Gamasutra: The Art & Business of Making Gamesspacer
A New Frothy Bubbling Of The Used-Game Stew
Printer-Friendly VersionPrinter-Friendly Version
View All     RSS
April 24, 2014
arrowPress Releases
April 24, 2014
PR Newswire
View All
View All     Submit Event





If you enjoy reading this site, you might also want to check out these UBM TechWeb sites:


 
A New Frothy Bubbling Of The Used-Game Stew
by Kim Pallister on 03/07/09 04:19:00 pm   Expert Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

I missed the DICE conference this year, but like much of the blogosphere I got a second-hand accounting of the more interesting talks at sites such as Gamasutra & GamesIndustry.biz.

Among the talks getting some coverage was that of Paul Raines, Gamestop's CEO, in which he defended their controversial (within the industry anyway) practice of selling used games. Among those reacting to the talk was a good reaction from Dave Perry on VentureBeat.

This isn't a new debate, of course. (e.g. Here's a thread from back in 2005, when Epic's Mark Rein was on a tear about it). Two things seem to have changed about the debate this time around.

First, the industry seems to have decided that it's in bad taste (or just politics?) to argue against the consumer's right to re-sell their games. Thank goodness we're not the music industry :-). Perry and others are instead arguing against GameStop's practices of promoting the used title over new, while at the same time pulling all the usual retail practices of charging publishers at every turn to promote the very products they are steering consumers away from the new versions of.

The second thing that's changed in this debate, and is really the subject of this post, is that the field just got real crowded for Gamestop, as Best Buy, Toys R Us and *shudder* Amazon are all cannonballing into the used-game pool.

I think this is a good thing.

I share the same concerns that many do, in that I want as much money flowing back to developers & publishers as possible, and that means making the channel as efficient as possible.

If we assume that used game sales aren't going to go away (I don't beleive they should, and they very likely aren't) then it's a question of how we improve the situation for those creating the content.

One way of course, is to leave the retail business, and move to digital distribution, services businesses, etc. That's the subject of another post. For those intent on offering boxed product like today's, what do we do to improve the situation?

The answer, I beleive, is in competition.

Being essentially the only game in town for those looking to trade their games in for new (or used) ones has been part of what's made Gamestop the powerhouse that they are.

Adding competition to the situation will mean a few things:

  • Gamestop may lose market segment share to these other retailers. If that's the case, their negotiation position with the publishers won't be as one sided as it is today, and that may help do something about the promotion of new games. (e.g. maybe a window of time before used games are offered up?)
  • Consumers will get more for their used games. In fact this is already the case with Amazon. At the very least this means the perceived value of games vs other entertainment goes up, and this may translate into more gaming share-of-wallet.
  • Competition may mean that used games need to compete between retailers, not just with new, driving that price down. Versus today, where 1 week after release, a hit title often only has a 3-5% delta between new and used.

 The net effect of the latter of the two points above is that if used titles sell for less and the retailer needs to pay the consumers more for them, they won't continue to be the high margin product that they are today - the very thing attracting all these retailers to the used game space! 

At that point, retailers will need to compete, and not just on what they pay out to consumers for used titles, but compete for publisher business, allocation, etc. That may amount to a share of used game sales, windows of exclusivity for the new titles, better pricing... who knows.

At the end of the day, it will help if both consumers and suppliers have choice, which is just what competition brings to the table. 

[Cross-posted from my personal blog]


Related Jobs

2K
2K — Novato, California, United States
[04.24.14]

Senior Video Editor & Animator – Temp
WB Games
WB Games — San Francisco, California, United States
[04.24.14]

Game Systems Engineer
Digital Extremes
Digital Extremes — LONDON, Ontario, Canada
[04.24.14]

UI ARTIST/DESIGNER
Digital Extremes
Digital Extremes — LONDON, Ontario, Canada
[04.24.14]

UI ARTIST/DESIGNER






Comments


Dave Endresak
profile image
I think you're making some good points. I'd like to add something to offer a bit of historical perspective on this topic. I'm only posting this info because it seems that there has been enough of a turnover within the industry that some people aren't aware of certain facts about the status of this topic a couple of decades ago except via secondhand sources.



In 1990-91, I worked part-time for a private, startup software retail store in a mall (my full time position was managing an amusement center store for a national chain of 200 or so similar stores). At that time, import game dealers such as Die Hard had just started becoming known through advertising in EGM and Gamepro. Such dealers were already offering used game sales as well as equipment sales. I encouraged the store owners (a young husband and wife) to enter both the import games business as well as the used games business. The store began offering both domestic and imported releases, and began pursuing used game and equipment acceptance and resale during the summer and fall of '91. They were moving out of the mall when I left due to the high rent, but their used game volume had already taken off and was making more money for them than the new stock.



I guess what I wanted to bring up was two important points. One point is that the used games business has been around for a couple decades now, and that GameStop is just the newest participant (albeit perhaps the biggest, to date). Retailers such as GameStop rely on customers for business. I have not seen any GameStop employee in my area (there are 4 stores in right next to each other plus a couple others a short distance away) push customers towards used products over new products except for instances when the customer is openly waffling on buying the product at all due to limited financial resources. In such a case, it becomes a question of getting a sale of a used product versus not getting a sale at all. The latter option results in nothing for GameStop or publishers/developers. There are also instances when a customer only buys new due to trade-in credit, and could not (or would not) buy the product new if they had to pay full price with no credit. Again, the latter option would result in zero return for GameStop or publishers/developers.



