Game Developers Hate Pre-Owned Sales. What Makes Them so Special?
With the recent comments from THQ’s Cory Ledesma and comic and news posts on Penny Arcade, the discussion on multiple publishers’ decisions to charge an extra fee for multiplayer to people buying used copies of their games has elevated from minor bickering on forums and in comments to a full fledged gaming cultural debate. Developers are saying that pre-owned game sales hurt them, and they have a point: They don’t receive anything from used games sales. But the problems with their arguments are in tone and logic.
First, the way some developers are addressing used game sales makes it sound like any gamer buying used copies is, as one email posted to the front page of Penny Arcade said, “some kind of delinquent.” Game companies: the people buying pre-owned games aren’t your enemies, they are your potential customers. Attacking them makes it cool to not buy your games new. Like with anti-piracy measures, announcing how tough it will be to pirate a game only serves as a challenge to the pirates to get it done faster. Complaining that people aren’t paying full price for your games, especially in today’s economy, doesn’t exactly make you the most sympathetic figure. It makes you look like a dick.
Second, there seems to be some misconception among developers that each used game sale is money out of their pocket. I would honestly be surprised if even half of the people buying used copies of these games would pick up the new copy instead if the cheaper option wasn’t available. And if they’re worried about first week or first month sales, the only reasons there even is a pre-owned copy of the game available for resale are:
1. Someone bought it at full price and hated it.
2. The game is only ten hours long with no replay value and the gamer in question would rather have the $15 in store credit than your game he just paid $65 for (after tax).
3. A meth-head stole it from Wal-mart
Which brings me around to my point: what makes game developers so special? Cars, real estate, DVDs, CDs, books, clothing and really just about everything else has a resale market. The only three things I could think of that don’t fall under this basic economic model are food, condoms and diapers and what you guys and gals do isn’t nearly as important as any of those three.
One developer whose -mail was published as part of the debate on Penny Arcade‘s front page brought up the used car analogy in defense of the new charges, saying that the wear and tear on a used car was a similar penalty. I completely disagree. If we are going to use cars as the example than the charge for multiplayer access would be like removing the back seat and windows. The car (game) still works, kind of, but a major component and selling point of it in the first place is now missing.
Another part of the car analogy that applies to games is that of resale value to the consumer. The only way most people can afford to buy a new car or house is by selling their previous one. The collapse of housing resale values (due to a glut of foreclosed properties and questionable lending practices) is what lead the recession we’re currently in. Our economy relies on the option to sell or trade possessions off to offset future purchases. Hell, some publishers, like Atlus and NIS, even benefit from this because they have such small print runs of many of their games they sell out quickly. Between fans wanting to make sure they have a copy and speculators hoping to see their $50 turn into $80 in a few months, it’s hard to find a copy of many of their games within a few weeks. Because the resale value is so high, gamers make sure to track down a copy early.
Should everyone buy new games, at full price, the day the games comes out? Sure, and in the magical fairy land where everyone can afford to do this I encourage the ideal. But I can’t, so I don’t. I wait months or even years to pick up games because even $20 is out of the question a lot of the time. By then there aren’t new copies of some games readily available. Plus, the upcoming multiplayer charges wouldn’t be a deterrent because by the time I get my hands on most games the multiplayer community is dead and buried, often even having had its servers shut down.
While I completely understand developers’ aversion to GameStop’s practices, what about gamers who use sites like Goozex or GameTZ? Are they opposed to us working out trades amongst ourselves? I guess it just boils down to developers complaining that this isn’t a perfect world, and the gamers refusing to wax philosophic on things that will never be.
Computer Exchange buys used and sells used and they do pretty well. I recently sold them my copy of Rock Band 2 for £20, twice what I paid for it. I bought it used and sold it used, because the cost of the game new is too high and my guitar broke meaning I’d have to pay a large sum of money for a new one.
