Paid Mods - Should Game Mods be Sold? - Extra Credits

First of all, I want to say a hearty welcome back and thank you to our friend Kathleen for returning as a guest artist this week. Kathleen's from an internet comedy team called LoadingReadyRun. They're the folks behind Desert Bus for Hope, and they make all kinds of cool stuff. You should go check them out. They're great. Here's some links. Okay, let's do this. So, recently Valve added the capacity for modders to charge for their work on Steam. We've seen Blizzard experiment with this a little bit in the past, but never before had we seen it tried on this scale or with this breadth of titles. Of course, Valve very quickly removed this new functionality due to angry feedback, but this is still worth talking about because paid mods on Steam are going to come up again. Valve is no doubt sifting through feedback and retooling the idea now. And the ability to charge for one's mods on Steam is obviously going to be a big shift, but will it be a good one? What will the repercussions be? Today, we're going to wrestle with those questions and think through the problems paid mods might present. So, first of all, are paid mods good for modders? I think the answer

here is yes. There was some uproar about modders only getting 25% of the revenue from their products under Steam's system, and yes, that's a small percentage, but then 25% is larger than the 0% they're getting now. So, that's at least a start. And if you think of this in terms of licensing and IP, 25% is actually pretty generous. Let me explain what I mean. If I, as a developer, wanted to make a game set in Skyrim, I would have to make a licensing deal with Bethesda. And not only is negotiating that kind of deal difficult in and of itself, but in that deal, I'd probably end up having to give Bethesda a huge percentage of the profits my game set in Skyrim earned. And in fact, I might even have to pay Bethesda up front for the privilege of making it. On top of that, while making the game, I'd be subject to a massive amount of oversight from Bethesda as to how I was using their IP, and they'd be holding me to deadlines that we laid out in our initial agreement. And that's a lot to deal with, but you know, it's actually pretty fair. Elder Scrolls is an incredibly valuable intellectual property. It has an installed audience of tens of millions of players, and

Bethesda's poured hundreds of millions, maybe billions of dollars at this point, into supporting that IP and building it into the mega giant it is today. The inherent value of using the Skyrim setting is going to benefit me greatly. And if I'm going to profit from that, if I'm going to benefit from Bethesda's hundreds of millions of dollars of investment by using their game world, it's reasonable that I have to give up a sizable portion of the profit. I mean, if you just think about it in terms of investment, let's say that Bethesda's put in $800 million to get Elder Scrolls where it is today. And let's say that I've got a three-person modding team, and we estimate that each person's time is worth about $75,000 a year, and we work on our mod for a year. By the time we're done, we'll have invested about 300ths of 1% of what Bethesda did. So, I'd say getting about 25% is pretty fair. But, okay, maybe you don't want to make a game using the Elder Scrolls IP, and maybe you just want to make a game using the Skyrim engine or modding tools. Even in that scenario, Bethesda would normally charge you a fee to do so, and often also take a percentage of the sales. Again, they put a lot of time

and money into building that stuff you're using. So, the bigger question to me is, would the shift to paid mods be good for the modding community at large? Modding has always had a certain purity to it. It was done out of love of the game, and because of that, we have all sorts of wild projects that might never have seen the light of day if profit was a motive. But, more than that, paid mods are also going to mean a lot more legal hassles, because somebody is inevitably going to put up a mod that uses stolen assets, or unlicensed music, or code from other mods, or simply another license that they don't have the rights to. What happens when someone uses the Skyrim engine to recreate Middle-earth? At worst, it'll come down to a bunch of lawsuits. At best, I expect we'll see some horrible infighting within the mod community over who owns what. All of that said though, the ability to sell mods means that modders have a way to get compensated for their time, which means that some of them will be able to completely devote themselves to the thing they love, modding games. That is a great thing. I think it'll help the modding community grow, too, and I expect it'll even serve as another path into the AAA industry for those who are

