Codemasters CEO Calls Pre-Owned Sales Model "Destructive"

[Sephiwind]

To be fair, 5-10% of the money generated through a pre-owned game sale should go back to the publisher.

But I doubt GameStop cares enough about the game industry to do something like that.

I'm sorry but I have to disagree. If the developers want a piece of the profits from used games then they should front some of the cash. Remember places like Game Stop have to actually buy back the game from someone in order to resell it. Since they are fronting all the cash/credit, and risk for the used game, then they shouldn't have to share any of the profit.

Well, if we're talking about risk... how about the risk of paying for the development of the game? Taking all the risk there and then not getting anything back from a great deal of the sales?

Also, you might want to read the rest of this little debate before replying to the first post in the chain... =P

Yeah there is risk but you also have to take into consideration that these companies only sell new games. Every used game was new at some point. So they have all ready made their money off of the used copy when it was new.

If these companies are losing so much money because of the used market then why don't they decide to buy back the used version of their games them selves. The answer is because it would cost them more money then it would be worth. They would have to figure out how to go about buying the game back, keep them stored, pay wages for employs, set up some sort of store front on their web site...etc. Mean while stores like game stop can just buy them back and then resell them at the same store.

Bu I digress. Back to the point at hand. These companies have all ready made money off of the used copy with the initial sale of it new. Why should stores like Game Stop buy the game back with their own money/credit, resell the game, and then have to give part of the profit from that sale to the developer when the developer gave the store nothing in return.

 

[StriderShinryu]

I still fail to understand why game publishers deserve to get paid again for something they were already paid for...there is no other industry that expects this (is there?)

In a sense, you could say that, yes, every other entertainment media industry does expect to get paid multiple times for the same product. Every other entertainment media, from books to movies to music, relies on multiple releases of the same product for revenue.

Sometimes they are looking to resell to the same buyer (Like that DVD you bought last year? Well now you really need to buy the super duper extended edition!).

Sometimes they are looking to entice new buyers (That hardcover version of last years best seller cost too much? Here you go, buy the softcover version!).

If all of those other media forms relied on accruing their revenue through a single new release sale you can bet they'd be just as ticked off about used sales, and just as interested in subverting them, as game makers are.

Like games have Collectors Editions, GOTY Editions, Greatest Hits and just the normal release?

Collector's Editions are released the same day as a standard release so that's hardly double dipping as I doubt most players buy both, and how many games actually get GH and GOTY editions? We're not talking one offs here on just the biggest (and generally already successful) titles, we're talking standard industry practice.

Every single book that gets released gets at the very least a hardcover and a paperback pocketbook version, with most now a days getting a softcover version too. Every single major studio movie that gets released has at the very least a theater release and a DVD release. Almost every single album that gets released is also toured by the artist, even if they're an underbill on a major ticket, and they all have tables full of merch. Games do not do this sort of thing and, in many cases, can't really do this sort of thing.

I know you're a common player in threads like this, but I'm not saying the game publishers/developers are right or wrong on this one. While I do believe they have a point, I also think they haven't explored every option and don't always seem interested in thinking outside the box. Trouble is, whenever a developer does start thinking outside of the box, as in this story, the self centered gamer crowd starts whining about getting nickel and dimed with other content delivery forms or DLC.

 

[Asehujiko]

To be fair, 5-10% of the money generated through a pre-owned game sale should go back to the publisher.

And what exactly did the publishers ever do to deserve to get paid twice for something they sold once?

 

[Jake Martinez]

It's heartwarming to see that the companies that make games feel they deserve some benefit that no other company in the history of the free market has enjoyed. Honestly, what makes them so god damned special? Does Ford come asking for money when their cars get resold? Don't think so. Does Toshiba expect a cut of the cash I get when I sell my old Plasma TV? Again, nope, not in the least.

Used goods being sold is nothing new. Hell it's been going on for as long as people have been making and selling things. Why the gaming industry chooses to get butt hurt over it is beyond me.

However, instead of pissing and moaning about it what they should be doing is asking what they could be doing to entice people to buy new instead of used. Maybe they could get away from this trend of charging more and more while they provide less and less of an actual product. I know I refuse to pay for sixty dollars for half of a game and then pay another 40 or however much on top of that for DLC.

The game market as it exists today is quick to point a finger at anyone but themselves. If it's not pirates its used game sales or maybe evil monkeys. It's never their fault though, never. Honestly the more I hear come out of their mouths the more I feel the more of these entitled pricks that go under and close up shop the better. If they really want to improve the gaming industry they need to stop passing the buck and look in the fucking mirror.

