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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."

Article Start Page 1 of 3 Next

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