It’s all about the cost for me – as a student, the cost of a new game at the standard retail price of £40 is equivalent to my food budget for two weeks. If I use an online rental service, I pay under £20 a month to rent three games at a time and as many as I like every month. I can get new releases within two days of the release date, sometimes on the same day, and I can keep them for as long as I like.
I realise developers have to make back the development costs on their games but the price is simply too much.
It’s probably fragile reasoning, but if a blockbuster film costs more than £100 million to make and costs £10 to buy on DVD, why does a game that (according to Develop) costs about £25 million to make at best cost four times as much?
Feel free to question that logic as comparing films to games isn’t always kosher.
Great article btw. :)
Ok people, great points made by everybody. But you lose me when you start comparing films and books to games. First of all movies and books gain revenue from multiple sources. Movies get millions from their initial release, then dvd/blu ray and then hbo and even basic cable rights. Books have hardcover and then paperback.
Video games have only one source of income and companies base the success of a game based on the first week sales (it’s shitty way to measure success I know).
According to my limited knowledge (that I gathered from probably not the most reliable sources) the cost of a $60 disk falls down this way:
Sell it to retailers for $48
$10 licensing fees to MS/Sony
Not counting packaging and shipping cost a typical publisher would gain around $38 from the sale of a disk. And while the development cost may be $25 million, they typically have an advertising campaign that is just as expensive.
So moral of the story, don’t buy used ’cause Gamestop is a dick. Have a little patience and hunt for good deals.
DJ Hero (with the turntable) was $20 on Toys R Us today.
@darkwhitehair: I knew it was fragile reasoning…
I agree with the moral of the story, although I frequented EBGames while in Canada buying lots of cheap used games. That makes me a very bad person…
@darkwhitehair: I don’t think the paperback argument for books works though, because that’s just a cheaper re-release of the same thing. Video games have Greatest hits (or whatever the company equivalent is) and price drops to half the original cost (or lower), so it’s roughly the same thing.
The used games industry is at least partly responsible for the growth of the games industry as a whole. There is no debate of this, it’s simple economics and the industry knows it.
There is a reason why the industry exploded when GameStop exploded, because games are an expensive luxury whose market grew exponentially when it became massively easy to trade in old product towards new product. The fact is that most people who sell games do so because they’re driven to buy whats new and popular, and the people who buy used games do so because they exist outside of the target economic market of new games. The gaming market, just like the car market, is hugely dependent on the used market creating extra income incentive for buying new product.
Don’t think for a second the industry doesn’t know this, they are banking on the fact that gamers are so religiously fanatical that they will simply find new sources of income to buy the same amount of games when their old games become too valueless to sell. Just like the banking industry, they are banking on consumer ignorance to make up for their toxic business model.
EVERYONE needs to understand something. The gaming industry makes more money than any form of entertainment in HISTORY. Do you really think a 16 BILLION dollar a year industry is faultering because of the same used game system that drove the industry to record profits only a few years ago. SMARTEN UP, the gaming industry is now so dependent on a toxic business model that they allowed to get out of control that they cant even keep their heads above water despite having the most consumer support any form of entertainment has EVER had.
I must say I deffidently agree with your points. Not only yesterday did I walk down to blockbuster to pick up a couple of used dvds. Was the last part of the story on these DVD’s cut out, so the publishers could “make more money” of corse not. The simple fact is that our economy has always done well with the sales of second hand products. Trying to take that away is just wrong.
I completely agree on every point made. The games industry seems to want to go the way of RIAA/MPAA.
“Just give us all your money”
@Harry Bandell: Only because your buying from Gamestop. EB used to be so nice, even had a disc polisher that you could use for free.
Great article. Well written, the kind of stuff we need up on Nukezilla.
My three points are that:
1. Movies are cheaper because you only get 1 and a half hours of entertainment out of them. Sure, if you bought Lord of the Rings you’d get more but it’s not even close to the single players campaigns we’re seeing today. I put in over 100 hours in FFXII.
2. If you tolerate this then your children will be next. What more do I have to say? They can charge whatever they want for whatever they want because they can.
