PCG Article GOG recommits to 'DRM-free philosophy' as it struggles to stop bleeding money

[ZedClampet]

GOG recommits to 'DRM-free philosophy' as it struggles to stop bleeding money

CD Projekt says GOG will refocus on its "core business" of selling curated, DRM-free games.

www.pcgamer.com

As I said in the article comments, I like CDPR and GoG--and I've probably got 50 games there--but DRM just doesn't matter to me. Except for multiplayer games, I can play any Steam game I want offline.

I just like Steam better--there, I said it. If I think of an old game I want, I might check to see if GoG has it, but most of the time I don't even think of them at all.

 

[mainer]

I think it's a smart move for CDPR, going back to their original philosophy being DRM free and being a store front/launcher for "good old games". That's always been the strength of GOG anyway in my opinion, as I don't see them ever truly competing head to head with either Steam or Epic.

Steam is also my favorite for various reasons, and most of my games reside there, but I also have 20-somthing games on GOG, but all of those are very old games; like Ultima Underworld and the entire Might & Magic series. Will I ever play them all? Doubtful, but they cost next to nothing, and are much easier to install than dragging out the old boxed version and trying to install it, or even get it to run. And the ones I have installed from GOG run fine on Windows 10. So maybe they'll only be a "niche" storefront/launcher, but they'll be the best at what they do that way.

One question that came to my mind when I was reading that article: What would happen to our games if GOG actually ceased to exist? All those games we purchased would no longer be available to play. I don't really think it will ever happen, it's more of a "what if" worst case scenario kind of question.

 

[Brian Boru]

What would happen to our games if GOG actually ceased to exist?

As long as you downloaded them, you're golden—play away for as long as your OS works with them.

 

[mainer]

As long as you downloaded them, you're golden—play away for as long as your OS works with them.

But what if they weren't downloaded? I have 24 games purchased on GOG, what are the chances that I would have downloaded and installed them all? I realize this is all hypothetical, and that these major store fronts/launchers will never cease to exist (at least in my lifetime), I'm just curious about what would happen in such a doomsday scenario. Surely there would be advanced warning to players, and some type of contingency plan in place.

 

[Brian Boru]

what if they weren't downloaded?

Then you're at the mercy of whatever gods take ownership of GOG properties.

I have over 900 games there, so I share your concern. All I can say is download any you can't be philosophical about losing

Of all the platforms, GOG is the last one I want to see disappear, due to the work they do to make old games work on new OSs.

 

[Sarafan]

GOG isn't going anywhere. Basically the financial results of the platform are not so important for CD Projekt. The platform is more like a field for experiments and a place with a mission. It's a quite similar situation to Google and YouTube. Google had to heavy subsidize the video platform for a long time.

Of course given the fact that CD Projekt is present on the stock market, there will be some actions undertaken to minimize the loss. But closing or selling GOG is not an option. In the previous year the platform made a record profit and a huge spike in sales revenues. The latter also look quite decent in the current year. The financial difficulties result from an increase in operating costs (global inflation had an influence on this, but it's not the only reason of the increase of course) not a drop in sales revenues. And that's the optimistic part of the whole problem.

Basically GOG has problems when it starts to compete with the biggest players in the digital distribution market. It's good at being a cameral platform for particular groups of users. And it'll probably focus on the latter in the future.

 

[ZedClampet]

Of all the platforms, GOG is the last one I want to see disappear, due to the work they do to make old games work on new OSs.

If Steam disappears PC gaming as we know it is dead and gamers lose many billions of dollars worth of gaming libraries. GoG is a cute way to get old games, but valuing it over Steam is, frankly, nuts.

I don't want GoG to go away, but I'm sure they will give you notice to download your games. I don't think GoG will exist in 5 years. They've been bleeding money for a long time now. Hardly anyone buys from them, and few companies are willing to go DRM free. The only way they can save it is to slash costs and make it just a barebones storefront and downloading service. Probably GoG Galaxy will be the first thing to go. The only real hope at this point is that CDPR's management can hold off investors while minimizing the losses the store creates to their bottom line because the store is probably never going to be successful again.

 

[Kaamos_Llama]

Probably GoG Galaxy will be the first thing to go.

They haven't updated it in a long time and I'm sure its had funding cut quite some time ago. Its pretty much fully functional for me already though so I hope they at least keep it going as it.

I wouldn't have bought a single GOG game without it tbh, now I own 30 odd, so they got something out of it.

If they check out completely I'll have to give Playnite a try, havent felt the need as Galaxy 2.0 does everything I want from a launcher already.

