Analyst: Used Game Boom Correlates With New Sales Decline

[Nu-Hir]

I like to think that I'm a pretty cheap person, and I try to avoid buying used. I agree with other posters, I'd rather support the developer/publisher than Gamestop. Usually used games aren't all that much cheaper than new games, so I don't mind paying a few extra dollars to make sure that my game isn't scratched and that I have all of the manuals. Plus, Gamestop can make money hand over fist with just one copy of a game, especially if they didn't sell it new to begin with.

 

[BlueHighwind]

I've always been buying used games, this isn't anything new for me. Why the heck should I pay more just for some annoying plastic wrap that you need a knife to get through? I also wait several months before I buy a new game. Do I look like I have 50 bucks for "Super Mario Galaxy 2"? The game will be just as good at Christmas as it is now.

Cause if you like (a) game, and want to see more of it in the future or want to reward the developers for making such a great game you need to buy a copy where the money you pay actually goes to these channels (well... it'd still be better without publishers decimating that kind of money but whatever). When you buy used, all your money goes to the guy or shop and they make a profit, but not a single penny reaches the devs (or the people taking a risk publishing it).

For those it is indeed worse than piracy, because piracy doesn't necessarily entail a lost sale, but when you buy "used" you actually are ready to and do pay the money and it is most definitely a "lost sale".

Sure you might be helping GameStop or whatever erect even more shops and pay more people to work there, but they don't make the games you want and love, or do they?

I don't know why they don't just attach a CD-Key to games and be done with it, consoles are a closed-off platform, so what would people do?
Oh, and decreasing prices or offering deals (see Steam) would also help them get more sales another way and make it less profitable for the "Used Games Salesmen".

Buying a used product isn't stealing from the publisher. I'm merely purchasing the product from an alternate source that is more economically feasible for me. I don't want to burn every bit of my (extremely modest) savings into my video game hobby. So whatever price I find that is best for my budget is the one I'm more willing to buy. Occasionally I find that I simply cannot wait and buy a game right off the kiln like Pokemon SoulSilver, but that's the exception not the rule. There's nothing wrong with being a smart consumer. I love Nintendo, but I'm not going to throw away an extra thirty bucks for an overpriced game, unless I seriously have to have it NOW (you know the emotion). And really, I only have that kind of attitude for Zelda and Kingdom Hearts.

Look at it this way: Nintendo sells Super Mario Galaxy 2 to some dude for $55. Then I go out and buy his copy of the game off him for $25 six months or a year later. Nintendo still sold one copy of the game at full price: their profit for that game is entirely unchanged. I'm not going to feel bad over "potential profits" they might have had if I was willing to indulge their insane prices. I'm not a sucker, and definitely not a willing one.

 

[corronchilejano]

Of course Gamestop has grown 600%, of course it's your fault project 10 dollar exists, and the part I like most, of course this is an actual threat to the industry, as opposed to something you high-horse people are so high-horse about. Used game sales are a bad business for the economy to begin with, simply because they bring nothing in, only direct a part of customers to themselves with the shiny lower priced deals. The money is circulating outside of the circle of people who have the least bit of their work put in the actual game.

Could you please tell me which industry in this world has gone bankrupt due to second hand sales?
Automobile industry? Alive and kickin'.
Music industry? Always making more money.
Movie industry? Always making more money.
Book industry? They're fine as always.

We could go on. Second hand market is something that EXISTS. Project $10 exists because some people wish it didn't, because that would mean more money for them. You cannot blame people for doing what they've always been doing, specially when it makes SENSE (new game for $20 or new game for $40?). It's never been illegal.

And you know what, I hope this will one day be the next piracy. I hope with all my heart that you start getting more and more paid day-one DLC to where it will go 3 or 4 times over the original price of the product. Because what little grounds there are to blame used sales for an actual drop in sales, the grounds are there.

That's fine if you want it that way. I, for one, when this starts happening, will just stop buying video games and go look for entertainment somewhere else, or at the very least, spend a HELL of a lot less money on video games. I won't be the only one though, so game companies need to think if they really wish to make an astounding ammount of money from each individual off a smaller audience...


... or be smart, and make less money from each individual but with a wider audience.

