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Are Used Games Really Killing the Game Industry?

We love to pound on tables and shake our collective fists when a DRM story pops up online. Usually a big company says that it needs DRM to protect its IP from thieves, and we counter with “Wow, that’s some Grade A bullshit!” or something equally witty. Pirating is bad. DRM isn’t the answer. That’s my position, anyway.

The other push button issue is the idea that used games are killing the game industry. Between used games and DRM it’s a wonder we have any games to play at all.

The latest “salvo” of sorts comes from Volition — developer of the totally straight laced and conformist Saints Row series.  Here’s an interesting series of quotes from Volition design director Jameson Durall writing at  #AltDevBlogADay

“Most Game Developers will agree that the Used Games market is significantly impacting the revenue we receive.   I think what most consumers don’t realize is that every time they buy a used game, there is ZERO money making it back to the Game Developers.  All of those profits are going directly to the re-seller and making it more and more difficult for us to continue making higher quality products.”

I think most consumers very much understand that. We’re not idiots. We just don’t care.  I think that’s also secondary to the fact that most new games cost $59.99 and people are looking to save a little cash whenever they can. Does Durall actually think that the number of people buying used games give a damn about anything else other than saving 10 bucks on a game–one that if it’s buggy or just plain sucks cannot be returned for a refund? $59.99 for Homefront is some bullshit, no? We’re just supposed to take a company’s word that a game is super special?

READ ALSO:  Why I Think Borderlands 2 Sucks (But I Like It Anyway!)

Here’s where things really go off the rails:

“There’s another big rumor about the next Xbox console that could really start to shake things up…it won’t play used games at all!  Personally I think this would be a fantastic change for our business and even though the consumers would be up in arms about it at first…they will grow to understand why and that it won’t kill them.”

It won’t kill them? Well, no, it won’t do that. But it will piss off a legion of gamers and I was always taught that riling up your retail base was never a terribly good idea. Those same gamers who are selling games used are also buying games new.  How about this? How about instead of trying to figure out a way to screw a gamer out of saving 5 or 10 bucks – why not stop spending a gabillion dollars advertising shitty games and trying to pawn them off to the public as being more than what they really are? How about lowering the price of these 60 dollar time wasters?

“In the end, I fully believe that we have to do something about these issues or our industry is going to fall apart.  People often don’t understand the cost that goes into creating these huge experiences that we put on the shelves for only $60.”

Only $60. Yeah, ok. Must be nice living in that world – a world where rolling the dice on a $60 piece of software is no big deal. Let’s call that “Durall World”. The game industry is not dying due to used games. There are companies dying due to bad business decisions and sinking crazy development money into bad projects and advertising gaffes.

READ ALSO:  Steam Greenlight

It’s not the guy buying Madden for $45 at GameStop.

Anyway, why should games be held to a different standard than any other industry? Used cars?  Ford didn’t get jack squat when I sold my old Tempo. Books? Music? Movies? What makes Saints Row special? If I buy a game for $60 (or $20 or whatever) I should be able to sell that game to whomever I wish – and developers should stay the hell out of my business. Speaking of that — didn’t GameStop also buy those copies from THQ?

 At that point, isn’t it sort of fair game?

Bill Abner

Bill has been writing about games for the past 16 years for such outlets as Computer Games Magazine, GameSpy, The Escapist, GameShark, and Crispy Gamer. He will continue to do so until his wife tells him to get a real job.

53 thoughts to “Are Used Games Really Killing the Game Industry?”

  1. “Anyway, why should games be held to a different standard than any other industry? Used cars?  Ford didn’t get jack squat when I sold my old Tempo. Books? Music? Movies? What makes Saints Row special?”

    Pretty sure the music and book industry have every intention of making second-hand sales a thing of the past as they move from physical formats to digital.  Look no further than Amazon Kindle books having a lend option that almost no publisher offers.  Other than that I agree with you.  The entertainment industries (including games) need to stop blaming the consumers for their bad business models.  Moreover, quit acting like shit is “only” $60 because it accounts for piracy/used markets.  If we eliminated both sources of lost sales tomorrow, Saints Row 4 is still going to be $60.  To be honest, it reeks of the same bullshit the CEO of Bank of America said when announcing their new fee structure (since retracted due to protests) — ie. “We have a right to make money.”  Also, “only $60″?  Are you fucking kidding me?

    Here’s an idea.  If they hate the fact that the money goes straight to Gamestop instead of them, maybe they should offer to buy back their products and sell the used copies themselves.  If they believe in their products, no harm right?  Those interested in used can still get for cheap, and the developers can reap the secondary sale.  But they wouldn’t do that, because it’d force EA to have to stand by Madden longer than two months, or THQ to stand by Homefront, etc.

  2. I agree with a lot of what you say here.  Once I buy a game I have every right to do whatever I desire with said game.  The idea that used games sales are killing the market is completely false.  I have purchased some used games in the past, and there have been many instances where I have gone out on a limb and purchased a game for 20-30 dollars that I wouldn’t have taken the chance on if it was full retail prices.  Darksiders is one such game, bought it used, played it, loved it, and now I’m certain that I’m going to buy the sequel this year.  I bought forza 2 used as well, and bought 3 and 4 retail because of it.  So yes, those developers didn’t make any money on those two games I bought used, but they have brought me in for 2-3 retail purchases.  In this sense would they rather I never buy the game used and then never get to play the product because they missed a few sales?  I think anyone would look at that and say no, they would take a new customer over no customer.  I believe that there arent many people who buy only used games so this helps create exposure to players you may not have hooked before.

