EA Execs Also Worried About Second-Hand Sales... But With A Better Approach

from the recognizing-the-market dept

Fri, Oct 10th 2008 3:48am — Mike Masnick

We recently wrote some video game execs complaining about how they should get a cut of any second-hand sales, apparently against the concept of the (well established) first sale doctrine. Reader EJDean alerts us to another article that quotes an exec at EA who also is complaining about second-hand sales, noting that it's a "critical situation." He makes an odd argument that video game companies probably do deserve a cut of the second hand market because digital products don't wear out, like normal second hand goods. Again, he may want to understand the first sale doctrine, as well as basic economics where the availability of a resale market helps increase the value of the initial product.

But, the good news is that while EA would like to get a cut of the secondhand market, it seems to at least realize that seriously pursuing it would be a problem. Instead, the company seems more focused on giving people reasons to pay, such as through additional online services that make it worthwhile for people to pay, rather than freaking out too much about second hand sales. This is the right approach. Rather than worrying about second-hand sales, find a business model where that's not even an issue.

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–The Techdirt Team

Filed Under: resales, secondary markets, video games
Companies: ea

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some old guy, 10 Oct 2008 @ 3:58am

No
No, it's not the right approach. What they need to do is stop trying to "deal" with the second hand market, and leave it the fuck alone.

Screwing paying customers by detracting from the resale value of their goods is not a consumer friendly approach.

This is all smoke and mirrors. They say they are giving exclusive content to original owners, but that's not the case at all. They are removing content from the game, and then giving it back to only the people they consider worthy of the content.

Talk about doublespeak, they are raping you so they can tell you how happy you should be to have gotten laid.
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Twinrova, 10 Oct 2008 @ 3:59am

And to add insult to injury...
Google announces its AdSense program is now ready for video game insertion.

Want to bet game prices don't come down when AdSense is used?

We'll let the consumer decide if ads=content and how they'll feel about it after paying $60+ for the game.
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Douglas Gresham, 10 Oct 2008 @ 4:14am

Re: No
It's the right approach if and only if:
1) You can still play the game second hand without their extras.
2) The extras provide real added value that's worth paying for.

Alternatively, I don't have a problem with fully subscription-based games (has to be for MMOs) - as long as it's crystal clear that what you're paying for is a subscription, not the copy of the game. Where I have a problem is the deliberate deceptiveness of the "you're not buying the game, you're buying a license" rubbish.

Who wants to bet whether EA's posturing will follow either of these approaches? I'll give you great odds on them not making a total mess and trying to completely rip off their customers . . .
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Peter, 10 Oct 2008 @ 4:18am

Old article.
That is an old article that I posted in comments here before pointing out that the second hand market was the real target for EA call home DRM.

There is nothing laudable from EA here, it is downright slimy. I am shocked to Techdirt supporting EA on this.

They unreasonably want a cut of second hand sales, but since that is impossible are using DRM to kill them.

I am boycotting any EA title with such rights stealing DRM in place and I tell others to do the same.
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Lucretious, 10 Oct 2008 @ 4:28am

Yeah, they give customers "reasons". I used their download service for the game "Crysis", the bastards charge you for the privilege of downloading the game you bought more than once. 10 for 3 years gives you unlimited downloads. That's not building value, its pure greed.
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pawn, 10 Oct 2008 @ 4:29am

Yawn, if the resale market is so awesome, companies should join the market. EA could buy back it's own games with a credit/coupon for a new EA game.

The customers would get value and EA could still limit the number of customers enjoying their product.
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Sopor42, 10 Oct 2008 @ 4:53am

Haha!
That's funny! The other day I picked up a copy of Neverwinter Nghts Gold Edition at a garage sale. Paid $3 for it. Just how exactly would Atari, Bioware, and WOTC track that sale, much less figure out how much of the $3 to get?

Although I don't really see what the big deal here is, as I've always expected to get different treatment as the second buyer. Ignoring the whole inferior product thing, I've never once thought that I was eligible for technical support for a game I purchased second-hand. Am I wrong about that? I know some companies will give technical support regardless of whether I was the first buyer or not, hell some companies don't even care if I bought the product! But I'm mostly thinking about hardware here... I guess I'm not so sure how this applies to video games though.