Or, you people can do the sensible thing: get a PC, Steam, and buy games dirt cheap while supporting the developer. And don't even try giving me any of that "PCs are expensive" bullshit.

Well, sorry to tell you the "bullshit", but a gaming rig isn't cheap for everyone (not in my country at least), and I know the existance of Alienware. You know what I don't like about Steam? You violate some forum rules (if you ever go there) and can get banned from the games you rightfully played. Hell, if you cheat on them you can get banned from them too! And I hate CS wallhackers as much as the next guy, but they still paid for it, at least they should get the benefit of not being able to play with anyone else. I know bans usually only affect a certain server or online play, but Valve HAS the power to lock you out of your own games for whatever reason, and no ammount of EULA protects you, at ALL.

People tend to forget that second hand market is also part of the video game business. It helps introduce new gamers and helps with the hype. Some people (like me) like collecting games too, and we buy them new as to keep them in the best shape posible, but I wasn't always a new game buyer, before my 360 and Wii I bought a Gamecube and bought all games second hand. Seeing as how much good came out of it, I became a new game buyer.

 

[Jared]

Well, its nice to see an analyst use some figurs to ba g up what he is saying for once...it does make sense, however, I think there is a much wider imeage to take into account there...mainly a really big recession which occured between those years

 

[Epitome]

Remember kids, when you spend $60 on a new game, the publisher and your beloved developer get most of the revenue. When you spend $45 on a used game, all the money goes to Gamestop. You might as well just pirate the fucking thing and go whole hog.

Also, you want to save money? Become a PC gamer and learn to love Steam.

Fuck the publishers, I detest giving them a cent. For the last decade I have watched them hoover every decent studio under their controls and turn beloved genres into more generic and mass appealing titles. Their loading on of DRM systems, SecuROM, price hikes and so on. Then they turn around and punish me? I never did anything to the industry why am i dealing with DRM systems tha let pirates off scott free, why should I pay your new price tag when I only want the developers to get paid. If its a choice between giving full price and watching the publishers taking the largest cut, or giving my local store improved profits then I know where my moneys going. If the publishers eventually fail, we will go back to smaller studios, focused on quality rather than mass appeal. Id happily sacrifice every 3d or motion games in exchange for a return to the days of Deus Ex and Baldurs Gate.


Dont compare used sales to piracy either, just because neither gets the devs paid they are not one and the same. As for Steam a well presented punch in the face is still a punch in the
face.

 

[FloodOne]

... what? As long as I can remember, new games have always been $50-$60. From the n64 carts, to high profile disc games.

Which means, if anything, games have actually gotten cheaper due to inflation...

So... seriously, what?

Yes N64 carts did cost that much, part of why the N64 failed (comparatively) was that it's cartridges were sold for almost double what PS1 games went for. PS1/2 games went for $30-40 except for the big multi disc boxes like Final Fantasy games, they tended to cost more but had 3 or 4 discs in them. PC games cost the same except for the simulators. Cube and Xbox titles also cost the same, it was the pricing norm.

Playstation Platinum/Greatest hits/whatever they call them now were $20. More people bought Playstation games pre 2006 than for any other platform, prices have gone up since the 90s/early 2000s by quite a large amount.

I've been gaming for over twenty years, and games have always cost $50 new all the way up until this generation. I'm not entirely sure where you're getting your facts from, but I don't think they're right at all.

 

[Blind Sight]

At OP: Really, people are surprised that a market that offers the same products, but cheaper is doing better then the initial industry? It's called business/capitalism people, competition drives prices down in order to generate more sales. I'm so sick of the games industry thinking that they have a monopoly on their goods, one a product is on the market, it's a tradable commodity. Of course, copying a product is completely different, but trading used goods for a reduced price is a completely practical idea. The gaming industry simply doesn't get the fact that it's alienating its consumers, so they're turning to another market for their product.

"In a capitalist society, all human relationships are voluntary. Men are free to cooperate or not, to deal with one another or not, as their own individual judgments, convictions and interests dictate." -Capitalism: The Unknown Ideal, by Ayn Rand.