The other point that I sort of already mentioned is that the main obstacle to buying new is simply financial resources. I'm sure everyone would love to buy new, even collector's editions, if everyone had true freedom to choose to do so. In my case, I have spent the past 30 years or so building my own personal archive because I actually research the products rather than simply using them for entertainment, and I've had to do this out of my own (very meager) pockets because there has not been anyone interested in sponsoring such an effort (either research or archive). This is particularly difficult for Japanese products because the cost is much higher than North America (and I will not pirate products or buy pirated imports). I've had to sell some of my archive at different points and may never see those items again, thus being unable to use them or cite them in research and analysis efforts. Of course, there are some new efforts at archiving, but they seem to be rather splintered, in my opinion (rather than being a concerted push for a common goal). This is especially important for research because accurate research must be on a global scale, not a local or national level.



I am not saying that the SRP for new products is unreasonable; that's not my feeling at all. However, I am saying that there needs to be sponsorship for people like me who wish to actually analyze and research products rather than simply buy them for personal entertainment. At present, there is no such sponsorship, at least as far as I know. Researchers are forced to scrounge around and do whatever they can, thus making their research a very hit or miss proposition, and preventing them from citing various resources that they are aware of but do not have access to. This lack of formal support and sponsoring also feeds piracy, in my opinion, but that's probably another topic for another post.

Kim Pallister
profile image
thanks for the comments Dave. A couple thoughts:



- Not sure about GameStop. I've heard anecdotally that they'll push the used product in cases. At the very least they are prominently placed (e.g. the local 2 stores in my area have used 360 games closed to the front door than the new titles). When in Japan one time, I had the CEO of a game publisher there take me out to a couple retail locations where they were actually stacking the new titles BEHIND the used ones. Seemed to be a consistent practice.



I get the point about financial resources (of the end customer), but again, the unique position of Gamestop allows them to maximize their profit and pass on a minimum to the consumer. I was in a local store yesterday to see that of the latest hit titles (e.g. Fallout 3, GoW2, etc), the titles were selling for about $55 vs $60 new. I believe they are only paying users about $25 to buy the title back, so they make $30 or a >50% margin on the used product. Opening that to competition is going to lower that $55 customer price, and raise the $25 buy-back price. Those factors are going to lower the margin and make the retailers more interested in selling new titles.



A large difference between Gamestop and the mom&pop retailers of yesteryear is that they do a sizeable chunk of business that allows them to charge stocking fees, mandatory participation in co-marketing (flyers or other ads), and the publishers are miffed that they are *paying* to attract people into the store where they may then be steered toward used product.

Roberto Alfonso
profile image
I continue to think the gaming industry is missing the point. Why the gaming industry should be different from, say, the book or film industry? Do book authors or directors get a share when someone sells his used book or VHS? What is the gaming industry doing for people to buy new instead of waiting a few weeks and buy used? As far as I know, game companies focus on children (6-12, like Nintendo), teens (12-18, like Sony) and young adults (18-24, like Microsoft). How game developers can expect to sell new at that price with this economic crisis to those demographics, probably the ones with the least financial backup.



The best for the industry is to accept this as part of the rules, and work prioritizing the new customer. Offer special deals for them (like a ticket for extra downloadable content, or something that is usually not sold back to stores like artbooks), or even become part of the used chain (for example, a publisher buying back its own catalog for limited or new content for future releases... imagine Activision buying Call of Duty 4 for $35 worth of downloadable content for any of their games, or a $30 discount applicable to another game, or even a special edition of the next item in the series, maybe even being able to ship it a couple of weeks earlier than the retail edition, or exclusive content like maps and characters, etc). Of course, they would not be selling the used copies, however they would be retiring them from the market. In fact, they could send those copies to other markets where they have little presence (places where piracy is high, and where they have no official presence... like China, South America, etc). I wouldn't mind buying an original used copy of a Wii game for USD 40 here, when the original new is sold by importers at USD 70-80, or where I must pay USD 60 to import them myself). Kicking the ball out of the field? Maybe, but maybe it would work.



Eventually everything will be downloadable, with retailers selling limited editions only. However, that won't happen in years.

David Lynch
profile image
The reason that I buy used games has little to do with price. Rather, it has to do with GameStop having a fantastically better return policy for used games.



My choices are:



1. Buy a new game. If I like it, great. If I don't, I can trade it in for maybe half what I spent on it.



2. Buy a used game. If I like it, great, and I got it for less than new. If I don't like it, I can return it within a week for a full refund.



One of these options is much, much better than the other.

Kim Pallister
profile image
@David:



1) One could construe this as another flavor of 'gamestop pushes consumers toward used games'. :-)



2) By 'better', you mean better for you as a consumer. Yes. Better for developers? Better for the industry? That's what's touched off this debate to begin with.

David Lynch
profile image
@Kim: Well, yes, better for me as a consumer. I doubt anyone is going to have much luck pushing better-for-the-developer/industry solutions that aren't also better-for-the-consumer, though. :-)


none
 
Comment: