The war on used games

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Monday, April 23, 2012
EDITOR'S NOTEfrom Sam Barsanti

I don't buy used games very often, and I rarely buy digital games, but if more titles were available for a cheaper price I would gladly start filling up the hard drive on my Xbox with virtual copies of games I'd probably never play. It'll be just like my Steam collection!

Gamestop

We are nearing a precipice in the gaming industry’s battle on used-game sales. The problem is that without a clear line of dialog to find a common-ground solution for publishers and consumers, this war will go nuclear very soon.

First, we must recognize what each side wants from one another.  Publishers want money.  We shouldn't deny it.  They do deserve a right to make a profit and to get reimbursed for the investment in making the product that the consumer wants  They see the sale of used games as lost income and are looking to find ways to recoup that (with the online pass being one of these "solutions"). Consumers of used products within the first few months of release are typically looking for the price to be reduced; they are looking for a deal.  Consumers have started raising boycotts, writing articles, posting comments on message boards, and declaring one publisher the worst company in America all because they are fed up with being overcharged.

The solution to this problem lies in the way many companies are re-releasing old games digitally. Now, people have other avenues to purchase titles even after they can no longer be found in stores. However, what these publishers should do instead is release new games at a discounted rate on or near the release date of the physical copy.

 

Selling games digitally at a reduced rate will cut into a lot of used-game sales.  Consumers who want a deal but don't care about the packaging (which is often missing with used games) can flock to the cheaper price online and not risk getting a damaged disk. Digital distribution does not carry a production cost as high as that of physical media which allows the publisher to set a reduced price online without incurring a loss in profit off of each game sale. The reason why digital distribution hasn't worked so far is because there is no financial benefit to the consumer. Most games are marked up to the MSRP when released online.  They do not reflect the market conditions like used-game sales do. 

This war is reminiscent of what the music industry went through when they were combating Napster and other similar music-sharing sites. The success of Napster wasn't because people wanted to get free music, it was because they wanted easy online access to it in a digital format. With services like iTunes and Amazon’s MP3 store, the music industry adapted their delivery system to prevent the piracy from happening. They didn’t put a bunch of DRM on their CDs and music players.  Now the music industry is, in some ways, stronger for it. 

The video game publishers need to take that lesson and adapt it to reflect that there are many customers out there that would like a cheaper price point. Do not alienate them by forcing them to pay more or insult them with lame excuses for additional charges.  It makes sense that a publisher would make more money off of a $50 game sale (digitally) than a $10 "used game fee" any day of the week.

Keep the physical copies of the game and throw in those added "bonuses" like an instruction booklet, physical disk, and free DLC at retail. This will keep the retailers happy as they are getting a unique SKU and won’t be undercut by the publisher.

Give the bargain shoppers what they are looking for: a bargain.

 
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Comments (16)
Blog
April 23, 2012

When talking about gamers being "overcharged" I always like to point out the inflation over time. This article by Ben Kuchera (now of the Penny-Arcade Report) is a favorite:

http://arstechnica.com/gaming/news/2010/10/an-inconvenient-truth-game-prices-have-come-down-with-time.ars

The problem with gamers using the "I want a bargain" argument is that they often pay 55 bucks plus tax for a used game that's a new release. That same new game from Amazon.com (for instance) would be nearly the same price, but directly support the developer.

Publishers have actually brought the cost of games down while making them bigger than ever (look at Kingdoms of Amalur or Skyrim and compare their value per dollar to the games of even ten years ago).

Less than a coffee at Starbucks. That's the difference between a new and used new release. One supports a company that's ONLY about making money. The other supports a company that's about making money AND art.

The answers are as obvious as everyone pretends--it's just not in favor of the people shouting about overpriced games.