They don't offer the "same product", they just resale the original product with better conditions while cutting the people that did make it out of the loop entirely. They don't invest in or sit on the risks of developing said games (aside of taking in the box for cash and putting a new price tag on it). If everyone turned to "buying used" and the people making the original product went defunct, GameStop, WalMart or whoever else won't replace that. They won't suddenly start making games...

I disagree, I'm not saying that GameStop or WalMart would begin to produce games, what I'm saying is that the used game market is offering games at a better price and with less bullshit. The gaming market must adapt and change to the fact that used games exist, rather then just moan and complain. Even if the used games market heavily damaged the gaming industry (which I severely doubt it will) other companies will still arise and continue to produce games, possibly at a cheaper cost or a higher quality. With the way the industry treats its customers, I think it's good that things are getting a little shaken up. Having an industry monopoly on games would do far more harm then good, it would allow for far more corruption and price gouging. We have a RIGHT to resell the goods we purchase within a capitalist society, that's a simple fact, in the same way you sell a car, a bicycle, a house or a movie.

 

[Dexiro]

The main reason people are buying used games is the price. Not that everyone is desperate to get a game for a few $ cheaper, just that the initial prices are ridiculous. No game is worth $50+.

Game stores never stocking up on new games is a big problem too. You'd be hard pressed to find that a decent new game that wasn't released in the last month. A lot of online sites have new games on order that are years old so it can't be too difficult to get hold of them.

 

[Treblaine]

The difference between 2003 and 2009 is that 106.9 million new games were sold in 2003, while 85.5 million were sold in 2009. That's approximately a 20% decline.

Funny, the standard game price of $60 today is almost exactly 20% more expensive than the standard price in 2003 of $50 (same in UK, £40-45 vs £30-35).

it's just like how cinema attendance has fallen yet ticket prices have sky-rocketed, especially with the introduction of the 3D "premium".

(also, this study does not consider DLC and downloadable games, which for consoles in 2003 were completely non-existent)

 

[Treblaine]

Remember kids, when you spend $60 on a new game, the publisher and your beloved developer get most of the revenue. When you spend $45 on a used game, all the money goes to Gamestop. You might as well just pirate the fucking thing and go whole hog.

Also, you want to save money? Become a PC gamer and learn to love Steam.

Forgetting the complexity of the flow of money in retail and assuming someone pays EA to get those boxed discs, development studios are not paid as I direct cut of that.

The publishers pay the developers a SALARY to make the game, they may even buy the studio and keep them employed but the game belongs to the publisher largely and they get have the rights to sell it to retailers or to distribute on Xbox Live or PSN, or even commission a third party studio to port it to PC or Wii then sell it to Steam to distribute.

Very rarely are the actual developers directly rewarded for sales and usually it is not so much a percentage, more an agreed fixed bonus as stipulated in their employment contract, like: "If your game sells over 1 million copies we will award you and extra pay package".

I HAET Pachter for doing dumb ass pie-charts of "where your $60 goes" as it is no where near that simple, as the relative percentage each gets would very depending on how many copies are actually sold.

Developers must get paid even if their games is a complete flop, they did do the work. But their studio may get liquidated, they get fired and may never be able to find another job for the poor reputation for their botched game. They have an incentive to do good games to get paid more to do newer games.

How the publishers actually sell the games to the DISTRIBUTORS is complicated.

The publisher may PAY a disc printing company to print to game code onto discs, package in boxes with manuals and all that to make a PRODUCT that the Publisher owns. You could consider the disc-printing company as part of the development team, paid to do a job, to make a product (but they are just doing the simple, non-artistic final manufacturing stage).

Now what does the publisher do with these boxes and boxes of games, well the business of that is usually quite secret, as it is best not to play a card game where everyone can see your hand/ They may be sold to a middle man who sells them to dozens of smaller stores. The publisher may sell them directly to the retailers like Amazon or Best Buy. There can be so many complicated deals, based on how many copies are wanted when, where and at what price.

Here is the big financial "conflict": the Publishers on one side that may have spent a LOT of money making this product that THEY OWN... yet the discs are cheap and quite quick to print...
On the other side, the retailers, and that is EVERYONE who sells games from Valve's Steam to Amazon, to Wal-mart. They are trying to sell the games at high enough margins, and minimise risks of buying a load of expensive games that they aren't able to sell or are forced to mark down price to sell at a loss. See games VALUE depreciates incredibly fast as a newer and more desirable game can often be only weeks away.