     

    Another thing I would like to see is a separation from the $60 price point for all games, maybe not every game is created equal, and therefore shouldn’t be priced as such.  I think some might look at this as a concession that a $40 game is inferior than a $60 one, but hey, maybe it is and maybe I’ll buy it if it’s not as expensive.

  3. Well, thanks. Not really journalism but rather a man who is in a bad mood as he stares down the barrel of turning 40 in 2 weeks.

    I expect gifts, btw.

  4. The buyback thing is…interesting McKay.  I don’t think THQ wants those copies back anytime soon though…

    And yeah that $60 line was a stunner.

  5.  

    p style=”background:white”>I have £100 to spend each year on games, Jeff has £50.

    p style=”background:white”>I buy 2 games at £50 each then sell both to Jeff for £50, this leaves me £50 to buy one more new game,

    p style=”background:white”>I’ve played 3 games and Jeff has played 2.

    p style=”background:white”> 

    p style=”background:white”>Without the second hand games market and presuming the games companies don’t reduce their prices.

    p style=”background:white”>I buy 2 games and Jeff buys one.

    p style=”background:white”>I’ve played 2 games and Jeff has played 1.

    p style=”background:white”> 

    p style=”background:white”>In both cases the games companies get £150 but if there is no second-hand games market then it will drive consumers to take less risks when buying games and a few AAA games will absorb more and more of the market.

    p style=”background:white”> 

    p style=”background:white”>I know this neglects the gamestation/gamestop percentages but the competition it generates is healthy for all.

  6. You also forgot the “I think about buying the latest Madden game, but then I decide against it because there will be a new one in a year and I can’t trade this one in for anything.”  I seriously think developers and publishers who rail against the used game market are just totally blind to the ripple effects that eliminating it would have.

    And on that note, why in the name of high holy fuck aren’t you asshats pushing the ever living shit out of digital distribution?!  I’m dead serious.  Why does it take 6 months at a bare minimum for a game to show up on Games On Demand in the Xbox Live Marketplace?  Why is the price exactly the fucking same as the current retail price, even though it costs you next to nothing to pump it down the pipes and make it available directly to me?  You must realize that this would single handedly kill the used game market, right?  You realize that Steam has basically done this for PC games already, right?  Beuller?  Beuller?

  7. Reducing prices?  Oh no they can’t do that.  After witnessing the Appstore revolution where millionaires are made from 1 dollar games these people are still using the archaic 60 dollar model.  People are broke, we want more for less.  Thats why the used games market is thriving and the appstore is making people like zynga rich.  And the best part?  2013 will see new consoles that no one really needs and a price hike on games that no one wants.  Hurray industry.

  8. Just call me honest az.  I have no idea what a video game journalist would want for his birthday anyway considering he gets most of his games for free and probably doesn’t want anything in that genre.

  9. Personally, I’m not a fan of Gamestop and the like. I do think that they are not helping the industry, that they are a glorified pawn shop. I don’t buy games used. Of course, there is a large precedent towards sharing other form of media, like books (libraries are evil!). There has been data collected to show that the sharing of books usually results in an increase of sales. Is there any data to suggest that if you someone buys one game used, he will buy the next one new? I think that the mechanics are different, because of the availability, and the need to return it. I also think that in many cases, the sharing or downloading things first leads to the purchase of actual copies, as in tv or movies. But it wouldn’t really work that way for games would it?  I don’t see why downloading a game illegally is any better than buying it used.

    But I also understand why folks do, and the person in question clearly does not. The way that he is talking about it is clearly divorced from reality, and is not going to help anyone’s argument against buying used games.

  10. If the companies are having trouble making money on blockbuster, big-budget games (which I am assuming to be the case, based on this sort of whining), maybe that is a sign that the market does not support such big budget games. Instead of attacking the customers, it would be better if the publishers would develop game budgets based on what they can actually make money on. Make games that cost less, then you can still make money selling them at a price more people are willing to pay. When it is all said and done, the consumers do not have to bend to the will of producers, producers have to respond to consumers. Failure to do so results in bankrupt producers.

  11. It also seems like console developers don’t really understand the biggest draw of the used games market.  That is, that games shouldn’t cost sixty bucks 8 months after they came out.  The PC market has game prices all over the field that match and even beat anything you could get from used games.   And people are buying them.

    So yeah, the Witcher 2 is now only 33 bucks. But guess what, people who didn’t want it at 60 bucks have probably broken down and bought it at 33.  I love PC gaming for that very reason; I see the Steam specials and pull out the wallet.  

    The only thing there is to say, and it’s been echoed in these comments already, is “Get over yourselves.” 

  12. Then this industry will die a slow, painful death just like the recording industry currently is.  And by “industry”, I mean the traditional big business industry.  There are tons of independent developers, musicians, artists, whatever, working outside the traditional distribution model now.

  13. I don’t know about actual statistical data, but I can definitely tell you as an anecdote that people buy, say, the first game in a series used and then pick up the sequels new.  It happened to me multiple times with God of War and Uncharted.  I guarantee you it happens with Gears of War, Halo, Assassin’s Creed, Infamous, Killzone, you name it.  If you have a trilogy (since that seems to be pretty common these days) and you kill used games, you just lost two new sales for the second and third games in your series!

  14. It’s admittedly a little silly, but the point is still there.  It just seems like game companies have a nasty habit of ignoring some simple facts.  Namely, that 95% of games released every year aren’t worth $60 (or whatever their retail cost is).

