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Have Used Games Helped the Industry Evolve?
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Have Used Games Helped the Industry Evolve?

July 26, 2012 Article Start Page 1 of 3 Next
 

Used may be a four letter word among publishers and developers due to the constraints preowned games and a hits-driven market has put on the industry. But despite risk aversion and other drawbacks, have gamers benefitted more than they have lost by the resulting ecosystem that the used game market has created?

Used games are evil. That is the common belief amongst the developers and publishers of the game industry. Retail stores make a huge chunk of profit that the actual game creators don't get a piece of. And many point to this lost revenue as the reason publishers have been forced to become more hits-driven and more risk averse.

"It's killing single player games in particular, because they will get preowned, and it means your day one sales are it, making them super high risk," David Braben, the developer behind Elite and Kinectimals, said in an interview with Gamasutra earlier this year.

The sales data supports Braben. If one examines data on the top ten selling games in the U.S. of each year, supplied by the NPD Group -- in particular this generation's life cycle of 2005 to 2011 -- the signs of successful risks are minimal.

The top 10 for 2011 were all sequels. If you argue Red Dead Redemption as a relaunch, it's the only thing close to new IP 2010.

In 2009 and 2008, Wii Fit and Wii Play were the only non-sequels. In 2007, we see Wii Play again, and the first Assassin's Creed; in 2006, we find Gears of War, as well as a game for Pixar's Cars; and both 2006 and 2005 featured Lego Star Wars as the only non-sequel.

If we consider film tie-ins like Cars and Lego Star Wars as not being truly original, that means in seven top 10 lists, the only non-sequel original games were Creed, Gears, Wii Fit, and Wii Play, which included a spare Wii Remote. That's four games out of 57, or a mere 7 percent.

This climate of sequel success does limit developers. "It’s much harder to introduce a new IP to the market," says Adam Badowski, managing director of CD Projekt RED, the developers behind The Witcher and its sequel. "And when you look at costs of developing a triple-A title, this is an important factor when deciding what games to develop."

And like CD Projekt RED, other small developers feel that limitation. "You want to do whatever you want -- some art game -- but we are a business," says Jeremiah Slaczka, the creative director and cofounder of Scribblenauts developer 5th Cell. "We have 65 people right now and growing, so every month we have to be making money. We have to make games that we know are going to make money."

But this aversion to risk and the resulting hits-driven industry has also contributed to a complex ecosystem involving digital content -- an ecosystem that saw explosive growth in response to the used game market. And while less originality in games does not benefit developers or players, if you break down what other contributions used games have made to the industry, you find an ecosystem that may be more of a boon to the game industry and to the gamers that keep it all going.

The concept of the used games market has become synonymous with Texas-based retailer GameStop. The company has 6,700 stores worldwide, with 4,500 of those in the U.S. "We are leading the industry. There's no one else who's doing a better job of discovery, in both the physical realm and the digital realm," says Tony Bartel, GameStop's president.

Used product was $2.6 billion of GameStop's revenue in fiscal 2011 (February 2011 to January 2012), which is 27.4 percent of the company's $9.5 billion in sales. And though new games sales brought in more revenue, $4 billion, used products provide the largest chunk of their profit, 46.6 percent in fiscal 2011.

"I don't understand why there isn't some sort of deal in place where a game store couldn't sell a used version of a game for the first 30 days," says Slaczka. Suggestions like a waiting point or a profit share have always met with a negative response from the company. Bartel countered that only 4 percent of preowned games sold were released in the last 60 days, and that publishers are getting something from it.

According to GameStop, 17 percent of its new sales -- overall -- are funded by trade in credit. "We are giving [consumers] 17 percent toward the purchase of [publishers'] games today," says Bartel. "We have that form of unfunded discount that we give to the publishers." 

Additionally, according to GameStop, there was $1.2 billion in credit for 2011, of which 70 percent went to new game sales -- and the retailer sells 25 to 30 percent of the new games in U.S., the most of any retailer.

Bartel also pointed to the success of downloadable content at GameStop. The Mass Effect 3 launch was big at the retailer, with a 40 percent attach rate for the DLC, From Ashes, that GameStop pushed fans to buy. Says Bartel, "We are helping people to discover this great digital content, while enabling the sale of a new game through the use of our buy/sell/trade model."


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Comments


Scott Sheppard
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It does seem to me that going all digital is the way to go. Selling codes at retail stores so moms can buy their kids physical presents for Christmas would be a first step, and to fix the bandwidth issue stores could offer kiosks that can upload new games to cartridge/USB stick type things. If digital distribution platforms were also willing to allow players to sell their games to other players (with a 10% cut going back to devs or something... maybe), or borrow them for a week (thinking of Steam here), then the digital age will be truly beneficial to consumers without hurting developers.

GameStop has created a genius model that takes advantage of the industry's trends, I don't understand why the industry doesn't change to hedge them out. All these slipshod tactics to hurt paying customers is so short sighted.

Alex Leighton
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I don't know why I've never heard of a digital download kiosk proposed before, but I really think that's a good idea.