5211_100857553261324_100000112393199_12455_5449490_n
April 24, 2012
Five bucks isn't good enough for me. I'm okay with the early adopters paying $60 for a game but six months down the road, chances are the company has made all the $60 sales they're going to. It's time to make as much money from whatever's left D possible, which means drop the friggin' tag. Steam hasn't de-valued games with heavy discounts; they've woken up and realized that if they can get ten or fifteen dollars for a stack of zeroes and ones sitting on a server, it's better than a kick in the ass. I do not approve of most digital distributions because they cannot come to terms with this.
Robsavillo
April 24, 2012

"The problem with gamers using the "I want a bargain" argument is that they often pay 55 bucks plus tax for a used game that's a new release."

Do you have a source for this? Because GameStop claims that only 4 percent of used-game sales are of titles released in the prior 60 days. In other words, most people buy games new within the first two months of release, which is when games make most of their sales, anyway.

"directly support the developer."

This isn't always true, either. Usually, the publisher has provided an advance to the developer, which must be paid back in royalties to the publisher before the developer can make any money off the game. You're directly supporting the publisher, not the developer.

"Publishers have actually brought the cost of games down"

Well, no. Game prices have increased over time. Aside from an oddball $70 SNES title here or there, video games used to cost less than $60, but now, $60 is the norm. And before you get into an inflation-based counter-argument, remember that wages in real dollars have stagnated or declined since the '70s.

"One supports a company that's ONLY about making money."

This is incredibly short-sighted. If you check out GameStop's annual financial reports, you'll see that in raw sales, GameStop sells more new product than used product by a large margin. Conversely, though, GameStop profits more from used product than new product. In other words, GameStop's used-game business model indirectly supports the sale of more new games and hardware because it makes the business profitable enough that they can continue to open more locations in more places so that they can sell more new product.

Dsc03881
April 23, 2012

what would happen in publishers started putting in their own trade in value of a game and went down from there? do you think people would still trade in titles

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April 24, 2012

I've said it before but it bears repeating. Used game sales are nothing new and the only reason whay it's become a problem a problem of late is because the trade in timeline is cutting into their new sales timeline. This is because most games can be finished in a few hours and there's no replay value. If publishers really want to stem this problem, they need to start green lighting games that aren't going to be traded in almost immediately after purchase.

And before anyone asks, no, Early DLC or tacked multiplayer is NOT the way to fix this. The former is simply more junk to download and install before it gets burned through and the latter only lasts until it gets boring. Compelling gameplay that lasts and promotes replaying the game will offer FAR better results than the other examples (and yes, that is pointed straight at Bioware with the ME3 mess. Yes, it was successful, but promised to be even more so if they hadn't been such ignorant jerks when it comes to their user base.)

Robsavillo
April 24, 2012

"First, we must recognize what each side wants from one another.  Publishers want money.  We shouldn't deny it."

Publishers have no right to make money off the sale of a secondhand item. They already received money from the sale of said item from the first buyer.

The first-sale doctrine, accepted legal precedent for more than 100 years, establishes that consumers assume property rights to anything they purchase. In other words, if I buy a book, that specific copy of the book is mine. I have the right to sell it, lend it, or give it away without giving further compensation to the copyright holder (who is not always the author).

What you're suggesting is that video game publishers deserve money each time a single copy of a game exchanges hands. And that's ludicrous.

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April 24, 2012

Unfortunately, I disagree with several points in this article.

First, the Napster comparison doesn't make any sense. And while people did use Napster because they wanted digital music; don't kid yourself -- They also used it because it was free.

Secondly, my blood boils every single time I hear the industry cry about used game sales because of the reason the author gives:

"Publishers want money.  We shouldn't deny it.  They do deserve a right to make a profit and to get reimbursed for the investment in making the product that the consumer wants  They see the sale of used games as lost income and are looking to find ways to recoup that."

That's a bunch of crap. I am a businessman. I am all for capitalism. But capitalism goes both ways. And I can name a thousand industries that have to deal with, and overcome, used sales -- From cars to furniture to DVDs to music CDs to MP3 players to TVs. This ignorant idea that the gaming industry can somehow force Gamestop's hand to not sell used games in ridiculous, to be kind. This idea that publishers are being cheated by used games sales is ridiculous, to be kind. Go take a lesson from the thousand other industries that have to deal with used sales and figure out how they get consumers to buy new.

