Retailers Warn "Project Ten Dollar" Will Hurt Consumers
Retailers are warning that Electronic Art's [http://www.ea.com] new "Project Ten Dollar," designed to help curb the used game market, is more likely to result in angry consumers and ultimately do more harm than good.
You may have noticed how recent EA releases like Dragon Age: Origins [http://masseffect.bioware.com] feature launch-day DLC that was comes free with new copies of the game but must be purchased separately by anyone who buys them used. That's Project Ten Dollar in action, an attempt by EA to take back some of the revenues it's losing to the pre-owned market by offering an incentive to buy new - or, depending on your perspective, a punishment for not.
It's obviously a blow aimed directly at retailers who sell used games but according to some of them, it's the customers who will feel the greatest impact. "The person you're pissing off the most is the consumer," GamesIndustry [http://www.chipsworld.co.uk/home.dept]. "This affects [them] directly - they pay the same amount of money and yet the resale value is much reduced. From a retailer's point of view, they'll just readjust [the price] bearing in mind you have to buy the voucher."
An unintended side effect of the program could be a reduction in new game sales, added SwapGame [http://www.swapgame.com/] CEO Marc Day, as customers suddenly find it harder to afford their habit. "EA's Project Ten Dollar move is aiming to stifle pre-owned games sales, but what they don't factor in is the damage this could have for them in relation to new sales," Day said. "The majority of customers who trade in for cash or credit do so to acquire new games they could otherwise not afford. Through trading in, we aim to help the customer make gaming more affordable, providing them with a way to buy new games."
This could be especially, and rather ironically, troublesome for a company like EA, which publishes regular iterations of many of its most popular releases, particular in the Madden [http://www.easports.com], all of these are effectively the same title upgraded each year," McCabe said. "And people trade in last year's for this year's. You go anywhere and you'll always find second hand copies of FIFA 07, 08, 09 - it's one of the ones we get the most of."
"People want a system that's as simple as possible - if companies start going down a variety of different routes to block second hand sales, online access - the thing Ubisoft are doing [http://www.escapistmagazine.com/news/view/98452-Ubisoft-Clarifies-New-Online-DRM-Scheme] where you have to be online to verify the game - it's just going to turn people off," he continued. "If they try to block pre-owned sales, they will see a reduction in those titles."
It's definitely a risky move for EA and any other publisher that follows in its footsteps. GameStop [http://www.gamasutra.com/php-bin/news_index.php?story=23396] maintained a 48 percent profit margin on the sale of used videogames in its 2008 fiscal year, more than double its margin on new software sales; in other words, even if used retailers are forced to reduce their prices of pre-owned game sales by initiatives like this, it will likely remain lucrative and thus undiminished.
"Will customers simply cough up the full retail price to get the exclusive content and online play on day one, or will they wait to buy it pre-owned at a low enough price, then pay the additional $10 for the same content?" Day asked. "If so the publisher could well shoot themselves in the foot. It is the publisher who is giving the customer the short straw."
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Retailers are warning that Electronic Art's [http://www.ea.com] new "Project Ten Dollar," designed to help curb the used game market, is more likely to result in angry consumers and ultimately do more harm than good.
You may have noticed how recent EA releases like Dragon Age: Origins [http://masseffect.bioware.com] feature launch-day DLC that was comes free with new copies of the game but must be purchased separately by anyone who buys them used. That's Project Ten Dollar in action, an attempt by EA to take back some of the revenues it's losing to the pre-owned market by offering an incentive to buy new - or, depending on your perspective, a punishment for not.
It's obviously a blow aimed directly at retailers who sell used games but according to some of them, it's the customers who will feel the greatest impact. "The person you're pissing off the most is the consumer," GamesIndustry [http://www.chipsworld.co.uk/home.dept]. "This affects [them] directly - they pay the same amount of money and yet the resale value is much reduced. From a retailer's point of view, they'll just readjust [the price] bearing in mind you have to buy the voucher."
An unintended side effect of the program could be a reduction in new game sales, added SwapGame [http://www.swapgame.com/] CEO Marc Day, as customers suddenly find it harder to afford their habit. "EA's Project Ten Dollar move is aiming to stifle pre-owned games sales, but what they don't factor in is the damage this could have for them in relation to new sales," Day said. "The majority of customers who trade in for cash or credit do so to acquire new games they could otherwise not afford. Through trading in, we aim to help the customer make gaming more affordable, providing them with a way to buy new games."
This could be especially, and rather ironically, troublesome for a company like EA, which publishes regular iterations of many of its most popular releases, particular in the Madden [http://www.easports.com], all of these are effectively the same title upgraded each year," McCabe said. "And people trade in last year's for this year's. You go anywhere and you'll always find second hand copies of FIFA 07, 08, 09 - it's one of the ones we get the most of."
"People want a system that's as simple as possible - if companies start going down a variety of different routes to block second hand sales, online access - the thing Ubisoft are doing [http://www.escapistmagazine.com/news/view/98452-Ubisoft-Clarifies-New-Online-DRM-Scheme] where you have to be online to verify the game - it's just going to turn people off," he continued. "If they try to block pre-owned sales, they will see a reduction in those titles."
It's definitely a risky move for EA and any other publisher that follows in its footsteps. GameStop [http://www.gamasutra.com/php-bin/news_index.php?story=23396] maintained a 48 percent profit margin on the sale of used videogames in its 2008 fiscal year, more than double its margin on new software sales; in other words, even if used retailers are forced to reduce their prices of pre-owned game sales by initiatives like this, it will likely remain lucrative and thus undiminished.
"Will customers simply cough up the full retail price to get the exclusive content and online play on day one, or will they wait to buy it pre-owned at a low enough price, then pay the additional $10 for the same content?" Day asked. "If so the publisher could well shoot themselves in the foot. It is the publisher who is giving the customer the short straw."
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