Publishers don't need to require their games' CD-keys to have online authentication. PC games' CD-keys locked away everything on the disc since inception, before the Internet.

And it's quite a stretch to say that publishers lose money from used content -- you're forgetting that the first buyer already paid the publisher for that particular copy, and unless you're ready to erode property rights, the publisher has no rights to property that it's sold to someone else.

Agreed Rob. Publishers are not victims in this equation. Used sales hurt them probably about as much as online piracy does, which is to say, not very much. However the people who really do get hurt (and a differentiation that most people forget to make) are the developers (except in very rare cases where the developer is also the publisher, as with Valve).

Um...no. I respectfully disagree. The first buyer already paid for the copy in question. Both the publisher and developer (through a contract with the publisher) were already compensated for this individual sale. If the first buyer decides to sell that game to a second buyer, neither the publisher nor the developer have ownership rights to that copy, i.e., they have no rights to earn money from the sale of that copy.

The real problem here is that publishers (and developers) want money every time a single copy of a game exchanges hands. This is a clear assault on long-established legal precedent regarding copyright and property rights (i.e., the first-sale doctrine).

Rob, no I think we do agree, but we're not seeing eye to eye on the details. I'm not disputing the ownership rights of the consumer to resell the product. The point I was trying to make is more on the subject of the sale of a used game over a new copy, not the compensation to publisher or developer for that used copy. I personally believe that the used market should and needs to exist. Where the issue arises is when used copies trade hands multiple times while new copies sit on the shelves. Admittedly, this a problem in the tactics of the retailer, and not one for the consumer. However, make no mistake, the publisher sees profit first, and the developer gets what is left over (usually after the funding has been repaid). Does this make the publisher responsible for having doled out the money to fund development? No. However, it is a fundamental problem when the developers themselves are seeing very little return. Used sales over new sales complicate this matter by removing more possible revenue for the developer. It's a complex issue, and the details are very much in question. Personally, if I could purchase directly from the developer, and cut out the retailer and publisher, I would (and do, when the opportunity presents itself). 

However, I am not disputing the ownership. I fully believe that the consumer has the right to do with their purchased product what they will. On that we definitely agree. Make no mistake, though, that the developers are much more beholden to the publishers than you think, and their fate is linked to what the publisher does, whether bad or good. If they sell one game and never another new copy, while the one passes hands between all the people of the world, I can guarantee you that that developer will be the one to suffer while the publisher chalks it up to a financial loss and moves on to their next venture.

The thing is, though, that it's a hefty assumption on part of anyone to make that a used-game buyer would have bought a new game had the used game not been available.

Obviously, we're talking about a price conscious consumer, and we already know that this consumer believes $60 to be too high (otherwise, she would not be considering buying a used game). We can no more say that used games are purchased in lieu of new games than we can say that games are pirated in lieu of being purchased. It's the same faulty logic.

In other words, if people are buying your game used overwhelmingly, then your game is priced to high. Without the used option, these consumers may not have ever bought your game at all.

Sure, CD-Keys don't need Internet access to function but without it they are that much easier to hack around.  Even then, they are laughably easy to get around in their current state.

I absolutely agree that the publisher should have no rights on a copy of a game that has already been sold.  I just think that in their minds that equates to a new copy of the game that would have have been sold if the used copy didn't exist.  While this isn't always true (some people only buy used), that is probably how they see it.

Price-conscious has nothing to do with people buying used at Gamestop. If you walk into a Gamestop to buy a game that came out a week ago and pick the copy that costs $55 instead of $60 you're not being a price conscious consumer -- don't give yourself that much credit. 

I also think it's clouding the issue to say the publisher wants money "every time the game changes hands." The publisher wants money from every person who buys and enjoys their game, especially if they enjoy it enough to spend time in multiplayer.

To say that we can't say that used games are purchased in lieu of new games is false, I believe. Essentially, we have three types of customers. We have people who always buy new for whatever reason, people who always buy used, and people who fall somewhere in between. The people on the fence are the people in question. People who buy used all the time we can rule out, because the odds are good that nothing will ever change their mind. The people who buy new are obviously not the problem. The real problem, as Adam pointed out, are the people who are on the fence about buying a game for $60 when the used version is $55. Honestly, for the person who is willing to make that kind of a tradeoff, we're not talking about price-conscious. We're not even talking about a game being priced too high. The difference in price spells that out rather clearly. It's also not about the person who chooses to buy a game that's 2-3 years old for $15, instead of $30. I wouldn't even try to argue that point. But can you honestly justify putting $55 into Gamestop's pocket instead of $60 into the hands of the publisher/developer who made the game? Now, I realize, that most people don't think beyond the $5 difference. However, this goes back to the discussion at hand and the meat of the article. If the publisher wants to offer less to the person who would pay $5 less to a pawn shop for a used version of the game, I don't see how that can be argued. This is not to say that the person who purchased it new in the first place doesn't have the right to sell it for $20-$25 to the pawn shop. It isn't even really in the same argument.