Until then Gaming Industry, welcome to capitalism, the free market, and STFU.

Robsavillo
April 24, 2012

Well said!

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April 24, 2012

Unfortunately, the industry can force GameStop's hand by going all-digital and cutting brick and mortar out of the equation. Why do you think GameStop invested in Spawn Labs and Impulse? Not saying it's right, but given the industry's past behavior, I can see them eventually "going nuclear" and eschewing retail sales altogether.

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April 24, 2012

The games industry has a complex when it comes to used games. Fuck them, and their complex. I'm all for creators getting paid for their work, but to act like people who get your product second hand are criminals is ridiculous.

Further, there's no other industry that operates this way. As Mike McLeod said above, many other industries deal with second hand sales and still exist. Criminalizing your audience isn't the way to win them over. A good product is. And even then, a good product might not catch everybody. But it will get those who value it.

This really all just reeks of the gaming industry refusing to change and adapt it's business practices. It would rather blame gamestop, blame second hand sales, blame it's customer base, server costs, production costs, etc. instead of budgeting properly and not devaluing it's own product. Something the gaming industry does regularly.

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April 24, 2012

@mike, The reason why I used Napster was because despite being shut down, once iTunes and Amazon hit the market the amount of piracy from mp3 sharing we down dramatically.  This wasn't because there was no access to free content anymore after it was shut down.  Anyone with a search engine can find file sharing sites still active.  The traffic to those sites is just not anywhere close to what Napster was producing in its hayday.  The only difference was the ease of access to cheap, legitiment content digitally.. which wasn't being offered before Napster.

As to your second point.  I agree also that publishers need to learn the lesson of capitalism and their pleas for more money are angering the public.  Which you kind of point out the main point of this article.  The excuses they are given to try to increase their profit are falling on deaf ears or falling on angry ones. The market is trying to find other avenues then the ones that industry wants to pursue.    This is the war I mention. 

Both sides have big guns they can still pull out.  But pushing further on in the conflict is going make things worse unless publishers learn to back off on this path they are going down.   There are inventive ways where both sides can win.

100media_imag0065
April 24, 2012

Publishers and developers scream and cry that the used game business is killing them. Nevermind the fact that they are lying, but what makes me laugh is the fact that they do everything in their power to make buying used the most attractive option for many buyers, and then complain when those buyers buy the game used.

Just think about how many hoopes you have to jump through just to play the games you want to play today. It starts with pre-order bonuses, which right out of the gate tells me that no matter where I buy the game, I am getting an incomplete version of it. Then we have online passes, which annoys users with codes and blocks used buyers from accessing the full game. It also blocks families from enjoying the same game online, since if you want to share a game with someone in your house, they would have to re-buy the online component if they want to play it on their console, even though you already purchased the game.

And what about the online passes that lock out single player content? So much for the whole "It's because of server costs" eh every publisher in the world? So much for all those gamers who don't have their consoles connected online. Oh well, their $60 isn't worth as much as a gamer who does have online connectivity. Then we have DLC, which again, right out of the gate I already know I am NOT getting the full experience. It has gotten so dirty now that developers and publishers are locking out the endings to their games to sell it to you later. Like Asura's Wrath. Many publishers are now just putting the DLC on the disk, and charging you a large fee for an unlock code for something you've technically already purchased.

Oh, but they don't stop there. Huge, story related content is being held back to sell to you later as DLC as well. Cheat codes that used to come on the disk is now being ripped out and sold to you for a price. But this isn't enough. Next we need to ask people to pay more for a digital version of a retail game compared to the price of the actual game at a retail store. This is my favorite one.

If they were really worried about used games, and if they really wanted to combat it, don't you think the logical thing to do would be to offer their customers incentives to buy new? That would be the logical thing to do, just like the movie and music industry does. They pile on content into their products as an incentive to buy new, instead of removing content behind a pay wall like the video game industry does. No, this would all make sense, so instead the video game industry asks you to pay MORE for the same product compared to the price at a retal store.

