More Misplaced Hatred For The Used Games Market
from the learn-some-economics dept
I'm constantly amazed at the general cluelessness of the video gaming industry on basic economics concerning the concept of the first sale doctrine and the ability to resell a product. More than pretty much any other industry, the video game industry is vehemently against the idea of reselling used games. They've claimed that it defrauds the industry, that it hurts consumers (say what, now?) and that it "cheats developers." All of this is ridiculous and economically ignorant.The latest to jump into the fray, as pointed out by Copysense, is some industry consultant who basically calls used games sales by Gamestop a version of money laundering:
It is time to for Gamestop to fess up and acknowledge their real business. Relative margins reveal Gamestop's actual business to be the collection and resale of used games. New game and accessory sales revenue may equal or exceed the used game revenue, but they do not come close to matching the profit. The stock of used games is financed by the very publishers who are being harmed by the market. They put up the risk capital to make and market the game and put the unit on the shelf. Publishers receive a one time, per unit fee for putting the game into the Gamestop system and are required to pay marketing development funds to Gamestop to have posters and other promotions in store. But Gamestop does not pay for the games, customers do. Gamestop only provides credit until the games are sold. The consumers' payment covers Gamestop's initial outlay, plus a profit. Because Gamestop pays on terms, the consumers' money is in the bank before Gamestop ever makes a payment on the new game units. If the consumers do not sufficiently cover the expense, Gamestop will call on the publishers for price adjustments and protection. While this business shows a profit with no downside risk, the entire retail side is merely a highly cost effective way of funding the used game inventory. To ensure return of the games, consumers who buy a games are bombarded with offers to turn them back in for credit. Each turned in game builds the used inventory, at no cost to Gamestop. When sold, the only person receiving the benefit, is Gamestop. When I put it this way . . . . I don't want to say it sounds like laundering, but . . . . . They take a game unit a publisher should get paid for, run it though a consumer, and turn into a game unit they can sell over, and over, and over, and over without compensation to the publisher.Of course, all of this is based on faulty economic theory. They all seem to ignore the fact that a healthy resale market increases primary market sales, by making the primary sale more valuable. It's a pretty simple equation. If I can buy a $60 game, knowing that I can sell it back later, that reduces the risk and the real "cost" to me. That increases sales. Separately, a strong resale market has other secondary benefits, such as hooking people on series of video games, so that they're more interested in buying the "new" (full price) versions.
But, overall, what these gaming industry execs and consultants are whining about is that they just don't like a free market where they can't artificially inflate the market price of games even higher. The used market acts as a check on the primary market to keep it realistic. And, as a result of a more efficient market, you actually have a bigger market. Those who assume that demand is totally inelastic think this is bad, but they don't recognize that game buyers have choices, and one of those choices is not to buy games that are too expensive. It's not fraud and it's certainly not money laundering. It's called keeping a market healthy.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: copyright, economics, first sale, video games
Reader Comments
Subscribe: RSS
View by: Time | Thread
"They take a game unit a publisher should get paid for, [buy it from the publisher and pay them fairly for it,] run it though a consumer, and turn into a game unit they can sell over, and over, and over, and over without compensation to the publisher. "
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Re:
The new titles sell cheaper is when they are terrible games people won't buy at that price. In those cases the publisher should be happy to sell units at any price. Gamestop probably wants to recoup anything, even at a loss, to get those stinkers off the shelves.
You can't publish a weak product and expect to get top dollar!
They also ignore the fact that games that are good/have demand sell used for very little discount. Theres not much incentive to buy those used. I (and many others) prefer new in those cases.
[ link to this | view in chronology ]
Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re:
I don't know about the specific terms Gamestop has with distributors, but I've been selling software through retail channels for a long time and can say how this sort of thing usually works: if a store is taking a loss selling the product, they don't come back and ask for reimbursement for units sold. They stop selling the units altogether and then return the unsold units for reimbursement.
