GWJ Conference Call Episode 277

Conference Call

Video Games, Used Games & The Used Games Market, Your Emails and more!

This week the guys talk about video games and explore some topic or another. This description is amazing because I wasn't on the show and I've been on a plane all day. Hurray!

To contact us, email [email protected]! Send us your thoughts on the show, pressing issues you want to talk about or whatever else is on your mind. You can even send a 30 second audio question or comment (MP3 format please) if you're so inclined.

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Show credits

Music credits: 

Intro/Outtro Music - Ian Dorsch, Willowtree Audioworks

Coactive (BigBot Audio Drop) - SGX - http://sgxmusic.com/ - 25:02

And All That Between (BigBot Audio Drop) - SGX - http://sgxmusic.com/ - 43:32

Comments

Valmorian wrote:

Every used game you purchase has already resulted in a profit for the developer.

This is the argument I simply do not understand. Yes, there was one profit. But someone else is profiting on the game multiple times -- sometimes hundreds of times -- over. And I'm sure that's revenue you don't think the publisher deserves.

And I assume you mean publisher instead of developer. Let's be clear on that: Publishers are the ones directly affected by used game sales. Developers are *indirectly* affected, as more sales of their games will lead to more work for them. There are developers that probably have sales figures tied into their contract with the publishers (and I assume 38 Studios is in this camp) so they likely have more interest in the publisher making more money. But the only company profiting from used game sales at the end of the day are the second-hand retailers.

So why should you, the consumer, care? You just want to get the games you want for as cheap as possible, and the concerns of corporate America mean nothing to you, right?

In fact, f*ck it. Buy all of your games second-hand, and never give another cent to Activision, Electronic Arts, Take-Two, etc.

And then let's see what happens.

LarryC -- there are so many assumptions in that post ...

Piracy represents unmet demand for various goods and services

It does?

Moreover, publishers and developers often think in terms of entitlement and moral issues, not in terms of economic ones.

Wha?

Gamers who buy used games and gamers who buy new games with the intent of selling them later - these are the less enthusiastic or less moneyed parts of the gamer market.

Really?

Once that market is migrated, all you're left with is the pure enthusiast market

/double checks sales numbers for games like Call of Duty new

Without going down the road of endless debate, I'll just leave it suffice to say that I don't agree with any of those points.

Just to clarify, is that an invitation to further expound or not?

Not really -- I'm not engaged enough to go in depth. Call it a drive by on my part.

Much love!

I can't believe you guys are all focusing on the Used Game discussion, when the biggest discussion point of this episode is clearly that there's Wipeout lore.

I think we need a front page article about this.

Seriously. cube's right on the money there. It deserves its own thread.

Demiurge wrote:

I can't believe you guys are all focusing on the Used Game discussion, when the biggest discussion point of this episode is clearly that there's Wipeout lore.

Oh I caught that too. Amazingly, this isn't the first time Wipeout's lore has come up on this site either. We can ask WipEout (coincidence??) to write the article:

WipEout wrote:
RobZacny wrote:

First, am I missing the boat on Wipeout? I assumed from the name it was just standard arcade stuff, but is there more to it than that?

If you like futuristic racing games, then you are missing the boat! But the series is based solely on arcade-style racing. When you read the "history" of the Wipeout racing league-- specifically in the booklets for WipEout XL and WipEout 3, it reads like a historical summary of the progression of Formula 1 to the current racing league (I believe it's like F5000 by the third game). I had always felt that with such detailed lore giving "realistic" weight to the games and their mechanics, the world of Wipeout would easily lend itself to a game that dealt with the "sport" of anti-gravity racing in much the same way F1 2010 does for Formula 1.

Elysium wrote:

LarryC -- there are so many assumptions in that post ...

Piracy represents unmet demand for various goods and services

It does?

A more accurate statement, in my opinion, is Some piracy represents ....

When your choice is $60 or pirate, and you're willing to pay $20, you choose piracy. That doesn't mean the publisher is necessarily interested in chasing that $20, but it is an unmet demand.

Elysium wrote:
Moreover, publishers and developers often think in terms of entitlement and moral issues, not in terms of economic ones.

Wha?

Demiurge wrote:

And I'm sure that's revenue you don't think the publisher deserves.

