[The Final Dakar]

So, I got to work this morning and while doing some reading during breakfast I stumbled upon this: Buying used games? Developers, publishers don't care about you
It's a pretty long read. It takes from some articles I previously posted in the news thread, and also this: Penny Arcade - Words And Their Meanings

For some reason it inspired me to write a mega blog-level entry (It's a little less than 750 words long) which I really don't know anywhere better to post but here. I'd appreciate any feedback and discussion you guys have to offer.

Roughly two years ago game developers and publishers (which I'll just refer to as developers for expediency's sake from here on out) were complaining about GameStop's used games practices eating into their profits. What did they do? Nothing - but continue to reward GameStop with exclusives for pre-orders; Avoid digital downloads, with their ability to sell directly to consumers (Where digital downloads do occur, they are not in a timely manner, i.e., concurrent releases, and lack a discernible pricing strategy).

Developers also fail to acknowledge that all those used games that GameStop is buying and reselling likely help fund a gamer's habit. People aren't selling their games to gameStop and then going out to a nice dinner - most are selling their games to GameStop and then buying more games to play. With the industry's penchant for creating gaming franchises, exposing your franchise to as many players as possible, new or used, can only be beneficial. With DLC, used gamers have another avenue with which to make purchases that help developers. There's the possible increase in word-of-mouth. And there's the chance that it can lead to the treasured pre-order or release-day sale for the sequel.

Still, developers should be blamed for more than a lack of future thinking in the retail space. For example, prices for games on PlayStations increased 50% from the PSOne to the PS3. I admit this isn't pure greed - development costs have also ballooned to movie-like proportions; Still this represents two problems: A lack of common sense (every game can't be a GTA IV-like blockbuster, but many unwisely try), and an effort to make large, long games to justify the higher retail cost, even though most gamers don't even finish these games because they are just too long. Sidebar: Interestingly, Wii games cost $10-$30 less than N64 cartridges 15 years ago, but this hasn't translated into a higher tie-ratio for the legendary gaming company. This is likely rooted both in the types of people purchasing the system and quality of the games available, however. Coincidently the online pass concept is less likely to affect the average Wii owner

Now the emerging developer strategy, online passes, is a concept whose wisdom is questionable at best. On the XBOX 360 for example, consumers already pay for online services which are supposed to cover the broad spectrum of multiplayer online gaming (XBOX Live). The developers' strategy charges players an additional fee for access to the same online gaming. Second, thanks to all but a handful of multiplayer games connecting via P2P, the overhead of supporting multiplayer is not as burdensome as companies would have you believe. That argument also ignores that once a game is resold the original owner is no longer a drain on those online resources provided by the developer.

There's a third reason more abstract reason this is short-sighted - this can hurt a game's reputation; The core resource of any online game is The Players. By restricting (by additional fee) the amount of players who play, you in turn make a poorer product for everyone. This isn't crippling for the Halos and Call of Dutys of the industry, but for older or more niche games, it can speed up the process by which it becomes difficult to find plentiful (fast matchmaking) or good quality (connection) games. The last thing any game with an prominent multiplayer component needs is a for a lacking online community (This is why we see PC developers exploring the concept of free-to-play MMOs).

Despite all I've pointed out above, I'm not trying to brand the developers as sinners and gamers as saints. There's plenty of illogical expectations on both sides. Gamers are cheap, thanks to human nature, necessity (see: the economy) or the sheer greed of wanting to play the growing plethora of games becoming available each subsequent generation (I won't touch on piracy here as it's still in its infancy on consoles, thankfully). Developers need to acknowledge the reality of being a gamer, rather than branding any one who buys used as below them and little better than pirates. Conversely, gamers need to realize that they are not owed the ability to afford purchasing every game that might interest them.

In short, is the direction the developer's strategy is headed in one that will keep food on developers tables? They first pointed to GameStop as the source of their problems, but did nothing outright. Instead they devised a strategy that targeted GameStop's customers (and likely theirs too). Now, after those gamers have broadcast their perception of unfair or unfavorable treatment developers have lashed out in return. Do you see what I see? Who are the developers catering to?

I'm not sure it's gamers. That worries me.

Yeah, I know, very long. Thoughts?

[ibook_steve]

I think the one factor that you didn't elaborate on: "I won't touch on piracy here as it's still in its infancy on consoles, thankfully" is the one you really should have. I would disagree with this statement. Wii's been hacked, XBOX has been hacked, PSP has been hacked, DS has been hacked, and now it seems the PS3 has been hacked. I'm not going to express my personal views on piracy, but the idea of it is very appealing for much of the target audience who plays games who don't have a lot of money. For these people, their options are pirating a game or buying it used at a (usually) more reasonable price.

I have the funds to buy new games, but unless it's something I absolutely positively must have (most recent purchase new: Super Mario Galaxy 2; most recent purchase used: Uncharted 2), I will not buy it new. The publishers don't seem to get this, and it's driving people to pirate.