  15. Digital distribution is the obvious and inevitable answer.  One problem is for it to work on consoles the console manufactures would have to be fully on-board.  But Microsoft and Sony need Best Buy and Gamestop to sell their hardware.  The only way the retailers will do this is if they can offset tiny hardware margins with higher margin software and accesories.  Microsoft and Sony don’t want to piss off retailers, so they will not be a party to undercutting them by going all-in with digital distribution.  Even though the software publishers would love to take the brick and morter stores out of the equation, it probably will never happen in the console world.

  16. “Anyway, why should games be held to a different standard than any other industry? Used cars?  Ford didn’t get jack squat when I sold my old Tempo. Books? Music? Movies? What makes Saints Row special?

    It has to do with the business model.  it cost Ford the same to make each base model car, so for every car they sell the just covered the costs associated with it.

    Books, movies, and music are more analgous to the game industry but the comparison isn’t really justifiable in a strictly business sense.  Movies are judged by the box office.  DVD sales are important, but not usually a make or break scenario.

    Books and music are more similar to games still, but music has live shows to make money.  Books I would argue are the closest to games in that that item sales are the only thing making money.  But one would argue that a book is next to free to write and printing, on a large scale at least, isn’t overly expensive.

    Games on the other hand incur almost all costs before the game ever reached market.  they have one chance to ever really make money and for most games that window of oppurtunity is relatively small. 

    Not trying to say that this guy isn’t out of touch with reality, just that the arguement is there for why used sales hurt this industry more than other.  Personally, I have no problem with used games, I just hate Gamestop and refuse to shop there.  I sell games on ebay (or at least i used to, I’m growing more and more disdainful of them as well).

  17. Used games are killing (or at least wounding) the industry big time, this part Volition Guy is right about. But the damage they’re doing isn’t in terms of the corporations that control this stuff’s bottom line. The damage they’re doing is in all of the bullshit they try to foist off on us to encourage us to buy games new at $60 retail. Let’s take stock:

    – Preorder “bonuses” of additional content, which may or may not even be gameplay material

    – Other “bonuses” and promotional items for first purchasers

    – Online passes

    – Delaying the release of content such as the co-op mode in Space Marine for first purchasers to discourage sell-backs

    – Premium DLC models

    – Subscriptions

    And other strategies to convince people to buy- and keep- games. Even worthless shit like Call of Duty Online is an attempt to prevent sell-backs…if you’ve bought a $50 subscription, you’re much less likely to go trade your game in at Gamestop for $25. If you’ve bought all of the Halo map packs, you’re not as likely to pretty much throw them away by selling the game on Half.com. This stuff encourages people to keep their games, which is one of the key reasons why so much content is withheld these days.

    Yet OUR bottom line is that most of us won’t spend $60 blindly on a game, and almost all of us would gladly accept a used copy for even five dollars less. Even if that means we don’t get the special Daffy Duck t-shirt for our avatar.

    The industry at a publisher level is rife with hubris. The thinking is that they market anything to people right now and add these silly incentives and it’ll sell. Instead of simply offering old fashioned value and quality for the money, they’re relying on schemes like the above to seperate gamers from their money. And these companies are getting desperate for your money because of situations like THQ- they’re sinking all of this capital into shitty marketing for shitty games that arrive more or less DOA.

    The marketplace is telling these companies OVER AND OVER AND OVER AND OVER again that the $60 standard doesn’t work. But they don’t listen, and instead try to pad out their product with meaningless crap like the above that only serves to limit their products. So much hubris in this business…the whole “consumer is a sucker” mentality needs to be stomped out. Consumers want to shop smart, save money, and get their money’s worth. Not a fucking costume for a video game character.

    Anyway, digital distribution will kill the whole issue.

  18. I think the gentleman from volition may be right about used games tbh.

    But the industry need to understand if they are going to take away a 2ndary benefit from buying something they need to offer us something significant in return.

    For instance:

    -New xbox locks out the used game market 

    would be not as bad if

    -New xbox allowed players to stream demos of any game released for it from xbox live for free.

    (& if microsoft made devlopers offer a significant chunk of content ).

     

    The problem this leads to is of course the ‘i dont have a good net connection’ dilema

    One way this could be solved would be to have any ‘used’ game not be locked out completelty but have all the content covered by the demo free to use off the disc without authentification.

    This would give people a chance to allow others to borrow game and try them out.

    One intresting id point to is that PC games used to cost the same as console games, but as it has become easier & easier to copy them prices have dropped. so that now pretty much every game is cheaper than its console equivalent on release.

    As steam sales show if a company knows it can pocket more sales from dropping a price it will.

     

  19. While I appreciate the point of view and I understand where the rancor originates from,  I have to say I think the analogy between used games and used cars is very weak and wholly inappropriate. I’d expect if you want your argument to carry water, you ought to use better logic. I keep seeing this analogy, and it’s not valid in the least. 

     

    The fact is, when you buy a used car, you are getting a product that is substantially different from a new car.   It has a ton of miles on it, has a lot of wear and tear, and will not function as efficiently nor for as long as the same car purchased new. It is fundamentally different from a new car. 

     

    On the other hand, a used game is entirely the same as a new game.  Entirely.  There is no difference at all in the game itself, and at the most only the physical medium may have scratches or something, but  that is irrelevant, as any Gamestop would exchange a used game that doesn’t work because of physical problems. The content, which is what you are paying for, the software itself, is entirely, 100% exactly the same as the new one. 

