, we have no more woollen blankets. It's taking from the one thing that's making you money. If we stop making games, they stop being able to sell them.
His point was that we had to do it because their margins were shrinking and they were going to go out of business. And I'm like, well, so now you're shrinking the publishers' margins so we're all shrinking and are going to go out of business. But, honestly, gamers can survive without retailers, but they can't without people making games. I just don't think the retailer has a higher order of right to survive than the people who make the content.
Maybe I'm wrong about that! I don’t worry about being provocative in my wording, because it's what I think everyone in our industry feels, and no one will say it.
Retailers must be scared of you, though, because you're completely circumventing them.
Well, sure. That's the point. But I would be happy to co-host our stuff on the GameStop or Walmart page, or whatever. We bypass the bricks and mortar side of it. Let's be clear, this is about bricks and mortar retailers who sell secondhand games. It's not all retailers, it's not even all bricks and mortar. I believe customers will go into a store where the people know the products, and pay more because of that - they will pay for that service.
But traditional retailers don't really know where their business will come from, with services like InstantAction coming along and bypassing them entirely.
It costs a lot of money to do what we do, and we can make a lot of money, but our margins are very thin. We're not trying to replace the retailer – that's not our goal. The game business has not been disrupted by the internet tremendously because the process of buying the game is still about learning about it through reading about it somewhere, you go to someplace to buy it, and you get to play it afterwards. That's the exact opposite of what the media on the web is about. There it's about finding media anywhere, I can sample it for free and if I like it, I pay for it.
That's a different philosophy. You have to change your mindset. GameStop might say, "Well, where's our place in that?" Well, you have to become a value-added retailer. It's better to buy with a GameStop card because you get to go to that retailer and hear about the games. That's one way. There are lots of ways for them to survive other than taking the money out of the system that's going to the publishers.
Publishers are the ones who are taking all the risk. They're paying for development, pay for the marketing - the retailer has zero risk. It's all consignment anyway: if a product doesn't sell, they box it up and send it back to the publisher. I'm sorry their margins are eroding, but that's not the publishers problem. To use a loophole in the law to just gouge them is just unacceptable.