I'm with Douglas Gresham on this one, I think... I would agree that as long as the game is completely playable without the "extra" content awarded to first-buyers, AND that the allow an avenue for second-hand buyers to purchase that content too!

But don't even get me started on MMO and subscription fees. I understand the argument of "Well first we had to develop it, then we have to maintain the servers" but as far as I'm concerned, companies that do that can kiss my ass! I won't play WOW or WAR/WHO because having to spend $50 for the game, and them immediately start spending $15/month to play is ludicrous! If Guild Wars can figure out a way to be profitable without the subscription fee, then WOW and WAR/WHO should try to figure out a way too! I never paid a cent to play Diablo and Diablo II online (Yea I know they're no MM ORPGs) and I won't pay a cent to play these others online.
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Hoeppner, 10 Oct 2008 @ 4:55am

Second hand sales it something you need to put up with on consoles.
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Anonymous Coward, 10 Oct 2008 @ 5:05am

Starting to smell fishy around here!
Im wondering if someone at Techdirt isnt getting a little PR money from EA? Their executives continue to occasionally TALK a modestly good game (not really but Techdirt seems to find something positive to highlight in almost every recent EA press release) but they continue to act as the anti-consumer content publisher they always have been. This executive has his head on backwards if he thinks consumers need to purchase the same content multiple times and he’s just as crazy if he thinks I should need someone else’s permission to sell MY OWN property. Finally this idea of removing significant portions of content from the original offering so that they can be used as "downloadable" or "added value" content later, is not new, creative, or good for consumers. It’s age old standard EA practice, with a clever new explanation. Shame on you guys at techdirt . . . tell your client to actually re evaluate the way it both views and interacts with its customers (more action, less press releases) and maybe then you will find it easier to convince us customers to view EA differently.
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Fsm, 10 Oct 2008 @ 5:05am

woah
A post about EA and not one Spore related anti-DRM comment in the comments. I'm amazed!
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ScytheNoire, 10 Oct 2008 @ 5:20am

Second hand sales will end
It's only a matter of time before console titles have DRM that locks them to a system, thus killing off the second hand sales market, and possibly also the rental market.

Digital distribution could do this right now, as it gets rid of the middle man in most cases.

EA should be more worried about lost sales due to their DRM. PC market isn't typically a big resale market, yet, they are putting DRM that has customers like me avoiding purchasing games they would like to play, like Mass Effect, Spore, and their upcoming C&C Red Alert 3.

In fact, DRM in general makes me nervous about purchasing any games other than MMO's which have no need for DRM. I fear that Fallout 3 will have some form of DRM, thus, infecting my computer with a corporate virus (yes, installing unauthorized files that affect the user experience is a virus, which is what EA and other DRM does).

So until there is a crackdown against things like DRM by the courts, at least those that infect users, I am avoiding buying games with DRM.

DRM directly affects the second hand sale market, with their phone home schemes, which will come to consoles too.
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SteveD, 10 Oct 2008 @ 5:33am

Did that just happen?
Did mike just agree with an EA exec?

Quick everyone, snowball fight in hell! :D
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Anonymous Coward, 10 Oct 2008 @ 5:44am

Re: Second hand sales will end
"PC market isn't typically a big resale market, yet, they are putting DRM that has customers like me avoiding purchasing games they would like to play, like Mass Effect, Spore, and their upcoming C&C Red Alert 3."

I predict EA will soon stop releasing titles for the PC market altogether. They already tend to the hold the titles for a significant period of time (to prevent piracy) after the console release, soon, they wont bother releasing them at all.
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Anonymous Coward, 10 Oct 2008 @ 5:55am

There's a second hand market for EA games? I thought they were unplayable because of DRM.
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Orlandin, 10 Oct 2008 @ 6:10am

Second hand sales
EA is willing to deal with the second hand market, because they know that they have already made a strong attack against it. They call it DRM. If the product will only install so many times, it would stand to reason that fewer installs would mean lower resale value, until the installs are used up and then that key is off the market completely.
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hegemon13, 10 Oct 2008 @ 6:20am

Digital goods don't wear out...but the medium does
If perfectly stored, the digital good does not wear out, but in real life, the physical storage medium gets dropped or scratched, especially if there is a required Play Disc. The manuals get damaged or misplaced. Jewel cases get cracked. Plenty can happen to a game to cause wear before the second buyer receives it.