If distributors have a different deal with Gamestop that allows Gamestop to get compensated for units sold below their cost, that's the distributors fault for entering into an insanely bad and unusual business deal. I really doubt that the terms with Gamestop are that far out of kilter from the usual deal.
[ link to this | view in chronology ]
Re: Re:
Why can't they get in the game if they are?
[ link to this | view in chronology ]
Re: Re: Re:
That or they want to whine and kick up a stink and get their Pocket Congress Critter (TM) to force used retailer to pay them repeatedly for the same product.
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re: Re: Re:
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
(smacks head)
Complaining about used merchandise? Really? I had no idea. It's like getting pissed off about Betamax & VHS.
[ link to this | view in chronology ]
Re: (smacks head)
[ link to this | view in chronology ]
This seems to be the nub. I don't quite understand what he's getting at there.
If he's saying Gamestop sells new games below cost then asks the publisher to make up the difference (then, once that is done, makes money off the resale of the used game it claims it didn't profit on initially), then he's kind of got an argument.
Of course, the publishers could just not agree to adjust Gamestop's price based on such claims of loss.
[ link to this | view in chronology ]
Re:
If a game is crap and doesn't sell, Gamestop doesn't want to pay the same cost as a AAA blockbuster title because they can't sell it at the same price. To move the shitty titles at all they have to cut prices below what the publisher wants.
Publishers over-value a lot of what they produce. They produce a lot of crappy titles and expect to rake in the same price per unit as Call of Duty or other successful titles.
[ link to this | view in chronology ]
Re:
It sounds to me like the publishers are selling games on consignment. Gamestop tells the publishers how many copies of a game they are willing to stock, and the publisher ships that many. Unsold games are later shipped back to the publisher, and Gamestop only pays for games sold. It's a common enough arrangement for music CDs and paper books, so it doesn't surprise me that it's used in the game publishing industry.
Under the consignment system, the publisher is the one taking most of the risks. Unsold games are the publisher's problem, not the retailer's. The publishers could simply tell the retailers that they will no longer sell on consignment, and the retailers have to pay up front for every copy ordered. That would shift much of the risk from the publisher to the retailer. I'd expect to see a massive lack of interest from the retailers on that, and the publishers know it too.
Instead, the publishers are trying for a new system. They want to be paid in full whenever a new game is sold, then paid again and again and again every time that same, paid for, game is resold.
I can see a number of problems with this, starting with the fact that there's absolutely no law that requires it, and quite a bit of case law and precedents that say it's not required.
But what would happen is if there was such a law? Would it apply only to big retailers? If that's the case the used game market would simply move underground to flea markets and garage sales. If it applies to everyone, what do I do with the box of old games I happen to have sitting in the garage? Do I have to go on a title search every time I want to hold a sale to clean out the garage? Any sort of "resale royalty" law is likely to bring the whole "orphan works" problem from copyright, and apply it to the resale of physical items.
[ link to this | view in chronology ]
Re:
"If he's saying Gamestop sells new games below cost then asks the publisher to make up the difference (then, once that is done, makes money off the resale of the used game it claims it didn't profit on initially), then he's kind of got an argument."
Depends. Is the publisher asking Gamestop for $1000 per game? $100? $10? $1? If the publisher is pricing the game too high for the market (or at least too high for Gamestop to make a profit while selling it at a marketable price) and Gamestop is adjusting for that, the lines of responsibility start to blur.
But even then, assuming you're correct, what he's saying is that Gamestop is behaving unethically regarding the initial sale -- which has nothing to do with their making profit on the used game market. It may be maddening and hypocritical, but the answer is not to try to cripple the used game market, which they have no legal or ethical control over -- it's to fix the pricing issues on the initial sale, over which they have both.
Otherwise you could take that one step further and claim that by buying the game at an artificially low price (what Gamestop is charging me) and then selling the game later, I'm a party to the same (illegal and/or unethical) act, even if I don't happen to sell the game back to Gamestop.
