Team Humidor on Used Games

[Russ Pitts]

Team Humidor on Used Games

Seeing as this week marks the launch of not one, but two new consoles, and that many of said consoles are already appearing as high-priced Ebay auctions overseas, we here at The Escapist decided that today would be a good day to revisit the issue of used games.

Or at least, we going to pretend we planned it that way. Basically, what happened was that someone suggested that used games rip off game developers, and well ? that pretty much started the ball rolling.

We reproduce here the emails that cause a brief, yet stellar conflagration of game editor ire on our Exchange server. Enjoy.

Used games rip off developers. Discuss:

Russ, Associate Editor
Saying used games hurt the industry is an oversimplification, and one with which I could not disagree more. The major threat to small, innovative development is the increasing cost of making games, which itself is based in no small part on the increasing complexity of game hardware.

However, if game makers truly fear the small games market, they'd do better to make better, cheaper games. Digital distribution is one solution, but it will not address the needs of consumers who can't or won't pay $60 for a game. Ignoring (or worse, condemning) that market will not solve anything.

Julianne, Executive Editor
I'm not disagreeing that the increasing cost of creating games is one of, if not the biggest problem facing small game devs. But calling the used games trade not a problem is turning a blind eye. Buying and selling used games, as the market is currently structured, is pretty much the same as pirated games to a developer, ie. they see no money from the resale of a game, just as they don't from a pirated game.

Small companies feel the pangs of this more than an EA, which has multiple titles at any given time to soften the blow of this kind of market. And there have certainly been companies who have floundered because they've made good games, but didn't protect them well enough from pirating to get the production money back. In it's similarity there, this side market is absolutely a problem. I'm not completely condemning a used games market, simply condemning the current structure, one in which the developer is cut out.

Joe, Associate Editor
Saying used game sales hurt developers is like saying used car sales hurt Ford. At the end of the day, someone had to buy the game in the first place, which means the developer made money on that unit. Really, by the time a game makes it to its second or third owner, the value of a shrink wrapped game has dropped to the point where publishers stop printing the game anyway. So you could actually say the used market keeps games around longer, which allows people to develop a deeper sense of brand loyalty.

Of course, there are the people who refused to buy new games at all, waiting for the early adopters to trade in their games a week after release. But that goes back to the old piracy debate, which (correctly) states that those types of people weren't going to buy the game anyway. In this case, the people who bother to wait aren't buying at the original price point.

If the industry insists on making a mountain out of a molehill, though, there's really only two options: Adopt the Long Tail approach and keep shrink wrapped games available at a lower price longer, which would pretty effectively kill the old-school used games business; or go digital distribution and force everyone to pay a standardized price and hope you don't lose too many customers.

What do you think?

Permalink

 

[Lex Darko]

We can speculate all day long about if the used games market hurts the video game industry, to know for sure we would need numbers from retailers.

But if we are just speculating I would say it does. The fact that you can buy a game used within 1 week of a game's release doesn't do anything good for the developer. And developers only make so much money per game. I think the saying goes drop the price from $50 to $40 you need to increase sales by 25%. That's not likely to happen when people will just buy used games which in actuality cut effect sales on a game.

The only people that really benefit from used game sales are retailers. Some would say that the consumer benefits too and to an extent they do. They get to buy their games for a few dollars less in the short term, but in the long term the developers are shorted and we end up with less innovative games and publishers unwilling give new ideas a chance.

My mom always says "you get what you pay for."

 

[iod]

The resale market allows more people to but the original game. Some people who would normally not allow themselves to buy a game at 50$ a piece, for example, might buy the game anyway, knowing they can later get a "rebate" in the form of resale value. So, in fact, the publishers make *more* money thanks to resale.
Otherwise, less wealthy gamers may put off buying the game until the price drops considerably, and may end up not buying it at all for a variety of reasons.

If book publishers can cope with used books market, why not game publishers?

 

[Lex Darko]

If book publishers can cope with used books market, why not game publishers?

Yes, but when was the last time you stepped into a Barnes and Noble where there were more used books on the shelf than new?

 

[Russ Pitts]

If book publishers can cope with used books market, why not game publishers?

Yes, but when was the last time you stepped into a Barnes and Noble where there were more used books on the shelf than new?

Book publishing is a vastly different business. I'm not sure that analogy will hold water.

 

[Andraste]

If book publishers can cope with used books market, why not game publishers?

Yes, but when was the last time you stepped into a Barnes and Noble where there were more used books on the shelf than new?

Book publishing is a vastly different business. I'm not sure that analogy will hold water.