(emphasis mine)
Are you saying this isn't a moral argument? Purely about maximizing revenue? It sounds like this is about people who didn't do any work creating the game profiting from it's creation.

If it were purely an economic argument, why constantly emphasize what leeches GameStop are?

Elysium wrote:
Gamers who buy used games and gamers who buy new games with the intent of selling them later - these are the less enthusiastic or less moneyed parts of the gamer market.

Really?

Are you doubting people who buy used games are doing so because of the price point? Why else would they do it? They like that funk of BO and Cheetos, that "used game" smell?

Elysium wrote:
Once that market is migrated, all you're left with is the pure enthusiast market

/double checks sales numbers for games like Call of Duty new

First, this isn't an immediate effect, you slowly see the people "on the edge" of a gaming purchase drifting away over a period of time. Second, since you can actually sell Call of Duty back to Gamestop, this isn't a valid example. Third, this is a statement about gaming as a hobby. We have significant used game sales channels, so gaming is growing. If we ever get to the point that all console games are $60, and piracy, rentals and used game sales are eliminated (i.e. the worst from DD), do you really think gaming will still be growing as a hobby just as fast? This eventually impacts everyone who likes to play games.

I actually completely agree that GameStop is a parasite on the industry and needs to contribute or die. It's the idea that we can just drop the used games market and everything is fine that I take issue with. I have a hard time believing that excluding people who can't afford $60 will do anything other than hurt the industry. Until now, we've let used games and piracy handle this. If we remove used games, where do you think they'll go? It's either piracy, or stop playing games. Considering how many people buy used games either one would have a serious impact.

I'm perfectly fine with day one DLC with the code included for free in new copies.

I buy new games whenever I have a chance. If Gamestop doesn't have one, I'll look for a new copy elsewhere. If I can't find a new copy, I'll dig one up from half.com, gamestop, or another store. I've never seen the point of used titles that are $5 less than new copies. If I have to get a used copy (probably because of the game being 4-5 years old,) the $10 extra will be trivial...

At the very least, this should reduce the cost of used games by $10.

Also, as far as unique PS Vita games you should try out... Go to a Gamestop and try the Gravity Rush demo. That's a solid original title for the Vita and one that I'm buying as soon as it comes out. Also, I held off on buying Rayman Origins so I could pick it up for the Vita... Having Persona 4 and Disgaea 3 in portable form are enough to sell me on the system though.

PyromanFO wrote:
Demiurge wrote:

And I'm sure that's revenue you don't think the publisher deserves.

(emphasis mine)
Are you saying this isn't a moral argument? Purely about maximizing revenue? It sounds like this is about people who didn't do any work creating the game profiting from it's creation.
If it were purely an economic argument, why constantly emphasize what leeches GameStop are?

I don't think I did emphasize GameStop as leeches. They found a business model that works for them, and it's spreading. But the publishers likely see them as leeches.

My problem with this whole argument is how people either don't understand the business specifics involved, or worse, don't care. I keep seeing this consumerist argument that it doesn't matter to the publishers or developers who buys a used game, because they already got one sale. As if that should be enough for them. These games cost gigantic amounts of money now, millions of dollars. And to see another company, basically a middle man, eat into your distribution chain and soak up potential sales? Hell yes they're upset about that. I don't understand why people can't see how the publishers would be furious.

So here's EA's answer: make a small portion of the game available only for people who buy a new copy, where EA can actually count that as a sale. And now suddenly gamerdom is getting screwed.

Hey, EA's trying. I can't fault them for that. They exist to make money.

This is quickly becoming a lightning rod topic for me.

LarryC wrote:

cube:

The way I see it, the significant secondary market for games only says one thing: the initial pricing is too high for optimal profit-taking on the supply-demand curve.

There is a demand for single Skyrim playthroughs, but not at $60. A significant portion of the demand is at $30, so Gamestop is meeting the demand by allowing gamers to resell the games for $30. This is an expected outcome of a free market economy involving properties. Part of the value of the initial game is understood to be in resale - cars would retail for much less if they could not be resold.
[...]

But Gamestop is not selling used copies of Skyrim for $30, they are selling them for $54.99 - only $5 off full retail. That there is very little gap between new and used games prices is a strong indicator that the pricing is fine. The strength of the secondary market just shows that when a customer is presented with two near identical products, they'll choose to save $5.