The company may argue that, as long as it installs, the wear has no effect. I say that, as long as I can sit comfortably in a used chair, the wear has no effect, either. This is just ridiculous double-talk, and another IP provider looking to get more for doing less.
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Ima Fish, 10 Oct 2008 @ 6:21am

Re: No
"No, it's not the right approach. What they need to do is stop trying to "deal" with the second hand market, and leave it the fuck alone."

Wow, that sums up my opinion exactly, plus it includes profanity, which is always a big plus! ;-)

Used games helps the game industry. Much in the same way that the used car market helps the new car market. And the used house market helps the new house market.

People cannot always afford new. But if you lock them out of buying used, they won't see a reason to buy when they finally can afford to buy new.
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jonnyq, 10 Oct 2008 @ 6:34am

If digital goods didn't wear out, then they wouldn't make a new Madden every year.
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Tamara, 10 Oct 2008 @ 6:42am

Re: Second hand sales will end
(yes, installing unauthorized files that affect the user experience is a virus, which is what EA and other DRM does
No that isn't a virus. It's malware. A virus needs to be self-replicating, which that isn't.
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Rekrul, 10 Oct 2008 @ 6:46am

If digital goods didn't wear out, then they wouldn't make a new Madden every year.

They make a new Madden every year to sell to the idiots who think that giving the computer generated players the names of real players will somehow change the game.
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sniperdoc, 10 Oct 2008 @ 6:55am

Utter bull...
In the IT world lately I've seen a trend that almost borderlining extorsion. Here's what I mean:

You used to be able to buy a device and own ALL of that device's capabilities. For instance, a Cisco Firewall: 1. The device is capable of supporting 10,000 clients 2. The device is capable of supporting 1000 vpn clients Guess what... that device gave you access to ALL of those things.

Now, you buy a device from Cisco, you don't own that devices capabilities. They "license" you out portions of that device. So, you literally buy the same device, but only get 1000 clients, and 50 vpn clients. You have to purchase LICENSES to get the rest of the features!

The funny thing is... the price of that "licensed" device hasn't dropped any from the cost of the previous device that had all the feature pre-enabled to begin with!!!

We're already running into that with subscription based games and into games that have "add-on" packages such as Battlefield 2142's Northern Strike add-on or Battlefield 2's Special Forces add-on.

This of course wouldn't be so bad if the price of the original game wasn't as much. i.e. Get the media to install World Of Warcraft for $0, yet charge a montly fee of a couple of bucks. But they're ripping people off, and people don't care!!!

World of Warcraft has the following fees (directly copied from their site:

Is there a monthly fee to play the game?
Yes. After the end of the free month included with the game, you need a subscription in order to continue playing the game. There are three subscription options: a month-to-month package at $14.99 per month, a three-month plan at $13.99 per month, and a six-month plan at $12.99 per month. The subscription fees for the three-month plan and the six-month plan must be paid in full.

That means even if you paid a 6-month fee, you're paying ActiBlizzard $77.94 for just 6-months of gametime? How about a year of gametime? $155.88??? No game costs this much. In production value, especially given that you have to purchase it from a store anyways.

Sure I get it, server upkeep, bandwidth costs, etc... but I don't see other games such as Call of Duty, Team Fortress 2, resorting to those methods. Because the gamer masses themselves have to front the cash to have a server operational!!! And we buy the games ONE time! We don't pay a fricking subscription!

Alas, the gaming world is going a different way. Hell, Call of Duty 5 will be subscription based... and I tell you all who the culprit of this subscription bullsh1t is:

Glorious, pompous, self-rightous, and I-am-greater-than-thou Lord British, Richard Garriot. We have him to thank for making casual computer gaming an enterprise to suck the people dry of their money. It all started with his great idea of Ultima Online. Then came Everquest, then Anarchy Online, Age of Camelot, World of Warcraft... you see where this is going.

But, gamers are continually paying into their pockets. When did gaming become a subscription service? There will come a time when single player games don't exist anymore and we don't own the software/games we purchase. We'll be paying to have to continued benefit to play a particular game.

And it's funny really, at the same time, the people who buy the games, are inconvenienced, and invaded by DRM that doesn't work anyways!!! Hackers/Crackers are out there every day chugging away at the software that gets released, and 9 times out of 10, the game is cracked and released before it hits the shelves?! Without the DRM and hassles of having software on your rig that's causing problems on some level with the overall health of the system. So, what's the incentive now to go out and buy the game? There isn't any. World of Warcraf... cracked. I can download WOW, play the latest release, and be active on servers where I don't require a subscription.