They are very different businesses, but Lex's point about B&N's used book sales, or lack thereof, is an interesting one. B&N, Borders and others like them are the pantheons of the written word and coffee - sounds lovely, now that I think of it - and they don't have huge amounts of shelf space dedicated to used books. You have to find smaller, off the beaten path bookstores that can no longer survive at malls (because of Barnes and Noble) for used books.

But when I stroll into the EB over at the mall, I can hardly FIND the new games for all the used. And then, once I do, they attempt to make me feel silly for paying full price when I get to the register by telling me how much I can save if I buy used. And that they are available a week or two after release, as Lex also mentioned, well, people can wait a week if it means $15 less than new. The way the system is currently structured, there's little reason to buy new.

 

[Russ Pitts]

The way the system is currently structured, there's little reason to buy new.

Somebody is buying new games, else there wouldn't be all those used copies cluttering the shelves.

 

[Lex Darko]

But when I stroll into the EB over at the mall, I can hardly FIND the new games for all the used. And then, once I do, they attempt to make me feel silly for paying full price when I get to the register by telling me how much I can save if I buy used. And that they are available a week or two after release, as Lex also mentioned, well, people can wait a week if it means $15 less than new. The way the system is currently structured, there's little reason to buy new.

One time I went to EB games to pick up a copy of Vampire the Masquerade: Bloodlines. When I stepped in the store I realized in my surprise that a new copy of the game was actually the same price as the used. With both the new and used going for $29.99. When I took the new game up to the register the manager at the checkout stood there for 10 mins trying to get me to buy the used copy. Every reason I came up with to buy new was meet with rebuttal. In the end the manager went as far as to actually open the box of the new game and put the new disc into the box the used game and sell it to me.

I once traded in a new game 3 days after it was released (Iron Phoenix for the Xbox, because it had no offline multiplayer) that was retailing for $50 and only got $25 back then a week later went back to that same EB and saw the same game listed for $40.

After experiences like those, seeing the trade in prices for a full priced game and seeing what they sell used games for. I know that the used game market benefits the retailer more than any consumer.

 

[Joe]

I think the books to games analogy falls short because of the way both media degrade. You can usually detect wear and tear on a book a lot easier than you can on a DVD. People dog-ear pages, they spill coffee on them, they warp, the spines break. A DVD can get scratched, and even then, most perceptible scratches don't affect the thing's performance.

Additionally, it's a price and profit margin factor. Most games are the equivalent of mass-market paperback. Games sell for $40-60. Paperbacks go for $5-9. To make even close to what EB does, Barnes and Noble would have to give you about $2.50 (in credit) for a $5.00 book, which they'd then sell for $4.00 - and that $2.50 offer is only good in the first week or two that the book is on shelves. For the $2.50 you'd get back on a book you read incredibly quickly, I think most people would either hang onto the book or donate it.

And really, who would buy a used paperback just to save a buck?

 

[Russ Pitts]

And really, who would buy a used paperback just to save a buck?

I would. I buy a used Clancy novel every time I fly. I also bought and sold used books for a good half of my twenties, and I think you're mostly spot-on with your analysis. You don't get squat for selling books, and most people just hang onto them. Also, they're far less expensive, per enjoyment hour, than games. The industry also works a lot differently. Books have a higher profit margin at retail than games, so that, plus the reduced supply of used merch. snowballs into a nice opportunity for retailers to hang onto that "new" market slice.

The game market, conversely, is oriented to encourage used sales almost all the way through. Consumers don't want to pay $60 for 10 hours of entertainment (which may or may not be fun), retailers want the higher propft margin that comers with used sales vs. new and the merchandise (as Joe said) retains its integrity longer.

I'm all for developers getting their fair shake, but the market is what the market is. Rather than punishing consumers by raising prices and/or seeking to eliminate the used market, the game makers should look to what their end is contributing to the equation, and then work to reduce that. In other words: better, cheaper games.

 

[Andraste]

I'm all for developers getting their fair shake, but the market is what the market is. Rather than punishing consumers by raising prices and/or seeking to eliminate the used market, the game makers should look to what their end is contributing to the equation, and then work to reduce that. In other words: better, cheaper games.

If it were that simple, that would be an easy solution. Unfortunately, to keep up with the depth and power of technology available today, as well as the consumers' demand that devs utilize that technology, costs of making the games are rising.

That prices of individual games are not rising as precipitously is quite surprising. I remember saving up for $50 NES games - not too different from prices today. It would seem, seeing those relatively stable prices, they are making better games, while receiving less money for them.

 

[Russ Pitts]

It would seem, seeing those relatively stable prices, they are making better games, while receiving less money for them.

I think this has more to do with the development of the industry's production dynamic than the used market. What we're seeing now is similar to the film industry in the 1930s. Big studios are moving into the production system, the teams are getting bigger, budgets are getting bigger and despite an increase in overall revenue, the individual artists aren't getting as fair a shake.