looking to work on big games. They can hone their skills while making a living modding games and use their work as a portfolio when applying to the major companies. That's pretty significant. So, okay, the next question. Would paid mods be good for players? I think yes, ultimately, with some qualifying statements. The obvious downside is that we'd have to start paying for mods that we've come to expect as free. That's going to feel especially frustrating when it comes to utility mods, the kind that don't add any content, but rather clean up UI, help you track monsters, fix lingering bugs, or automatically organize your inventory, that kind of thing. Ultimately, though, I think it might turn out to be a price worth paying because I think we're going to see better mods under that system, larger mods, mods with fewer bugs. We'll see more of those really ambitious mods completed instead of falling apart halfway through. And I think you'll see more of the mods you're really excited about finished in a timely manner, too, because the closer they're released to a game's launch, the more profitable they'll be. Despite the monetary cost, I think paid mods are going to end up being a win for the gaming community. We'll see more high-quality content for

our favorite games. So, now we come to the tricky question. Will paid mods be good for the developers whose games are being modded? This is the big unanswered question that's going to determine whether paid mods live or die in the long run. On the plus side, your game's likely to be getting higher-quality mods, and obviously those mods are now creating an additional revenue stream for you, too. So, that's good. But for developers, the downsides of this system are potentially massive. First of all, there's all the lost revenue opportunities. If everybody's already buying mods that offer them new adventures or bring them new stories in your game, will they even care when you release your official DLC? Like, how do you sell a pack of new units for a Total War game when modders have already added quality versions of every conceivable faction within the first 2 weeks? But the bigger question is, what does this mean for developers legally and in terms of support? I mean, developers are going to be getting a cut of the revenue from mods. So, what happens when a modder starts selling mods with stolen or unlicensed assets and some of that money goes to you? Or worse, what happens when some modder decides to throw Lord of the

Rings or Halo content into your game using a whole intellectual property you don't have the rights to? Of course, I'm sure the paid mod EULA will have language to distance the developer from any liability and the contract with the modders will do the same, but those efforts don't mean much until they've held up in court. And when somebody sees their content or intellectual property used in a game without permission and the parties involved include a penniless modder and a multi-million dollar company, well, I sure know which one of those the lawsuit's going to target. In the past, mods have always inhabited a sort of legal gray area, but modders and modding teams were allowed to get away with making things like that World of Warcraft mod for Minecraft because there was no market for such things. There was demonstrably no value, so rights holders could turn a blind eye. But trademark and copyright protection in the US are tricky. And you basically have to protect your stuff from anyone else making a profit off of it because if you don't, the next person who wants to do so can just point to the first person and say, "Hey, that guy didn't have to pay for using it, so legally it must not have demonstrable value." Does this mean that developers are going to have to be

on the lookout for modders using their IP? Will they have to send cease and desist letters or sue to preserve the value of their copyrights? It gets especially tricky because once paid mods are a thing, even unpaid mods have a fairly demonstrable potential value and paid mods have money going right into the pockets of rival companies, which as a game company, you pretty much can't let happen with your licenses. There's also the question of support. While it sounds ridiculous for a game company to have to support some random person's mod, anybody who has ever worked in community management knows that when players go online to complain to somebody that the thing they paid $5 for doesn't work, there's good odds that they're going to go to the dev, not the modder. And since a sizable portion of the money they paid will be going to the developer, they have a pretty good case to ask for that. And what happens when a mod is found with malicious code or simply does something the developer doesn't want it to do, like auto leveling the player, and they have to ban that mod. Do they have to give anyone who's already bought it their money back? See, while a lot of the focus of the discussion I've seen so far has been around what paid mods mean for the players and the modding community,

the list of questions for developers is enormous. And the future of such a system, as well as how it benefits modders and players, is largely going to be determined by how some of these developer questions get answered. Only time will tell. Lastly, we have to ask, will paid mods be good for Valve? Uh, yes. Yes, they will. See you next week.