Sorry about Yet Another Car Analogy, but Fo... Chr... uh, hmm, GM didn't get to profit when I resold my old Nova. Krups doesn't get a cut if my coffee maker goes for $15 at a yard sale. I got a really nice used microwave for $30 once; Samsung didn't get a dime, nor did they expect to. And Sears isn't knocking at my door with a cease-and-desist (or my neighbor's) because I bought my neighbor's old router. (Wood, not network. :) A large percentage of the books in my collection were purchased from perfectly legitimate used book stores. I've been known to sell books to them. Neither Daw nor Tor nor Baen nor et.al. have been trying to shake them down that I've heard of.
If the gaming distributors have a problem with the way Gamestop is selling new games, then they should address that problem, not try to use it as an excuse to get a cut of the used game market. If they want a cut of the used game market they should set up a used game exchange. You know, like Gamestop has done.
"Of course, the publishers could just not agree to adjust Gamestop's price based on such claims of loss."
Or some other change in the arrangements, but yes. That would qualify as addressing the correct problem.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Re:
I'm sure if they wanted to they could absolutely find a way to deal in their own used games, some kind of trade-in service, added value for repeat customers, etc.
This might result in having to lower the price of new units to make them more desirable than the pre-owned, however, and they would never want to do that.
Such a quandary - pirates or consumers, both are eating them alive.
EA is clearly suffering: http://investor.ea.com/releasedetail.cfm?ReleaseID=594196
[ link to this | view in chronology ]
Re: Re: Re:
Case in point: their upcoming Origin "service", which isn't an opt-out service. EA games, from The Old Republic to Mass Effect 3 to Battlefield 3. It tracks your application usage, your registry and then EA have the right to sell hat information to advertising companies whether you like it or not once installed.
When your company relies on the malware model to support its infrastructure costs, then doesn't reduce the cost of its games (both online AND offline), then most consumers have a problem.
[ link to this | view in chronology ]
Re: Re: Re: Re:
Well done and agreed. EA is clearly not suffering from the resale market (left off my /s up there), but a chronic incapacity to respect paying customers.
[ link to this | view in chronology ]
Re: Origin & EA & Schemers
Sadly, I fear those days are coming to an end. I've dealt with endless DRM issues over the years, and on more than a few occasions I've had to use a crack in order to play the game I legitimately paid for.
I'm fed up. I've had enough. I'm trowing in the towel. I will NOT put up with invasive DRM, nor will I put up with their "requires a code to play" pay to play scheme on used titles. If the only way to play games in the future is to pirate it, then that is what I'll do. Games keep me sane. They help relieve stress. I had no problem supporting the game industry because I truly, honestly cared. But if they are going to piss on me, a loyal customer, then f^ck them and the horse they rode in on. This camels back is officially broken.
[ link to this | view in chronology ]
Re:
I have no love of Gamestop, they have their own issues, but this is nonsensical.
[ link to this | view in chronology ]
Unpaid EA
[ link to this | view in chronology ]
Re: Unpaid EA
More specifically, the creators got paid on the initial sale and gave up their rights/control over the physical copy of the game they sold. They could compete in the resale market if they want a cut, or they could even include resale restrictions in the initial license (i.e., turn it from a sale into a license).
[ link to this | view in chronology ]
Re: Re: Unpaid EA
And this is only for console games. On PC, it effectively already is a license market, since digital distribution controls the lion's share of the PC game market, and everything there is a license rather than a sale.
[ link to this | view in chronology ]
Re: Re: Re: Unpaid EA
I see no reason to give up my resale rights because they want to tie the game to an account. And I couldn't care less about their TOS or EULA.
[ link to this | view in chronology ]
Re: Re: Re: Re: Unpaid EA
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Unpaid EA
[ link to this | view in chronology ]
Re: Unpaid EA
[ link to this | view in chronology ]
Re: Unpaid EA
[citation needed]
[ link to this | view in chronology ]
Re: Unpaid EA
Because the game medium is usually a convenient disc or physical package, it's also very simple for customers to create this secondary market independent of the process that created the game in the first place.