Do used game sales contribute? I don't honestly think they do. Certainly not more than the profit-mongering at the publisher level, and certainly not more than "team bloat." I think that the perception that games must get more complex to keep up is frankly a fallacy, and one of the major problems with the industry. I think Nintendo will prove that in this console cycle.

Innovation and fun trump technical gewgawry in my book. But then again, I gladly paid $20 for Armadillo Run, a game with very few bells and/or whistles, but which nonetheless was (and still is) an incredible amount of fun. And that game took exactly one person to build.

But (and here's the important thing from my end) I would have bought that game used if it were available. Not to screw anybody, and not to make a statement, but because I'll always try to save money when it's an option. Always. And I'm sorry if that hurts people, but market realities stop for no man, beast or ideal.

 

[Russ Pitts]

Alright, on second thought, maybe I wouldn't have bought Armadillo Run used. There's a ***** in my argument there. I do repsect what he did, and do think it's worth supporting. I hate myself for being so weak, but there it is.

 

[Joe]

Yeah, but it wasn't available used, because he adopted the digital distribution model. So, rather than being forced with having to choose if you wanted to directly reward the developer, you had to if you wanted to play the game, which brings us back to the point I made beforehand: digital distribution is an alternative for developers who don't want to worry about used games sales potentially cutting into their profits.

 

[Ajar]

At least some EBs and GameStops carry used DVDs as well, but I don't see used DVDs at other DVD retailers. I wonder if to some extent the used video media phenomenon is limited to video game retailers?

Fletcher, I think more people would buy an indie game like Armadillo Run new out of a desire to support the developer than would buy the newest EA or Ubisoft release new, were both readily available used. Maybe not that many more, but at least some more.

The next question is how the inevitable transition from optical media to digital distribution will play out for brick and mortar retailers. There will still be people who want something tangible when they buy a game. Will they be able to go to a kiosk at EBGameStop, choose a game, and have the kiosk burn it to a disc?

 

[Joe]

At least some EBs and GameStops carry used DVDs as well, but I don't see used DVDs at other DVD retailers. I wonder if to some extent the used video media phenomenon is limited to video game retailers?

Nah, Blockbuster sells used DVDs and pushes them about as hard as EB does used games.

The next question is how the inevitable transition from optical media to digital distribution will play out for brick and mortar retailers. There will still be people who want something tangible when they buy a game. Will they be able to go to a kiosk at EBGameStop, choose a game, and have the kiosk burn it to a disc?

That sounds awesome.

 

[Ajar]

At least some EBs and GameStops carry used DVDs as well, but I don't see used DVDs at other DVD retailers. I wonder if to some extent the used video media phenomenon is limited to video game retailers?

Nah, Blockbuster sells used DVDs and pushes them about as hard as EB does used games.

Good point, I'd forgotten about that. My local Blockbuster still devotes a lot more shelf space to rentals than used (or new) sales, but there's definitely a significant used presence.

The next question is how the inevitable transition from optical media to digital distribution will play out for brick and mortar retailers. There will still be people who want something tangible when they buy a game. Will they be able to go to a kiosk at EBGameStop, choose a game, and have the kiosk burn it to a disc?

That sounds awesome.

To take it a little further, maybe Valve will put EBGameStop out of business by establishing "Valve stores" with a tiny brick and mortar footprint -- just large enough for a Steam-linked, DVD-burning kiosk?

I think it's a lot more likely that they would ink some kind of deal with EBGS, or that EBGS would go it alone, but on the other hand, I didn't expect Apple stores, either.

 

[Echolocating]

To take it a little further, maybe Valve will put EBGameStop out of business by establishing "Valve stores" with a tiny brick and mortar footprint -- just large enough for a Steam-linked, DVD-burning kiosk?

I could be wrong on this, but I remember hearing that "stamped" discs are more durable and last longer than "burned" discs.

 

[Goofonian]

To take it a little further, maybe Valve will put EBGameStop out of business by establishing "Valve stores" with a tiny brick and mortar footprint -- just large enough for a Steam-linked, DVD-burning kiosk?

I could be wrong on this, but I remember hearing that "stamped" discs are more durable and last longer than "burned" discs.

They last lots longer. The burning process is more of a chemical reaction than anything else and as such the final product is much less stable and much more prone to imperfections. Although there is no real reason that someone couldn't engineer a kiosk that holds a couple hundred gold masters and stamps out your disc for you on request. Would require much more space and be a lot more expensive to set up but it could definately be done and I would bet that over its lifetime the cost in producing it would balance out against the reduced running costs compared to a brick and mortar store. The only problem then is that the government is more likely to help out the stores by introducing tax laws and such because the stores employ people.