Intensive efforts in re-sale of used games throws a spanner in the works as it ACCELERATES the depreciation process as more games are sold, more are available for resale, this can leave the publishers high and dry as they want to keep selling more box-loads of "Call of Halo-Zone XII" but the retailers can be satisfied earlier thanks to resale.

Consumers (usually being not very business savvy) sell their used games for far less than they are actually worth, probably perceiving that they "got their dollars worth" out of the game or are bored of it and it becomes worthless TO THEM. Millions fail to consider what it is worth TO THE MARKET, but it's standard practice now. Anybody trading in and demanding more will just be ignored or buttered up with some gimmick.

 

[Therumancer]

Fine, but did he take into account first hand prices of games going from $30-40 to $50-60+ in that same period of time?

... what? As long as I can remember, new games have always been $50-$60. From the n64 carts, to high profile disc games.

Which means, if anything, games have actually gotten cheaper due to inflation...

So... seriously, what?

Yes "what?" as in "what are you smoking?" No way new games were 50/60 in the N64 generation, I clearly recall games being in the 30-50 range at that time.

They were in the 70-90 dollar range where I was.

Games are cheaper now than when I was younger.

Also, adjust for inflation. Even the NES era was more expensive.

See, project $10 doesn't mean your getting $10 worth of free content you wouldn't be getting otherwise if you bought used. In a practical sense it means that once you redeem the code once, the game will thereafter be missing an integral piece. That means you can't lend it, and of course you can't get much value out of trading it in (which is the idea). So basically if some dude buys a game for $60 to kill a weekend (blowing through the 12 hours of content) he can't expect to get much value off of the trade in towards a game for the next weekend.

By integral, you mean completely optional and not necessary, right? Because to my knowledge, no essential aspects of games have been affected by Project $10 yet.

I consider pretty much everything that has been a part of the project $10 program to have been integral to the gaming experience. Shale for example turned out to be a big part of a major plotline involving Golems in general, and I considered the "Firewalker" stuff that was part of "Cerberus Network" to be an entire aspect of the game. What's more it's not being extended to making multiplayer a $10 DLC that only comes included with an original game purchuse.

At first I was somewhat supportive of the idea, but when I really started to think about it, I realized that if these things that I got with an original purchuse were missing from the game, it probably would have been a big deal.

That is incidently why the program is being done, if it wasn't a big deal and the content was truely trivial it wouldn't be an effective way of trying to combat used game sales, or try and get people to pay the producers.

-

When it comes to the price of games, all semantics arguements about comparitive pricing aside, $60 is a lot of money. That's a signifigant hit out of someone's paycheck, especially in this economy.

There is no way around the simple fact that games are expensive. Things like the used market (trading in) and the like are a way of deferring that cost for a lot of people. Things like "Project $10" and similar initiatives ultimatly wind up making games more of a financial burden for many people who buy them.

What's more the industry engages in price fixing and cartel behavior. One of the problems with the recent $10 price hike was that it was coordinated by the industry deciding "we should all raise our prices $10 and make more money", a practice that is incidently illegal in the US and exactly what gas companies and such are constantly in trouble for (and under federal investigation). What's more the price fixing also means that with very rare exception all games sell for the same exact price, irregardless of the development costs, or length/quality of the game. A game like "Modern Warfare 2" infamously cost half a billion dollars to make and market, yet it sells for the same price as titles that only cost a fraction of that to develop. An RPG with hundreds of hours of content is priced the same as a game that might have a dozen hours of playtime, with a similar quality of graphics and animation.

Things like this are why I am so critical of the industry.

Let me be blunt, I'm a capitolist. Making games is not a charity, but at the same time there are standards at least in the US as to how business is supposed to be conducted. I am also a believer in consumer rights, and feel entitled to "call" an industry when I feel they are abusing their customer base.

Greed is fine to an extent, however when your looking at a multi-billion dollar industry, pulling in record profits, and experiencing explosive growth (in a general sense, there are always exceptions) sitting down and saying "well we can squeeze even more money out of people through DRM, and attacking used game sales" is going a bit too far. The industry doesn't need these things to stay afloat or remain competitive, they simply want to remove rights consumers always had with their products so they can make even more money.