[ link to this | view in chronology ]
Re: Unpaid EA
[ link to this | view in chronology ]
Re: Re: Unpaid EA
What makes a book different from anything else? You don't send a check to Ford when you sell your car, why would you pay an author when you sell his book?
[ link to this | view in chronology ]
TOO late i downloaded 10000 games
and im not alone we long ago gave up on listening to copyrights ...i think its time to JUST SAY NO TO THEM.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
There's no way in hell I'm spending $60 on a "what if", even if 10,000,000 reviews give it 5 stars.
Those reviews don't mean a thing to me until I can add my own.
Also, I'm glad GameStop exists. Without it, I could never purchase these used games to try them out without the "Okay, that's enough demo. If you want total immersion in this game, buy it!" messages I receive from downloaded demos (360).
[ link to this | view in chronology ]
Re:
Their employees get a little "too friendly" with you. Like, if they hear anything game-related, they feel like that they have to comment on it. A little privacy when I'm shopping might be nice? They do know their stuff though, so maybe it's a little attempt at a gamer trying to reach out to another gamer.
That wouldn't be all too bad, if they didn't use that to try to upsell EVERYTHING. They will try to get you preorder some game, and if you refuse, they have the gall to ask you "are you sure?" like 3-4 times, and then the same thing over with their pro power card. Please man. I just came in here to get a game. Not be marketed to.
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re: Re:
The Gamestop stores here aren't like you described. Not to mention that the most beautiful young woman I've ever seen in my life, used to work at one of them. Alas, she had a boyfriend...
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
They are working on a console they will provide for free. The games will be accessible online only. It is up to you to pay for connection. It is coin operated(in case they are flagged as rogue and can't process your payments). They will send ICE to collect your coins once a month. You can pay more for a bigger coin box and/or slot if you are a heavy gamer. Their collection fee, whether there are coins or not, will be thirty dollars/month.
"All this at no cost to you"
Some restrictions may apply*
*,mnbv,, mdg,a,zngcvblmdsbfmnbdg,ms bvm m,ndg fbgskbg,nbkfv jkfhkrgjhkdjgklfhklnhhlk[lfhkwlet'lmhnlz otijrtekll bluoriylo[r[ldro[eiyl['dh[ldrkkkyt[ler pourl[tjs[rlkjtl[WIRU[OK PUW4POT;4WLILTO POP[UP[RY;RELOJY'LDJ KRJTLRJYL m;ouyprto orpoy;]dtjhty;dj ;jth;dtljh];adtjyh;lj roy;da.jh'laekjh[laej; laepy]peryh;lrjy';lruj.glsrut' o;r[lyjaedrlgj [laedyt[lijdsrl[rdkiu[rlkght
We hope you enjoy being our customer as much as we HAVE ENJOYED HAVING YOU.
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re: Re: Re:
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
So rather than look at the real problem (why people are selling off their newly purchased game within a month of owning it) they focus on the symptom of the problem, the used sales.
I have made the suggestion before that they should partner with GameStop to get them to disclose the movements of used games. In this, GameStop would release regular data on how many used games people trade in and how many are sold. This would provide game publishers with enough information to determine when a reduced price would spur new sales or when a re-release would be warranted.
That is not to say the solution is perfect, but it is a change of pace.
[ link to this | view in chronology ]
Re:
you mean like the fact most of the games these days completely SUCK and are only playable for about a couple weeks or less before everything's done and boring?
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re:
Ubisoft... Yeah...
The ability to know how many people are buying used games won't tell the people much. It just means the publisher has to add more value to their games to entice people to play them longer.
[ link to this | view in chronology ]
I factor in resale when deciding whether to buy
If I could not resell my games, I would not be willing to pay so much for most of them. I have never paid $60 for a download only game. And if video games keep getting more expensive, I may just have to drop that hobby and focus on playing Go.
[ link to this | view in chronology ]
I'm sure glad this "used" sale thing dosen't happen in any other markets
I must say that if there isn't, there ought to be a law against any "used" car selling by anyone because it's eats away at the profits of the major car companies, their children and possibly even their little dog (Toto) too.
