Team Humidor on Used Games

Team Humidor on Used Games

imageSeeing as this week marks the launch of not one, but two new consoles, and that many of said consoles are already appearing as high-priced Ebay auctions overseas, we here at The Escapist decided that today would be a good day to revisit the issue of used games.

Or at least, we going to pretend we planned it that way. Basically, what happened was that someone suggested that used games rip off game developers, and well ... that pretty much started the ball rolling.

We reproduce here the emails that cause a brief, yet stellar conflagration of game editor ire on our Exchange server. Enjoy.

Used games rip off developers. Discuss:

Russ, Associate Editor
Saying used games hurt the industry is an oversimplification, and one with which I could not disagree more. The major threat to small, innovative development is the increasing cost of making games, which itself is based in no small part on the increasing complexity of game hardware.

However, if game makers truly fear the small games market, they'd do better to make better, cheaper games. Digital distribution is one solution, but it will not address the needs of consumers who can't or won't pay $60 for a game. Ignoring (or worse, condemning) that market will not solve anything.

Julianne, Executive Editor
I'm not disagreeing that the increasing cost of creating games is one of, if not the biggest problem facing small game devs. But calling the used games trade not a problem is turning a blind eye. Buying and selling used games, as the market is currently structured, is pretty much the same as pirated games to a developer, ie. they see no money from the resale of a game, just as they don't from a pirated game.

Small companies feel the pangs of this more than an EA, which has multiple titles at any given time to soften the blow of this kind of market. And there have certainly been companies who have floundered because they've made good games, but didn't protect them well enough from pirating to get the production money back. In it's similarity there, this side market is absolutely a problem. I'm not completely condemning a used games market, simply condemning the current structure, one in which the developer is cut out.

Joe, Associate Editor
Saying used game sales hurt developers is like saying used car sales hurt Ford. At the end of the day, someone had to buy the game in the first place, which means the developer made money on that unit. Really, by the time a game makes it to its second or third owner, the value of a shrink wrapped game has dropped to the point where publishers stop printing the game anyway. So you could actually say the used market keeps games around longer, which allows people to develop a deeper sense of brand loyalty.

Of course, there are the people who refused to buy new games at all, waiting for the early adopters to trade in their games a week after release. But that goes back to the old piracy debate, which (correctly) states that those types of people weren't going to buy the game anyway. In this case, the people who bother to wait aren't buying at the original price point.

If the industry insists on making a mountain out of a molehill, though, there's really only two options: Adopt the Long Tail approach and keep shrink wrapped games available at a lower price longer, which would pretty effectively kill the old-school used games business; or go digital distribution and force everyone to pay a standardized price and hope you don't lose too many customers.

What do you think?

Permalink

We can speculate all day long about if the used games market hurts the video game industry, to know for sure we would need numbers from retailers.

But if we are just speculating I would say it does. The fact that you can buy a game used within 1 week of a game's release doesn't do anything good for the developer. And developers only make so much money per game. I think the saying goes drop the price from $50 to $40 you need to increase sales by 25%. That's not likely to happen when people will just buy used games which in actuality cut effect sales on a game.

The only people that really benefit from used game sales are retailers. Some would say that the consumer benefits too and to an extent they do. They get to buy their games for a few dollars less in the short term, but in the long term the developers are shorted and we end up with less innovative games and publishers unwilling give new ideas a chance.

My mom always says "you get what you pay for."

The resale market allows more people to but the original game. Some people who would normally not allow themselves to buy a game at 50$ a piece, for example, might buy the game anyway, knowing they can later get a "rebate" in the form of resale value. So, in fact, the publishers make *more* money thanks to resale.
Otherwise, less wealthy gamers may put off buying the game until the price drops considerably, and may end up not buying it at all for a variety of reasons.

If book publishers can cope with used books market, why not game publishers?

iod:

If book publishers can cope with used books market, why not game publishers?

Yes, but when was the last time you stepped into a Barnes and Noble where there were more used books on the shelf than new?

Lex Darko:

iod:

If book publishers can cope with used books market, why not game publishers?

Yes, but when was the last time you stepped into a Barnes and Noble where there were more used books on the shelf than new?

Book publishing is a vastly different business. I'm not sure that analogy will hold water.

Fletcher:

Lex Darko:

iod:

If book publishers can cope with used books market, why not game publishers?