The smart thing about the day 1 DLC strategy is that it devalues the used product, and also creates a way for the published to monetize used products.

Well lots of stuff to talk about with this one.

Firstly the used market. It seems to me one option would be for the industry to come to some agreement with used retailers to share in some fashion the profits of used sales. Another would be for publishers to allow folks to trade in games directly to publishers for some kind of in store credit.

Then the Vita. For me, my ownership of a iPod Touch and a iPad convinced me I want to own a Vita, a first since I was a little kid when I got given a Lynx. The reason for this being it convinced me I like playing games in bed or on the train, but with the exception of board games and adventure games I simply hate touch only gaming. Speaking of which, Titan is an awesome iPad game.

And finally narrative gaming. I'm certainly one who loves this stuff and hate shooting games (which is why I buy so few mainstream games these days) and so adventure games have pretty much always been my favourite genre. And of course it reminds me of how much I loved Heavy Rain and how disappointed I am that it seems to have had zero impact. It didn't lead to any inspired by games or outright clones.

Gravey wrote:
Demiurge wrote:

I can't believe you guys are all focusing on the Used Game discussion, when the biggest discussion point of this episode is clearly that there's Wipeout lore.

Oh I caught that too. Amazingly, this isn't the first time Wipeout's lore has come up on this site either. We can ask WipEout (coincidence??) to write the article:

WipEout wrote:

If you like futuristic racing games, then you are missing the boat! But the series is based solely on arcade-style racing.

Wait, this is not a game about surfing?

I like how the conference call discussion of the Day 1 'New Copy' Content DLC ended, as it echoed my own thoughts. For the developer, their customers really are the folks who spend money on new copies. The new copy DLC acknowledges that relationship. I mirror the thoughts of that final speaker on the CC that used copy folks are just not direct customers of the developer, so they are not being punished or anything. They could just as easily choose to buy the new copy and establish that 'relationship'

I dont even like the term Day 1 DLC for referring to content included in a new copy. I tend to think of Day 1 DLC as paid for DLC that happens to be available on the same day as the release of the game... for all, even the new users. I have mixed feelings about this, though I understand development of the core game stops well before it officially releases, leaving time for teams to focus resources on addon content that can be released. Still I think there is a PR hit for this.

As for online passes, I guess this shouldnt give me any mixed feelings, but it does. Ultimately it has the same purpose as new copy 'content' dlc, but I think this aspect bugs me because it entails removed functionality of the product. Still, its a smart business strategy that ensures some trickle back to the original dev/publishers for multiplayer focused games/communities. I guess this feels heavy handed to me, and by its own requirement it fractures a potential community. Maybe this works for some massive titles, but most games have a short multiplayer half-life anyways. Similary going back to new copy content, if it were a multiplayer map, it carries the same danger of fracturing a community, or obseleting content from the getgo.

I dunno. Overall I don't mind New Copy Content DLC. I get annoyed at retailer pre-order exclusive DLC even more I suppose.

Demiurge wrote:

I don't think I did emphasize GameStop as leeches. They found a business model that works for them, and it's spreading. But the publishers likely see them as leeches.

My problem with this whole argument is how people either don't understand the business specifics involved, or worse, don't care. I keep seeing this consumerist argument that it doesn't matter to the publishers or developers who buys a used game, because they already got one sale. As if that should be enough for them. These games cost gigantic amounts of money now, millions of dollars. And to see another company, basically a middle man, eat into your distribution chain and soak up potential sales? Hell yes they're upset about that. I don't understand why people can't see how the publishers would be furious.

So here's EA's answer: make a small portion of the game available only for people who buy a new copy, where EA can actually count that as a sale. And now suddenly gamerdom is getting screwed.

Hey, EA's trying. I can't fault them for that. They exist to make money.

This is quickly becoming a lightning rod topic for me. :)

I still see this as a moral argument, because while you've accurately described the situation it's also clear you think the publishers are in the right on this one.

And like I said, it's something I completely agree with. But I dislike trying to pretend it's "just economics" (as if there is any completely objective perspective to economics). This is an argument clearly on the side of the publishers and developers against GameStop, because you think the publishers and the developers have the right to stop them. That's explicitly moral.