/sarc
[ link to this | view in chronology ]
[ link to this | view in chronology ]
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Has this guy ever sold a used car?
[ link to this | view in chronology ]
make a trade off, and make it worth while....
"They have to want to get off. How do you get a crew to want to get off a submarine? How do you get a crew to want to get off a nuclear sub..."
Jack Ryan, Hunt for Red October
Q. How do you make a gamer want to give up the secondary market?
A. You give him something he considers more valuable in return.
[ link to this | view in chronology ]
Wow - they really blew the lid off this scandal! Do they mean to tell me that retailers sell products above cost? That's robbery!
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Say that again...
[ link to this | view in chronology ]
Re: Say that again...
[ link to this | view in chronology ]
Re: Say that again...
[ link to this | view in chronology ]
Re: Say that again...
There never even has to be any such thing as a "used" game in the first place. It's software. The more tech-savvy game companies already realize this. This is why there is no "used" market for Steam-exclusive titles. Steam gets that lower-price market themselves when they do periodic sales.
Yes, Gamestop's activity drives up demand enough to support the $60 prices on newer games, but if game publishers could all harness that "used" economy like Steam, they wouldn't need the game to cost $60 in the first place.
[ link to this | view in chronology ]
Re: Re: Say that again...
[ link to this | view in chronology ]
Say that again...
[ link to this | view in chronology ]
Re: Say that again...
[ link to this | view in chronology ]
And as has been mentioned, the second hand/resale market can do much to drive new games. A friend of mine gave me their copy of Civilization III a few years ago. I liked it so much I bought the Complete edition of Civ IV last year, when Civ V came out. When Civ V drops to about $30 I'll probably buy that one too.
What makes this story even more amusing to me, is I just finished reading this story
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
This kind of ripoff is rife
Damn those used furniture stores, they buy their furniture for a fraction of the original price and resell it for profit without any money going back to the original furniture manufacturer...
Damn those (real) estate agents, they don't even buy the property they just take a cut when a property is sold without any money going back to the original construction company...
Of course that's all very different to computer games because... erm.. well it just is.
[ link to this | view in chronology ]
wait? what?
there is a name for this kind of thing; it is called "retail". all retailers try to buy on credit and sell the product before the invoice is due. why are they blaming gamestop for this behavior? all our dealers try do this exact thing. it's great for us (it sells product and makes us money) and it's great for the retailer (it make them money). the only downside is when we make a product that nobody wants to buy.
[ link to this | view in chronology ]
Games aren't cars; don't have lasting value; they're a fad.
As usual, not arguing for, just stating likelihood. It's basically an opinion, and the games makers have their view.
But I don't use Mike's technique of referring to one of his prior articles as if it held conclusive proof. You'll note that above, Mike writes: "They all seem to ignore the fact that a healthy resale market..."
But in the referenced piece, he writes:
"Research on used book sales suggests..."
BIG DIFFERENCE BETWEEN "FACT" and "SUGGESTS", Mike. You only get away with your assertions because your fanboys here are incapable of integrated knowledge and rigorous logic.
[ link to this | view in chronology ]
Books aren't cars; don't have lasting value; they're a fad.
And libraries...Don't even get me started on libraries. It's like renting games! Hundreds, maybe thousands of people get to use the publisher's property and they only get a cut once!
[ link to this | view in chronology ]
Re: Games aren't cars; don't have lasting value; they're a fad.
On what planet should it be illegal to resell something you purchased? How can a government of the people, by the people, for the people even justify that one?
[ link to this | view in chronology ]
Re: Games aren't cars; don't have lasting value; they're a fad.
First sales are most important for game manufacturers because it makes them X amount of dollars. Used sales make them $0. Whether or not gaming is a "fad" (a fad with nearly 4 decades of history, but rock & roll is considered "dead" nearly every year, so maybe you have a point...) has nothing to do with this argument.
[ link to this | view in chronology ]
Re: Games aren't cars; don't have lasting value; they're a fad.
