Point-of-sale video game activations won't work

The Entertainment Merchants Association, an organization that represents North American entertainment retailers, reported in the latest edition of its trade publication, Inside EMA, that point-of-sale video game activations could help save the industry "billions of dollars" in lost sales due to theft and piracy.

Dubbed Project Lazarus, the organization's initiative plans to determine "the feasibility of deploying 'benefit denial' technology on retail optical discs."

According to the EMA, its study has found that benefit denial, the "concept of denying a shoplifter or internal thief the ability to use stolen goods," could lead to reductions in theft and piracy.

The study isn't complete, and associated costs still need to be analyzed. But the EMA says benefit denial could substantially improve the process of buying games.

According to the organization, games should be shipped to retailers in a "locked state and then automatically 'unlocked,' based on a point-of-sale transaction." So if anyone attempts to play a locked game on a console, it won't boot up. Only after the sales transaction is complete will the game be activated. It can then be played on the game machine of their choice.

The EMA thinks that this is the future. I think that the plan is a loser.

Piracy and theft is indeed a problem in the video game industry. But it's not so bad that it requires games to be shipped in an unactivated state. Moreover, game piracy is really a bigger problem on the PC than on consoles.

According to a study performed by TweakGuides.com, Crysis Warhead, a PC game, was illegally downloaded more than 243,000 times over a two-month period. Fallout 3's PC version was illegally downloaded more than 271,000 times in a single month. But the Xbox 360 version of the game was downloaded just fewer than 20,000 times in the same period. TweakGuides couldn't find a single PS3 copy of the game that was illegally downloaded.

Those are just a few examples of many that TweakGuides cites. Piracy is certainly impacting the industry. But as TweakGuides points out, it's not a major problem. And since most of the issues affect the PC side of the business, not even benefit denial will be able to stop piracy. Once the game is activated, it could easily be downloaded onto a computer and uploaded to torrent sites, as usual.

How will it work?
In order for benefit denial to work, the EMA would presumably require the three major consoles to have some sort of activation verification function to ensure that games were legally purchased. It will be interesting to see if Nintendo, Sony, and Microsoft agree to that.

There is also a lucrative market for used video games to consider. After some gamers complete a title, they sell it back to the retailer. How will benefit denial handle that situation?

What if a gamer wants to share a title with a friend? Will that game still work on the friend's console, even though they didn't purchase it? It better.

And what about connectivity? Will video game consoles need to connect to the Web to verify activation? If so, it could pose a problem, since many users don't connect their consoles to the Internet. It's adds another hurdle to overcome before they can enjoy a game.

What about downloads?
We also can't forget that video game downloads will make this initiative obsolete before it even gets off the ground. Microsoft announced at E3 this year that it's bringing full-game downloads to the Xbox 360. The practice is widely considered the future of the video game industry. And once again, the EMA has proposed nothing with Project Lazarus that will address that.

Benefit denial just doesn't make much sense. I understand that retailers are trying to find ways to limit the amount of lost sales, but using a video game activation system will only make it worse on the industry. And since there are so many issues with the plan, I don't see how it can work.

I think it's time to get back to the drawing board, EMA.

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