Used is a Four Letter Word

It seems like used games have suddenly become the hot-button issue in the gaming spectrum, which is interesting considering that used games have been widely available for going on a decade. The problem is that the used game market has not only redefined the direction of the specialty retailer, but it has attracted the attention of the big box stores, and the success of limited test markets might eventually reshape the landscape of the gaming retail industry as a whole, edging publishers and developers out of a significant cut of the action. This as next-generation systems send development costs skyrocketing put developers in the position spending more than ever just as the biggest retailers are considering keeping more of the profits for themselves.

What this retail conflict means for consumers is the guess of every self-proclaimed professional analyst in the market. The only thing that can be said with any certainty is that should used games continue to eat up larger percentages of the marketplace, developers and publishers will be faced with the potentially difficult issue of trying to either adapt to or subvert the new retail experience. There's no promise that the results will be good for consumers in the long run, though there's also no promise that it won't. The question is what should consumers do now? To buy used or new, that is the question.

The sale of used games is something upon which I have some degree of knowledge. I've spoken at painstaking and largely cathartic length in the past on why retail outlets want you to buy used games, so I will assume you have a basic handle on the situation. Used games mean that retailers pay less for the same product, and don't have to share their usually more significant profits with anyone. Which, as it turns out, is exactly why publishers and developers think it's a pretty bad idea.

On the flip side, the arguments against used games are equally sound, particularly from a developer standpoint. The houses that actually make the games we play usually see only around 20% of the revenue from royalties on their products, and as development costs rise the amount of that revenue that actually becomes profit is increasingly smaller. There's no coincidence that as the next generation of games demand larger resources to move from concept to product, these houses have to resort to being completely bought out by larger publishers. The truth is there's already virtually no room for smaller developers to produce next generation content, and even medium sized houses are often struggling. So, in the face of these mounting problems, how are they supposed to survive a consumer base that is playing their product but paying someone else?

And, standing outside of all this is the consumer that finds themselves in an environment where developers and publishers are financially forced away from taking chances, where there is no room to experiment without the virtual guarantee of market success, and where products must be forced to market quickly to recover revenue lost in large development costs. There's increasingly less time for developers to make it innovative, or even right, a problem that's only going to get worse as the PS2 and Xbox go quietly into that good night. So, consumers are left with a general library of games that are rehashed and increasingly tired from a gameplay standpoint, and increasingly feature incomplete from a technical standpoint.

With educated consumers frustrated at the stagnant quality of games, and uneducated consumers happy to buy whatever has the lowest price-tag, retailers find themselves in a market where even spending $5 less for the same game seems like a perfectly reasonable, if not desirable, idea. Thus leading to fewer revenues for the developers and publishers; thus leading to an industry even less likely to be innovative; thus exacerbating the frustration of consumers. Fear leads to anger, anger leads to hate, and hate leads to guys like Mark Rein coming out angrily bashing the retail industry for stealing food from his mouth. Which, all finally begs the million dollar question: are the sales of used games at least partially to blame for a perceived decline in gaming quality?

The argument is not whether developers are correct in their complaint that retailers are dipping into their supposed cut. Virtually no one is disputing that. But, of course, the retailers would respond that the margins they make on new games are so small as to make business, particularly for the specialty retailers, virtually untenable. And independent retailers can't even get their foot in the door with a distribution model that is entirely geared toward large scale operations, where even if they have the resources to get current titles, they must buy a host of other titles they are never likely to sell. So, the current industry has put retailers into a position where they simply must make money wherever they can.

There is evidence, however, that the problem vexing traditional outlets is opening up new methods and avenues for content delivery, ones that, in the long run, may see more money going to the right people. And, here lies the possible solution to the problem, at least for the gaming industry and consumers. Though the model is largely in its infancy, digital distribution is an enterprise that Valve, and more recently Microsoft's Live Arcade, has shown can be very successful. Even as companies like Electronic Arts eat small developers whole only to regurgitate them later as bland, cookie-cutter games that are woefully overpriced you have games like Geometry Wars and Marble Blast Ultra becoming the killer app for the Microsoft's new 360.