 

[Plurralbles]

Guys... you were all talking about how the price for games has been around 50 for the past 17 years or so, why is the video game industry the only industry that isn't allowed to adjust its prices for inflation? If games were 50 then, they should be about 65 now in order for gaming companies to still get the same amount of Real value.

Just a thought to tell everyone bitching about price that they might want to shut up. You're already saving money just by the industry keeping their price steady.

 

[Cynical skeptic]

Correlation does not equal causation.

Apart from just blindly parroting that as a kneejerk reaction to the word "correlation," how can you say that in this context?

Considering the only reason used copies exist is because new copies were made and sold, its simply impossible for this data to implicate anything beyond direct causation. Especially considering the way used copies are, at best, placed between the consumer and a new copy, and at worst, in many cases, provided without anything resembling the option to buy a new copy.

If "too expensive" is your argument, just fucking pirate and shut the hell up. At least in that case you wouldn't be supporting a parasitic entity that in recent years has evolved into a planet sized cancer, with developers/publishers trapped in decaying orbits around it.

And just to be pedantic, The "used games" argument isn't about personal trades between individuals. Its about massive corporations cheating people into functionally paying at least 175% of the price of a new copy (between a trade-in and the sticker price) for a copy thats changed hands already. Libraries aren't a comparable parallel, as they're non-profit, thus functionally equal to individual trades. Used cars aren't a comparable parallel, as the value of a car objectively decreases with every mile driven and every second it exists, with an independently maintained index (blue book) of that deprecation.

So... please, if you're cheap, if money is tight, whatever, just pirate. Stop giving money to parasitic entities that have no part in the creation of games.

 

[Naheal]

Correlation does not equal causation.

Apart from just blindly parroting that as a kneejerk reaction to the word "correlation," how can you say that in this context?

Considering the only reason used copies exist is because new copies were made and sold, its simply impossible for this data to implicate anything beyond direct causation. Especially considering the way used copies are, at best, placed between the consumer and a new copy, and at worst, in many cases, provided without anything resembling the option to buy a new copy.

If "too expensive" is your argument, just fucking pirate and shut the hell up. At least in that case you wouldn't be supporting a parasitic entity that in recent years has evolved into a planet sized cancer, with developers/publishers trapped in decaying orbits around it.

And just to be pedantic, The "used games" argument isn't about personal trades between individuals. Its about massive corporations cheating people into functionally paying at least 175% of the price of a new copy (between a trade-in and the sticker price) for a copy thats changed hands already. Libraries aren't a comparable parallel, as they're non-profit, thus functionally equal to individual trades. Used cars aren't a comparable parallel, as the value of a car objectively decreases with every mile driven and every second it exists, with an independently maintained index (blue book) of that deprecation.

So... please, if you're cheap, if money is tight, whatever, just pirate. Stop giving money to parasitic entities that have no part in the creation of games.

So, what you're saying is that you'd rather steal the games from the devs than pay a distributor?

 

[Cynical skeptic]

So, what you're saying is that you'd rather steal the games from the devs than pay a distributor?

A: You can't call it stealing if you weren't going to buy it in the first place (buying used not counting as a purchase as far as the industry is concerned).

B: There is no functional difference (apart from you getting conned).

C: Everyone doing so would force retailers to rethink their bussiness models and dealings with content producers

So... did I stutter?

 

[Naheal]

A: You can't call it stealing if you weren't going to buy it in the first place (buying used not counting as a purchase as far as the industry is concerned).

Piracy is theft. Period. Even a used game can provide an income via DLC. This is why DLC exists

B: There is no functional difference (apart from you getting conned).

Actually, piracy causes severe harm to both the gaming industry and the distributors. Also, distribution needs to exist so newer games can get exposure that they need. As it stands right now, a distributor will sell more games then, say, steam or valve. People want a physical copy. However, these distributors can't survive off of new games alone. So, they buy and sell used.

C: Everyone doing so would force retailers to rethink their bussiness models and dealings with content producers

No. Doing so would force retailers to either shut down or raise the prices of their new games.

Answers in bold.