Game Crazy: Publishers Benefit From Used Game Sales

Andy Chalk

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Nov 12, 2002
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Game Crazy: Publishers Benefit From Used Game Sales


Used game sales are a thorn in the side of many industry executives but in a recent interview, Marc Mondhaschen of Game Crazy [http://www.gamecrazy.com/] pointed out that publishers do in fact benefit from the sale of pre-owned games.

The debate over the evils of used game sales has been raging for some time now. Numerous high-profile industry figures have decried pre-owned game sales for their negative impact on the industry; Nintendo's Reggie Fils-Aime went so far as to say they're bad for consumers [http://www.escapistmagazine.com/news/view/90627-Nintendo-President-Used-Games-Are-Bad-For-Consumers]. On the other side of the coin, an increasing number of retailers are embracing the practice to varying degrees and it's clear that used game sales aren't likely to go away anytime soon.

But as Mondhaschen, director of used games at Game Crazy, pointed out, that's not necessarily bad news for publishers. While they don't see any direct revenues from used game sales, he said they do enjoy certain other benefits.

"We did a study not too long ago for a very large vendor who we managed to figure out for them 20 percent of their sales inside the first 28 days were paid for with trade dollars," he said in an interview with IGN [http://wii.ign.com/articles/102/1023199p1.html]. "So you got 20 points of their sales that wouldn't happen unless we had a trade business going. And that's specialty retail. Game specialty retail is maybe a third of the channel, 35 percent of the channel. So you got 10 percent of your sales that wouldn't happen unless somebody was out there trading games with your customers."

"And if you didn't have specialty retail it would be pretty hard to sell innovation into the channel at all. I mean, Wal-Mart doesn't really buy Katamari Damacy," he continued. "So, in order to innovate, in order to grow innovation in the business you need a specialty games retailer that actually knows something about videogames. And in order to have them, they need the margins through used games. But then the loopback, the way publishers get cut in is through trades. Because trades go to purchase new games."

He also pointed out how the rise of downloadable content for games has created a "sympathetic business" that results in increased retail revenues for publishers as well. "As an example, when The Lost and Damned (L&D) came out we started selling a whole lot more Grand Theft Auto 4, both on the new side and on the used side," he said. "Which, then, sort of funds people's ability to go play L&D again. And then the trade business funded all those L&D cards that showed up in stores."



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CD-R

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Mar 1, 2009
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Malygris said:
Game Crazy: Publishers Benefit From Used Game Sales



But as Mondhaschen, director of used games at Game Crazy, pointed out, that's not necessarily bad news for publishers. While they don't see any direct revenues from used game sales, he said they do enjoy certain other benefits.

"We did a study not too long ago for a very large vendor who we managed to figure out for them 20 percent of their sales inside the first 28 days were paid for with trade dollars," he said in an interview with IGN [http://wii.ign.com/articles/102/1023199p1.html]. "So you got 20 points of their sales that wouldn't happen unless we had a trade business going. And that's specialty retail. Game specialty retail is maybe a third of the channel, 35 percent of the channel. So you got 10 percent of your sales that wouldn't happen unless somebody was out there trading games with your customers."

"And if you didn't have specialty retail it would be pretty hard to sell innovation into the channel at all. I mean, Wal-Mart doesn't really buy Katamari Damacy," he continued. "So, in order to innovate, in order to grow innovation in the business you need a specialty games retailer that actually knows something about videogames. And in order to have them, they need the margins through used games. But then the loopback, the way publishers get cut in is through trades. Because trades go to purchase new games."

He also pointed out how the rise of downloadable content for games has created a "sympathetic business" that results in increased retail revenues for publishers as well. "As an example, when The Lost and Damned (L&D) came out we started selling a whole lot more Grand Theft Auto 4, both on the new side and on the used side," he said. "Which, then, sort of funds people's ability to go play L&D again. And then the trade business funded all those L&D cards that showed up in stores."



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So what I think hes trying to say is if people didn't have the ability to trade in thier games they wouldn't have the money to buy new ones? Thats what I got anyway. Personally I still think your better off selling your used games on craigslist or ebay. As far as game traders go I prefer Game Crazy to Gamestop. Only downside is they have hardly any PC games ever.
 

Amnestic

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Aug 22, 2008
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I was in my local GAME store recently chatting to the shop floor manager type person about this when the rest of the store was empty. He mentioned something about publishers releasing 'two kinds' of game. One which you could trade in and have the retailers sell as a Used Game (which would cost more) and another version which would be effectively 'for your use only' and, I suppose somehow tied to your PSN/Xbox LIVE account (which would be released far cheaper than the former). Dunno how much weight that has or if it even exists beyond his own wild delusions. \o/

Either way, used game sales are - well, awesome. It means I get to enjoy things like Modern Warfare 2 without sending any money to Activision for their god awful pricing scheme. That, and a number of my friends work at a local CeX branch so I get staff discounts.
 

brewbeard

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Nov 29, 2007
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So...their argument is that for every 2-4 publishers who lose (potential) new sales, one publisher gains maybe 1/5th of a (potential) new sale? If anything the benefit of used games is that it gets more people to experience your product, but at the same time, the profit from the sale of used games goes solely to the distributor, so technically the publisher could reap the same benefit by using planned price drops, which aren't an option because distributors sell used games instead, and actually make money in the process.
 

Dudeakoff

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Why don't publishers like me owning something I brought? Used games are good, it's the only way I could get my hands on Ico.
 

Avernus

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Jun 10, 2009
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'..the sale of pre-owned games.'

Pre-Owned. I was hoping that marketing phrase would never leave the confines of the auto industry.

/start rant

Pre-owned is supposed to replace used. 'Pre' is supposedly short for previously - which makes perfect sense if you want to convey that pre-owned means that it is literally previously owned.

Respectfully, the English language disagrees, and takes a steamy shit on this perversion.

Pre, means before. Which is something the highly paid marketing people who came up with this phrase are very well aware. This means that pre-owned, is new, not used. Twist a word and raise the subconsious percieved value. Brilliant marketing in all honesty... add additional words that you would normally associate with something new, like 'certified'. Certified Pre-Owned. Reinforce what you've already started to mess with in people's heads.

'Hey asshole, it's used. How about you adjust your price to reflect that?'

/end rant

...um ....sorry.
 

hansari

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brewbeard said:
So...their argument is that for every 2-4 publishers who lose (potential) new sales, one publisher gains maybe 1/5th of a (potential) new sale? If anything the benefit of used games is that it gets more people to experience your product...
Yeah, I feel like this "Game Crazy" exec was grasping at straws when forming this argument. (I recommend he join the local high school's debate club...although I doubt there is much of an argument to make...)

The only benefit I could possibly see was how someone could buy a used copy of an older game, then become so enamored by it that he begins to follow the franchises newer releases...but thats all just more speculation...
 

Pimppeter2

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I can't buy new games. I like knowing that Im the first one to open and smell my game