The phenomenon has taken the industry and consumers by surprise; after all, who was talking about Live Arcade and Geometry Wars last November?

I hear a lot of people criticize the 360 as inferior evidenced by the popularity of Live Arcade presuming it to be the sign of a poor launch, but that thinking strikes me as a bit narrow and overly simple. The criticism that these games aren't "next-gen" is entirely wrong. It's just that "next-gen" might have more to do with a new model of business, better systems of distribution, and an expanding online marketplace than it does with texture mapping. There's nothing technically wrong with the 360 retail launch titles like Call of Duty 2, Project Gotham Racing 3, Ridge Racer 6, or Quake 4 per se, but don't mistake them for next-gen titles. They are last-gen titles with a facelift; games that could not afford to do anything daring or particularly noteworthy because the cost effectiveness of the risk was unacceptable.

The truth is that in the retail model of business, games can't afford to be truly next-gen from a gameplay perspective until much later in the system's lifecycle: see games like Guitar Hero, Katamari Damacy, Ico, and Shadow of the Collosus for examples on the aging PS2.

But, the 360 is not likely to develop into that truly next-gen system that plays a significant part in both furthering the game experience while opening up the new model of content delivery. No, Valve remains the closest to the mark on dictating their own fate and recapturing the market that has moved toward used games, a fact evidenced by their expansion of Steam into delivering 3rd party content, and the PC remains the best frontier for digital distribution.

The Valve/Steam model may be the most significant, and in the long run, best threat against the current publisher dominated market. What we may eventually see is larger developers with the resources and capital follow Valve's lead and pull away from publishers by distributing their own works, on their own terms, and cutting themselves a larger slice of the retail pie. These developers would still work with publishers on limited terms to get boxed copies of their game into retailers, after all, regardless of the used threat, developers will always want to have a store front presence in the Best Buys and Wal Marts of the world, but that might eventually be considered a secondary delivery method. Further, as Valve has shown, these larger developers with proper systems in place can act as limited publishers in their own right by giving online distribution access to small developers without the resources to digitally sell their own product. And they can price these independent titles competitively.

What this may ultimately mean is a crash, or at the very least a plateau, for retail outlets and the massive game publishing houses we've come to know and often distrust. As more games are sold online, following the general trend of increasing online sales, with direct download and immediate access at (hopefully) reasonable prices, there will be fewer games actually sitting on store shelves, and both the new and used retail market might actually begin to diminish.

While this doesn't solve the problem of rising development costs, it does mitigate the issue by cutting out the expensive process of distributing games, circumventing the threat of a retail dominated used market, and returns a higher percentage of revenue directly to the developers. It also allows for games like Geometry Wars, where development costs can stay low allowing for professionally produced and distributed budget titles on next-gen platforms. It will ultimately make the gaming experience broader, more convenient, more robust, while funneling dollars back to the developers.

What this is all meant to suggest is simply this. The turmoil created by the used market is an indicator that the industry itself might very well be entering a changing marketplace. The demand and recently exponential success of the used market is evidence that the prices for games have exceeded what people are willing to pay. It is, in essence, a warning shot across the bow of the current publisher based model, and those companies experimenting with online distribution models are banking on a historically growing market and a sense that the times they are a changin'. Microsoft's Live Arcade's immediate and remarkable success has gotten the company's attention, and you should expect to see more games and games of a higher quality begin to make their way to the online service. Nintendo's similar service for the Revolution may prove even more successful.

In the end, the answer to the question of whether to buy new or used is probably immaterial. There is a change in the industry that is already underway, and the question may be completely irrelevant within the next generation's cycle should direct download distribution take off in the manner which it threatens. The reason the question has flared so recently has more to do with an industry being forced to recognize a monumental shift in customer attitudes than anything else, and with luck the end result will be better for both developers and consumers.

- Elysium

Comments

unntrlaffinity wrote:

Yeah, except it costs a whole six dollars. What do you want back, a buck? With reduced costs on our end, the consumer, games would hopefully be cheap enough that it's not really worth bothering.

It's still not the same as I have today with my concrete media.

If my PC's hard disk decides it's done spinning, but I want to keep playing my game I purchased through a Steam-like distrubution, how do I do so? If I've got in-hand media, then I can reinstall, and all I've lost is my saved games and configuration. If this happens, then it's not "just" a $6 cost, it's the hypothetical (and in reality $20+ cost) per game to be replaced.

There's a similar issue with the required Windows XP registration. It's presumably smart enough to figure it's really the same PC being reregistered in this case, but what if (as has happened to me in the past) the motherboard shorted out, and I need to replace it, the CPU, and possibly other parts that didn't like being in range of the flames and acrid smoke? Since I bought XP *with* the hardware, I have a legitimate OEM copy (as LeapingGnome mentioned above), and it's still legitimate to be used, as far as I understand, in either of the above cases.

And, most likely any solution that allows me to be able to get the game replaced without a fresh full-price purchase can be turned into a way to sell such as a used game.

unntrlaffinity wrote:

And what about mp3 purchases? You can't just burn these onto a cd (well, not legally) and sell them to people, and I don't see the angry villagers with their pitchforks and chairlegs over that. When you purchase something that's been digitally distributed, it's just something you've accepted.

If buying music online was the only option open to me, I'd be the first in line at the Gardening Tools and Furniture store. As it is, I have the choice to buy a physical copy and not have to worry about problems with reselling, moving between machines, or whether or not a song will play in my Sansa mp3 player.

croaker wrote:

If my PC's hard disk decides it's done spinning, but I want to keep playing my game I purchased through a Steam-like distrubution, how do I do so? If I've got in-hand media, then I can reinstall, and all I've lost is my saved games and configuration. If this happens, then it's not "just" a $6 cost, it's the hypothetical (and in reality $20+ cost) per game to be replaced.

Any half-assed attempt at a digital distribution method should have the abilty to say "this user account owns a license to this game". I know Steam does this now. Instead of a "dig out CD, reinstall, play" cycle, you have a "download client, reinstall, play" cycle. No loss of six dollars, no loss of game. You would still lose your saves and configurations, though, unless you had backed up your files, which would also be an obvious feature to include. Again, Steam has this feature.

By the way, I'm not a Valve plant.

unntrlaffinity wrote:
booty wrote:

Great article. I'm surprised you didn't mention in passing the rumors that the PS3 will have some tech that will tie your disc to your console, thus preventing it from being resold. What kind of consumer fall out do you think that would generate? How would it factor in people's decision between a 360 and PS3?

That's because they're just rumors. Something I already mentioned.

Funny, I thought I was talking about Elysium's article.

unntrlaffinity wrote:

I think it's a moot point, because it's a move consumers wouldn't like, and it would hurt their business in a market they can't afford to not be competitive in. Someone out there holds the patents to Divx and EZ-D, too. Game companies didn't exactly snatch up those concepts for their platforms.

I disagree. Console producers would make a judgement of lost sales from customer outrage vs revenues gained from no used products. I think the jury is still out on whether something fails just because the customer doesn't "like" it. Witness the broadcast flag debate, the dvd copying debate, hell most of the DMCA. Did you not buy Half Life 2 because Steam sucked? No, Half Life 2 rocked and you took Steam whether you liked it or not. Similarly, if the PS3 is attractive enough, people will buy it despite the fact it won't play used games. Now, for me, to be that attractive the PS3 better look like Scarlett Johansen and give back rubs, for the SOCOM fanboys the bar may be much lower.

Excellent article!*

It seems to me that digital distribution is all well and good but currently we only see it on some major titles in the PC industry (which has sunk below $1 billion in sales for 2005) and they don't get hit by the used game market like consoles do. EB/Gamestop typically won't give you much anything for used PC games and they hardly sell them anymore. So used games is more of a concern for the console industry, the current and "next-gen" systems have no way to really make downloading the next GTA game viable. Smaller arcade games, sure. But the hard-drives just aren't big enough to house many "next-gen" games. Let alone people willing to download 8 gigs worth of angsty-teen Square cinimatics.

Whatever the "solution" for used console games is, I don't think we'll be finding it in the next five years short of a price drop to encourage consumers to buy new. The PC industry is responding heavily to piracy right now, we'll see how the console industry responds to used games.

*Certis is a plant for GWJ.

I actually work for EBgames (part time). The used market is definitely something they love to focus on. They continually push harder, as when you scan a game that someone's buying, if there's a used copy in inventory, the computer will flag it so you can hit the customer with that fancy "want to save five bucks?" line. Additionally, they mystery shop and mystery call constantly - and if you fail to mention to the "customer" on the phone that they can trade in their used games for a measly 1/3 of the going retail (if that), the store manager gets a grilling from the district manager.
It's not even funny. Some games trade in at a meager one or two dollars each if they're old, but sell for 10-12 bucks, depending.

booty wrote:

Funny, I thought I was talking about Elysium's article.

So was I. I was pointing out it's not worth mentioning because there's no real substance to it. I mean, I've heard a rumor that when the rapture comes, Jesus' decision to either select the 360 or PS3 as his preferred redemptive platform of choice will greatly influence the quality of the bump mapping on the clouds in heaven, though either way it's generally agreed there will be fantastic animation effects for the fiery flames of hell. Those of us banished to purgatory will be allowed to play the original Final Fantasy on the Revolution until we've learned our lesson. But I hardly think that this subject has a place in an actual debate or discussion.

booty wrote:

I disagree. Console producers would make a judgement of lost sales from customer outrage vs revenues gained from no used products. I think the jury is still out on whether something fails just because the customer doesn't "like" it. Witness the broadcast flag debate, the dvd copying debate, hell most of the DMCA. Did you not buy Half Life 2 because Steam sucked? No, Half Life 2 rocked and you took Steam whether you liked it or not. Similarly, if the PS3 is attractive enough, people will buy it despite the fact it won't play used games. Now, for me, to be that attractive the PS3 better look like Scarlett Johansen and give back rubs, for the SOCOM fanboys the bar may be much lower.

The Divx dvd's and EZ-D formats are better examples of what we're talking about here, because they crippled the user experience and because of this, consumers didn't like them and they failed.

As of now, the broadcast flag isn't even an issue. It might be in the future, but yes, I think if people hate it, they'll circumvent it, and it'll go away. People love their Tivo, and I think they won't give it up regardless of what Hollywood wants. And it's hardly predestined to go into effect, I mean, even senators hate the idea.

Dvd protection that prevents copying, while annoying, doesn't really affect the average user's dvd watching experience. Maybe I can't burn someone copies from my dvd collection straight out of the box, but if I bring my copy of "40 Year Old Virgin" to my friend's house, their dvd player doesn't lock me out and tell me I can only play it in my original Samsung dvd player. I'll admit to not having children who can screw up my dvd's, but honestly, I've never had to backup a disc. I still have all of my original dvd's, in good condition, and the only one I've had to replace is Resevoir Dogs, because I accidently dropped it and it got badly scratched. A movie which is 6 bucks at Best Buy, the saving of which would not have been worth the time, effort, or blank media needed to backup my whole collection "just in case". Would this all be different if the dvd protection was malicious like Starforce? Hell yes. But it's not, it's just a mild irritant, one that currently is almost laughably easy to circumvent.

(And yes, I did put off buying Half-life 2 because Steam sucked. I only purchased it last year after many friends assured me that while still annoying, it wasn't nearly as big a piece of crap as it used to be.)

The idea that someone who owns a PS3 will never want to purchase a used game, play a rented game, or play one of their games at a friend's house or vice versa, is somewhat ludicrous, unlike my apathy about whether or not I can backup my dvd's. Added together with all we have about the PS3 issue is a single news bite about a patent they applied for, which has no clear connections to the PS3 at all, and yes, I think any doomsday discussions about how it will affect the consumer base, if implemented, into a piece of hardware that doesn't even exist yet, is jumping the gun a bit and not really a worthwhile endeavor.

Elysium, I always felt that the cry against used games was coming from the big publishers like EA, who are probably hurt more by that lost revenue then successful independent developers like Valve. Any evidence of this? Developers don't seem to be hurt by rising development challenges, look at all the unpaid amateur groups on the internet. Sure, developers don't get paid squat, but what else is new? Used games take revenue away from standard publishing channels that companies like EA control, and into less conventional distribution that any small company can participate in.

Just something that I remembered reading over at dubious quality about this. It brings up some interesting points about the continued viability of companies that specialize in used games. Of course this still won't help us, the consumer, in getting more chancey, bizarre, independently developed games.

unntrlaffinity wrote:

But I hardly think that this subject has a place in an actual debate or discussion.

Well, I don't think there is any true debate since we both agree it's a rumor. As for having a place in the discussion, let's see. Elysium's article was examining the economic paradigm shift resulting from the rise in sales of used games. He further explained how some of the parties involved are addressing the situation by, among other things, eliminating the possibility of selling their games used. So do you honestly think there's no place in the discussion of the impact of this trend continuing?

To look at it another way, I was trying to gauge people's response to this part of the article:

Elysium wrote:

The only thing that can be said with any certainty is that should used games continue to eat up larger percentages of the marketplace, developers and publishers will be faced with the potentially difficult issue of trying to either adapt to or subvert the new retail experience. There's no promise that the results will be good for consumers in the long run, though there's also no promise that it won't.

Anyway, moving on...

unntrlaffinity wrote:

The Divx dvd's and EZ-D formats are better examples of what we're talking about here, because they crippled the user experience and because of this, consumers didn't like them and they failed.

I see your point, but I think the situation is different enough that the analogy failed. You also had to have a special Divx player and the price point wasn't in the sweet spot. Most importantly, there were no Divx exclusive movies so there was always the alternative of buying a full fledged DVD. If a console publisher puts out it's Zelda/SOCOM/beloved franchise out on non resellable media, there is no alternative beyond not buying.

unntrlaffinity wrote:

The idea that someone who owns a PS3 will never want to purchase a used game, play a rented game, or play one of their games at a friend's house or vice versa, is somewhat ludicrous,...

I don't know anyone who's saying this.

unntrlaffinity wrote:

Added together with all we have about the PS3 issue is a single news bite about a patent they applied for, which has no clear connections to the PS3 at all, and yes, I think any doomsday discussions about how it will affect the consumer base, if implemented, into a piece of hardware that doesn't even exist yet, is jumping the gun a bit and not really a worthwhile endeavor.

I hardly think raising the point for discussion equals "doomsday discussions". If you don't want to talk about rumors, fine. At this stage in the game, anything you say about the PS3 is highly speculative because of the drought of official information. But I've hardly painted the discussion you've reacting to. Alas, even Elysium's article mentions Nintendo's service for the Revolution, which is rumor if I remember correctly.

I think this is part of why the indie gaming movement is growing for the PC.* Many more well-done and unique games are being developed by small teams for the PC every year, and they generally follow the online distribution model for reasonable prices (typically in the $10-$20 range). I've even picked up a few over the past couple of years: Geneforge 2, Fate, and I'm considering a few newer puzzle ones I've checked out (Oasis in particular is quite compelling). If I'm only paying $20 or less for a good quality game, I'm happy with that even if I never can trade it in.

*Farscry has been secretly planted in multiple forums to promote indie gaming companies

booty wrote:

To look at it another way, I was trying to gauge people's response to this part of the article:

Elysium wrote:

The only thing that can be said with any certainty is that should used games continue to eat up larger percentages of the marketplace, developers and publishers will be faced with the potentially difficult issue of trying to either adapt to or subvert the new retail experience. There's no promise that the results will be good for consumers in the long run, though there's also no promise that it won't.