As far as the mechanics, and who the publishers are actually punishing here - the original customer who gets less trade-in value, or the used consumer who gets less game, or GameStop. It's all three, really, and I don't think you can separate that easily.

Ultimately people are making "consumerist" arguments because they are consumers and if they don't represent their interests, who will?

And my argument is that they have a right to be upset, and if we can avoid punishing them at all, while still cutting out GameStop, that's the ideal world. If we simply forge ahead with the simplest solution (i.e. killing used games) without trying to address the concerns of consumers, we'll all be worse off.

PyromanFO wrote:

And like I said, it's something I completely agree with. But I dislike trying to pretend it's "just economics" (as if there is any completely objective perspective to economics). This is an argument clearly on the side of the publishers and developers against GameStop, because you think the publishers and the developers have the right to stop them. That's explicitly moral.

No it's not. Saying a company has a right to do something to another company is not a moral statement. It's a fact of business.

If this were truly a moral argument, the publishers would cut off all inventory supply to GameStop and any retailer following suit, coming down the mountain in the press at them with righteous fury. But that's an extremely stupid thing to do.

If I were making a moral judgement in this, I would tell everyone who buys used games that they are bad people. But you and I know both know this to be false. In fact, I think I said as such on the show.

All I want out of this conversation is an acknowledgement of what's *actually* happening here. The publishers *do* have a right to try new ways to get consumers to buy new copies instead of used. Just as the consumers *do* have to right to vote with their wallets.

But let's not lose sight of why the publishers are doing this. Companies like GameStop are eroding potential profits, from the publisher's point of view. And the pubs want to find a way to make new purchases more attractive.

What's the part here that doesn't make sense, Allen? Serious question (I know the Internet makes me sound snotty, not trying to be). What part here isn't clear?

I think that iTunes (for music) and Steam sales have proven that even if a certain product doesn't make money initially, that there is a price point where people will be willing to buy it (without piracy) and where the developer will still see income streaming in.

Will I buy every game at $60? No way. But there are a lot of games that I have purchased at lower prices. Since I'm a PC gamer, I don't buy used, but I believe that there is some merit to the argument that I don't want to pay full price for every game.

Thus digital distribution once again seems like the perfect solution to everyone except those who want to trade games and those who don't have broadband.

If this argument makes no sense I'm also whacked out on Nyquil at the moment.

Will I buy every game at $60?...

Precisely. The $60 dollar new vs $30 used thing is a false dichotomy. There's a large range of new game prices. I picked up Borderlands GOTY for £20 a few days ago on the high street. There were lots of console games around the £15-20 mark.

I dont think the used game argument is worthy of such vitriol. I'm fine wih developers using DLC as a nudge in the direction of buying mew. Personally, I buy used games occasionally, but I feel slightly guilty doing it. I'd rather give my money direct to the developer if possible. I don't think many gamers would disagree with that really. The same reason I use debit or cash instead of credit in local shops I like, because I'd rather they got more of my money.

Another missing piece here is shelf time. When a game sits on a shelf for a while, and you then see it marked down 10 bucks, it's not Best Buy that's eating that $10. Best Buy goes BACK to the publisher and says "We still have 20k copies of your 2 month old game on the shelf, we'd like you to write us a check for 100k so we can mark it down $5" and the publisher does.

I stand behind the idea that the real issue here is one of value and positioning. If you make a game that's 8 hours long and lives entirely on the disk, it's not fundamentally different than making a movie and putting it on DVD. A used market will ensue, and that's just how it goes. Because rentals are generally just harder to come by and manage in game-land, that means buy it, sell it becomes a viable consumption model (as opposed to DVDs, where there are other models that make more sense).

Publishers and Developers are just trying to change the dynamic. If you change the dynamic without changing the *product* then you're not going to be all that successful. That's really what the whole act of putting the content on the disc but locking it away is about.

Ultimately, the way to have people keep your game, however, is to make it a game worth hanging on to. You can make it super long. You can make it actually replayable. You can make it such a classic you never want to give it up. You can create a big multiplayer community with long long legs. You can create an ongoing stream of free or cheap DLC that will make you want to hang on to the game to see whats next. You can lean heavily on digital distribution and balance it with lower prices or convenience factors (steam).