Yes, but when was the last time you stepped into a Barnes and Noble where there were more used books on the shelf than new?

Book publishing is a vastly different business. I'm not sure that analogy will hold water.

They are very different businesses, but Lex's point about B&N's used book sales, or lack thereof, is an interesting one. B&N, Borders and others like them are the pantheons of the written word and coffee - sounds lovely, now that I think of it - and they don't have huge amounts of shelf space dedicated to used books. You have to find smaller, off the beaten path bookstores that can no longer survive at malls (because of Barnes and Noble) for used books.

But when I stroll into the EB over at the mall, I can hardly FIND the new games for all the used. And then, once I do, they attempt to make me feel silly for paying full price when I get to the register by telling me how much I can save if I buy used. And that they are available a week or two after release, as Lex also mentioned, well, people can wait a week if it means $15 less than new. The way the system is currently structured, there's little reason to buy new.

Andraste:
The way the system is currently structured, there's little reason to buy new.

Somebody is buying new games, else there wouldn't be all those used copies cluttering the shelves.

Andraste:

But when I stroll into the EB over at the mall, I can hardly FIND the new games for all the used. And then, once I do, they attempt to make me feel silly for paying full price when I get to the register by telling me how much I can save if I buy used. And that they are available a week or two after release, as Lex also mentioned, well, people can wait a week if it means $15 less than new. The way the system is currently structured, there's little reason to buy new.

One time I went to EB games to pick up a copy of Vampire the Masquerade: Bloodlines. When I stepped in the store I realized in my surprise that a new copy of the game was actually the same price as the used. With both the new and used going for $29.99. When I took the new game up to the register the manager at the checkout stood there for 10 mins trying to get me to buy the used copy. Every reason I came up with to buy new was meet with rebuttal. In the end the manager went as far as to actually open the box of the new game and put the new disc into the box the used game and sell it to me.

I once traded in a new game 3 days after it was released (Iron Phoenix for the Xbox, because it had no offline multiplayer) that was retailing for $50 and only got $25 back then a week later went back to that same EB and saw the same game listed for $40.

After experiences like those, seeing the trade in prices for a full priced game and seeing what they sell used games for. I know that the used game market benefits the retailer more than any consumer.

I think the books to games analogy falls short because of the way both media degrade. You can usually detect wear and tear on a book a lot easier than you can on a DVD. People dog-ear pages, they spill coffee on them, they warp, the spines break. A DVD can get scratched, and even then, most perceptible scratches don't affect the thing's performance.

Additionally, it's a price and profit margin factor. Most games are the equivalent of mass-market paperback. Games sell for $40-60. Paperbacks go for $5-9. To make even close to what EB does, Barnes and Noble would have to give you about $2.50 (in credit) for a $5.00 book, which they'd then sell for $4.00 - and that $2.50 offer is only good in the first week or two that the book is on shelves. For the $2.50 you'd get back on a book you read incredibly quickly, I think most people would either hang onto the book or donate it.

And really, who would buy a used paperback just to save a buck?

Joe:
And really, who would buy a used paperback just to save a buck?

I would. I buy a used Clancy novel every time I fly. I also bought and sold used books for a good half of my twenties, and I think you're mostly spot-on with your analysis. You don't get squat for selling books, and most people just hang onto them. Also, they're far less expensive, per enjoyment hour, than games. The industry also works a lot differently. Books have a higher profit margin at retail than games, so that, plus the reduced supply of used merch. snowballs into a nice opportunity for retailers to hang onto that "new" market slice.

The game market, conversely, is oriented to encourage used sales almost all the way through. Consumers don't want to pay $60 for 10 hours of entertainment (which may or may not be fun), retailers want the higher propft margin that comers with used sales vs. new and the merchandise (as Joe said) retains its integrity longer.

I'm all for developers getting their fair shake, but the market is what the market is. Rather than punishing consumers by raising prices and/or seeking to eliminate the used market, the game makers should look to what their end is contributing to the equation, and then work to reduce that. In other words: better, cheaper games.

Fletcher:
I'm all for developers getting their fair shake, but the market is what the market is. Rather than punishing consumers by raising prices and/or seeking to eliminate the used market, the game makers should look to what their end is contributing to the equation, and then work to reduce that. In other words: better, cheaper games.

