Gamestop: Used Games Provide Billions for Publishers

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Gamestop: Used Games Provide Billions for Publishers

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Gamestop President Paul Raines claims that pre-owned sales "do not cannibalize new game sales".

The issue of used games sales is among the most contentious of the industry, ranking just below DRM for sparking ire across the internet. Publishers don't like the idea of missing out on games sales, while customers don't like the idea of paying $60 dollars for a game they might not end up enjoying. You're less likely to hear a great deal of support for retailers like Gamestop in the discussion, but they actually might have an interesting perspective to bring to the table. During an interview with Gamasutra, Gamestop President Paul Raines argued that pre-owned sales are far from one-sided transactions, and that they actually benefit the entire games industry in ways few realize.

"We are not ashamed of the pre-owned business and in fact we believe that it's good for the industry," Raines said. "We're really not cannibalizing new game sales. That's a common misconception ... We think there's a real lack of awareness as far as how it's good for the industry."

To back up his claim, Raines noted that 70% of the income customers receive from trading in used games never leaves GameStop, but is immediately spent on new games. According to Raines, that provides approximately $1.8 billion dollars to publishers alone. Customers who trade-in their games tend to do so after approximately six weeks, at which point the process would repeat itself.

Assuming this is true, publishers might have reason to be upset because they still aren't making as much money on sales as they could be. To Raines, that argument doesn't hold water either, because used game sales ultimately draw in new customers. "A lot of our consumers tell us that the pre-owned business has allowed them to learn more about video gaming," Raines notes. "There's a disconnect between a lot of the blogosphere and what consumers tell us."

Whether the numbers Raines quotes are accurate or not, there seems to be a great deal of miscommunication between GameStop and publishers that hurts gamers just as much as anyone else. To change the nature of the discussion, Raines wants to rebrand GameStop as a contributor to the industry as well as a brick-and-mortar retailer. "We don't sell appliances. We don't sell groceries. We are all about gaming," Raines says. "I play four hours of videogames a week. Our office is filled with gamers and people who are into videogames. We are authentically into gaming. This isn't a company that dabbles in it. Yeah, we have a business model, we have to make profits, but we're really into videogaming."

Source: Gamasutra via Eurogamer

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Kind of weird that he is just now coming out and saying this. I have seen this logic used in the defense of used game says for awhile now. The problem isn't that the publishers feel like they are losing profits, it's that they want more control over their products. Gamestop's a middleman that they feel they shouldn't need despite what some exec might tell you when they say, "retail is important to us".

Well they could always try making more games that are actually worth full price.

Ignoring the rest of the article, I find it funny that he claims to be really into videogames with that massive 4 hours a week gaming... I understand hes busy and probably can't spend a lot of time on games, but at that point why put a number on it?

Anyways, I bet publishers do realise this effect, but they want the money heading for their games, not increasing business in gaming all around.

Tonight on Flimsy Unmeasurable Clashing Kopinions, we have Video Game Publishers vs. Retail outlets, Video Game Publishers vs. Pirates, NRA vs. Gun Control Activists, and a tag team match between Feminists and English majors vs. the Apathetic and everyone who isn't an English major.

The rules are: Everyone has to argue until all of one side gets bored and quits caring, then both sides lose.

I will say that almost all the times I bought a game used, I bought the sequels new.

Happened with Uncharted. Bought the first used, then pre-ordered the second, and pooled money with my brother to buy the collector's edition of 3. Which had an online pass which meant only one of us could play the multiplayer. So thanks for that, Sony and Naughty Dog.

Happened with Halo, bought the first and second used when I finally got an xbox, and every future Halo game I bought the collector's editions.

Bought Fable 1 used, bought Fable 2 and 3 new. Also collector's editions. Also bought Fable The Lost Chapters new.