     

    That’s a huge and fundamental difference between used games and used, well, anything else, at least things whose value resides in their physical reality, especially machines as complex as cars. And frankly, I think therein is the heart of the problem the industry is having with this issue and why it’s so difficult to find a solution: the lack of any actual difference between the software product, used vs new.  To developers and publishers, the sale of used games is essentially the same as pirating, and I don’t think very many reasonable people would claim that pirating is not having a negative effect on the industry. 

  20. Nintendo is by far the worst offender at that. There is no reason Super Smash Bros Brawl should still be $50, the same price it was FOUR YEARS AGO! If they ever come out with this “used games are hurting us” BS (if they already haven’t), I will blow my freaking lid. Because at that point, it’s your own damn fault people are buying used copies.

    But all of the companies are bad at that. The only way a game will come down in price a few months after launch more than $5 or $10 is if it never sold well in the first place. But the more popular games are kept at high prices, except now there are a bunch of used copies of them as well. At that point, what incentive should the consumer have for buying the a new copy? None at all. Instead, the publisher could be lowering the price of the new copies. Sure, maybe you’d only break even, but at least you’ve got people buying copies from you. But they don’t do that. And yet this bad business model is the consumer’s fault. 

  21. Great read, thanks ; I cannot understand how the publishers can actively be ready to reduce the real value of their product by trying to fight against the used games market. Among the customers of a brand new game, how many of them are only ready to pay a full price because they know they somehow can sell it back later, to some other people who would never have paid the full price in the first place ? By preventing the second hand consumers to buy their games used, the risk is indeed that publishers might hurt their first hand sales …

  22. What is the ‘huge and fundamental difference’ between games, and, say, books? I certainly hope that any developer taking this stance on software has never, ever bought a used book. After all, the publisher and author aren’t seeing a dime from those sales. And, for that matter, anyone taking this stance better have not bought any used software or books of any type.

     

    I have never bought a used game in my life, nor have I sold any games. But software developers making this argument make me see red.

  23. I’ve seen a number of good points made both in article and in the comment section. The only thing I have to add is this:

    While I may not be the typical gamer, I buy both new and used. The games I buy new are games I have a strong suspicion I’ll like. I’ve arrived at that conclusion from either prior purchases, which may or may not include a used game, or from a demo that was released before. In some cases, I might even take an author’s word for a game, despite the fact that it’s a game that hates me so much that it starts to crush my. . . soul. Repeatedly. But I digress.

    When I buy used, it’s typically in the gaming lull over the summer, or it’s an impulse buy on a game that I had my eye on, but didn’t have enough interest to drop sixty bucks on. I need to emphasize, I’m buying games for twenty bucks because I wouldn’t have bought it otherwise. Yes, I’m having the experience without giving anything to the developer, but I would argue that the company never would have attained my money anyway. Currently in my library, I have Dungeon Siege 3 and Overlord, both are games I skipped initially, but stumbled upon in a used sale. I was content not to play them at all, but I got them for dirt cheap.

    If a developer’s argument is that they’re getting screwed out of money by my decisions because they aren’t getting a cut, I also think that point is at least founded in logic, but the answers they’ve offered have been slim. If both of those games were still listed at even forty bucks, I would have no interest at all in buying them. They still aren’t getting their money. Not immediately, anyway. But maybe if Dungeon Siege 4 comes out and I see some previews addressing some of the complaints I have, it might turn into a day one purchase. I think they’re ignoring that.

    How about game companies offer their older libraries for a much discounted price via digital download? I’ve seen a few games priced at around thirty bucks on the XBL market that GameStop is carrying for fifteen. That’s at least money in their pockets. Getting competitive with your pricing later on in the game might be a better avenue for combating this than trying to prevent me from owning the product I bought.

  24. The HUGE fundamental difference is that when the large margin of used cars are “traded” in its for a NEW car. The dealer makes money off the used car by auctioning it most of the time and sometimes reselling it. The “NEW” car is a new sale that the manufacturer does indeed get full money for.

    When a game is traded in MANY times its on another USED title. Completly bypassing the manufacturer. The vast majority of the transaction that are made in car sales vs videogame sales are apples to oranges and are really not an analogy at all.

     

  25. That car analogy is good. Even though Ford doesn’t see anything from most used sales, at least Ford dealerships will touch used cars, so they can get into that market.

  26. For the same reason Madden 2007 isn’t worth 60$ today, the value of any piece of software depreciates over time. They have a very competitive environment to live in.

  27. Anyway, digital distribution will kill the whole issue.

    Yeah, about that. So back when I bought Half Life 2 (Alyx cover, on 5 or 6 CDs, iirc), it came with this thing called Steam. So I installed it, created an account… realized I no longer needed those CDs (though I didn’t get rid of them until this past summer) because of digital distribution and said “cool”. As we all know, Steam makes it easy to buy stuff, legally, and install/reinstall/uninstall ad nauseum, and has for seven or eight years now.

    But Steam has also has followed me through three or four computers, and I’m pretty sure I could go back and reinstall any of the few games I’ve bought on the service now if I wanted. Based on the backwards compatibility stance of the current generation of consoles (i.e. support it for the first couple years as an incentive for folks to upgrade or way to stop people from caterwauling about their past investment, then abandon it), I may not be able to that with my PinballFX tables on the next xbox.

    This isn’t too far from the music industry and iTunes. It’s legitimate and it’s a purchase that isn’t devalued or rendered inoperable over time. The same songs I bought years and years ago will play on my new iPhone or my old silver Nano. The same can be said for the ebooks I’ve bought (at least so far, a few Kindle books and few iBooks in…). Or the CDs I’ve ripped to MP3.