All of these are admirable, positive things companies can do to get more engaged with their customers. Or you can stick a sh*tty code in a box that you need to play the game the way it was originally designed.

As I stated in the Nextbox thread, I really think the publishers need to do a better job incentivizing people to buy new instead dis-incentivizing (that's a word right?) used sales. The current approach isn't much different than the hardline tactics used against piracy on the PC which haven't exactly worked.

I personally don't feel there's anything wrong with people buying used, but in the end the publishers need to figure out how to deal with someone offering nearly the same product for cheaper. Things like online passes aren't going to kill the used game sales for people who don't play online. An extra DLC character isn't going to stop people from buying the game if they just care about plowing through the game for gamerscore (or the ending) or just don't care. In the end everyone else to suffer through things like DLC codes, online passes, authorization schemes, etc.

So publishers: don't penalize me because I can't afford the "full" experience or don't wish to spend $60 on MACHO SHOOT MANNES XXV for the 5th time. Give me a reason to spend $60 on your developer's precious bits. Comp the season pass, give me a discount on all your DLC, give me a voucher for free DLC, give me the soundtrack, give me some recognition as a fan of your game, give me the DLC a week early, give me a discount on your next game, send me the expansion a week early, put me in a special owner's club where we can give feedback, give me priority on support calls, etc.

Just give me something special if this is really a problem. Not a pat on the head while asking if I could spare a fiver for the rest of the game.

rabbit wrote:

Ultimately, the way to have people keep your game, however, is to make it a game worth hanging on to. You can make it super long. You can make it actually replayable. You can make it such a classic you never want to give it up. You can create a big multiplayer community with long long legs. You can create an ongoing stream of free or cheap DLC that will make you want to hang on to the game to see whats next. You can lean heavily on digital distribution and balance it with lower prices or convenience factors (steam).

Don't forget stuffing feelies in the box, as they do with the Limited/Collectors/Whatever editions that are becoming more and more common. Does anyone know what percentage of new game sales are from the ones with more stuff in the box?

All of these are admirable, positive things companies can do to get more engaged with their customers. Or you can stick a sh*tty code in a box that you need to play the game the way it was originally designed.

Unfortunately, doing the admirable thing requires more work and more investment which probably makes it all the more painful if the game doesn't sell /capt.obvious

How did the industry get by before the current generation hit? I worry that used games is a bigger problem nowadays due to the increase in development costs not being properly offset by a similar growth in market/audience.

shoptroll wrote:

Unfortunately, doing the admirable thing requires more work and more investment which probably makes it all the more painful if the game doesn't sell /capt.obvious

I think that's the real conclusion to the side discussion between Pyro and Demi. There's a question of rights, of the ethicality of various options within one's rights, and of cash. It's the cash part that really creates the stress, though. Everyone wants to get/keep more money.

shoptroll wrote:

How did the industry get by before the current generation hit? I worry that used games is a bigger problem nowadays due to the increase in development costs not being properly offset by a similar growth in market/audience.

Vastly smaller budgets. Contrary to what you may think, most videogame companies are actively bleeding money, EA in particular. It's very easy to say "its because they make sh*t games" but with the exception of bilzzard-fueled Activision and (we can guess) private-company Valve, its a freaking financial bloodbath in gaming right now.

wordsmythe wrote:

Everyone wants to get/keep more money.

Right which is partially why we're seeing a push to digital distribution since a portion of the physical distribution costs go away. Unfortunately for retail, the publishers really have the upper hand as far as I can tell...

rabbit wrote:

Vastly smaller budgets. Contrary to what you may think, most videogame companies are actively bleeding money, EA in particular.

That's not terribly surprising. EA seems to be the one making the biggest amount of noise about used sales, so I guess that confirms some suspicions of mine.

It's very easy to say "its because they make sh*t games" but with the exception of bilzzard-fueled Activision and (we can guess) private-company Valve, its a freaking financial bloodbath in gaming right now.

That's depressing, although aren't smaller outfits faring ok-ish?

On a side note, I remember seeing the GDC 2005 presentation by J Allard (HD GENERATION. Also: microtansactions) and realizing that this generation was going to be a lot about monetization strategies which made me a little sick to think about at the time.