And yeah, that basically goes on and on for a while with the following franchises:

Ratchet and Clank
Resistance series
Saint's Row
Maximo
Fucking Timesplitters (BEST. GAMES. EVER.)
Persona
Gears of War
Kingdom Under Fire (well, this was broken by Circle of Doom. That game SUCKED)

And some more but I think I made my point. Also seen this happen with quite a few friends as well. Yes it's anecdotal evidence, but I wouldn't be surprised if there was some truth in it.

Zaik:
Tonight on Flimsy Unmeasurable Clashing Kopinions, we have Video Game Publishers vs. Retail outlets, Video Game Publishers vs. Pirates, NRA vs. Gun Control Activists, and a tag team match between Feminists and English majors vs. the Apathetic and everyone who isn't an English major.

The rules are: Everyone has to argue until all of one side gets bored and quits caring, then both sides lose.

Actualy if anyone has the numbers its gamestop, I mean they would be keeping track of this sort of thing. Plus when you consider you get more trade in for store credit then actual cash, it makes sense that at least 70% stays in the system.

I play four hours a day! If not more...

I know this won't be a popular opinion, but based on my own personal experience GameStop is not entirely wrong on this. I worked there as an ASM for over two years, and most of my regulars traded in games in order to buy new ones. It was the only way they could afford to keep up with the industry.

While I completely understand most of the complaints about used games, especially from developers and publishers who are seeing their games resold multiple times while they only profit from one sale, there are so many gamers out there who wouldn't be able to buy any new gamers without the store credit from trade-ins. I've also seen customers buy an older used game, and come back later to buy the sequel or a similar game new.

GameStop is far from a perfect company, but in some cases, yes, it's possible that trading in games could lead to more sales of new games.

I buy used games and new ones. I trade in games to buy new ones. I also have a Gamestop near me that cares about it's customers. But I can't ignore that most people who post about Gamestop have had bad encounters with their local shop.

Thanks Gamestop. I hope you can do more (like not hiring dickheads?) to help gamers and the industry.

Kordie:
Ignoring the rest of the article, I find it funny that he claims to be really into videogames with that massive 4 hours a week gaming... I understand hes busy and probably can't spend a lot of time on games, but at that point why put a number on it?

You kind of said it yourself, but for anyone else thinking the same thing, think, have you ever run a corporation? Have you ever dealt with anything like that that consumes your entire being?

You are indeed correct Kordie, why put a number on it anyway? But still.

OT: I don't really think that this perspective is what pubs wanted to hear, the publishers are already making money, what they want now is CONTROLLL and all the money. Both sides are silly. Used Game Sales may be hurting new game purchases, as well as new game pricing should be lowered to 50 bucks again, because seriously I would be able to justify a fifty dollar game better than a 60 dollar game... and that's why PC wins in pricing

I hadn't thought of it this way. Most used games are of the crapware variety,
And they aren't ever purchased. That's why one must dig for gold...

easternflame:
I play four hours a day! If not more...

You are what, 16? And he is an adult working in a retail company, as an exec if I read that right. Wait til your age doubles and see if you still log that many hours. Im 30 and I've barely got time for an hour a day when lucky, but I still manage to binge play periodically.

no offense, but their policies are directly opposed to what their president says. they encourage used sales, to the point of second-guessing their customers' decisions if they want to buy new.

my story: bought a PS3 new last year. explicitly stated i wanted new copies of god of war 3 and demon's souls (both retail at $20 greatest hits editions). was asked by the employee if i wanted the used copies for $18 and after saying no, she assured me that the discs were fine, and i had to again repeat that i wanted the new copies. she grumbled and got me the new copies. i finished my transaction but was furious.

i mean, i didn't say 'i want X'. i said 'i want a new copy of X' and i can understand asking once if i'd want a used copy for $2 less, but the fact she asked me again pissed me off to no end. read your fucking customers: if someone comes in and asks explicitly for something, you don't question them, you get what they ask for (unless they didn't have it). i doubt this girl would have continued to pester me to buy used if there wasn't some story or company incentive for her to get me to buy used.