    Make it easier to buy than to pirate and people will buy it – sometimes twice (I just ordered a CD copy of something I bought on iTunes). Legal is preferred. I like the sense that my digital purchases will sit in the cloud for me and I can play/read/hear them when I want.  I don’t get the sense that consoles are going to go that way. I’d love to have a console with a BIG hard drive (or reasonably priced expandability) and the ability to download games on the same day they are released to retail (assuming my ISP doesn’t start limiting downloads). They’ve already got rid of the manuals (boo!). Why not do it? Because (as someone else said) they need the retailers to sell the hardware. Steam doesn’t, and very few retailers have a PC section anyways that amounts to more than Warcraft, Cabela hunting games and shovelware.

    Another concern I have about forward compatibility (and it applies to physical games as well) is the death of multiplayer. When multiplayer servers for games get shut down as little as two years after a game came out (or less), that diminishes the purchase. Makes it harder to introduce people to older (good) games (my brother bought his xbox four years after I did), makes it harder to get full value out of a purchase over time. Why not trade it in if you think it won’t work in two years? In the overused, uh, used car analogy, wouldn’t that be like the automaker taking back the custom trim, fenders and engine bonnet after two years? Sure, you can still drive and you could hack something together, but it’s never gonna be as good as that initial factory experience, and may not be worth your effort.

  28. On the consumer side of the equation, there is no difference between used games and used books.  The difference is the the cost of production.  I posted somewhere below, but there is very little cost with a book.  It is essentially written for free  there are costs asossiciated with it, such as printing, shipping, and some marketing perhaps but no where near what a game costs to make. author is generally paid royalties based on the number of books sold.  so with books there is a far lower starting cost that needs to be made up to be profitable.  it’s a huge difference but due to the differences in business models the effects of used sales is far more harmful to a game developer.

  29. Two things.

    First, they do not lose any money from people buying used games. A simple example: Person A is willing to buy a game for $40, Person B is willing to pay $20. The way it is today is this: Person A actually pays $60 to the retailer then sells it to B for $20. If you stop B from buying the game used, both A and B will wait until the price drops to the amount they are willing to pay for a new game. Or they lose interest while waiting and don’t buy it at all. In no way will anyone magically have a higher budget to spend on games.

    Second, the smart part of all the people in the industry know this. I think its part of the bargaining strategy. Complain about lost sales loud enough and people will not discuss the fact, that they already took away some basic customer rights with digital distribution. Steam, Games for Windows, Origin etc all tie the game to a single account. If a resale is possible at all you have to pay a fee. The ship has saled, most consumers have accepted it.

    Personally, I just behave accordingly. I can wait for a month (or six month) for a sale, I already have a list of publishers I will avoid because of DRM (I will not buy Anno 2070 and Settlers thanks to the Ubilauncher, everything that includes Origin is out since they tried to screw people with the EULA). Adding some more companies to the list because of other things is no big deal to me anymore.

  30. The author needs to recoup their time, and the costs of editing, agents, etc. Ten percent royalties on a book is not, as I understand it,  uncommon. So say a pocketnovel of 400 pages (~100000 words) took two months to research and write (double the NaNoWriMo 50k in one month target), and cost $8.99/copy. Figure 8 hours a day times 45 days for 360 total hours. How many copies do you need to sell to make minimum wage?

    If minimum wage is $9/hour, that’s 10 copies. So you need to sell 3600 copies to make it at least as worthwhile as working retail. In 2010, only 134 mass market paperback books sold more than 100,000 copies according to publishersweekly[dot]com. At our above estimate, that’s still reaching just $90,000 for the work – for the cream of the crop booksellers. Never mind the arcane payment systems. Or the fact you can’t multiply this by six to figure out yearly earnings given the unlikely prospect of writing six well received books/year, since US publishers produced 316,480 new titles and editions in the 12 months of 2010. Only 0.04% or so sold more than 100,000 physical copies.

    So yeah, it’s cost of production to some degree, but I don’t buy (ha-ha) that the margins are the same or that it’s far more harmful to a game developer. Very different in terms of scale, very different in terms of accounting – even duration of the production of each good may vary wildly. Then you throw in compatibility, where books are pretty much just hitting their next generation with ebooks, as opposed to the last generation’s lifecycle of about six hundred and fifty years. What’s a console lifetime? 6-10 years?

    All I’m saying is we don’t have a lot of good analogues to the used game market to serve as a basis for discussion, despite trying to find one that fits. It’s just different enough that we can’t compare it (easily) to cars, books, clothing, houses, furniture, pineapple shrimp, lemon shrimp, coconut shrimp, pepper shrimp, shrimp stew…

  31. Once again flawed. You assume gamers are to poor to buy 60 dollar games. These kids are walking around with lots of money for gaming. Go look at  your MW3, Oblivion, Battlefield3 numbers. Games likee that dont suffer the used hit as much becuase people dont trade them in.

    If anything that is probably the biggest lesson if you want to defend sale of used games. Game makers should make games that get played not played for  10 hours and traded in. But games that are played for Long periods of time (you know like till the next iteration comes out). This prevents used sales greatly by not provided used copies by the shit ton.

    Even then the game designers lose out because when MW4 comes out they still could have had sales they should have on new games 40 dollars vs not getting anything for thier product.