If I wanted a game, I would have three options as a consumer legally buying a game. I can most likely download it digitally on my consoles, or I can go to EB Games or an electronic store and buy it new or used. 10 times out of 10, buying it used is the cheapest alternative, so that's what I do. Now this should tell publishers that reducing the price of their digital games would be the smart thing to do, since they are already saving a ton of money by releasing them digitally and offering us a discount on these games would still get them a large profit.

Everyone would be happy. We would get the game cheaper, and publishers would make more of a profit than they do at retail. And since this makes sense, publishers do everything they can to do the opposite. On Microsoft's "Games on Demand" service and Sony's "PSN" service, games that can be bought for $10 to $40 at a retail store is often priced $20 to $60. I have yet to see a single game on either of those services costs less than what I can buy it for used at a store.

And they wonder why people keep buying used? All they would have to do is be reasonable. That's all. That is all they would have to do. If I wanted to buy a game, and I saw that EB Games was selling it used for $30, but Microsoft's Games on Demand service had it for $35, I would pay the $35. I would pay the extra $5 for the easy of use. However, publishers greed makes them ask much, much more. Most games that can be purchased for $30 elsewhere is priced at $45 to $60 on the Xbox 360 and PS3.

So what am I to do? I go to the store to buy it used. The publishers just lost a sale because they are unwilling to give their customers a break. They are unwilling to give us a good price. Even EA refused to offer us a $5 discount on their games when purcahsed through the PS Vita store. A measly $5, and they refused to offer us even that. No wonder everyone buys used. If publishers are unwilling to give us a break, and if they refuse to understand that we can't afford to pay more at every turn, then they deserve to have their games bought used.

All gamers want is reasonable prices. That's all. I can't tell you how many sales they have probably lost because of their resistance to offer us affordable prices on their downloadable retail games, or their insistance on shoving so many pay walls into their games. While the movie and music industry has lowered prices and thrown in a ton of extra content, video game publishers have done the opposite, and then complain when people buy used. They have nobody to blame but themselves, and I have zero sympathy for them.

Robsavillo
April 24, 2012

To the point about pricing, Chris Kohler of Wired's Game|Life wrote an excellent editorial, "Video Games Can't Afford to Cost this Much," in the wake of former THQ executive Richard Browne's misguided op-ed on Games Industry International.

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April 24, 2012

Also, nickel and diming your customers doesn't help.Day one DLC, project 10 Dollar, which was about server costs, btw, yet now we have single player content locked behind a paywall. Pre-order bonsues spread across multiple retailers makes a lot of customers feel like they aren't getting the entire game, etc.

But make no mistake, used games will stick around and publishers are scared of gamestop. Look at the Deus Ex debacle with Gamestop. Gamestop ripped open PC versions of Deus Ex to remove the vouchers Square Enix put in their for a copy of a downloadable game because Gamestop had a competing service. This would have been a PRIME moment for the industry, especially a (former) Heavy Weight like SE to say "You know what? Fuck you. You gutted our product and made it worth less than it was before you opened it. We aren't doing business with you any more".

Instead Square Enix apologized to Gamestop and sent out copies without vouchers.

The industry can complain all they want about the chain, but they're not going to go all digital without letting gamestop in on it. Publishers know they need retail, and retail knows that.

Default_picture
April 25, 2012
I don't buy used often because I want to support the publisher but I do buy digital. I love steam the prices are good. However I'm not a huge fan of pricing on xbl games on demand. The prices are often higher than amazon and some retailers. The are always higher than used so I just don't buy it at all. Digital games should always be cheaper than retail. There is no shipping no overhead etc. If publishers would price at market norms I'd buy a lot of games via xbl. Hell I own around 200 live arcade games so I'm willing!
Default_picture
April 25, 2012
I don't buy used often because I want to support the publisher but I do buy digital. I love steam the prices are good. However I'm not a huge fan of pricing on xbl games on demand. The prices are often higher than amazon and some retailers. The are always higher than used so I just don't buy it at all. Digital games should always be cheaper than retail. There is no shipping no overhead etc. If publishers would price at market norms I'd buy a lot of games via xbl. Hell I own around 200 live arcade games so I'm willing!

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