At any rate, the people on the fence are the ones that are in question, and we absolutely can say something about them. For some, $60 may be too much to pay for a game, but not when they are buying the used game for a mere $5 less. That absolutely does hurt the developers. 

OK, time for some (GameStop specific) facts.

1) Only 4 percent of used-game purchases are of games released within the 60 days prior of purchase. We all know game sales are front loaded to the first few weeks. So this means that people are not buying $55 used games (Although, let's be fair here and acknowledge that heavy used-game buyers are likely to have an Edge card, and thus, they receive an additional 10% off. That makes the purchase $50.) when they intended to buy new. Most people buy games new when they come out, not used.

2) 70 percent of proceeds from trade-in value goes directly into buying new games. This means that most people (and by a large majority) are buying new games and then selling them later to buy more new games.

Look, I get it. That we're here discussing the business end of the industry means that we're bigtime fans of gaming. We all want developers to succeed, and thus, many of us tend to overidentify with game studios. We're fans, dammit, not mere customers.

News flash, though: The industry doesn't treat you like a fan. You are a mere customer, and their attitude toward us is clearly evident in these types of money-pinching schemes designed to wrestle ownership and control from us.

I'm just about done having this argument, honestly. If the industry wants to cut off their own legs out from underneath themselves, so be it.

Also, check out GameStop's public financial reports. In the latest report, go to page 33. GameStop sells more new hardware and software (2010 numbers: 18.1% and 41.9%, respectively -- that's a clear majority) than used products (2010 numbers: 26.1%). But the retailer also profits more much more from used products (2010 numbers: 46.2%) than new hardware and software (2010 numbers: 7.3% and 20.7%).

If the industry cuts into GameStop's best source of profit, which allows them to open more stores in more locations (and therefore, sell more new games and consoles), the industry should expect to see a decline in sales of new games and consoles, too.

Rob, I agree that the Gamestop argument is a tired one, and while it is still a valid problem, it is something that is extremely complex and will see no solutions from people like us (I also do appreciate the debate, and the citations you have provided). I merely brought them up in my example because they are the largest video game retailer in the world. I believe this problem extends beyond them, but I would like to address some of the valid points you made (Keep in mind, I only take issue with people who purchase a used game within a short period of the game being released). In the first article you quote, the Gamestop exec gives the figure that 4% of used sales come from used games sold within 2 months of the game’s release. Now, this figure is obviously chosen for a reason (it SEEMS very low), but I’ll use it anyway. Using the 2010 report that you kindly pointed out, the total revenue for Gamestop in 2010 was 9.474 billion. If approximately 26% of this is used sales (couldn’t find the info you pointed out on page 33, but I’ll take your word for it), that means that 2.463 billion in revenue comes from used sales alone. Now, let’s take 4% of that for all used games purchased within 60 days of being released for the year, which equates to approximately $98,529,600. Now, that’s no small number when you consider that that’s the revenue purely for that 2 month period of time. If we carry that out to sales of a used game within 6 months of being released (in my opinion, more realistic since this is the average time it takes for a game to drop in price, both used and new), that number swells far beyond that. So, while it may seem like the numbers are low, rest assured they are quite significant. Also, I don’t believe for a second that Gamestop will ever have any trouble opening more stores, whether the industry is cutting into their used sales or not, nor will their ability to open more stores or not have much effect on the number of people buying new products or industry numbers. Where I am from, there are 3 Gamestops within a three block radius of each other, all catering to the same clientele. However, Gamestop aside, we can say this about most retail shops that deal in used sales of games that were just released (Gamestop just happens to be the biggest offender).  

My point remains the same. The developers suffer from used sales. It’s just a fact. Publishers try to offset this by making sometimes ill-informed decisions that end up hurting consumers. It’s a game of push and pull, and by and large, we’re not invited. And yes, we have this discussion because we care, but I identify with developers because I care about the games that they make, and I generally want to see them make more. I also identify with them, because by and large they ARE us. A large majority of developers got into it because they love the hobby just as much as we do. Those are just two reasons I can think of to support them as much as I can. And while what publishers are doing very well might cut the industry off at the knees, you can be sure that Gamestop cares not a whit about whether the industry is holding the axe or they are.

