Pre-owned sales in the next generation

Here is an article that speculates about them:

http://www.mcvuk.com/news/read/publishers-to-receive-cut-of-xbox-one-pre-owned-sales-at-retail/0116137

What do you think?

Personally I find it believable. Not enjoyable, or lenient on both the costumer and the retailer, but "Hey, it's Microsoft!".

If these news checks out, then the second hand market will be controlled by the Microsoft's regional policies, which have been bad for some places, like Australia or Portugal.

Will this generate more profit, or squander it and create losses?

Sony, contrary to Microsoft, threw the ball to the publishers with:

Sony has also dodged questions regarding used games on the PlayStation 4. The company has confirmed that preowned titles will play on the next-generation system, but said decisions about activiation fees will be left up to individual publishers.

"It's a publisher decision," Sony said in February. "We are not talking about it. Sorry."

according to this article: http://www.gamespot.com/news/xbox-one-preorder-plan-revealed-6408850

So what do you think? Will publishers enforce a fee for second hand sales? Will the second hand market become almost inexistent? Or will PS4 save the market?

I think we're going to see something similar to what we saw on the PC. I used to buy used PC games via eBay or Amazon, until they all started requiring Steam or other DRM activation. Personally, I am fortunate enough that this came at a time I started making more money (i.e. got a real full-time job). I know it is not as easy for others.

However, with that trade-off, we also now see the big sales, because companies get more of the profit from each sale and can afford those continuing sales, long after a product "ships" (as opposed to before, when a game basically produced no real profits after a couple months as it transitioned to the second-hand market).

So, I fully expect that, if used games on consoles also start going away, we will see similar sales on the console marketplaces. That way, Microsoft, Sony, and Publishers/Developers can take advantage of the large consumer-base that cannot buy full-priced games but will gladly buy the discounted games.

@fakekisser: do you think Microsoft will have the great sales Steam does? Because I sure don't they currently have a couple sales a year where they get the price almost as low as the retail version.

I like your perspective, but there is a snag. In Portugal and other countries, games don't get discounted often, and the Xbox marketplace doesn't have the habbit of lowering prices, so we can get into a place where games don't get discounted until there is a decision from the publishers for both new and second hand games.

@sopranosfan:

@jeust:

I think that's a big question (how many sales/discounts we'll see on the PS4 and Xbox One). I personally do think the PS4 and Xbox One will see sales closer to what is on Steam (though not at the same level). I think we'll see 3-4 pretty big sales a year. Of course, some of those sales may be more if you have LIVE Gold or PlayStation Plus... But, I think that Publishers/Developers would be crazy to kill off used games (or make it substantially harder to play used games) and not "fill the gap" by doing more sales. They cannot expect that everyone will buy the games at full price. I think that's simple economics. There aren't enough people that can buy every game full priced to support that model. That's one reason I think Steam is so successful. It has different pricing models for different people with different spending-abilities. Therefore, they get gamers that can buy day-one and gamers that will buy games on sale.

I live in the US, so I can't pretend to know what it is like in other countries. So, I'll definitely admit ignorance there and not try to speculate. However, I would hope that we see more sales in other countries, as well, to combat piracy. Steam and GOG on the PC have some very good stories about how their models help with the problem of piracy.

the game industry has been wanting to stamp out used game sales for decades or at least see some profit from them.

looks like this gen might just be the one to finally do this.

not that bother myself as i don't buy used games (i find amazon just as cheap) and i never borrow or lend games.

must suck for those that do though.

I don't know... Microsoft isn't known for big sales. :P

@jeust: You are correct. The only thing I can say in reply to that is that David DeMartini from EA once had this to say:

Question: One of the things that Steam does is this random deep-discounting of software, and it works well for them. Do you see that as something you want to do?

David DeMartini: We won't be doing that. Obviously they think it's the right thing to do after a certain amount of time. I just think it cheapens your intellectual property.