I understand where you are going with this analogy, but unfortunately it doesn't hold up to scrutiny.

In the case of an auto manufacturer, they don't make money just off the sale of the car but also:

1) Financial services (loans and financing)
2) Regular maintenance
3) Extended Warranty
4) After market products (accessories)

In many ways, the vehicle itself is just a way to move additional product and services. The analogy here in the software world would be a game like WoW with it's subscription base, or a pay to play model of some sort with micro transactions.

Also, in terms of other types of good, generally they have wear and tear which devalues them over time. This isn't really true with software at all. Also, if software needs "maintenance" then they get a patch, always for free - imagine if EA or someone demanded you pay them a dollar for a patch for a game, would that sit well with anyone?

Frankly, digital distribution is the way to go here. Cut retailers out of the loop entirely. This isn't really possible for the current crap console market, but on the PC platform it's become the defacto distribution model of choice and the benefits here are pretty astounding. Hell, I buy many games off of steam and I'm constantly looking for their mid week and end of week sales where I can often pick up new titles for half off or more.

This is a win/win for the publisher and the consumer because the consumer gets a discounted rate on the purchase (plus automatic updates, dlc, etc) and the publisher saves money on distribution and resales which means they can afford to discount games on sales to drive profits.

I know that a lot of the people that frequent the escapist are far younger than me, but I'll provide an "old guys" perspective on this: First of all, the price of games has not really risen dramatically over the last 20 years and this is because while the profit margins have gotten narrower, the overall market has expanded by leaps and bounds (gaming is more or less a mainstream hobby now). This pattern will turn around if the companies cannot continue to increase revenue - you see, they are all public companies and their value is dictated by their stock price, which is dictated by increasing growth (net profit increase over quarter by quarter).

These companies, as public companies, need to increase that quarter over quarter growth as a fiduciary responsibility to their shareholders. The retailers in this case are causing them a perceived "loss" - not because YOU don't have to pay full price for a game, but because they (the publisher) don't get a cent for it at all and are completed "locked out" of expanding the market (ergo, people who only buy used games).

Now, here's the rub - if the game publishers can lock out the retailers and expand into that market as well, then the good news for most people is that game prices will stabilize again for another ten or twenty years. However, if that doesn't happen then the publishers will find that they have tapped their market out completely and the only way to increase profits will be to expand margin on the per unit sales, which translates to either - firing staff, or higher prices.

Anyway, as a consumer, the general rule is that you do NOT want a "middle man" between you and the supplier. In this case, the retailer is adding an inefficiency into the market and someone is going to bear the burden for it. I'll give you guys a hint - it won't be the publishers who will wear this in the long run, because like I said, they are simply not allowed to by virtue of being public companies (shareholders won't let them do this).

Anyway, back to my original assertion - the best solution here is to move more and more sales to the digital distribution model. Possibily even subscription based in the long run (Would you pay 50 or 60 bucks a month to be able to play any game you want from a publishers title list, even new games when they came out? Just like cable tv? I probably would...)

There's lots of room here for coming up with a good solution for consumers and the suppliers, but unfortunately the distributors are going to be the guys that need to get the axe in order for this to happen.

So in summation - hasta la vista GameStop. It's been (not really) nice knowing you.

 

[Whoracle]

What I don't get in this whole debate is:

Pre-owned sales have been around for as long as gaming existed, and the industry grew.
How is this a problem, then?

 

[WolfLordAndy]

Its times like this, I'm glad I'm a PC gamer.

That and with steam, I never have to actually use any of the highstreet retailers.

 

[Xanthious]

I understand where you are going with this analogy, but unfortunately it doesn't hold up to scrutiny.

In the case of an auto manufacturer, they don't make money just off the sale of the car but also:

1) Financial services (loans and financing)
2) Regular maintenance
3) Extended Warranty
4) After market products (accessories)

In many ways, the vehicle itself is just a way to move additional product and services. The analogy here in the software world would be a game like WoW with it's subscription base, or a pay to play model of some sort with micro transactions.

Also, in terms of other types of good, generally they have wear and tear which devalues them over time. This isn't really true with software at all. Also, if software needs "maintenance" then they get a patch, always for free - imagine if EA or someone demanded you pay them a dollar for a patch for a game, would that sit well with anyone?

Actually, it holds up perfectly. Games are an item that is manufactured and then sold to the public just like cars, TVs, couches, books, etc. It doesn't matter how well they holds up over time or what kind of money manufacturers can make on the back end with after market products etc. The Doctrine of First Sale spells it out fairly clearly. You buy it, you have the right to resell it. This applies to individuals as well as businesses. People reselling stuff they buy is in no way a new concept. The gaming industry feeling they should be immune to something that every other maker of goods has dealt with since the people began buying and selling goods just shows what kind of greed driven pricks are running the show.