Or it would reduce first sales, because it effectively makes the game more expensive, so people would buy fewer of them. I'm sure it's one or the other.
[ link to this | view in chronology ]
Me: A little bit of a false play here. If I have $60 for one game, or I can buy two used games for $30, the potential is that I get the used games (especially if they are the same games I would have bought for full price).
Your assumption is "more consumption of games", but there are only so many hours to play games, and that limits the number of total purchases (new or used) anyway. So even if there are a few more cycles of the money, there is little to show that there is actually an increase in new sales as a result of used sales. Rather, those who buy used instead of new decrease new sales, and the people selling their old games buy new ones, pretty much making it net nothing.
However, as gamestop picks up money on both sides, they are probably happy with the increased economic activity. But it is very misleading to say that there is some magical increase in sales of new games as a result of used sales.
[ link to this | view in chronology ]
Re:
If I go to buy a game, I know what I want before I go. Usually it is a new release. I may pick up a used title if its cheap enough if I hadn't bought it at release I probably didn't want it that much. I would certainly never pay full price for it new so it isn't a lost sale to the publisher. At least this way I get to try their product and maybe buy the next one when it's released.
Other people won't buy new no matter what. Strangling the used market isn't going to magically make those people start buying games at $60 a pop. I suspect most of them simply won't buy at all.
[ link to this | view in chronology ]
Re:
First person buys the game for $60, and then he sells it to the second person for $30. The first person buys another game for $60 and also sells it to the second person for $30. The publisher gets its cut of $120 for two games. First person paid a net of $60 for two games. Second person paid a net of $60 for two games.
Now, what if the first person can't resell the game? First person buys the game for $60, but the second person can't or won't pay the full price. The first person buys another game for $60, but the second person can't or won't pay the full price for that one either. The publisher gets its cut of $120 for two games. First person paid a net of $120 for two games. Second person paid nothing and got nothing.
Now, what if the first person can't resell the game, and only had $90 to start with? First person buys the game for $60, but the second person can't or won't pay the full price. The first person now only has $30 and can't buy another game at full price, and the second person can't or won't pay the full price for that one either. The publisher gets its cut of $60 for one game. First person paid a net of $60 for one game. Second person paid nothing and got nothing.
(I didn't run the first scenario with the $90 restriction because it would have had no effect on the outcome)
As you see, the second person isn't a factor for the publisher at all, as long as the the first person can and is willing to pay. The second person can, however, effect whether the first person can pay.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Right Answer: The legacy business should compete and innovate.
What Happens in Reality: Wahhhhhhhhhhhhh
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
1. There will always be a resale market
2. The original producer will bitch and moan about how the resale market is destroying his margins
Nothing will change that market dynamic and I couldn't be happier about it.
[ link to this | view in chronology ]
DRM dual standards
The funky thing with this business model is that if I legally purchase a new game, then scratch the disc, the game company feels no obligation whatsoever to replace it. If they were selling me the right to play the game, and the game required the disc, they'd either have to replace the disc or else they'd be in breach. Instead, they seem to take the attitude that they're selling the disc, which comes attached to the rights to play the game. One disc == one set of rights.
Realistically, then, this sort of thing is the game industry's own fault. They've attached the value and rights to their products to physical media -- big surprise when people then do things with that media that don't directly profit the companies.
[ link to this | view in chronology ]
Why just Gamestop?
[ link to this | view in chronology ]
Re: Why just Gamestop?
This should tell the publishers something. If people are going to your competitors instead of you, shouldn't they do something like... Iunno. dropping the price of the games to something manageable for the average consumer? Just a thought...
[ link to this | view in chronology ]
Clearly you are not a gamer. The resale value of even the most popular console game drops worse than a car when you take it off the lot. While I do agree with the concept that a secure resale market does provide a degree of security and could encourage a potential customer to purchase a product, the reality is that the only reason gamers are willing to trade in their games for a pittance is they are eager to grab the next new shiny thing. I have several friends that have worked for Gamestop as managers and they can validate the claim that the majority of profit for the company is in resale.