    In the end its a catch 22. You see the game makers keep margins low for retailers. On a 60 dollar game a store makes like 5 bucks. Thats why they hard sell you the books and accessories. Then they cry they dont get money for the used games.

    I see both sides of the issue and feel for both. Im not sure what the solution is but I can tell you it isnt easy. Its probably something where stores that sell used games get higher margins on new games, and in turn send some of the profit of the used copies back to the manufacturers. The only other thing a manufacturer can do is to Tie a enable code to a console users login. Then when the game is sold used the new user will have to pay a fee of sorts to authorize the game. This fee will lower the price of the used game even more but the combined price of the used game and the fee will end up being less than new but enable the manufacturer to get a piece of it at least. This imo is most likely to happen.

  32. Apologies for the spam filter.

    Really nabbed a ton of good posts. I think I have freed them all from their bondage.

  33. Yes, it is only $60 dollars.  That’s actually cheaper then it was two decades ago:

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

    I personally like to think some of that has to do with transitioning to cd based media instead of catridges.

    Then take into account the cost for developing the game.  Assuming a two year development cycle with 100 employees at an average cost of $10,000 a month puts the development cost around the $24 million mark.  (keep in mind I said cost of employee, that includes office space, taxes, hardware, and salary.  And 100 employees is on the low end of studios).  Marketing is then another $24 million on top of that.  That’s $50 million without taking into account actual physical production or factoring returns (consumers may not be able to return a game but a store can return unused copies).  Then out of that $60 price tag the publisher/developer sees less then half.  A portion goes to the platform holder (Microsoft, Sony, Nintendo), a portion goes to the store front, and then a portiion is spent on shipping & storage.

    If the used games industry was in a more respectable state I don’t think that you’d be seeing the same kind of attacks on it.  The fact that a company will sell a new game at $60, a used game at $55, and then buy that game at $20 is wrong.  Having less then a 10% difference in price between new and used is generally where the developer gets annoyed.  No, it’s not a trivial amount of money but it’s also not a large cost; my local sales tax is higher then that.  If the used game was $30 then the developers could at least rationalize it as a budget concern or that the game was really only worth $30 in the first place instead of looking like their work wasn’t worth the extra $5 dollars to give them money.

    I do think it’s an amazing coincidence that the store fronts that don’t allow used games (steam and iOS app store) and allow limited returns/refunds are also the stores with the most variety in pricing.  It could be the fact that they’re the distributor & platform holder combined, it could be that they don’t have employees that need to be educated, or it could be that they can respond to pricing a product to what the market can bear much easier.

    Personally I am surprised that everyone that’s using a monetary arguement isn’t suggesting services like gamefly.

  34. Money in the game industry is a big deal right now – we see companies, some of which have produced great games, rolling over left and right.  But I don’t understand any argument against used games.  Is there eve another kind of property that couldn’t be resold, with no profit to the original producer?  People have noted the used car analogy may be inapt.  But what about something like a kitchen table, or a chair?  Or a shirt?  If I buy that stuff, and then I sell it in a garage sale or on Craigslist, the producer isn’t paid for the second sale.

    Combine that with the fact that games, unlike a lot of other things poeple buy, can’t be tested for quality before a purchase.  You’ve just got to trust, or trust someone else’s determination, and open your wallet.  There’s clear incentive there for consumers to seek a low price.

    I see two obvious solutions for game producers. Are the full solutions? Probably not, but they might also make a difference to struggling companies.

    First, companies should price their games more competitievly. Not every game should be $60. Simple economics says that you may see more profit if you lower your price point. People have brought up Homefront. Was I going to buy that game for $60 after bad reviews? Certainly not. But even after bad reviews I was intrigued and might have spent $20. Or $15, for a single-player only component. Or something.  Sure, it’s going for $30 now, but we’ve also talked about games having a limited sale window because the market is continuously flooded with new products. Companies with games that do not hit extremely high quality marks should aggresively lower their prices, and do so quickly before the next wave of product comes out.

    Second, if game companies hate the used games market because it takes money from them, they should look at how much money Gamestop is making. And then they should take that profit stream for themselves. Why can’t EA offer to buy-back my EA games, and give me a credit to use to buy a new EA game? If they put that credit 5% higher than Gamestop, then I pick them every time and they get the assurance that the next game I buy is an EA game. I’m not saying that is exactly how such a system should work, but I can sit here on my couch and think that up in ten minutes. The professoinals employed at game companies should be able to see this also. It would be far more effective for publishers to muscle in on the used game trade than to complain about it to their consumers.

  35. You’ve introduced many new ones. The first of which is: It doesn’t matter how much money someone has. It matters how much money they’re willing to part with, for your game.

    You are still thinking in a binary “buy/don’t buy” scenario, where a game is new once and you expect everyone even vaguely interested to buy it right away. The world is more complicated than that. The game has to be amazing for people to give it the “MW3, Oblivion, Battlefield3″ treatment.

    Flaw #2: You’re saying games that are not AAA blockbuster titles shouldn’t be made? Really? “Game makers should make games that get played not played for  10 hours and traded in.” Really? These are the exact games everyone else is concerned with. The other +80%. The type of games fueling the used market. The ones that aren’t worth the $60 price tag, but aren’t worth ignoring at certain lower prices. You go ahead ignoring all these games, but while you do, the rest of the world will move on without you. Today we know it mostly as the “used” market. It takes advantage of:

     

    Why does everyone love Steam, or want to emulate it? Because offering dynamic prices over time also allows the people responsible for the game to tap into these dynamics. Charging $60 is unnecessary when you are able to make these later sales.

