NameIsRobertPaulson said:
Secondly, games would become more rare (since you can't resell them). And last time I checked, rare items don't really go DOWN in price.
This is not how economics works. I mean, it is for free market commodities, but that's not what we're talking about.
To develop a game, let's say it costs $20 million. This is the sunk cost; no matter how many units they sell, this cost is fixed. This is the
primary cost that publishers/developers are trying to recoup with game sales.
We'll assume it's a console game, so no digital distribution, and it costs $3 for the manufacture and shipping of each disc, case, and manual. This is the variable cost, it changes based on number of shipped games. And, since the game's going retail, the retailer is going to keep $12 from the sale. So, the developer/publisher gets $45 for each sale.
Now, 1 million people are willing to spend $60 on this game. Of those, half are willing to wait to buy used instead for $40. An additional 200 thousand people are willing to spend no more than $40 for the game. These people all buy used.
How does the profit break down? 500 thousand people buy the game new for $60, netting the dev/pub $45 per sale, resulting in $22.5 million for the dev/pub. 700 thousand buy the game used for $40 netting the dev/pub $0. 2 million people are non-contributing jerks who pirate, but that's a completely separate issue. The game has made $2.5 million more than it cost to produce. This game is a failure.
But, what if there were zero used sales, and the dev/pub sold the game for $40? 1.2 million people would buy the game new for $40. Cutting off the manufacturing cost ($3) and retail cut ($8), the dev/pub makes $29 per sale, resulting in a profit of $34.8 million. By cutting out used games
and lowering their prices, game companies can turn a game that barely made it's money back to a $14.8 million home run. Of course, if they don't lower their prices they'll get $45 million (a $25 million "let's buy all the executives private golf courses").
Do I think they'll lower their prices? Of course not. They'll keep selling at $60, and we'll (well,
you'll; digital distribution has solved this particular problem for PC gamers, heh) keep paying it. But with more money going to the developers and publishers, they will be able to take slightly more risk
and buy private jets for all their executives.
Who loses with no used game sales? Retailers. And by retailers, I mean Gamestop. And, honestly, Gamestop can die in a fire. Well, several fires. All across the country. One at each store and office should be sufficient.
Anyway, this isn't a freemarket economy.
Actually, the used games market is: people buy and sell at the best deals they can get. (What did I say? I meant the best deals Gamestop will give them. So it's more of a "Gamestop economy" than a freemarket. Except on eBay.)
But new games aren't on a "market," their price is set by the publisher, and the publisher makes, ships, and sells a certain number of units at that price. If they need more, they just manufacture an additional million units and ship them out. There won't suddenly be a "scarcity" of units, and even if there were, the publisher isn't going to suddenly raise the price of that game in response to demand.
Which means, when a publisher raises their price, they aren't "responding to market forces" or any nonsense like that. They're just taking more of your money because they want it.