Demiurge wrote:
PyromanFO wrote:

And like I said, it's something I completely agree with. But I dislike trying to pretend it's "just economics" (as if there is any completely objective perspective to economics). This is an argument clearly on the side of the publishers and developers against GameStop, because you think the publishers and the developers have the right to stop them. That's explicitly moral.

No it's not. Saying a company has a right to do something to another company is not a moral statement. It's a fact of business.

If this were truly a moral argument, the publishers would cut off all inventory supply to GameStop and any retailer following suit, coming down the mountain in the press at them with righteous fury. But that's an extremely stupid thing to do.

If I were making a moral judgement in this, I would tell everyone who buys used games that they are bad people. But you and I know both know this to be false. In fact, I think I said as such on the show.

All I want out of this conversation is an acknowledgement of what's *actually* happening here. The publishers *do* have a right to try new ways to get consumers to buy new copies instead of used. Just as the consumers *do* have to right to vote with their wallets.

But let's not lose sight of why the publishers are doing this. Companies like GameStop are eroding potential profits, from the publisher's point of view. And the pubs want to find a way to make new purchases more attractive.

What's the part here that doesn't make sense, Allen? Serious question (I know the Internet makes me sound snotty, not trying to be). What part here isn't clear?

The way I see it, there's a difference between the right to try things to get a cut and the right to get a cut from secondary sales. Some people (not you) have come out and said they support the latter, so it's a murky situation when the topic comes up and you're not sure which is being described.

rabbit wrote:
shoptroll wrote:

How did the industry get by before the current generation hit? I worry that used games is a bigger problem nowadays due to the increase in development costs not being properly offset by a similar growth in market/audience.

Vastly smaller budgets. Contrary to what you may think, most videogame companies are actively bleeding money, EA in particular. It's very easy to say "its because they make sh*t games" but with the exception of bilzzard-fueled Activision and (we can guess) private-company Valve, its a freaking financial bloodbath in gaming right now.

A few years ago, everyone was crowing about how much money the video games industry was raking in, how they'd surpassed Holywood, blah blah. I think too many publishers let that go to their head and AAA budgets ballooned without any thoughts as to whether or not the revenue growth would continue to outpace expenses. Rather than admitting that budgets have gotten out of hand, they'd rather make a lot of noise about used sales and piracy.

shoptroll: Good news! The pubs are already doing exactly what you asked! They're giving you something extra for buying new:

Catwoman missions in Batman AC
Retro maps in BF3 Limited Edition
Free co-op play in Saints Row 3, and free Genki-themed DLC for preorders
Bonus 6th faction with exclusive missions in KoA: Reckoning

The difference between "something extra" and "locked away core content" exists purely in the eye of the beholder.

In my other life, btw, I am a vicious hater of content owners (right now) and DRM. I was explaining to my wife this morning that a pirated episode of a TV show is superior to a legitimately purchased digital copy (or a DVD). These companies really ought to sell folks what they want. Instead they sell what they want to sell. We need more Gabe Newells.

Oh, and apologies for the sarcasm, shoptroll. You're a good GWJer in my book.

I could rant about DLC that integrates with the base game vs. DLC that exists outside the main experience / post-game but I think that's for another thread. No worries about the sarcasm though, but my main point still stands: there's not enough incentive to buy new.

Quintin_Stone wrote:

A few years ago, everyone was crowing about how much money the video games industry was raking in, how they'd surpassed Holywood, blah blah.

I'm pretty sure the Hollywood comparison was being used by Activision regarding MW3 sales. However, this is a pretty poor statistic to talk about when you're talking $60 games vs. $15 movie tickets. Especially when the former reaches a maximum audience in the tens of millions while blockbuster movies sell a magnitude more tickets. That's not growing the audience in my mind.

You know what would be even better? Publishers should ship three copies of the game with every purchase! That would be better. They should also send a code that allows me 100 more downloads (but not tied to a device, so I can "loan" those codes out to buddies).

It would be such a better value, and as a customer, I deserve the best value. And they should drop the price to $12. You know, 'cause that's an even better value.

And if they don't? Well, then I just have no choice but to pirate the stuff.

I don't get why the publishers always take such a defensive posture. All they have to do is sell me what I want. Take my money!