The fact is, I've got a 60GB cap, almost all of which I use for school/work/serious stuff. I'm neither going to pay overage charges or upgrade my internet just to get a game that is digital only, I pass on it.

But I would certainly be willing to go to a store with a hard drive, have the store sell me an unlock key, and be off to the races.

Matt Robb
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A few thoughts.

First, has it occurred to any of these companies that perhaps they're just spending too damn much on making these games? I'll grant that some of them work better with a very realistic setting, but just how many times do you need to recreate a model of a person for each game? I would think a lot of the assets between these games *should* be able to be reused. Plus, not all games need that level of realism. I've spent more time lately on games with visuals like Minecraft and Terraria than the triple-A shooters. The Lego games they cited are far simpler on visuals, I'd bet they spent significantly less on the art than most other games. These giant production costs aren't needed. A solid game is what's needed.

Second, the line about the used game market driving prices up is BS. The prices were up *before* the used game market was so strong. If anything, the high prices drove the popularity of the used game market. I can't stomach dropping $60 on an unknown or a sequel that adds little gameplay value.

Third, DLC. If you're using Day 1 DLC to try to lock people in, you can't charge $60 for what amounts to an incomplete game, then charge even more to get at all the content. You wonder that people don't want to pay $60, then you start effectively charging $70-90 and expect the customers to swallow it. If the disc amounts to being the platform and demo of the game, and all your real content is DLC, price accordingly. If you charge $10 for a piece of DLC, and the game only comes with enough content to equal to one DLC package, $60 likely won't be seen as fair. Keep producing quality DLC and people will keep ahold of the game, much like the subscription MMO companies do.

Stop throwing money at your project just because.

Stop trying to force people to keep your game. Make them want to keep your game.

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Joe McGinn
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Sorry, but "add replay value" and "spend less" are the two biggest fake arguments always raised in every used-game debate. The argument weaker than those is the plain factually incorrect myth that console game prices have risen at all, ever, in the last 20 years.

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Darcy Nelson
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@Joshua Oreskovich: If you budgeted that much to spend on games per month, and you planned on actually using that entire budget, I would invest in a rental service a la Gamefly, so you're not shelling out $60 bucks for a turd. Try before you buy, and all that.

I'd say go to Blockbuster, but... I can't remember the last time I saw one that was open.

Michael Stevens
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In my mind, the most damning thing that Gamestop does is destroy their old games rather than store them. It's understandable that they can't stock everything on location, but there's a missed opportunity to keep those games alive at their webstore.
I think it's strange/dissapointing that the "resale culture" hasn't lead to wider appreciation of niche games and 5-10 yr old games. If people are buying games with the idea that it's potentially only a rental, I don't see why console gamers aren't becoming more adventurous over time.
I'm really glad Sony has made some older titles available on PSN (TOMBA!) particularly because they seem to be curating it with an eye for diversity and critical appreciation.

Matt Robb
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Agreed. I managed to get a copy of Culdcept Saga shipped from out of state. I'd have been sad if they had burned them all.

Laura Stewart
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I have a confession: I buy used games! And the availability of used games made me a gamer. I was introduced to Fable 2, and bought an XBOX and a used copy of my own. And then a used copy of Oblivion, Nier, and Fallout 3.

I went on to pre-order Fable 3 and Skyrim, and GOTY editions of Oblivion, Fallout: New Vegas, and Fallout 3. But, as a barrier to entry, if I had been faced with $240 in game costs that first year instead of less than $80, I might have found a cheaper hobby.

And yes, I did get the Skyrim art book and the giant plastic dragon.

Darcy Nelson
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Buying used games is also great for getting games you just can't get anymore. I FINALLY got my mitts on a copy of Grandia II after years of refusing to pay the online price, which could be very steep indeed.

Random idea: Maybe the devs and brick and mortar should make an agreement to not sell used copies of games that were released less than 90 days ago?

Danny Bernal
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Here's my 2cents on this BS.

Look up Disgaea 4 on amazon.com -- $40 new for the premium edition.
Now look it up on gamestop ... preowned - $45 FOR THE STANDARD!

Just a small sample of a few that I've seen. I'm still trying to wrap my head around how this makes sense. Needless to say I enjoyed the first so much I ordered part 4 as premium because it's cheaper than a regular used copy.

Explain this to me:

..."Bartel believes that GameStop's used game sales provide a more tangible benefit to the industry -- making the latest and greatest games affordable to more consumers."

If you ask me, people are buying used because they "believe" they are getting a better value. End of story. This perception is what needs to change if the industry wants to bring the money to the developers. Game stop is simply taking advantage of the fact that consumers expect to get a game when they walk in. Also, the average consumer's expectation is that you can get it used for less money. whether that's true or not this instant gratification is a huge driving force.

Saul Gonzalez
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Curiously, the author of this seems to think the terms "help" and "force to" are equivalent.

Brandon Van Every
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Yeah, I didn't buy the premise that anything was proven here either. All of these anti used market strategies are also anti-piracy strategies. The industry would have done them anyways, and social business models were going to be explored.


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