(source: http://www.gamesindustry.biz/articles/2012-06-06-david-demartini-origin-wants-to-be-the-hub)

However, Origin now has a couple games on sale almost, if not every weekend. At the end of March, they had a pretty big 50% off sale on a lot of titles. I think EA realized that they need the sales, and I feel Microsoft may realize the same.

Of course, there are no guarantees. Microsoft appears to be doing several things on the Xbox One that consumers aren't liking... Maybe not doing sales will be one more thing they do that upset consumers...

I feel the one billion they want to invest in the gaming market is linked to the initial revenue losses they are expecting, due to the consumer unfriendly measures they are going to implement. Lack of sales can be part of the strategy.

These retailers will be severely hamstrung if this Azure cloud ever goes down. I can't see Gamestop putting up with that crap. And there's no way Gamestop will accept only a 10% margin on used sales they nee at 40-50% to cover their operating costs, that would be suicide for them to accept that low of a cut.

I suspect Gamestop and Microsoft will now enter a battle of brinkmanship. Gamestop threatening to not carry and X1 consoles, Microsoft squeezing their cut. Gamestop has no choice in this scenario, if they accept Microsoft's terms they die, if they don't carry the next gen consoles they die. Their only hope is to pressure Microsoft for a larger cut.

Actually, this is WONDERFUL for GameStop. It will effectively kill any unauthorized competition, such as e-bay, or even me loaning a game to a friend who wouldn't need to buy it afterward. Used games will probably cost more, but they'll be regulated so it won't matter. There will be no competition.

For every loss GameStop receives from a smaller cut of used sales, they'll make up for that with a higher market-share.

This will all end badly. They will get richer and we will get screwed. There's no way in hell this is a good thing.

So, how do you as an individual sell a game on eBay, a yard sale, etc? After all, if MS make creates a system so that retailers can do this and they block the public that 'could' land them in hot water. It never seems likely but stuff like this can will go to the courts. If enough people whine to their representatives Microsoft and Gamestop get to go to Capitol Hill to sit in a Senate hearing that asks, "WHAT THE HELL ARE YOU FOLKS CONSPIRING AT????"

Actually it isn't wonderful for Gamestop at all. And it doesn't and won't work that way.

Doesn't matter if they own the entire used game market or not. If 10% margin is all they get, And Sony follows suit with Microsoft on this, Gamespot is likely bankrupt in 3-5 years. Maybe less.

This isn't an aspect of their business, we are talking about their entire profit center, roughly half of the entire profit (48.1% based on the latest 10k filing) the company produces being reduced by 80%. Their used gamesales would have to increase exponentially to recoup that kind of hit. (something on the order of 500%) That's not likely to happen given that Microsoft supposedly is adding a price floor of $35.00 for used games which removes the biggest incentive to buy used (low price), so Used Games sales are more likely to go down than up.

Even if by some miracle Gamestop did get a 500% volume increase in Used games their stores probably cannot acquire and store enough product to service that kind of demand without considerable expense.

Not even Costco and Sam's Club can survive on less than 12% margin and they are a much larger big box format which can support lower margins than a convenience format like a Gamespot.

Not to mention Gamestop will still have significant competition for used games since they will have to still contend with Steam and the console digital delivery services. While those games are not used, the main driver of used games sales is price and digital releases are often cheaper than disc. It also means Gamestop will have no pricing power because of this competition so they can't raise prices enough to cover the loss of their margin.

This is Microsoft's way of killing Gamestop without "killing" Gamestop so they don't get sued by a dieing company.

You will most likely hear a statement on Monday or Tuesday regarding this issue from Gamestop since their shares droped over 20% on friday.

@spaceinsomniac: In light of new information, it doesn't sound nearly as bad for Gamestop as it once did which may make your scenario workable.

http://www.giantbomb.com/forums/general-discussion-30/no-fee-for-used-games-on-xbox-one-1437891/

It all really depends on how much the fees they charge Gamestop are. If Gamestop only gets 10% as this earlier rumor said then I am right, if Gamestop gets 70-80% then you are right. That is what makes or breaks this.