  36. If devolopers killed 2nd hand games tomorrow, they wouldn’t make much, if any, more money – they would just alienate their customers and effectively kill “mid range” games – only the big dogs would survive. If a game can’t be traded in, it become worth less in the eyes of the consumer, especially one who would normally sell it on, trade it, lend it etc. This means if they still try to charge $60 for a single use game, sales on all but the top flight (CoD and the like) franchises will plumet – people will wait for price cuts or just skip over games entirely if they are one use, locked to your console affairs. 

  37. I am “one of these kids” for 15 years now. I could afford to buy more games, I’m just not willing to pay more. Like I said in my example, the price I am willing to pay is the “value” I attribute to a game plus the resale value I expect to get (for me personally that is already 0 because I keep all my games). In other words, the money they earn from the first person already includes the money from the guy that buys the used game.

  38. Well it’s basically already happened in the PC world, and I still see Best Buy selling PC hardware.  They push “extended warranties” on those like mad because it’s pure profit for them.  They do the exact same thing if you buy a console there.

  39. The mom and pop used game stores are al but gone thanks to GameStop, I remember some other store that adopted the whole, hey you are saving $5 method.  They overinflate certain things and generally are not a good deal.  I tend to only buy REALLY old games at gamestop, but only after confirming that I can’t just go to Target or amazon and get it NEW cheaper then they have it for USED! 
    If you bought a car even with good depreciation on Thursday and tried to sell it Friday, you won’t like the difference, and even Carmax wouldn’t sell a used car that was $60,000 for $55,000 just because.  They would go on market value.  I remember one game store near me owned by a retired investor, really awesome guy named Steve Edelstein, great dad, did me a lot of favors when I was very sick and NO one had PS2s.  He even wrote articles and corresponded on news about video games telling parents that ratings and restrictions were less important then them being involved and looking into the issues for themselves rather then just plugged ears/covered eyes yelling CENSOR!!!  Anyway he had a database that he connected to for trade value of games, it was a much better system then I see at Gamestop, yes they have a database and list values, but it’s not as detailed as the one the mom and pops used.  I got to see how it evaluated and after looking at it more understood that it was a good system.  Sure you didn’t always get quite what you wanted, but they were not inflating or deflating, and putting ridiculous mark ups into the equation.  Profit margin was a lot tighter and more realistic.  His store had a loyal following and all were sad when the doors closed, he wasn’t forced out, but rather just saw the writing on the wall and decided to cut his losses.

     

    sigh…

     

    I just wish developers were not acting so greedy, being able to do things the old way is preferable to me.  I don’t buy the newest games right away, and recently was annoyed when I went to buy Battlefield 3 and couldn’t do much with it, GameSlop took it back luckily, but I’m going to be switching to PC games and steam like one user stated above.

  40. This argument is flawed for two reasons.

     

    First, you are correct that many used cars are traded in for new cars. However, many used games are traded in towards the purchase of a new game (which you seem to disagree with). Well, I do this. I do this a lot. I don’t like paying $60 for a new game, so I’ll bring one or two trade-ins to the store and use that credit to bring down the cost from $60 to something I feel more comfortable paying. I have the ability to pay $60 right out of the gate if I want to, but the problem is… I don’t. Just like I don’t want to pay full price for a new car if I have a used car that I’ll no longer use that I can trade in for it. It should also be noted that it takes time for new games to turn into purchasable used games. When Mass Effect 3 comes out, I want to play it then, not in a month when I can find a used copy for only 5 bucks cheaper (at which point I feel like the reseller is bending me over anyway). I’d rather have the new one that nobody else has touched, I’d rather have the bonus DLC, and I’d rather play it immediately.

    Second, you’re operating on the assumption that most gamers trade in used games for more used games, yet you say that those same people trade in a used car for a new car. Why? As a matter of fact, my significant other just traded in a used car last year to purchase a newer used car. We didn’t want to pay full price for a new car that would lose a chunk of it’s value the second we drove off with it when the model from the year before was thousands of dollars cheaper.

     

     

  41. Though I sympathize with (most) developers, I tend to think rather more poorly of publishers. The problem I see is that they tend to look at the carrot and the stick approach and reach for the stick most of the time. If they’d give me incentive to play their games, I’d be more willing to do so. A couple of notes to publishers and developers:

    Yes, you hate used games. You will never, ever be able to persuade a significant chunk of your fan base that getting rid of them is to their benefit. It’s to your benefit. The problem is that it’s logical for a gamer to look at the movie industry and see that those folks do just fine with the used DVD market being around. Authors haven’t disappeared because there are used book shops. The problem you have is the approach you take. People don’t like being pushed and beaten into line, and they’re not stupid. Yes, yes, there are differences between the movie and book industries and your own, but frankly, that fine distinction doesn’t hold water with most people. 

    Instead of penalizing gamers for purchasing used games, why not  give them incentive to purchase new ones?

    Here are some ideas:

    1) Keep going with (and expand) “free-for-new” DLC – Things like an extra gun and armor might not seem like a lot, but it’s a nice little reward for purchasing a game new. Expand on things like the Cerberus Network for ME2 and give me free DLC over time for my purchase. Think of it like an investment. An extra mission here, an extra map there, things that don’t take a ton of development time but do increase the experience, and all offered for free to folks who purchased the game new. This gives me incentive to get in at the start and to keep my new copy of the game rather than sell it off after I’ve beaten it. Not all gamers would agree with me on this one, but it’s better than trying to torpedo my game.