If it were that simple, that would be an easy solution. Unfortunately, to keep up with the depth and power of technology available today, as well as the consumers' demand that devs utilize that technology, costs of making the games are rising.

That prices of individual games are not rising as precipitously is quite surprising. I remember saving up for $50 NES games - not too different from prices today. It would seem, seeing those relatively stable prices, they are making better games, while receiving less money for them.

Andraste:
It would seem, seeing those relatively stable prices, they are making better games, while receiving less money for them.

I think this has more to do with the development of the industry's production dynamic than the used market. What we're seeing now is similar to the film industry in the 1930s. Big studios are moving into the production system, the teams are getting bigger, budgets are getting bigger and despite an increase in overall revenue, the individual artists aren't getting as fair a shake.

Do used game sales contribute? I don't honestly think they do. Certainly not more than the profit-mongering at the publisher level, and certainly not more than "team bloat." I think that the perception that games must get more complex to keep up is frankly a fallacy, and one of the major problems with the industry. I think Nintendo will prove that in this console cycle.

Innovation and fun trump technical gewgawry in my book. But then again, I gladly paid $20 for Armadillo Run, a game with very few bells and/or whistles, but which nonetheless was (and still is) an incredible amount of fun. And that game took exactly one person to build.

But (and here's the important thing from my end) I would have bought that game used if it were available. Not to screw anybody, and not to make a statement, but because I'll always try to save money when it's an option. Always. And I'm sorry if that hurts people, but market realities stop for no man, beast or ideal.

Alright, on second thought, maybe I wouldn't have bought Armadillo Run used. There's a chink in my argument there. I do repsect what he did, and do think it's worth supporting. I hate myself for being so weak, but there it is.

Yeah, but it wasn't available used, because he adopted the digital distribution model. So, rather than being forced with having to choose if you wanted to directly reward the developer, you had to if you wanted to play the game, which brings us back to the point I made beforehand: digital distribution is an alternative for developers who don't want to worry about used games sales potentially cutting into their profits.

At least some EBs and GameStops carry used DVDs as well, but I don't see used DVDs at other DVD retailers. I wonder if to some extent the used video media phenomenon is limited to video game retailers?

Fletcher, I think more people would buy an indie game like Armadillo Run new out of a desire to support the developer than would buy the newest EA or Ubisoft release new, were both readily available used. Maybe not that many more, but at least some more.

The next question is how the inevitable transition from optical media to digital distribution will play out for brick and mortar retailers. There will still be people who want something tangible when they buy a game. Will they be able to go to a kiosk at EBGameStop, choose a game, and have the kiosk burn it to a disc?

Ajar:
At least some EBs and GameStops carry used DVDs as well, but I don't see used DVDs at other DVD retailers. I wonder if to some extent the used video media phenomenon is limited to video game retailers?

Nah, Blockbuster sells used DVDs and pushes them about as hard as EB does used games.

The next question is how the inevitable transition from optical media to digital distribution will play out for brick and mortar retailers. There will still be people who want something tangible when they buy a game. Will they be able to go to a kiosk at EBGameStop, choose a game, and have the kiosk burn it to a disc?

That sounds awesome.

Joe:

Ajar:
At least some EBs and GameStops carry used DVDs as well, but I don't see used DVDs at other DVD retailers. I wonder if to some extent the used video media phenomenon is limited to video game retailers?

Nah, Blockbuster sells used DVDs and pushes them about as hard as EB does used games.

Good point, I'd forgotten about that. My local Blockbuster still devotes a lot more shelf space to rentals than used (or new) sales, but there's definitely a significant used presence.

Joe:

The next question is how the inevitable transition from optical media to digital distribution will play out for brick and mortar retailers. There will still be people who want something tangible when they buy a game. Will they be able to go to a kiosk at EBGameStop, choose a game, and have the kiosk burn it to a disc?

That sounds awesome.

To take it a little further, maybe Valve will put EBGameStop out of business by establishing "Valve stores" with a tiny brick and mortar footprint -- just large enough for a Steam-linked, DVD-burning kiosk?

I think it's a lot more likely that they would ink some kind of deal with EBGS, or that EBGS would go it alone, but on the other hand, I didn't expect Apple stores, either.

Ajar:
To take it a little further, maybe Valve will put EBGameStop out of business by establishing "Valve stores" with a tiny brick and mortar footprint -- just large enough for a Steam-linked, DVD-burning kiosk?