Publishers such as EA, Ubi and Vivendi just don't seem to get it. They are causing their OWN demise! At some point, people will just stop buying games altogether and will just download the cracked versions. All because of games' overinflated prices, their overall buggyness (look at Stalker Clear Sky or GRID) and shoddy design in general.

Hell I've been paying for my games for the longest time, but tell me what my incentives are to pay EA/Ubi/Vivendi? I have plenty of know-how to find and play cracked games. But I choose not to, because I try to be supportive of those greedy and ego-over-inflated publishing houses. EA loses good staff every day because they don't treat their production staff well due to overbooked deadlines and unrealistic deadlines. All because they want to make the buck before some other publisher. Well guess what... if you produced a quality game, it wouldn't matter. People would buy it anyways!!!

God I rant too much sometimes... but I just wish the publishers woke the F up!!!
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Anonymous Coward, 10 Oct 2008 @ 7:23am

Re: Utter bull...
You're right, $60 for a game is too much. It's always been too much, and it's just even worse when you add a subscription to it. I think you choose a poor example, though, when you pick WoW -- yeah, it's popular, but they do it wrong. I'd rather pick out GuildWars (pay for the game, free to play online) or City of Heroes -- pay for the game and the subscription, but they regularly make major additions to the game. They've made 12 major additions to the content in about 5 years, plus minor tweaks and patches along the way, and seasonal events. They make paying the subscription worth it.

Anyways, I expect that paying for the game (when a subscription is involved) is going to go away. That's a major obstacle to getting new players, and if all else is equal (not always the case), the game that's easiest to start playing will draw the largest crowd, and the regular monthly fees will bring in the profits.
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Enrico Suarve, 10 Oct 2008 @ 7:24am

Great News!!!
Finally some good news from EA

I'll be sure to bear it in mind when I next buy a game as it sure outweighs their poor development, unoriginality in sequals, invasive DRM, crap tech support...

oh wait
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some old guy, 10 Oct 2008 @ 7:32am

Re: Great News!!!
RE: Great News!!! by Enrico Suarve - - Oct 10th, 2008 @ 7:24am

Define: Suave
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Mike (profile), 10 Oct 2008 @ 7:40am

Re: Starting to smell fishy around here!
Im wondering if someone at Techdirt isnt getting a little PR money from EA?

Um. No.

but Techdirt seems to find something positive to highlight in almost every recent EA press release

Would you like to back that up? No? Oh, right, because you can't.

We have a search engine. Why not go look at every story we've written about EA:

http://www.techdirt.com/search.php?site=&q=+ea+

Ok. Now, there are a *few* semi-positive ones there, but I'd say most are pretty negative. The fact is I just call things as I see them. And, I'd hardly call this a "positive" article for EA, as I spend most of it pointing out where they're wrong, and only note the sliver of hope at the end.

Ok. Would you like to apologize for accusing us of something that's obviously untrue?
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Anonymous Coward, 10 Oct 2008 @ 7:55am

if EA wants my biz back they will refund my money for games they INFECTED with SECUROM!

FUCK EA!

NOT 1 CENT!
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Gamer, 10 Oct 2008 @ 8:00am

Re: Old article.
I'm with you on boycotting EA. I haven't bought an EA game in several years, mainly because I haven't seen anything worth playing and the fact that instead of focusing efforts on making good games, they're more concerned about buying out everyone else.

Best interests of the stockholders my ass, I owned EA stock several years ago and sold it all after watching them make crappy games and try to make up for it with Advertising.

long live the independent development studios.
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Anonymous Coward, 10 Oct 2008 @ 8:11am

Re: Re: Starting to smell fishy around here!
"Ok. Now, there are a *few* semi-positive ones there, but I'd say most are pretty negative. The fact is I just call things as I see them. And, I'd hardly call this a "positive" article for EA, as I spend most of it pointing out where they're wrong, and only note the sliver of hope at the end.

Ok. Would you like to apologize for accusing us of something that's obviously untrue?"