DVS BSTrD:
Well they could always try making more games that are actually worth full price.

I got, like, forty games for $130 from Steam the other day. Best value evar.

Sober Thal:
Thanks Gamestop. I hope you can do more (like not hiring dickheads?) to help gamers and the industry.

But the dickhead market is so strong at the moment.

Dickheads. Dickheads everywhere. :P

Boudica:

DVS BSTrD:
Well they could always try making more games that are actually worth full price.

I got, like, forty games for $130 from Steam the other day. Best value evar.

Standard retail price is $60 American, and a LOT more in Australia. I doubt you could justify spending THAT for each for your Steam games, fun as I know they are.

DVS BSTrD:

Boudica:

DVS BSTrD:
Well they could always try making more games that are actually worth full price.

I got, like, forty games for $130 from Steam the other day. Best value evar.

Standard retail price is $60 American, and a LOT more in Australia. I doubt you could justify spending THAT for each for your Steam games, fun as I know they are.

Standard retail price for what?

Dark Souls (PC): $69
Dwnaguard: $25
Darksiders II: $50
Borderlands 2: $70
Skyrim: $60
Hitman Absolution: $45

All those prices seem great. Also, the Australian economy is doing a lot better than the U.S. economy. The standards of living are better for Australians, too. With those comes increased cost of luxury goods. My home is Sweden, but I think Australia is a fantastic place to live ^^

70% of the money is also spend on another purchases... which are in probably at least half of the cases on used copies of the games so the money stays at GameStop.

DVS BSTrD:
Well they could always try making more games that are actually worth full price.

2 posts in and we already have a winner

thiosk:
I hadn't thought of it this way. Most used games are of the crapware variety,
And they aren't ever purchased. That's why one must dig for gold...

easternflame:
I play four hours a day! If not more...

You are what, 16? And he is an adult working in a retail company, as an exec if I read that right. Wait til your age doubles and see if you still log that many hours. Im 30 and I've barely got time for an hour a day when lucky, but I still manage to binge play periodically.

I'm 17 and I find it hard to log an hour a day too, where the hell do these people find this time?
I mean if I get a day off I might play for 8 hours straight to catch up a little but christ 4 hours a day? Every day?

This is something that should be fairly obvious to anybody with half a brain.

ultrabiome:
no offense, but their policies are directly opposed to what their president says. they encourage used sales, to the point of second-guessing their customers' decisions if they want to buy new.

Their policies also promote the sale of new games. Gamestop has always offered a considerable amount more in credit when you are trading in games towards a NEW game. They always have large signs promoting trade ins towards new recently released games. They also always ask about preorders which surprise surprise involve new game sales.

It appears to come down to pointing fingers, if I had to blindly believe one of the two sides it would be the publishers because they have their shipped units to reference. That said I don't really trust them.

The fact of the matter is without hard numbers being given freely it's hard to say how much any particular practice is impacting the industry. Quoting tidbits like "70% of turn-ins are used on new games" doesn't really tell us much.

I would like to know the breakdown of new vs. used sales, then break that down to include what portion is store credit from turn-ins. Add in inventory ordering habits and tracking of the most popular games (new/used) copies to see the ongoing picture. That would all be useful information. Random out of context stats or anecdotal stories don't tell us anything or give information to the debate.

This is true of either side.

Boudica:

DVS BSTrD:

Boudica:
I got, like, forty games for $130 from Steam the other day. Best value evar.

Standard retail price is $60 American, and a LOT more in Australia. I doubt you could justify spending THAT for each for your Steam games, fun as I know they are.

Standard retail price for what?

Dark Souls (PC): $69
Dwnaguard: $25
Darksiders II: $50
Borderlands 2: $70
Skyrim: $60
Hitman Absolution: $45

All those prices seem great. Also, the Australian economy is doing a lot better than the U.S. economy. The standards of living are better for Australians, too. With those comes increased cost of luxury goods. My home is Sweden, but I think Australia is a fantastic place to live ^^

Hmmmit appears I have been something of the misinformed. Although to be fair Dawnguard is an expansion, Darksiders 2 has been out for awhile and I was talking about day-one release price. Glad games don't cost more for you than us though.

DVS BSTrD:

Boudica:

DVS BSTrD:
Standard retail price is $60 American, and a LOT more in Australia. I doubt you could justify spending THAT for each for your Steam games, fun as I know they are.

Standard retail price for what?

Dark Souls (PC): $69
Dwnaguard: $25
Darksiders II: $50
Borderlands 2: $70
Skyrim: $60
Hitman Absolution: $45

All those prices seem great. Also, the Australian economy is doing a lot better than the U.S. economy. The standards of living are better for Australians, too. With those comes increased cost of luxury goods. My home is Sweden, but I think Australia is a fantastic place to live ^^

Hmmmit appears I have been something of the misinformed. Although to be fair Dawnguard is an expansion, Darksiders 2 has been out for awhile and I was talking about day-one release price. Glad games don't cost more for you than us though.

A shame the reason Australia is doing especially well at the moment is the poor U.S. dollar. So many people out of work and so much debt... :(

Then again... Cheap games for me... Ah fuck it. Go Australia! XP

ultrabiome:
no offense, but their policies are directly opposed to what their president says. they encourage used sales, to the point of second-guessing their customers' decisions if they want to buy new.

my story: bought a PS3 new last year. explicitly stated i wanted new copies of god of war 3 and demon's souls (both retail at $20 greatest hits editions). was asked by the employee if i wanted the used copies for $18 and after saying no, she assured me that the discs were fine, and i had to again repeat that i wanted the new copies. she grumbled and got me the new copies. i finished my transaction but was furious.

i mean, i didn't say 'i want X'. i said 'i want a new copy of X' and i can understand asking once if i'd want a used copy for $2 less, but the fact she asked me again pissed me off to no end. read your fucking customers: if someone comes in and asks explicitly for something, you don't question them, you get what they ask for (unless they didn't have it). i doubt this girl would have continued to pester me to buy used if there wasn't some story or company incentive for her to get me to buy used.

That doesn't happen at my local stores. Anyway, Gamestop pushes pre-orders (those are new) and Gamestop is always running a special where you get more if you put it towards a pre-order or a recently released NEW game.

Here's the special right now:

Power Trade: Get a 30% trade bonus on any games traded toward a new copy of: Darksiders II, New Super Mario Bros. 2, Madden NFL 13, Transformers: Fall of Cybertron

Anything else you would like to say about them pushing used games?

But what about if people buy used games and sell them later to buy more used games? It happens a lot, since new games usually take awhile to go down in price and since Gamestop always has deals for buying used products. In that case the publisher literally does not see a single cent from the purchase of their product. Which seems kinda unfair since they usually worked pretty hard to make it. But it doesn't effect me personally since I recently switched to PC gaming :)

Sober Thal:
I buy used games and new ones. I trade in games to buy new ones. I also have a Gamestop near me that cares about it's customers. But I can't ignore that most people who post about Gamestop have had bad encounters with their local shop.

Thanks Gamestop. I hope you can do more (like not hiring dickheads?) to help gamers and the industry.

Most people have had encounters at all kinds of stores from Wal Mart to McDonalds.

Killing_Time:
But what about if people buy used games and sell them later to buy more used games? It happens a lot, since new games usually take awhile to go down in price and since Gamestop always has deals for buying used products. In that case the publisher literally does not see a single cent from the purchase of their product. Which seems kinda unfair since they usually worked pretty hard to make it. But it doesn't effect me personally since I recently switched to PC gaming :)

Why is it unfair? I am sure factory workers worked hard building my car, couch, stove, refrigerator, television and so on. Should they get a cut when I sell these things on?

You know, I haven't bought a CD in years but once upon a time I sold all of my CD's, should I have had to give money to the record companies?

We are all about gaming," Raines says. "I play four hours of videogames a week.

Is anyone else having trouble taking this guy seriously? 4 hours a week makes you really into video games? What?

Shinsei-J:
I'm 17 and I find it hard to log an hour a day too, where the hell do these people find this time?
I mean if I get a day off I might play for 8 hours straight to catch up a little but christ 4 hours a day? Every day?

You serious? even when I had a job logging 3-4 hours a day wasn't all that difficult.

If he's "really" into gaming then 40 minutes a day shouldn't be very challenging. You spend roughly 4 hours on the can each week... This is obviously the case of some guy pulling a random number out of his ass that he thought would impress people. Not everybody has a lot of time on their hands, but there's no point in professing your dedication to something when you're not even committed enough to dedicate an hour a day.

while playing 4 hours a week it should take him anything from 2 weeks till several months to finish a game. A snail's pace. And while there's no requisite that you have to be a voracious gamer that plows through several games a week, you should at least set aside some time to do the thing you're supposedly so "serious" about.

llagrok:

Shinsei-J:
I'm 17 and I find it hard to log an hour a day too, where the hell do these people find this time?
I mean if I get a day off I might play for 8 hours straight to catch up a little but christ 4 hours a day? Every day?

You serious? even when I had a job logging 3-4 hours a day wasn't all that difficult.

If he's "really" into gaming then 40 minutes a day shouldn't be very challenging. You spend roughly 4 hours on the can each week... This is obviously the case of some guy pulling a random number out of his ass that he thought would impress people. Not everybody has a lot of time on their hands, but there's no point in professing your dedication to something when you're not even committed enough to dedicate an hour a day.

while playing 4 hours a week it should take him anything from 2 weeks till several months to finish a game. A snail's pace. And while there's no requisite that you have to be a voracious gamer that plows through several games a week, you should at least set aside some time to do the thing you're supposedly so "serious" about.

In my defence I'm taking a course, working and chronically ill so I do kinda see where people find this time, I just didn't think about that at the time of commenting. I don't know how busy he is though and I do agree with you that it's probably just a number he pulled out of his ass. I assume his comments about the employees being gamers is most likely correct and just because he pulled a number from his ass doesn't mean he doesn't play games.

I definitely think there should be a used market but Gamestop should definitely NOT be in charge of it like they are.

Their gouging has made used games only $2 short of new and at that point they are cannibalizing the market. Here's how: most gamers have a limited amount of money they will spend on games. If a used game is around $10 it's not going to cut into the budget so much; that's an impulse buy. A used game that is $57.99 is taking the place of a new game purchase in the consumer's budget, especially when the retailer limits their stock of new games & sells opened games at new price as gamestop is known to do.

Duffy13:
It appears to come down to pointing fingers, if I had to blindly believe one of the two sides it would be the publishers because they have their shipped units to reference. That said I don't really trust them.

The fact of the matter is without hard numbers being given freely it's hard to say how much any particular practice is impacting the industry. Quoting tidbits like "70% of turn-ins are used on new games" doesn't really tell us much.

I would like to know the breakdown of new vs. used sales, then break that down to include what portion is store credit from turn-ins. Add in inventory ordering habits and tracking of the most popular games (new/used) copies to see the ongoing picture. That would all be useful information. Random out of context stats or anecdotal stories don't tell us anything or give information to the debate.

This is true of either side.

Both publishers and gamestop are completely full of shit. The used market is just an excuse for publishers to pull nickel & dime schemes and isn't cutting into their bottom line as much as they'd like you to believe. There are plenty of real reasons why some of them are doing poorly. At the same time, Gamestop does all it can to sell used games (at next to new prices) rather than new games because that's where they make most their profit.
If you're going to pick a side, why don't you pick the side of the consumer? After all, that's what you are.