Example: I buy a new xbox game for 60$ + tax. I trade it in a week later, because I realize that the game has no replay value, for 30$ even. Gamestop resells the game for 50$ + tax. Assume someone else makes the same mistake I did and tack on another sale. Gamestop just made 100$ minus whatever they owe the developer for the game.
While I am certainly not knocking their ability to make a buck, Gamestop assumes little risk and makes a lot of money while the developers get just a little bit off the initial sale. Considering what goes in to a game I don't think it unreasonable that the developers get a portion of the resale value in this instance since the same company they have licensed to sell the game is reselling it time and time again.
This is not the fault of Gamestop in my opinion. Developers simply need to be a little more savvy and contract in something to make a little off of "official" resales. Problem solved.
[ link to this | view in chronology ]
Re:
It's flawed logic that a resale is a lost sale. If I am not going to pay $60 for a game, I am not going to pay it, period. Whether or not it's available used.
Once you buy something, it's yours. If game makers want to control the revenue, then stop selling games and start leasing them.
Of course, if they wanna see losses, that's the way to do it. Instead they are complaining about their "slow growth" of only adding several billion dollars in sales over the previous year.
[ link to this | view in chronology ]
Re:
The market doesn't care how hard you work on the game, how many years you spent at it. The market only cares "is it worth my money". Charging me full price for a game, and then telling me I have to pay the developer a cut when I resell it? That's odd, I thought when you charged me full price for the game, you relinquished all control over it (ya know, what happens in any other sale). If you want a portion of re-sale, then give me a reason to agree to it. Otherwise, no.
I've got a flea market in a couple of days, and I'm looking to sell a few dozen books I own. Should I have to ring up the publishers and give them a fraction of what little amount I expect to make?
[ link to this | view in chronology ]
Re:
I do consider that unreasonable.
Firstly, if the developers aren't making enough money for their effort, they need to either increase their prices or reduce the amount of effort.
Secondly, Gamestop actually does have ongoing costs related to selling the same game over and over: they have to pay employees, leases, utilities, etc. The developers have no such ongoing costs.
Saying that the developers deserve a cut of all future resales is saying that the developers deserve unearned gravy. That, somehow, the developers have some sort of right to an ongoing profit. There is no such right to profit, ongoing or otherwise. It must be earned.
If the developers want a cut of resale, then they need to take an active part in that market by actually engaging in the resale activities. They need to continue to add value past the initial sale.
Some do this (DLC, etc.) If they desire the cut that badly, that's the proper way to go about it. Not by getting some kind of legislation against resale or injecting themselves into resale deals simply by virtue of existing.
[ link to this | view in chronology ]
It's their own fault!
Why would anyone pay £50 for a game that can be completed in two or three days of gameplay, when you could wait a couple of weeks and get the same game for half price or less?
[ link to this | view in chronology ]
More
Goodwill accepts donated video games and resells them.
Consignment shops all over the place resell used video games.
Gamestop is just one of literally thousands of business' that resell video games.
Despite this massive resale market, the video game industry was an $18 billion annual monster in 2008
http://seekingalpha.com/article/89124-the-video-game-industry-an-18-billion-entertainment-ju ggernaut
It's expected to reach $70 billion by 2015.
http://venturebeat.com/2010/05/25/video-game-industry-to-hit-70-billion-by-2015-but-growth- will-slow/
Apparently the resale market is not having a negative impact.
[ link to this | view in chronology ]
Other industries
[ link to this | view in chronology ]
Use Car Sales
There's a rather obvious flaw within the Used Car/Furniture arguments some of you are using. Used cars and furniture depreciate at an incredible rate compared to games. So long as they aren't scratched, games play as good as new for YEARS after their initial purchase. We have a caricature of the "Shady Used Car Salesman" for that very reason. Furniture isn't quite as bad but its still pretty bad, a lot of people are very turned off by the idea of buying a couch that was lived in by someone else for an undetermined amount of time.