 

[Brian Boru]

If Steam disappears PC gaming as we know it is dead

PC gaming will only die if the market disappears, not if a supplier, even the main one, disappears. To put it another way, while there's demand, there will be supply. Steam won't disappear tho—if they screw up, they'll be bought by a competitor for pennies on the dollar.

gamers lose many billions of dollars worth of gaming libraries

Not a chance, some body or group of companies would step in to quieten the deafening roars of gamers in agony. If they didn't, every PC gamer retailer would suffer greatly from the backlash.

The only way they can save it is to slash costs

That depends entirely on GOG's strategic value to CDPR. Saving 30% deduction on every sale of their own major sellers made thru GOG may be well worth it on its own, or senior management may see it as a core service to the gaming community which is worth supporting, or it may be good PR and worth keeping as a sort of loss leader.

There's also the question of how the accounting of sales of their own games was/is handled. Is it all properly credited to GOG, or is there some tricky transfer pricing game in play? I scratch my head how the old Good Old Games could be profitable, but now they're selling newer dearer games, they're bleeding money—all/most of the tech infrastructure for the store, cart & library were already in place, so where did the losses suddenly come from?

Probably GoG Galaxy will be the first thing to go

Is that costly?
If they're paying big fees to the other retailers to be allowed collect their player libraries, then it could go. But I don't see it, when Playnite can operate for free.

valuing it over Steam is, frankly, nuts

I agree, but that's not what I'm saying—sorry for my clumsy phrasing. My point is best summed up in two ways:
1. As long as there are PC players, there will be Steam and many wannabe Steams, no danger there.
2. GOG provides two services which as far as I know are unique—updating games to work with new OSs, and a focus on curated DRM free.

I don't want those services to disappear, which they likely would if GOG folds. There's very little danger of Steam's services disappearing, once their market share became available to competitors. But they won't disappear, there'd be a queue to buy their assets—I bet Microsoft would snap them up.

 

[ZedClampet]

PC gaming will only die if the market disappears, not if a supplier, even the main one, disappears. To put it another way, while there's demand, there will be supply. Steam won't disappear tho—if they screw up, they'll be bought by a competitor for pennies on the dollar.

Of course I don't think PC gaming is going to die, but if we got to the point, in the next 20 years, where Steam collapsed, then PC gaming is dead, not because of the Steam collapse, though. I didn't say that.

Not a chance, some body or group of companies would step in to quieten the deafening roars of gamers in agony. If they didn't, every PC gamer retailer would suffer greatly from the backlash.

No way this would ever happen unless Steam was bought out rather than collapsed. No one, and I mean no one, is going to provide the infrastructure needed for over 100 million gamers to be able to download their hundreds of billions of dollars worth of games, not after a Steam collapse.

That depends entirely on GOG's strategic value to CDPR. Saving 30% deduction on every sale of their own major sellers made thru GOG may be well worth it on its own, or senior management may see it as a core service to the gaming community which is worth supporting, or it may be good PR and worth keeping as a sort of loss leader.

There's also the question of how the accounting of sales of their own games was/is handled. Is it all properly credited to GOG, or is there some tricky transfer pricing game in play? I scratch my head how the old Good Old Games could be profitable, but now they're selling newer dearer games, they're bleeding money—all/most of the tech infrastructure for the store, cart & library were already in place, so where did the losses suddenly come from?


Is that costly?
If they're paying big fees to the other retailers to be allowed collect their player libraries, then it could go. But I don't see it, when Playnite can operate for free.

Their losses are coming from development costs and infrastructure including equipment and personnel. GoG has a lot of employees, but not as many as it had when they laid off people a couple of years ago. Still, I'd say personnel, including the development team, is several million dollars a year. Then you have all the other costs associated with running this sort of business--buildings, equipment, etc.

People think GoG is just a bit of software that CDPR runs while it's doing other things. This is not true at all. It's a full-on business arm of CDPR, currently one that is bleeding money.

 

[Sarafan]

If Steam disappears PC gaming as we know it is dead and gamers lose many billions of dollars worth of gaming libraries. GoG is a cute way to get old games, but valuing it over Steam is, frankly, nuts.

There are some reasons to prefer GOG. First of all it's DRM-free aspect, which is important if you're into preservation of game files. GOG has a different approach to the ownership of games than Steam. Maybe it's not full ownership like it was in the case of boxed editions, but it still puts a strong emphasis on the property values. Of course I know that the game's EULA often claims that you're merely acquiring the right to use a copy of game, not own it, but the fact that there's no DRMs on GOG games makes you an owner of the copies from the practical point of view.