If you say it’s untrue Mike, I will take your word for it. I won’t apologize for bringing up the question though, because I still think it looks “reasonably fishy” (this was a pretty lame “bright side”). Again I accept your statement, but given the often skeptical tone Techdirt articles take with many companies who business models are based on content deprivation (many of whom have a MORE consumer friendly history then EA), the tone Techdirt seems to have taken with EA recently feels . . . well a bit too "understanding". Again, you say this is simply calling it as you see it, then I believe you. I would urge you to take another look though, because I think you’re seeing something positive, that isn’t really there.
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mobiGeek, 10 Oct 2008 @ 8:14am

Re:
Have you tried comparing Madden '08 to Madden '98 (or whatever it was called)?

Digital goods do wear out...they become old and tired.

Anyone willing to pay me $50 for my copy of DOOM I? How about DOOM II? They are both in pristine condition, boxes unopened!
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Forge, 10 Oct 2008 @ 8:47am

Re: Haha!
I agree with you 100%. If they want to kill secondary sales, follow the MMO market. If they actually want to make money there, they need to follow Guild Wars' example. I will pay ~60$ up front for a game, OR I will pay 5-10$ a month for a game. I am still not playing nor am I likely to ever play WoW simply because they ding you BOTH ways.

Up front or monthly, not both.
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Nate, 10 Oct 2008 @ 8:48am

Digital products don't wear out?
(Looks like you beat me to it, mobigeek.)

I take exception to the notion that second-hand digital products (especially video games, as in this case) "don't wear out" like traditional, tangible goods. For one, the physical medium onto which the content is written does have a tendency to wear out and, in the case of second-hand games or music, there is most often a disclaimer that the product is provided "as is."

Second, the market price for old content is determined largely by supply and demand, which is predicated by a context involving relative qualities, nostalgia, community, and more which also tend to wane.

If EA tends to disagree, and they would like to demonstrate a commitment to this premise, then perhaps they might implement a competitive buy-back program?
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Agonizing Fury, 10 Oct 2008 @ 9:57am

Re: Re: Re: Starting to smell fishy around here!
It is generally much easier to see a dim light in pure darkness.
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Anonymous Coward, 10 Oct 2008 @ 10:58am

Re: Re: Re: Re: Starting to smell fishy around here!
"It is generally much easier to see a dim light in pure darkness.
"

I see your point
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JT, 10 Oct 2008 @ 11:44am

Re: No
By providing extra stuff, you can determine if you want to pay the retail price or the discounted second hand price. What's the big deal with that? If I get an extra weapon for buying it new, who cares? It doesn't change your option to buy it used...You're still completely able to buy it used.

I'd rather see a model like this than releasing versions they call "Gold Edition" or "Collectors Edition" with unlocks or free downloads, etc.
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niftyswell, 10 Oct 2008 @ 12:09pm

doesnt wear out?
So gold and gem dealers need a cut of subsequent profits? Games do wear out as technology makes them obsolete..why are PS1 games selling at such a lower price otherwise? How many C64 games are for sale?

not a good argument.
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JT, 10 Oct 2008 @ 12:12pm

Re: Old article.
What are you talking about? This is about GameStops on every corner selling used console games. What they lose on second hand sales of PC games isn't worth what they put into DRM.

They did DRM to prevent people from sharing the game with another member of the family or friend or even file sharing. They do DRM because it's much easier to get around current protection methods on the PC than having to make a physical hardware change on a console.

DRM is evil and vial that only causes issues with the people who actually buy the game. It doesn't change the thousands or millions of downloads on file sharing sites.

But this has absolutely nothing to do with DRM and everything to do with the console market.

You have a choice as to whether you think being able to download some content is worth the extra money or you still want to buy a console game new.

I'm sure if you like running a small business off of eBay selling used games it would affect you but otherwise, who cares? If you are willing to pay new price for a weapon or some "making of" videos, etc. otherwise keep buying a used game. Why does this seem like rocket science to so many on here?
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Anonymous Coward, 10 Oct 2008 @ 12:28pm

Re:
At least ONE person on here gets this is about consoles and not the PC.
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Mike (profile), 10 Oct 2008 @ 1:10pm

Re: Re: Re: Starting to smell fishy around here!
Again I accept your statement, but given the often skeptical tone Techdirt articles take with many companies who business models are based on content deprivation (many of whom have a MORE consumer friendly history then EA), the tone Techdirt seems to have taken with EA recently feels . . .

