This Blog Post is Used. Why Didn't You Support the Original?

Used games won't go away. Publishers need to realize this; and the more they fight against the will of the customer, the more they will lose out. There will always be a market for used items, be it books, movies, music, cars, houses, whatever. And a sale in a used item does not equate to a lost sale of a new item, which is also something the industry fails to understand.

When I purhcase a game, there is a set price I'm willing to spend on it based on my interest (e.g. demos, word of mouth, hype, knowledge of the series). So when a game is released for $60 new, I have to decide if that particular title is worth $60 to me. If not, I'll wait for the price to drop. What usually happens though, is that the used price drops more quickly than the new price does, so I end up with a used game. The problem is that most games released are all priced the same, instead of a relative value of production or worth. Not all games can be AAA million sellers. Unfortunately, the market can also disagree with this theory at times in that games like Viva Pinata were released at a lower price and still sold low (though that may have been due more to poor marketing).

If the industry feels they should get a cut of used merchandise, then it should work with retailers and not fight them. Why not work out a deal with retailers that sell used games so that they get a bigger percentage of profit selling new games, and in return, a portion of the used sales will go to the publisher. As it stands now, retailers make almost nothing on new games, with most of the money going to publishers. However, this business model relies on front-loaded sales; whereas Gamestop makes most of it's money on used games over a longer period of time.

One point I would have to side with the publishers is the Gamestop practice of used game prices on recent releases, where the savings are minimal. In this case, the publisher is losing a new sale, which in the end is lost financial support for the publisher and developer. After watching the Bonus Round on Gametrailers, I would have to agree with Michael Pachter that used game prices would need to be a minimum percentage off of the new price. This king of change can only happen though if the gaming industry is willing to work with used game retailers such as Gamestop; find a way to make the new game market more appealling for the retailer.

The industry needs to look critically at it's business model now, and see how it can work with emerging trends; and not spend money, time, and effort fighting against it. This is especially true with the emergence of direct-download sales. What of those sales? What can I with these games once I no longer want them? Will I still be able to play them when the next generation of systems is out? If activation is required, what happens 10 years down the line if I get the urge to play it again?

Books, movies, and music are still all surviving (despite what certain **AA groups might think), and there are healthy markets for both new and used items. None of them see any profits on used items either, why is gaming any different. Work with retailers, price your product accordingly, make better products that offer more value to the consumer; and most importantly don't fight against change, embrace it and use it to your advantage.


tl;dr
The used market isn't going anywhere. Instead of fighting retailers, work with them to find a solution that is beneficial for both parties.
The game industry is no different than that of books, music, or movies.

15 Comments
16 Comments
Posted by Eelcire

Used games won't go away. Publishers need to realize this; and the more they fight against the will of the customer, the more they will lose out. There will always be a market for used items, be it books, movies, music, cars, houses, whatever. And a sale in a used item does not equate to a lost sale of a new item, which is also something the industry fails to understand.

When I purhcase a game, there is a set price I'm willing to spend on it based on my interest (e.g. demos, word of mouth, hype, knowledge of the series). So when a game is released for $60 new, I have to decide if that particular title is worth $60 to me. If not, I'll wait for the price to drop. What usually happens though, is that the used price drops more quickly than the new price does, so I end up with a used game. The problem is that most games released are all priced the same, instead of a relative value of production or worth. Not all games can be AAA million sellers. Unfortunately, the market can also disagree with this theory at times in that games like Viva Pinata were released at a lower price and still sold low (though that may have been due more to poor marketing).

If the industry feels they should get a cut of used merchandise, then it should work with retailers and not fight them. Why not work out a deal with retailers that sell used games so that they get a bigger percentage of profit selling new games, and in return, a portion of the used sales will go to the publisher. As it stands now, retailers make almost nothing on new games, with most of the money going to publishers. However, this business model relies on front-loaded sales; whereas Gamestop makes most of it's money on used games over a longer period of time.

One point I would have to side with the publishers is the Gamestop practice of used game prices on recent releases, where the savings are minimal. In this case, the publisher is losing a new sale, which in the end is lost financial support for the publisher and developer. After watching the Bonus Round on Gametrailers, I would have to agree with Michael Pachter that used game prices would need to be a minimum percentage off of the new price. This king of change can only happen though if the gaming industry is willing to work with used game retailers such as Gamestop; find a way to make the new game market more appealling for the retailer.

The industry needs to look critically at it's business model now, and see how it can work with emerging trends; and not spend money, time, and effort fighting against it. This is especially true with the emergence of direct-download sales. What of those sales? What can I with these games once I no longer want them? Will I still be able to play them when the next generation of systems is out? If activation is required, what happens 10 years down the line if I get the urge to play it again?

Books, movies, and music are still all surviving (despite what certain **AA groups might think), and there are healthy markets for both new and used items. None of them see any profits on used items either, why is gaming any different. Work with retailers, price your product accordingly, make better products that offer more value to the consumer; and most importantly don't fight against change, embrace it and use it to your advantage.


tl;dr
The used market isn't going anywhere. Instead of fighting retailers, work with them to find a solution that is beneficial for both parties.
The game industry is no different than that of books, music, or movies.

Posted by Vinchenzo

Used games should definitely give a cut of the cash to the original developers.

Posted by Eelcire

So would you also extend this to books, movies, and music; should publishers in those markets get a cut of used sales as well? And what of the retailers, what benefit would they get for giving a portion of their profits to publishers? For it to work, publishers will need to give a little in return; give retailers that sell used games a higher margin on new game sales. Sure, the publisher would not see as much profit in the short term, but long term profits will be more healthy if the game has legs (and this would also be an incentive for developers to take more time on their games, releasing much stronger titles).