I could be wrong on this, but I remember hearing that "stamped" discs are more durable and last longer than "burned" discs.

Echolocating:

Ajar:
To take it a little further, maybe Valve will put EBGameStop out of business by establishing "Valve stores" with a tiny brick and mortar footprint -- just large enough for a Steam-linked, DVD-burning kiosk?

I could be wrong on this, but I remember hearing that "stamped" discs are more durable and last longer than "burned" discs.

They last lots longer. The burning process is more of a chemical reaction than anything else and as such the final product is much less stable and much more prone to imperfections. Although there is no real reason that someone couldn't engineer a kiosk that holds a couple hundred gold masters and stamps out your disc for you on request. Would require much more space and be a lot more expensive to set up but it could definately be done and I would bet that over its lifetime the cost in producing it would balance out against the reduced running costs compared to a brick and mortar store. The only problem then is that the government is more likely to help out the stores by introducing tax laws and such because the stores employ people.

even if you do buy games at the bloated $59.99 price which I'm not adverse to if i really want to play a particular game, how many games do they expect me to pay full price for?

10 games is $600 the average life of a game is 10 to 15 hours, thats only 150 hours of game time that might increase if there are good multiplayer modes and community.

I'm not a rich man i cant afford to buy every game i want to play even at lower prices, i pick and choose i don't pirate software and i only buy used games on rare occasions usually for games that are out of print.

id prefer a new business model that doesn't have me forking out so much for new games so i have more money to buy more games. i would assume at lower prices they would sell more games and make just as much or more money, i dunno though, higher upfront cost and then the almost certainty that additional charges will come later for additional content is straining my psyche to the point where I'm turned off from buying games at all.

I don't like the direction of the industry, i don't feel its fair to me as a consumer, i feel like I'm over paying for what I'm getting and I'm getting tired of it.

I'm also tired of being forced to listen to anti-piracy adds in legal bought products as if i need to hear there propaganda, poor you so what if someone pirates your software or buys your games used, you shouldn't make that the focus of your business we the actual consumer should be your focus you should offer us a good product for a fair price and stop stiffing us left and right and quit bitching about lost profits to piracy and used sells.

you are not going to make any money if you piss us off, your not going to make money by stiffing us all your doing with your anti consumerism is making new pirates while killing your consumer base.

Goofonian:
The only problem then is that the government is more likely to help out the stores by introducing tax laws and such because the stores employ people.

This is an interesting angle to the discussion which we hadn't yet broached. Digital distribution, if carried to its logical extreme, would put more than software pirates out of business.

I'm finding it hard to see why Games should be different from any other reusable retail product

For instance I work in the Tyre industry, which surprisingly (now I actually think about it)
draws alot of parallels eg:
someone buys some tyres then trades them in for say a new set of low profile wheels and tyres

there is alot of money in second hand tyres, and yet my company (a very big one even in little old New Zealand) as a manufacturer is not interested, let the independants sell them, they can guarantee them if they like. We are not going to if they are outside our terms of trade, and these are very reasonable for the sake of safety, but even we have to draw the line somewhere.

Likewise with the game industry, They shouldnt be interested in sales that bring a whole new set of headaches, scratched disks, multiplayer games that have had the cd key banned as I've seen happen a few times in BF2 for example.

our motto is you can only sell a tyre once, hopefully we'll never see it again until they want a new one and we'll dispose of it.

I'm all for keeping unnecessary angst out of our business, we made our cut if someone is willing to take the burden of having to deal with the bargain hunters then that person is most welcome to them. In a perfect world give me the flush individual with bags of cash who knows exactly what they want, any day of the week.

Greedy lazy capitalist pig........you'd better believe it

The tire business does have some parallels but the biggest difference is that tire companies don't just sell their product directly to consumers only. They also sell it directly to car manufactures so used sales aren't as big an issue as they are video games which only sell to the consumer.

I think we're going to find that a number of analogies don't seem to fit just right with the game industry; which, I think, is the problem the game companies are having themselves. The closest example in terms of dollars spent/received and production is the movie industry, but even that analogy fails due to the box office factor. No matter how many used copies of various movies end up on the shelves, "cutting into" movie companies' profits, the industry still enjoys a several-week (sometimes months) exclusive distribution channel in the form of movie theaters, and this is where the majority of their profits originate. Video games do not enjoy such a luxury.

