Paid exclusivity
Paid exclusivity is the anti-competitive practice of limiting goods to only being usable via use of a specific company's product, whether it be permanent or only for a short time. This can be done either for a single product, or a supplier's entire product line.
Video game console manufacturers (such as Microsoft, Sony and Nintendo) often reach an agreement with third-party publishers and developers, to restrict a game to be exclusive to its own platform. The main goal of this is to promote their platforms, but in the process it can hinder people from playing the game as they have no desire to purchase the console and forfeit potential sales on other platforms for the third party publishers. A subsidy is sometimes paid to the third party publisher as a form of compensation for lost potential sales for the platforms they had to exclude. Since console manufacturers are usually in video game publishing business as well, they can also fund the development process of second-party games under the condition that they would gain exclusivity to such games.
A recent example of this practice was the recent addition to the Tomb Raider series of games. Despite Square Enix being disappointed in their Tomb Raider Sales, it was revealed at Gamescom 2014 that sequel Rise of the Tomb Raider will be a timed Xbox One Exclusive, which could possibly result in lower sales. There was some outrage by Tomb Raider fans unwilling to purchase an Xbox One to play the game on release.
History
One of the earliest examples of paid exclusivity was when Microsoft announced at 2007 that Grand Theft Auto: Episodes from Liberty City would be exclusive to the Xbox 360. Microsoft reportedly paid Rockstar Games $50 million to gain this agreement.
BSkyB, a British television service was also known for using paid exclusivity to get rights for the 'first subscription pay-TV window'. Sky's film domination was the main cause of forcing consumers to pay £50-£60 million more than they should usually.
Criticism
BSkyB was reprimanded by the Competition Commission for its domination of the film market, and was threatened with action prohibiting from having exclusive action.
Video game console manufacturers (such as Microsoft, Sony and Nintendo) often reach an agreement with third-party publishers and developers, to restrict a game to be exclusive to its own platform. The main goal of this is to promote their platforms, but in the process it can hinder people from playing the game as they have no desire to purchase the console and forfeit potential sales on other platforms for the third party publishers. A subsidy is sometimes paid to the third party publisher as a form of compensation for lost potential sales for the platforms they had to exclude. Since console manufacturers are usually in video game publishing business as well, they can also fund the development process of second-party games under the condition that they would gain exclusivity to such games.
A recent example of this practice was the recent addition to the Tomb Raider series of games. Despite Square Enix being disappointed in their Tomb Raider Sales, it was revealed at Gamescom 2014 that sequel Rise of the Tomb Raider will be a timed Xbox One Exclusive, which could possibly result in lower sales. There was some outrage by Tomb Raider fans unwilling to purchase an Xbox One to play the game on release.
History
One of the earliest examples of paid exclusivity was when Microsoft announced at 2007 that Grand Theft Auto: Episodes from Liberty City would be exclusive to the Xbox 360. Microsoft reportedly paid Rockstar Games $50 million to gain this agreement.
BSkyB, a British television service was also known for using paid exclusivity to get rights for the 'first subscription pay-TV window'. Sky's film domination was the main cause of forcing consumers to pay £50-£60 million more than they should usually.
Criticism
BSkyB was reprimanded by the Competition Commission for its domination of the film market, and was threatened with action prohibiting from having exclusive action.
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