Steve

[The Final Dakar]

Originally Posted by ibook_steve 

I think the one factor that you didn't elaborate on: "I won't touch on piracy here as it's still in its infancy on consoles, thankfully" is the one you really should have. I would disagree with this statement. Wii's been hacked, XBOX has been hacked, PSP has been hacked, DS has been hacked, and now it seems the PS3 has been hacked.

Infancy might be an understatement. Toddlerhood? Childhood? Compare the ease and widespread PC piracy and console piracy is a dream by comparison. If I wanted to play a pirated game on my XBOX tonight how long and how much money would it take me?

The other reason I ignored it is if it was really easy, used game sales would be in the tank.

Originally Posted by ibook_steve 

I'm not going to express my personal views on piracy, but the idea of it is very appealing for much of the target audience who plays games who don't have a lot of money. For these people, their options are pirating a game or buying it used at a (usually) more reasonable price.

One of the things I hinted at but neglected to adequately compare is the affect piracy has on sales. I've seen the argument that its not as detrimental to music sales as the RIAA would like to imply. In this case I think the used games market is achieving a similar affect in a legal (if not beneficial) way. One of the main points I was trying to make is that if you eliminated the used games market completely the net effect on the retail market might be a net gain, but not to the degree these guys seem to think. I think this echoes arguments with music piracy.

Originally Posted by ibook_steve 

I have the funds to buy new games, but unless it's something I absolutely positively must have (most recent purchase new: Super Mario Galaxy 2; most recent purchase used: Uncharted 2), I will not buy it new. The publishers don't seem to get this, and it's driving people to pirate.

Steve

Interestingly, I'm actually a huge critic of GameStop. I think the disparity in buyback and resale price is offensive, I find their employees to be ranging from stupid to arrogant, and altogether pushy. I too have the funds to buy games new. I also wait on most purchases. But the difference for me is I wait until the retail price drops or a sale is run before purchasing, rather than by used. Do you find that retail prices never catch up to the prices you spend used?

[jokell82]

Originally Posted by The Final Dakar 

Infancy might be an understatement. Toddlerhood? Childhood? Compare the ease and widespread PC piracy and console piracy is a dream by comparison. If I wanted to play a pirated game on my XBOX tonight how long and how much money would it take me?

The other reason I ignored it is if it was really easy, used game sales would be in the tank.

Really?!?! Because I think exactly the opposite.

The piracy of console games had its heyday back with the PS1, PS2, and Dreamcast. I was in college when the Dreamcast and PS2 were huge, and the piracy of the games for those consoles was crazy. I don't know if anyone in the dorms actually bought games back then. Back then there was no multiplayer on consoles (not really, although the Dreamcast tried with Phantasy Star Online), so pirating games was pretty easy - you just had to have a CD or DVD burner. At the time those were kind of expensive, but if you knew one person with one it was all you needed.

Now so many consoles are online, and so many games are played online, and they have checks to make sure the games are legit. The ability to pirate the games has diminished as the consoles and games have gotten more complex. I don't see it getting any easier to pirate games, and if the industry moves to digital distribution I'd bet the piracy rate would be basically zero.

[The Final Dakar]

Originally Posted by jokell82 

Really?!?! Because I think exactly the opposite.

At the very least, its regressed to a point where it's weaksauce?

Originally Posted by jokell82 

The piracy of console games had its heyday back with the PS1, PS2, and Dreamcast. I was in college when the Dreamcast and PS2 were huge, and the piracy of the games for those consoles was crazy. I don't know if anyone in the dorms actually bought games back then. Back then there was no multiplayer on consoles (not really, although the Dreamcast tried with Phantasy Star Online), so pirating games was pretty easy - you just had to have a CD or DVD burner. At the time those were kind of expensive, but if you knew one person with one it was all you needed.

I forgot I ever cracked my PS2. Oddly you excluded the system I heard cracked the most – the original XBOX.

Originally Posted by jokell82 

Now so many consoles are online, and so many games are played online, and they have checks to make sure the games are legit. The ability to pirate the games has diminished as the consoles and games have gotten more complex. I don't see it getting any easier to pirate games, and if the industry moves to digital distribution I'd bet the piracy rate would be basically zero.

Good points.

[jokell82]

Originally Posted by The Final Dakar 

At the very least, its regressed to a point where it's weaksauce?

Definitely agreed.

Originally Posted by The Final Dakar 

I forgot I ever cracked my PS2. Oddly you excluded the system I heard cracked the most – the original XBOX.


Good points.

Xbox came around when I had given up on games, so I don't know much about it or the piracy scene around it.

[ibook_steve]

I probably should have mentioned that I don't buy my used games at GameStop/EBGames. I have a Gamefly subscription and I use the "Keep It" option all the time along with the bonus credits and dollars I get from them for being subscribed now for about 7 years. I just got Uncharted 2 for $18, impossible at Gamestop, and the box and manual are always perfect since they don't get shipped with rentals.

The only thing I use Gamestop for most of the time is game guides (for some reason I like to spend $20 on a hardcopy guide for my favorite games) and for used peripherals.

My only recent new hardware purchase at GameStop was my PS3 last Black Friday (included LBP and GoW collection).