 

[Jake Martinez]

I understand where you are going with this analogy, but unfortunately it doesn't hold up to scrutiny.

In the case of an auto manufacturer, they don't make money just off the sale of the car but also:

1) Financial services (loans and financing)
2) Regular maintenance
3) Extended Warranty
4) After market products (accessories)

In many ways, the vehicle itself is just a way to move additional product and services. The analogy here in the software world would be a game like WoW with it's subscription base, or a pay to play model of some sort with micro transactions.

Also, in terms of other types of good, generally they have wear and tear which devalues them over time. This isn't really true with software at all. Also, if software needs "maintenance" then they get a patch, always for free - imagine if EA or someone demanded you pay them a dollar for a patch for a game, would that sit well with anyone?

Actually, it holds up perfectly. Games are an item that is manufactured and then sold to the public just like cars, TVs, couches, books, etc. It doesn't matter how well they holds up over time or what kind of money manufacturers can make on the back end with after market products etc. The Doctrine of First Sale spells it out fairly clearly. You buy it, you have the right to resell it. This applies to individuals as well as businesses. People reselling stuff they buy is in no way a new concept. The gaming industry feeling they should be immune to something that every other maker of goods has dealt with since the people began buying and selling goods just shows what kind of greed driven pricks are running the show.

Exactly!

I just want to point out a few things:

1) You guys are mostly ignorant about what you are exactly purchasing. It's not the code on the media, or the physical disk so much as the *license to use the media* Licenses do not have to be transferable, nor do they have to be in perpetuity. I have plenty of licenses for software that are neither that I use on a daily basis for my job.

2) The CEO of codemasters here is not saying "kill used game sales", he's saying that publishers need to work with retailers to tap into that market. His idea is probably something along the lines of "some dollars in this market is better than no dollars". A lot of people agree with him, just see EA's project 10 dollar for reference...

3) A whole lot of you are frankly not really thinking about the situation, how it came about, and what it's implications are. It seems like all you want to do is "rage against the man" instead of understanding why things are the way they are. Getting angry about a perceived right (that doesn't actually exist) is just silly.

Frankly, I don't know why I bother trying to engage in actual debate sometimes on this site. You quote one paragraph from my post and totally ignore the other paragraphs that go into the market forces at work by way of explanation of the dynamics of the situation and then shows how both some good and bad can come out of it. I won't claim to be a freaking genius, but I'm at least trying to talk about, you know, the actual issue, instead of "hur hur hur this guy should eat a dick" or "die in a fire greedy cockgobblers".

 

[Royas]

To be fair, 5-10% of the money generated through a pre-owned game sale should go back to the publisher.

No it shouldn't, you don't want to set that precedent. The publishers are not entitled to anything from a used sale otherwise the gamer who sold the game to Gamestop would also have to pay 5-10% to the publisher. See how quickly that could turn into a big mess?

It's outrageous that places like GameStop are basically stealing sales because they encourage their customers to sell the games back as quickly as possible. They're basically an expensive rental store.

Obviously a law could be instated that would force retailers to pay this fee if they are to be allowed reselling pre-owned software, which would not directly affect the consumer... unless GameStop and such store decide to adjust what they pay for the used games so that they'll get the same (ridiculous) profit. But the consumer always has the option of not being lazy and selling the game directly to another consumer.

And, yes, it is ridiculous that someone will buy the game new for $60 ($15-20 profit, est.), return it 10 days later for $35, and then they sell it again for $55 (another $20 profit), and then the cycle repeats a couple of times. Meanwhile, the guys who actually slaved to create and market the game don't get anything beyond the original sale.

This is why I avoid both purchasing pre-owned games and selling my own. That nasty trend doesn't need feeding, even if it means I can't afford playing as many games as I otherwise would.

It's called the free market. The publishers are not entitled to even one penny of the secondary market, and that's that. GM doesn't get a penny when I sell my car, Random House doesn't get a penny when I sell my book, why in the hell should EA get anything if I sell or trade in my Dragon Age (as if I would do that)? It's not like Gamestop is holding a gun to anybody's head to trade the games in, or to buy them used. The consumer is making that choice, and it's that consumer choice that makes a capitalist system work. Publishers don't like it, they need to give people reasons to buy new and not trade the old. I damned sure don't want to see any kind of legislation involved here, that never goes well.

In order to end used game sales, you'd have to change the very foundation upon which the current economy is based. I don't think that's such a great idea.