There's also the thing that Brian Boru already mentioned. Games on GOG are properly modified to run without major issues on modern hardware and operating systems. Steam not always provides such features.

Next, there are people who prefer GOG due to the specific community around it. The community is demanding (I can confirm that as a moderator), but also quite unique You won't find such personalities anywhere else over the Internet.

Some people also prefer GOG, because they want to support smaller companies or they like the design of GOG and Galaxy more than Steam. I'm sure there are other reasons to prefer GOG over its competitors.

I don't think GoG will exist in 5 years.

I don't think so. GOG is part of the CD Projekt group which is in very good financial condition. GOG didn't have a single year with a net loss in the financial results. Probably this year results will be worse and the company will have a first loss in the history of yearly reports, but it's nothing that can't be managed. Think of it like about YouTube for Google or Epic Games Store for Epic. Both are (or were) operating on big losses for a longer period of time.

Hardly anyone buys from them, and few companies are willing to go DRM free.

These are facts and numbers for 2020: https://www.gog.com/news/check_these_facts_and_numbers_about_gog. The sales revenues are growing year to year constantly and they reached 343,75 million PLN in 2020, which gives us 82,25 million dollars. Maybe it's not a huge number in comparison to Steam, but I wouldn't say that hardly anyone buys games at GOG.

The only way they can save it is to slash costs and make it just a barebones storefront and downloading service. Probably GoG Galaxy will be the first thing to go. The only real hope at this point is that CDPR's management can hold off investors while minimizing the losses the store creates to their bottom line because the store is probably never going to be successful again.

Some restructuring will be done for sure. However as long as the whole group is in a good financial shape (and it is right now), I don't see a huge threat to GOG's functioning.

There's also the question of how the accounting of sales of their own games was/is handled. Is it all properly credited to GOG, or is there some tricky transfer pricing game in play? I scratch my head how the old Good Old Games could be profitable, but now they're selling newer dearer games, they're bleeding money—all/most of the tech infrastructure for the store, cart & library were already in place, so where did the losses suddenly come from?

Gwent's operating costs are shared by GOG unfortunately. It was announced a week ago that Gwent will be separated completely from GOG and some employees that are focusing on online aspects of the platform will be moved to CD Projekt Red. I'm certain that this will help to improve GOG's financial results in the upcoming year.

 

[Brian Boru]

Gwent's operating costs are shared by GOG

Ah, I forgot about that. So is it reasonable to say then that loading costs unrelated to the store onto the store's balance sheet is a major or minor contributor to the current financial oopsie?

These are facts and numbers

Much appreciated—I knew I'd seen that somewhere, but couldn't find again in a rush. Very decent numbers, especially more than doubling revenue—that's a key indicator of good health, assuming it didn't suddenly collapse this year for reasons other than pandemic. Once they realign the accounting orchestra, the reports should better match performance.

 

[Sarafan]

Ah, I forgot about that. So is it reasonable to say then that loading costs unrelated to the store onto the store's balance sheet is a major or minor contributor to the current financial oopsie?

I don't remember whether it was clarified how big are Gwent's operating costs, but yes, they contribute to the loss and they do it probably in a meaningful way. If it wasn't like this they wouldn't be separated in the upcoming year.

Much appreciated—I knew I'd seen that somewhere, but couldn't find again in a rush. Very decent numbers, especially more than doubling revenue—that's a key indicator of good health, assuming it didn't suddenly collapse this year for reasons other than pandemic. Once they realign the accounting orchestra, the reports should better match performance.

There was no big decrease in the sales revenues in the first nine months of this year. In fact they even went up in the third quarter and this one is always the worst when it comes to financial results. I think they'll manage to balance the whole business in the longer period of time, but we have to prepare for the first loss in history in the yearly results for 2021.

 

[ZedClampet]

What I don't understand about this situation is that GoG caved to the demands of Chinese players to support government sponsored censorship and authoritarianism and didn't put the game Devotion on their site, so where is all this Chinese money now? GoG did what they said, so why aren't they buying games on GoG?

 

[Brian Boru]

GoG did what they said, so why aren't they buying games on GoG?

I have no idea, but the obvious guess is they're buying on Steam, since Steam also pulled the game at the time.

 

[ZedClampet]

I have no idea, but the obvious guess is they're buying on Steam, since Steam also pulled the game at the time.

Get your facts right, Impatient Gamer. Steam never took the game down, the game's publisher did. Valve had zero to do with it. But then a year later, Red Candle tried to quietly put the game on GoG, and GoG said okay, but changed it's mind at the last second due to messages it received from Chinese players.