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GameStop investors spooked by Sony patent that could lock out used games

GameStop investors spooked by Sony patent that could lock out used games

January 3, 2013 | By Frank Cifaldi

Investors in video game retailer GameStop have been bailing out today after a widespread report alleged that Sony's next home console may not play used games, the store's bread and butter.

The patent application, which was filed by Sony Computer Entertainment Japan last September, is for a system that would tag individual RFID numbers to each game disc manufactured. That tag could then be read by the console it is being played on and tied to a user's account information to determine, as the patent says, "whether a combination of the disk ID and the player ID conveyed from the reproduction device fulfills the terms of use or not."

While the potential usage of this patent is not clear (and Sony is, of course, not commenting), several news outlets have speculated that this could mean that the company's next home console will prevent players from playing games that were originally purchased by someone else, dramatically cutting into the used games market that accounted for around 46 percent of GameStop's profits in its last fiscal year.

In reaction to the reports, share prices dropped by as low as 7 percent during trading hours today, though some investors think there's no reason to panic.

"We think the reaction is overblown," Wedbush analyst Michael Pachter said in a note sent to Gamasutra.

According to Pachter, blocking used game sales wouldn't do much for Sony's bottom line, given that only 10% of its console game's sales are published by Sony itself. Such a move, he says, would open the floodgates for Microsoft to be the good guy and offer the next-gen console with more options, something Sony can't afford to let happen.

So what other use case could this patent support? It could combat counterfeit games or, as Pachter speculates, it could indeed lock out used game sales: not from Sony, but from any publishers "foolhardy enough" to "risk the wrath of its customers."

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