I saw this as setting up the foundation for his lead-in into digital distribution. But if you see it as any method a company may use to adapt or subvert retail, then I think my Jesus example is pretty valid. I mean, having the big guy on your side would be a huge boost. Maybe not in Japan though, since that heretical place is filled with heathen shintos.

booty wrote:

I see your point, but I think the situation is different enough that the analogy failed. You also had to have a special Divx player and the price point wasn't in the sweet spot. Most importantly, there were no Divx exclusive movies so there was always the alternative of buying a full fledged DVD. If a console publisher puts out it's Zelda/SOCOM/beloved franchise out on non resellable media, there is no alternative beyond not buying.

You won't need a specific piece of hardware to place the specific media of PS3 games? I'm thrilled to hear that. As for the price point sweet spot, no one knows what it's actually going to cost, but most analysts are leaning towards the high side, and with Sony's announcement of how many things it will do, act as a Tivo, have it's own version of Live, stream media to your PSP, essentially do everything but offer a service that will raise your children for you, since you'll be too busy playing Killzone 2 to care for your progeny, I can only imagine it will be prohibitively expensive.

As for EZ-D, you didn't need a special player for this. It simply degrades once you open the package, and after a few days it'll be worth less than an AOL trial cd. Except the pricing that was supposed to compete with rentals was actually a little higher. The idea was you'd pay this to avoid the hassle of returning the movie to the store, but with Blockbuster I have that theoretical two weeks to get the movie back to them, which isn't that hard, and with more than 3 days to watch a movie I can lend it to friends, watch it again with the commentary, or if for some reason I got interrupted during my first viewing, try it again a few days later on my next day off from work.

I think this is a good point, only being able to play specific franchises on specific systems. After all, I did buy a used PS1 just to play FF7, and then sold it when I was done. Except that many big name games now will be multi-platform, more than existed "back in the day", and that Nintendo (mention of Zelda) hasn't mentioned anything like this. So yes, if something like this happened, you'd be out the option of playing some Sony exclusive games in any way except for non-transferrable media. But you know what? So? That's why I think it wouldn't happen. There are so many companies that will be competing for you gaming dollar, any irritant at all that may send you to the competition is a huge negative. Will I really care that much about Killzone 2 and MG4 when I am literally being deluged with alternative and less restrictive choices on other systems like Oblivion, or the new Zelda, or anything multi-platform like Splinter Cell?

booty wrote:
unntrlaffinity wrote:

The idea that someone who owns a PS3 will never want to purchase a used game, play a rented game, or play one of their games at a friend's house or vice versa, is somewhat ludicrous,...

I don't know anyone who's saying this.

I was just pointing out that I can live without having to copy my dvd's, and so can most dvd watchers, because the issue will hardly ever come up. Which isn't the same as locked content to a single console.

booty wrote:
unntrlaffinity wrote:

Added together with all we have about the PS3 issue is a single news bite about a patent they applied for, which has no clear connections to the PS3 at all, and yes, I think any doomsday discussions about how it will affect the consumer base, if implemented, into a piece of hardware that doesn't even exist yet, is jumping the gun a bit and not really a worthwhile endeavor.

I hardly think raising the point for discussion equals "doomsday discussions". If you don't want to talk about rumors, fine. At this stage in the game, anything you say about the PS3 is highly speculative because of the drought of official information. But I've hardly painted the discussion you've reacting to. Alas, even Elysium's article mentions Nintendo's service for the Revolution, which is rumor if I remember correctly.

It's not a rumor. It's an announcement Nintendo themselves made. It's also coupled with an online survey conducted about the service, as well as their own patent on how the service would work. By comparison, the discovery of the Sony patent is more like finding it on display on display in the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying 'Beware of the Leopard'. And I don't mind talking about rumors, if there's even a little substance to them. But I guess I view the front page articles as being closer to, you know, articles, than my obsession with water cooler gossip over the latest pictures in the Enquirer of how the PS3 boomerang and the Nintendo remote have been secretly seeing each other, meeting up at seedy by-the-hour hotel rooms to indulge in their forbidden love.

And don't think I fail to see the irony in your luring me into an extended discussion of a topic I claimed wasn't worth mentioning. Touche, Monsieur Booty, touche.

unntrlaffinity wrote:

And don't think I fail to see the irony in your luring me into an extended discussion of a topic I claimed wasn't worth mentioning. Touche, Monsieur Booty, touche.