3. Finally, I can’t help but remember the scene from Snatch where Vinnie Jones tells the three people trying to rob him that they smelled some action and wanted a taste. Seems the other game companies are jumping on the bandwagon.
As good as the article is, and it is a very insightful and good article, there is another sort of articles Nukezilla is in dire need of:
Articles about games. At a what looks like 19 to 4 ratio of articles about gaming industry politics vs. articles about games or gaming. Do you guys even play anymore? :-D
Okay plain and simple.
You buy the game outright, you aren’t licensing it from them like fucking windows, its your to do whatever the flying fuck you want to with and they cant say shit about it so I wish this whole thing would go the fuck away already. Restructure your business model game companies so that you arent spending so much fucking money on the dev cycle. Restructure the way you make games so they arent so disposable and have long term value. Stop making people resent you with the constant nickle and dimeing via worthless dlc (EA im looking at you). Im so tired of these fucking companies crying about shit like this. Make quality games and support them for a long time like WOW does and dont just jump into the next dev cycle and crap out another shitty version of your game and maybe things would be better for you and you could develop a solid relationship with consumer and engender some love instead of acting like Lindsy Lohan and crying about being oppressed cause she got caught with cocaine and doesn’t want to go to jail cause shes mother terresa. FUCK OFF GAME DEVS.
Not to burst your bubble, but games are software, and ALL software is licensed and not bought.
But you raise an interesting point: That the games have no longevity anymore. This is kind of a devils circle: Make a game that everyone plays for ages and you WILL sell less games in that time.
Also, the Game Devs themselves are not responsible for this bullshit, the publishers are.
What I take from this is they just see the money stores like Gamestop rake in over used game sales, and want a slice of that pie.
I can’t speak for other markets, but here in Canada EB Games/Gamestop is the only big player in that market. As such pretty much dictate it, giving you a rather paltry $25 for a brand new game, then turning around and selling it for $55+. It’s ridiculous. You can walk into some stores and 3/4 of their shelf space is dedicated to used games. Other used outlets like classified ads, flea markets and pawn shops now set their prices based on their rates. I’ve actually had people counter offer my classified ads quoting what I’d get from EB Games…
I can’t think of any used market that’s as lucrative as used game sales, and as a consumer it’s infuriating that we’re getting screwed over at retail, but still being viewed as the enemy by developers who completely bow down to Gamestop with exclusive pre-order incentives.
To be honest I hope more big retailers get into the used game market. I’ve found that Futureshop gives me better trade in value for games and seems more willing to lower prices for their used games. Plus if I don’t want a game I can use the credit on anything in the store.
You make a bunch of good points but I think perhaps your logic is slightly flawed when you talk about the reasons people trade games in.
1) Let’s say Popular Game 3 comes out and sells a million copies. Out of that, no matter how good the game is there are going to be a bunch of people who don’t like the game, so it’s not like you can always blame the developer for point 1.
2) In point two you sort of assume that there is no value in games that have no replay value or are quite short, and these are inherently bad things. I think it would be a sad world where the only way to get people to buy your game would be to shoehorn in extra length and ‘replayability’ where it isn’t actually needed. The consequences of no replay value and short length MAY be trade-ins but not necessarily because the developers have done something wrong.
The point is, that sure, some games have flaws that make them more traded-in than others, but there is nothing that developers can or even necessarily SHOULD be doing to prevent a base level of second hand trade-ins. Since that base level of trade-ins exists, that creates magic reason 4 for trading in games:
4. Because you can; it’s just the done thing.
I know plenty of people who buy games, trade them in, then just buy more games with the money just because that’s the done thing. That culture might be a symptom of the market being saturated by too many games with just a fleeting presence (rather than collectors items to be treasured), being bought by gamers of a less-enthusiast and more casual persuasion. But it’s difficult to see what developers could have done to prevent that, and easy to understand why the situation may frustrate them.
I’m going to level with you here. I had a more coherent point to move onto, but I sorta lost it.