Perhaps I misread the statements, but I didn't think the focus was on content deprivation, as everyone seems to be assuming, but on providing extra *services* that are worth paying for. That's different.
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JB, 10 Oct 2008 @ 1:34pm

Re: Re: Haha!
Even with MMOs there is still the right to sell the game and transfer everything to the buyer. Even though you are paying for a short term license to play the game, you can still sell the remaining time on the license, the game files that you purchased (what you bought for $50), and you can add in some monetary value for your effort in developing the virtual aspects tied to your account. Once it all has been transferred, you must forfeit any claim to the account and remove/destroy any remaining copies of the files.

You do have to be very careful to word your sale such that you are not selling property that belongs to the game company. They can, and probably will, jump all over you and hold you criminally responsible.

I have sold a few of my previous MMOs and can attest that, as long as your wording indicates you are selling only what you have purchased and the effort you put into it, the game can be resold.
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PaulT (profile), 11 Oct 2008 @ 6:07am

Re: Utter bull...
Interesting rant, and utterly false for several reasons:

- User-based licensing is very common and has been going on since IBM's mainframes. It's nothing new.

- Game add-ons often come a year or two after the original game was released. Do you expect the people making these add-ons to work for free just because you bought the original game at some point? You have a point if content was removed from the original game to make the add-on, but otherwise you're just being asked to pay for some optional additional content. What's wrong with that?

- The main client for WoW hasn't been full price for a long time. You can pick it up for $10 in a lot of places (it's $20 on Blizzard's site) and you can also download a 10 day free trial.

- Your subscription for WoW isn't for the game, and not just for the server access. It's for the regular patches and updates (major changes to the game are regularly released, for free), staff at Blizzard who moderate and run the game (FPS games don't need game masters, for example), etc. It's a business model that every major MMO (apart from Guild Wars) uses. If you don't like it, play a game that doesn't require a monthly fee. I don't see what's wrong with it - WoW has always been a sub based game and they've never pretended otherwise.

- "World of Warcraf... cracked. I can download WOW, play the latest release, and be active on servers where I don't require a subscription."

Good for you. There's 10 million people out there who are part of a larger community who will never see you in the game. But it's OK if you're on a cracked server right? There's a few people in there?

- OK you start making sense in the last part. Yes, DRM is nonsensical and the primary reason for people to avoid PC games in favour of console versions. EA and UbiSoft really are the main culprits for causing their own declines in that market.

So here's the thing - DON'T support them. Support the other publishers who are making non-DRM, non-subscription games! If those games start selling as well as, or better than, the DRM games, that's the only message they will listen to. If you choose not to buy anything at all, that just shrinks the market and makes these fools think they're right.
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Joanie, 11 Oct 2008 @ 6:37am

They're insane
These guys are truly insane. Digital products don't degrade? So I can just plug a cartridge into my Commodore 64 which no longer works? Or maybe I'll just fire up Windows XP and play Tomb Raider 1. Wrong.

Your products stop working. That's worse than degrading. If you are so concerned about second hand profits (which won't happen), then why aren't you concerned enough to take the DRM out which are hurting your first hand sales?
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M, 11 Oct 2008 @ 8:09pm

Re: Utter bull...
I downloaded World of Warcraft and enjoyed it. I then bought the game without reading the box closely enough. I did not realize that it was a subscription based game. After the free month was up (about a year ago) I have not played it since. I am not paying that much money for a game that I (thought) I had already bought and paid for.
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Tse, 12 Oct 2008 @ 3:36am

don't wear out?
> digital products don't wear out, like normal second hand
> goods.

WTF, they send you a new DVD when the old one is scrathed enough? Haven't heard of this happening :D
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jeanny, 19 Nov 2008 @ 10:45pm

Re: No
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jeanny, 19 Nov 2008 @ 10:50pm

about the used cisco
hi,i dont why should stop to deal with the second hand market,i am the selle of the used cisco ,customer can buy the good quality cisco at a very low price,i think that is so good for them,why should people want to stop ? If you are need used cisco,pleaee fell free to contact me ,i promise to provide you the good used cisco,my mail adderss is : jeanny@ciscosell.com. MSN is : bingshuilinger@hotmail.com.Looking forward to hearing from you ASAP.
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