I was seriously thinking about pointing that out, but was afraid it come across as snarky.

In respect to the original spirit of this thread and your apt Douglas Adams reference, I'm not respond point to point to your post. I will just say two things. One, I don't think we're in much disagreement here. Two, I wasn't trying to dwell on the PS3 rumor which we both acknowledge hella weak, I was just hoping to use it as springboard to garner other's thoughts on the future of owner's rights of resell in videogames. Thanks for yours.

I am still a bit confused as to why a thriving used market seems to work for books, dvds, clothes, cars, and just about anything else you can find at a garage sale but it is destroying the video game market. Seriously, doesn't that make anyone else think that the problem must be with the industry not with the sale of used stuff?

I wonder will switching the distribution model fix the underlying problem? (whatever that may be)

I'm just guessing Farley3k, but I assume it's because costs are rising but revenues are declining. For the markets you mentioned:

books: I don't think these are getting more expensive to make, with the exception of really well known writers getting good money. Still, anyone can write a book without incuring expensive costs (compared to video games).
dvds: The cost of these are really subsidized by the original medium in which they appear (movies, tv, etc.). Not that expensive to make.
cars: Can't really speak to this.
clothes: With globlization, wages for these workers are paid with actual dirt.
food: that's just gross. Nobody buys used food.
In contrast, video game costs keep rising on average.

farley3k wrote:

I wonder will switching the distribution model fix the underlying problem? (whatever that may be)

Really good question. If direct distribution takes hold, it could lower the cost of entry for some players by not having to share profits with retailers or pay for their premium space. Thus games like geometry wars appear since the whole budget of that game probably would've doubled in order to get it on the shelf at walmart. However, for the AAA titles that always have to be bigger/better graphics/CGI features, the sky's the limit on the cost. You'd think the hit a ceiling sooner or later, but many have been waiting for the same thing to happen in movies for decades.

Avilon wrote:

I actually work for EBgames (part time).

Thanks for your insight.

farley3k wrote:

I am still a bit confused as to why a thriving used market seems to work for books, dvds, clothes, cars, and just about anything else you can find at a garage sale but it is destroying the video game market.

The only thing I can think of is that the entertainment/information industry has tried to stop every technological advance. The musicians where against the Phonograph; then the record companies tried to outlaw the radio broadcasts of music, Vaudville tried to make movie theatres illegal, the Hollywood studios were against television, the Television networks tried to get VCR's outlawed (or at least tax every new blank tape), now they are against Tivo. At every stage the old guard has been against what ends up making them a fortune. Corporate/business types are usually small minded and thus don't see the benefits of new inventions. I am sure that MP3's, used games, and TIVO will end up making a fortune for the same people who are against it.

Good points all, but in the end the fact is they are trying to get me to buy their product and they seem to be going about it badly.

They try to make me feel like I am bad becuase I sell something I bought. They make anti-piracy systems which make using thier product very difficult. Etc.

However at the end of the day they still want my money. I don't think they really understand that sometimes.

booty wrote:

I was seriously thinking about pointing that out, but was afraid it come across as snarky.

In respect to the original spirit of this thread and your apt Douglas Adams reference, I'm not respond point to point to your post. I will just say two things. One, I don't think we're in much disagreement here. Two, I wasn't trying to dwell on the PS3 rumor which we both acknowledge hella weak, I was just hoping to use it as springboard to garner other's thoughts on the future of owner's rights of resell in videogames. Thanks for yours.

It definitely would've been snarky, but I would've appreciated the humor in it.

I was just bitter over the number of alarmists I run into on a day to day basis, who read just the headlines to a newspaper online or otherwise, which are frequently misleading and whose content is actually the opposite of what the headline implies, and the frustrating discussions I end up in because of this. I mean, we have Google at our fingertips, which can provide us with at least the basics of any topic within seconds, and sometimes it seems like no one can be bothered.

So yeah, it wasn't meant to be as much of an attack as it seemed.