    2) Allow your developers time to increase production value – reading between the lines in some interviews, I’ve come to the conclusion that developers and publishers often have an extremely tense relationship with regard to the timeline. A developer is often pushed to release a game that hasn’t been sufficiently tested. Though I understand that the publisher’s perspective that every month the game is delayed is more money out of their pocket, it’s a hell of a lot better to release a game late than to push something out the door that’s going to piss off your fan base (and you know it). Alternatively, give the developer more time from the get-go.

    3) Make a deal with resellers – If you’re angry that you aren’t getting part of the proceeds for used games, reach deals with the folks that sell them to get a portion of the profit. A few dollars a game may be worth it to avoid you attacking their main money machine. They might be unwilling to do it at all, but that leads me to #4:

    4) Offer trade ins yourselves – If you get into the reselling market, you’re cutting off the resellers at the knees. Think about this – you offer to buy the used game for the same cost as the reseller, or perhaps a few dollars more, through an online service. You also offer used copies to gamers with an included online pass, additional DLC, or a demo of an upcoming game. Assuming this is legal, you’ve just cornered the market.  Even if you can’t include additional incentives, you’re at least going to get a portion of the market since gamers are well aware that GameStop gets an obscene margin on used games in the first place. Yes, you make less money on a used copy than a new one, but you keep gamers happy that can’t afford or won’t buy a new copy.

    5) Offer refunds/warranties – One of my main problems with new games is that it’s impossible to return it. If I get a buggy pile of junk with no replay value that feels like it was put together by a group of fifth grade kids… well, lets just say, fool me once, shame on you, fool me twice, shame on me. I’m far less likely to invest in your steaming pile of crap next time around. Offer me a refund, I’m more inclined to take the risk. Hell, make it a largely restrictive one – 72 hours. Something like that. But something. Linked with that, we have…

    6) STOP MAKING POOR QUALITY GAMES – This may sound difficult at first, but everyone knows when they see certain titles that it’s going to be mediocre at best. Frankly, a lot of us wonder why you even bothered wasting the money to make it. Most of us won’t even take the chance. Wouldn’t that money be better spent on a blockbuster title? Yes, this results in fewer games, but we don’t play that crap anyway. Don’t waste our time and money (and yours). Yes, some “blockbusters” end up being crappy games as well, but I’m much more likely to risk my money on something that I have a moderate amount of confidence in.

    There’s more… lots, lots more… that can be done to improve your cash flow. Some of this would take a significant monetary investment on your part. Some of it would take a touch of faith in gamers in general, treating them like moderately intelligent consumers rather than sheep, and it certainly would mean getting out of your comfort zone. But all of it would result in gamers having more faith in you, more willing to take risks, and more incentive to purchase from YOU rather than GameStop.

  42. I think the biggest problem I see in this whole debate is the repeated assumption that Gamestop = used games. Sure they sell used games, but I’ll bet that the numbers of used games Gamestop sells is absolutely dwarfed by Amazon, or Craigslist, or Ebay. Heck even Bestbuy does used games now. I buy any used games I buy at Gamestop because convenience is more important to me than a few bucks. That said I’m the only person I know that feels this way. Talk about closing down the used games/books/music/etc market has been around as long as those things have and nothing has ever been found effective. We’re only going to see a limit to the used market when games go download only, and that’s only going to happen when 80+% of the world has high-tier broadband.  In other words we’re looking at about 20 years from now.

    p class=”p1″>Personally I like how recently folks that bought new got an extra quest in there somewhere. I don’t like it if they restrict online or multiplayer, because I don’t play online or multiplayer, but I can understand why they do it.  It’s even better if the extra content can be bought relatively cheaply say $5 which is only 10% more than the price of a newer used game, but it’s really like 25% of the profit for the publishers/creators/etc. for the new game with no new physical media needing to be created.

  43. I’m an odd duck on this topic, freely admit it, but I don’t imagine I’m the only one, so…

    Anyway, money for me is tight (as in, buying a new console means I don’t get to go on vacation this year, tight; as in, a $60 game cost more than my food bill for 2 months, and probably means I don’t buy any food for a week, tight), so, I tend to run a generation behind. I bought a PS2 after the PS3 came in. I got a Sega Saturn after Sega got out of making hardware. I try to buy new when I can, as a moral stance, but, at best, within a year I have to buy used – stores don’t carry new copies of games for that system anymore.

    I find it easy to buy new by digital distribution, which has a guarrenteed availablity. Otherwise, it only happens when the stars align, and I have the cash and see the game on the shelf (generally, several months/years after release).

    I’m also unusual in that I don’t sell things back – If I liked the game enough to buy it, and play it, I generally will keep it, and play it again (I just broke out Duck Tales for an evening last month, for example).

    I guess what I’m saying is that, this disscussion is making a lot of assumptions about how and why people buy used games, but I, and I imagine at least some percentage of gamers, don’t follow that method of use.

    Sure there are people out there who can drop $60 a month on a new release. But there are also two income families that are just scraping by, and a $5 dollar game in the bargain bin sure would be a useful gift.

    Admittedly, that probably makes them, and me, part of the 70% of the market that makes up only 30% of their profits, but Nintendo’s Wiiware and Steam seem to found ways to trade into and engage that area in a reasonable manner, as have a couple of PC devs.

    If Microsoft’s neXtBox blocks used material, I won’t buy the system, not out of any moral sense of outrage, but because I won’t be able to buy the games by the time I can buy it, so why bother?

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