Lunar Templar:

DVS BSTrD:
Well they could always try making more games that are actually worth full price.

2 posts in and we already have a winner

Soooo....

If it is worth the full price that will prevent it from being resold?

OT: So the 70% of the money never leaves Gamestop. So if we follow the money that means it is essentially Gamestop giving discounts equal to 70% of the trade in value. Giving 1.8 billion dollars in discounts on new purchases with trade ins more or less.

Now that sounds like a shitty deal that Gamestop. I mean where does the 1.8 billion dollars come from? Oh yeah.... they sell those traded in titles to other customers at 4 times the value of what they were traded in for....

Now here is the thing. That cannibalizes new sales. You should know that Gamestop since you made a business model of trying to get games traded back in the first week where the hype is high. You should know that since you directly ask people if they want a slightly cheaper used version whenever they they walk up to the counter with new copy. I dont buy the bullshit spin you just put on this. If you couldn't siphon money out of the system you wouldn't be in business. You dont add to the mix. Digital distribution will make you a relic off the coming years. And I wont be mourning.

Suki_:
This is something that should be fairly obvious to anybody with half a brain.

ultrabiome:
no offense, but their policies are directly opposed to what their president says. they encourage used sales, to the point of second-guessing their customers' decisions if they want to buy new.

Their policies also promote the sale of new games. Gamestop has always offered a considerable amount more in credit when you are trading in games towards a NEW game. They always have large signs promoting trade ins towards new recently released games. They also always ask about preorders which surprise surprise involve new game sales.

true, i won't deny that they do that for pre-orders or just released games. after a few weeks though, when sales of the $50-$60 games drop and so does the price, they push the used games hard.

they are promoting buying new games with money traded in from older games that they will resell at higher prices for more profit.

it's no secret that gamestop makes more money off of their used sales than new. if they didn't, they wouldn't have half or more of the store shelf space for pre-owned games. if they didn't sell new though, they'd lose the source of all of their used games.

Crono1973:

ultrabiome:
no offense, but their policies are directly opposed to what their president says. they encourage used sales, to the point of second-guessing their customers' decisions if they want to buy new.

my story: bought a PS3 new last year. explicitly stated i wanted new copies of god of war 3 and demon's souls (both retail at $20 greatest hits editions). was asked by the employee if i wanted the used copies for $18 and after saying no, she assured me that the discs were fine, and i had to again repeat that i wanted the new copies. she grumbled and got me the new copies. i finished my transaction but was furious.

i mean, i didn't say 'i want X'. i said 'i want a new copy of X' and i can understand asking once if i'd want a used copy for $2 less, but the fact she asked me again pissed me off to no end. read your fucking customers: if someone comes in and asks explicitly for something, you don't question them, you get what they ask for (unless they didn't have it). i doubt this girl would have continued to pester me to buy used if there wasn't some story or company incentive for her to get me to buy used.

That doesn't happen at my local stores. Anyway, Gamestop pushes pre-orders (those are new) and Gamestop is always running a special where you get more if you put it towards a pre-order or a recently released NEW game.

Here's the special right now:

Power Trade: Get a 30% trade bonus on any games traded toward a new copy of: Darksiders II, New Super Mario Bros. 2, Madden NFL 13, Transformers: Fall of Cybertron

Anything else you would like to say about them pushing used games?

My Gamestop has a list behind the counter going "Gamestop is currently searching for:" and a list of games that has been released recently. They do this in order to encourage people to play the games and then trade them in so they can resell them while the demand for them is high (during release hype).

Not to mention that it more or less says in the employee handbook that if a customer comes up with a new title you have as used, you are supposed to ask them if they would like to save money buying used.

Also the fact that they shrinkwrap used games and sell them as new.

That is all i want to say about them pushing used games.

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