As a last note, it does not matter whether the number is $5 less or $10 less. If consumers were truly price conscious, they could find acceptable alternatives. There do exist places online where games can be purchased new for the price of a used copy at Gamestop. That, to me, is the definition of being price conscious. There really is no excuse, except for being lazy, and to those people I believe that if you lose out on a multiplayer mode because of a decision like that and end up having to pay extra to get it, you essentially get what you paid for.  

Page 33 of the report, not of the PDF file.

You're mixing up the sales and the profit percentages. Twenty-six percent in sales means the percent of products sold, not the percent of profit made. GameStop saw 46.2% in profits from used products in 2010.

Bottom line: GameStop sells more new stuff than used stuff. Way more. That's irrefutable. But they make more money from selling the used stuff than they do the new stuff. The margins on used products are higher, and because GameStop sells used products, they have money to open stores in new locations, hire more employees, and therefore, push more new products, which they sell at a higher rate than used products.

You should believe that GameStop wants to open new stores. In 2010, they allocated $75 million to open 400 new locations.

"The developers suffer from used sales. It’s just a fact. "

It's not, and you haven't argued a reasonable case. You have a lot of conjecture and anecdotes, a misinterpretation of the numbers, and a hefty dose of assumptions of revenue loss.

Look, I realize that this is a no-win situation. I'm not sure how I can mix up the profit margins on used sales when they are essentially 100% profit for Gamestop. If you would like to factor in how much they pay for the used product, fine, but the profit margin for them off of these sales is still huge (even if you do not factor in those people who originally bought the product for the new price and sold it back for a fraction of the cost, which is even more money in Gamestop's pocket). Also, I'm not disputing that Gamestop sells more new than used. That was never in dispute. The dispute was about the impact of the people who purchase the used version of a product when the new version has been on the shelf for sx months or less. My point in breaking down the numbers was that the numbers that are given are a creative obfuscation. Essentially, they only use the numbers that look small, and not the ones that are large. And I never said that Gamestop has no interest in opening new stores. My exact statement was that I don't believe for a second that Gamestop will have any trouble opening new stores, regardless of their used sales. It is a healthy assumption on your part that the lack of used sales of games within that small period of time when a game comes out would be so damaging as to cripple Gamestop's ability to open new stores, hire more employees, or stock new product. Conversely, if you believe that this number would be so large as to be so damaging, how could you not admit that the sum is no small one that they reap at the expense of the industry (by that I just mean money that cycles endlessly inside Gamestop and never sees the people who put out the product in the first place)? Either way, it seems to prove the point. 

At the end of the day, you believe what you believe, and I believe what I believe. In fact, I'm glad to know that we've both done our homework on the subject. It means that there are people out there who know more about the subject than just a few simple facts. However, though you may believe that I am full of conjecture, anecdotes, misinterpretation, and assumption about the loss to developers, I would remind you that you have provided no real evidence to the contrary. Perhaps we do need to just agree to disagree.

How do they hurt the honest consumer? The honest consumer will buy games new and pass the profit to the publisher and developer.

If you care about supporting the developer for making a quality game, how is supporting this "buy used" movement going to help them? I've seen too many good studios go under. I can't help but think that pirated and used games helped them down that path. Online passes aren't helping the developers, only the publishers. But new game sales help keep the developers relevant and fundable.

Not as often as you would think. After all, does purchasing L.A. Noire new help Team Bondi?

Also, you could just buy used games from Gamefly, and you get the unused online pass free.

Matthew, Team Bondi is a bad example. They were facing an uphill battle (not to mention a legal one) in terms of finances right off the bat. They were doomed from the beginning, because of mismanagement, and while new sales helped to pay the developers SOME of the money they were owed (last I heard, many of the developers had their own lawsuits going just to get paid for the work they did), the company of Team Bondi itself was in ruins. So, in a sense you're right. But again, that is a very atypical situation. However, there are many cases where developers close up shop because they are not able to remain solvent in the face of poor sales. Now, whether this is due to used sales or just a poorly made game, that could be argued. However, one thing that cannot be disputed is that new sales ALWAYS benefit the developers, while used sales net them nothing. 

As a brief sidenote, I'm speaking about games that have just released. There is no argument about games that are years old. As with the list you provided, good luck even finding a new version of any of those games. The real problem in this equation lies with the sale of used games that have just released. Just wanted to clarify that. 

FYI, online passes DO help developers. 

I didn't think the required online multiplayer pass was a big deal either. I thought it just makes it harder to pirate the games. I mean, it made sense for me to register with EA's Origin service and a few other things, so that I could receive my extra limited edition goodies. But the concept realy hearkens back to the old Sierra Online days, for me at least.

I don't think developers will ever require online passes for single-player content. That would really stink. Bethesda did something to restrict Rage though. I thought the whole seal-the-sewers idea was a bit much.