I guess I believe that any market will be self-correcting in the long run, and that video games are still pretty much in their infancy (adolescence?).

I submit to your points about video game development costs. I think movies are comparable in budgets, time, staff, and marketing, even surpassing games in those respects, but they do have more opportunities to make their money back. A movie that bombs in theaters can still make its cash back on video. But I also think game developers and publishers bleed money where they don't have to. Does it really matter where your video game offices are? Will your workstations perform less efficiently in Portland, Oregon? So why have the insanely priced office spaces in places like California? And the obsession with graphics and technology, which is partially a consumer obsession too, like a vicious and self-fulfilling prophecy and cycle of destruction. I think the quote for the games forum can be reinterpreted to mean that fun is greater than technology too. When Fallout 2 came out, graphically it was almost exactly (okay, exactly) the same as Fallout 1, as was Tactics, and they were still a blast today, and Fallout 2 is on many, many, peoples best crpg's list. [/tangent]

Hello. Long time no post.

Anyway I was suprised to not see anyone speculating on how much used game sales prop up new game sales. I'm of the opinion that developers do see money from used game sales albeit indirectly. When Joe Q Gamer wants a new release he'll bring his old games into his local gamestore to trade them in and partially finance the new game. Thus the developer of the new game sees a cut of these used game sales, again indirectly. Without such financing, Joe Q Gamer surely would buy less $50 games. Thus used games are being used to support what perhaps is an artificially high pricepoint.

What this means imo is games should be priced lower. Like has been said volume would help make up for the lower price. A lower price would easily be more of an impulse buy. Remember when VHS movies were $90 or higher new back in the day? It didn't hurt the movie industry to lower their prices to $20 for VHS tapes and of course now DVDs. They made up the difference in volume. I believe at a lower $20 pricepoint there will be less temptation to trade in a game when you might only get $5 for it and when there's almost a zero chance the trade-in value will be worth more than what the game will be selling for (new) within a year. That's not the case with $50 games. Trade in or sell your game asap after you finish it because within a year it surely will be selling for $20 new. So in most every case why not dispose of your $50 game asap? If you do get the urge to play it again and want to add it to your collection you can be assured that said game will be alot cheaper down the road.

So I believe a lower pricepoint would alleviate much of the desire to trade in your old games. It would help increase the chances of a videogame being an impulse buy. It would also probably make the rental market less desirable.

A couple other random thoughts.

The relative cost of labor to handle a trade-in at your local gamestore would go way up if new games topped out at $20. Labor in this case is a fixed cost and thus $20 games, besides giving customers less incentive to trade in games, would greatly hurt the used gamestores' margins as they can't suddenly decrease what they pay their employees. I would tend to think this would make the used game business less attractive and ultimately shrink it.

The other observation here is upcoming competition in the used game marketplace will put more money from used games sales in the hands of consumers and thus more money in the hands of developers. The news that Best Buy is entering the used game market means you're eventually going to receive more money for trading in your game than you did before. I can only see this trickling down to developers as Joe Q Gamer will then be able to afford more $50-$60 games than before. Let's not forget Ebay. If you 'trade-in' your games on Ebay you easily receive much more money on average than your local gamestore.

In the end I don't think used games are hurting the industry much at all. I think used game tradeins go towards the purchase of new games. I think prices are higher than they should be. I think the used game market shows this. I also tend to think the smart companies already take into account how much money they think they can make when they develop a game. So used games or no, as a developer/publisher it still comes down to how well your game sells and how much money you spent making and promoting your game when determining whether or not you live to make another game another day.

trip1eX wrote:

Remember when VHS movies were $90 or higher new back in the day?

Hm, nope. Does this mean I'm not as ancient as I think?

No, but it does mean your mind is starting to go. So actually you're more, not less, ancient than you think.

Maybe people would be incented to buy NEW if they started to include those little trinkets we used to get with the old huge boxed PC games. Like the cloth maps, the plastic "magic runes", little figurines, etc. At least some people would rather get those things new than used. In fact, if it was a pair of "magic runes" underwear, people would be even further incented to buy new... no-one likes to wear used underwear!