Posted by EvilTwin

A lot of good points.  My favorite being about the pricing structure.  Way too many mediocre and/or short titles that just aren't worth 60 dollars are released.  And by the time the price drops, the game might be hard to find and no one may know or care at that point.  If they can launch a game like Wanted: Weapons of Fate at 40 dollars, then they have fully stocked shelves and their full marketing budget (whatever that may be) behind that date and price point.  If it sells twice as many copies because of it, publishers win. 

Posted by Subject2Change

Retailers take advantage of the used game market and I agree that there should be some sort of mutual agreement with the companies and it should be percent based so if EBgames wants to sell a used copy of a new release for 57 bucks the publisher gets say 5% of that and thats still 3 bucks or so. However a lot of the hardcore gamers don't go to EBGames for their used titles, me personally I buy mine from Amazon.com, eBay, half.com or on rare ocassions off of Craigslist but then again I am usually only buying used copies of OLD titles that EBGames has long forgotten about.

However I do completely agree, and up until now EBGames/GameStop has dominated the used game market, hopefully maybe Amazon or these other sites can do something like this and it may help swap people to those means instead.

Posted by FCKSNAP

Unlike other sections of the economic world, there hasn't been one company that boasts about having monopolized over 50% of the used/new/pre-order market in the US. Why do you think no one complained about this in the 80's or 90's? There used to be variety and right now Gamestop is abusing their power.

Posted by Illmatic

The biggest problem I have with games and the main reason I buy used games so often or simply rent from Gamefly is that the prices of alot of these games just aren't in my budget. It's not even a factor of whether or not Game A should cost just as much as Game B. The truth of the matter is that I just can't pay a price that high. When I do decide to spend that much money, I have to make it a point that I for sure am getting a lasting and excellent experience because there's no telling when the next time I'll be able to drop some cash on a new game will come. Some people, especially the cast of ListenUP don't like to equate the price of a game to length but when tossing down $60 for a game, its going to come to mind whether you like it or not.

Posted by inkeiren

It may not be a solution, but I think downloadable content could help out developers a bit.

Posted by Luke

This was a pretty gewd read.

I think that most Publishers/Developers are more gun-hoe about fighting Retailers.  I strongly feel that things like OnLive and Downloadable full AAA games will happen before they start working together, where the Publishers/Developers can control the sales of their stuff 100%.

Recently, here's David Jaffe discussing the issue a bit:

  

Edited by Eelcire

With other retailers such as Amazon and Best Buy getting into the used market, competition will come. But it's also a matter of marketing as well, which Gamestop does well since their primary market is used sales (that and they specialize in video games). Amazon and Best Buy will need to establish an identity among consumers that they are in the used market as well.

But if the publishers want a cut, they need to be working with these retailers:

  • Publishers: price accordingly (not all games are AAA $60 titles)
  • Publishers: give retailers that are in the used market a higer margin on new sales
  • Retailers: give publishers a percentage of used game sales
  • Retailers: minimum percentage off for used games
  • Retailers + Publishers: work with each other for better marketing. Host more events, more advertising.


These points high-light the compromises each party needs to take. One more question arises if publishers were to get a cut of used game sales (or any used sales market for that matter): Who has to pay? Retailers is easy, but what about eBay, Craiglist, local garage sale?

Posted by EvilTwin

^Nice hat Jaffe.

Posted by PenguinDust
Eelcire I think you are right. Excellent analysis of the argument.  In the end, I think the market will decide what works best.  And, as to your question of who will pay?  You and me, kid.  Gamers will make up the difference either as less credit for trade-in or higher used game prices.  Since Craigslist and your local yard sale are too hard to track, an additional price will be added to all new games under the assumption that the game will be resold at a later date.  If it's resold at Gamestop, Amazon, FYE or another retailer then everyone gets paid twice.  Sweet deal.
Posted by Eelcire

Well, we're already used to that anyways. Consumers pay a tax on all blank media (i.e. CDs, DVDs) to compensate for potential piracy to the music and movie industries.

Posted by FCKSNAP
Eelcire said:
"Well, we're already used to that anyways. Consumers pay a tax on all blank media (i.e. CDs, DVDs) to compensate for potential piracy to the music and movie industries."
Which I think is awful, and never really liked. That's why I think I will never buy a Zune, since 30% of every sale goes to the same "industry advocates"
Posted by Eelcire

One way publishers could really benefit from working with retailers in used games is the monitor of sales. Relase a new game and see what the numbers are for new/used sales over the course of a month. New numbers lower than expected? What about the used sales then, and at what pricepoint were they selling? Also for long the term a publisher could guage what old franchises might be worth looking into again.

Posted by Suicrat

If a person buys a physical item for which there is no contract, he should be allowed to sell it to whoever offers him the best deal, and the person who bought it should have the right to do the same. If publishers want their items self-contained and one-customer-per-unit, then they need to ask customers to sign a contract stipulating such. If they refuse and they still want sales, then they either need to cut prices or grin and bear it.

I have no sympathy for publishers when it comes to used games, they push retailers' margins so thin, and charge the consumer so much. If the two can find a way to retain greater value, then they should be allowed, unless publishers wish to establish legally binding contracts (like in the case of digital games) with their customers, stipulating that they either retain or destroy their copy of the game in question.