Used games sales do amazing because outside of box art and contents, you largely only have have one of two types. A broken game, and a working game. Functionally, digital copies of anything are just as good as a new one. That isn't true of things like cars and furniture.
What GameStop is doing isn't illegal, and I do buy from them. However once I realized that original publishers don't get money from used games (took me far to long to get that one), I changed my buying habits. I buy most game
[ link to this | view in chronology ]
Re: Use Car Sales
No, I didn't think so, I'd be lucky to get $30 in STORE CREDIT (not cash) for the game, due to the whole 'no refund on opened games policy' that most stores have. You know the one that forces you to buy the game and open it, before even seeing the EULA that you are required to agree to if you expect to be able to actually play the game (try answering NO to accepting the EULA and see how well the game plays).
I can expect a used car or furniture to be usable and useful to me for at least a year (if not 5-10 years), can anyone say the same thing about games (name one game from 5 years ago that you still play on a regular basis...)?
How useful is a game once you've completed it? With most games only having 5-10 hours of actual gameplay, sometimes repeated several times so they can claim, 50-100 hours of game play (if you want to repeat the same 5-10 hours of activity 10 times at different 'levels' or as different 'players', 'countries', 'agencies', etc).
[ link to this | view in chronology ]
Re: Re: Use Car Sales
[ link to this | view in chronology ]
Re: Re: Re: Use Car Sales
[ link to this | view in chronology ]
Used Car Sales Continued
(Hit a word cap i think on my last post)
[ link to this | view in chronology ]
Re: Used Car Sales Continued
[ link to this | view in chronology ]
Re: Used Car Sales Continued
[ link to this | view in chronology ]
My question to the game companies is this: What am I supposed to do with the 100+ games I have played on the Xbox 360 over the past 6 years? I suppose I could sell them to friends but is that really any different than what Gamestop does? Gamestop just does it on a much larger scale.
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Nail on the head
Maybe a $15.00 football or whiffle bat & ball set is what the publishers had in mind......hmmmmmm. Not a bad thought.
[ link to this | view in chronology ]
user comments seem to ignore
Also, this site is booooring.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
It's not just Gamestop!
It is time to for Realtors to fess up and acknowledge their real business. Relative margins reveal Realtors' actual business to be the collection and resale of used homes. New homes and land sales revenue may equal or exceed the used home revenue, but they do not come close to matching the profit. The stock of used homes is financed by the very builders who are being harmed by the market. They put up the risk capital to make and market the home and put the buiding on the block. Builders receive a one time, per unit fee for putting the house into the system and are required to pay marketing funds to Realtors to have signage and advertising posters and other promotions in store. But Realtors do not pay for the houses, buyers do. Realtors only show the homes until the homes are sold. The buyers' payment covers the Realtors' initial outlay, plus a profit. Because Realtors do not pay for the right to show the home, the buyers' money is in the bank before Realtors ever pay for anything. If the buyers do not sufficiently cover the expense, Realtors will call on the seller for price adjustments and protection, even going so far as to requiring them to make up any shortfalls. While this business shows a profit with no downside risk, the entire retail side is merely a highly cost effective way of funding the used home inventory. To ensure return of the business, consumers who buy homes are bombarded with offers to sell them and buy replacements from existing listings. Each listed home builds the used inventory, at no cost to Realtors. When sold, the only person receiving the benefit, is Realtors. When I put it this way . . . . I don't want to say it sounds like laundering, but . . . . . They take a housing unit a builder should get paid for, run it though a consumer, and turn into a unit they can sell over, and over, and over, and over without compensation to the builder.
[ link to this | view in chronology ]
And
[ link to this | view in chronology ]
Anti-Trust Law
http://en.wikipedia.org/wiki/Sherman_Antitrust_Act
http://en.wikipedia.org/wiki/Clayton_An titrust_Act
[ link to this | view in chronology ]
Golf claps, all round.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
If they throw it out, it is an expense.
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Other use of used games market
[ link to this | view in chronology ]
game pricing
[ link to this | view in chronology ]