Fletcher:
No matter how many used copies of various movies end up on the shelves, "cutting into" movie companies' profits, the industry still enjoys a several-week (sometimes months) exclusive distribution channel in the form of movie theaters, and this is where the majority of their profits originate. Video games do not enjoy such a luxury.

FYI...

DVDs alone now provide 59 percent of the feature film revenues of the studios, as opposed to 48 percent in 2004. (http://www.slate.com/id/2123286/)

...DVDs are now trumping theatre revenue considerably. However, I totally agree that the film industry's two-punch distribution system easily makes for more profit.

I don't know, but the short shelf life of titles and high prices seem to be linked to a delivery method that's self-destructive. When you only give customers an opportunity to buy a game within a short time frame (6 months) and at a high price ($60), you make it very attractive to create and sustain a used games market.

Will the videogame industry concede its incompatible software architecture war? In no other industry do we see such an abandonment of profitable product like we do in the videogame industry.

An interesting sidenote is the question of why $60 is considered a high price. Is it? I paid CDN$70 for Oblivion and spent close to 100 hours playing it. Even if you add the amortized cost of the Xbox 360 I played it on, we're still talking about roughly $1 per hour of play. Only books beat that. I pay about CDN$45/mo for my digital cable, and yet I only watch roughly 10 hours of TV a month (if that); cable would be even more if it wasn't bundled with internet. When I go to the movies, I pay CDN$7-15 for 1.5-3 hours of entertainment.

Granted, not all games are as gargantuan as Oblivion. Some only last 10 or 15 hours. However, even 10 hours at CDN$70 is not an unreasonable investment of money for fun per unit time. Heck, it costs me CDN$9/hr (that's a per-person fee) to rent an indoor tennis court at the local YMCA, and that's on top of the CDN$400+ annual membership (which admittedly is almost fully subsidized by my employer, though that's a taxable benefit).

I'm not necessarily arguing that games are not expensive, I'm just speculating about why the perception exists (regardless of its validity). Added: I guess it's at least partly a question of up-front costs -- I bet a lot of World of WarCraft subscribers don't think about the hundreds of dollars they've paid Blizzard in monthly subscription fees.

Echolocating:
I don't know, but the short shelf life of titles and high prices seem to be linked to a delivery method that's self-destructive. When you only give customers an opportunity to buy a game within a short time frame (6 months) and at a high price ($60), you make it very attractive to create and sustain a used games market.

This is very true. And also the retailers' call. They are the ones who pull the stock from shelves after it's been there only a few months/weeks to make room for new, incoming product. Which I can understand, there's a lot of product moving around.

Except there's suddenly space on the shelves for the used product that's more than a few months/weeks old. You know, the used games market they facilitate, and by general consensus, the market on which they seem to pull in higher margins.

Ajar:
I'm not necessarily arguing that games are not expensive, I'm just speculating about why the perception exists (regardless of its validity).

It's all relative.

When I was a young boy, I had lots of disposable income... when I was a young man, I had even more disposable income... now that I'm married, have a child, and a sizable mortgage, I consider games to be expensive. ;-)

Andraste:
This is very true. And also the retailers' call. They are the ones who pull the stock from shelves after it's been there only a few months/weeks to make room for new, incoming product. Which I can understand, there's a lot of product moving around.

Except there's suddenly space on the shelves for the used product that's more than a few months/weeks old. You know, the used games market they facilitate, and by general consensus, the market on which they seem to pull in higher margins.

Yeah, at my local EB Games, half the shelf space is used games. In fact, they don't even stack the same titles in front of one another, so you have 10 used copies of Halo 2 taking up an entire row. It's not a matter of not having enough room for older unopened product, it's a matter of just stocking enough new product to fuel their own used games market.

I don't blame EB Games though.

The gaming industry is about reinventing the wheel over and over... and over again. As soon as developers take "a chance" and build an amazing game with yesterday's processing power, they'll realize that high-poly digital realism isn't the only means to sell games... hey, wait. Isn't Twilight Princess coming out soon? Hmmm... it will be interesting to see if a "technologically inferior" game can rise to fame. Maybe good game design is about functionality... instead of ultra realistic, real time 3D running at 100 frames per second.

 

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