Steve

[subego]

Any thoughts on Best Buy and Target starting to take trade-ins?

[P]

It's really only a problem because Gamestop takes such a huge cut. If used sales were directly between gamers, it wouldn't hurt anyone, because used game sales fund future new purchases. With the huge Gamestop cut, it only funds Gamestop.

[jokell82]

Originally Posted by P 

It's really only a problem because Gamestop takes such a huge cut. If used sales were directly between gamers, it wouldn't hurt anyone, because used game sales fund future new purchases. With the huge Gamestop cut, it only funds Gamestop.

Why is that a problem? If it's OK if my friend sells me his old game, why is it bad that Gamestop does the same? Just because they make more?

[P]

Originally Posted by jokell82 

Why is that a problem? If it's OK if my friend sells me his old game, why is it bad that Gamestop does the same? Just because they make more?

Because you have a certain amount of money that you can spend on games and certain amount of time to spare, and given a steady supply of games that are good enough for you to buy, that budget is what is limiting you. More great games doesn't generally increase the total money spent on games, and fewer great games only decrease it if the total number drops below your budget (of $ or time).

If you bought straight from the publisher and then resold to your friend, 100% of the money spent on that game would go to the publisher. Yes, you resold it and got some money from your friend, but that is money that you can spend on more games - and that's exactly what people do. The money changing hands between you and your friend is irrelevant to the equation. If the the used market grows, publishers can simply raise prices. If they charged $100 for a game and you get $80 for it used, it's the same to you as if they charged $60 for it and you got $40 for it. The lower prices for used games expand the market by catering to people with less money but a higher tolerance for not getting the latest game, scratched boxes etc.

If you have a middleman in the picture, that changes everything. Since Gamestop pays so little for used games, that money doesn't fund many new games purchases, and since they charge so much for the used games it doesn't expand the market. Compare with cars - the competition between new cars and used cars is almost non-existent. Used cars are good for the manufacturers, because they expand the market and decrease the cost for their customers. You don't see car OEMs fighting the used car market - in fact, they encourage it.

[jokell82]

Originally Posted by P 

Because you have a certain amount of money that you can spend on games and certain amount of time to spare, and given a steady supply of games that are good enough for you to buy, that budget is what is limiting you. More great games doesn't generally increase the total money spent on games, and fewer great games only decrease it if the total number drops below your budget (of $ or time).

If you bought straight from the publisher and then resold to your friend, 100% of the money spent on that game would go to the publisher. Yes, you resold it and got some money from your friend, but that is money that you can spend on more games - and that's exactly what people do. The money changing hands between you and your friend is irrelevant to the equation. If the the used market grows, publishers can simply raise prices. If they charged $100 for a game and you get $80 for it used, it's the same to you as if they charged $60 for it and you got $40 for it. The lower prices for used games expand the market by catering to people with less money but a higher tolerance for not getting the latest game, scratched boxes etc.

If you have a middleman in the picture, that changes everything. Since Gamestop pays so little for used games, that money doesn't fund many new games purchases, and since they charge so much for the used games it doesn't expand the market. Compare with cars - the competition between new cars and used cars is almost non-existent. Used cars are good for the manufacturers, because they expand the market and decrease the cost for their customers. You don't see car OEMs fighting the used car market - in fact, they encourage it.

Sorry, but if I sell a used game to my friend, how am I not the middleman? How am I not exactly like Gamestop?

I think your logic is flawed as it pertains to Gamestop's business model. If Gamestop really did pay so little for used games, no one would sell to them. And if they charged so much for used games, people would buy new. Gamestop can only exist if people are satisfied with what they're getting in return. If everyone thought they were getting screwed by Gamestop it would be out of business.

It seems to me that this whole situation is only a problem when it comes to online support. If all games were single player and required no support after the fact, publishers would care a lot less about the used market since they wouldn't be spending extra money on these used players. But with the online play, free downloads, patches, etc, games cost more money these days after they have been manufactured. The problem is that used players get that same support but they didn't actually pay the publisher for it - they paid someone else.

If that is accepted as why publishers are so against the used market, then selling to a friend (or even giving to a friend) is no different from buying from Gamestop when it comes to the publisher. They still have to support a new player that didn't pay them any money.

Also, why do you assume that if you sell a game to your friend the money goes to new games? The only time that is guaranteed to happen is actually at Gamestop, where you get trade-in value instead of cash. But if my friend gives me $40 for a game I sold him, that's drinks this weekend, not another game.

[P]

I'm just speaking in averages here. Perhaps you do drink up the money for a used game, but you know when buying a new game that you can resell it for $40. That makes it easier to shell out the $60. You are not the middleman, because you are a consumer of games. You do not try to pay for food and rent with your used game sales.

This is all like old brain teaser with the 30 shilling room or whatever. There is a group of gamers who are potential customers. They have a certain amount of money that they might spend. This pool of money actually varies very little with the quality of games coming out. The games compete with each other, but the total market doesn't particularly grow or shrink (usually - the Wii has grown it, for instance, but in general.). This pool of money must be shared between Gamestop and the publishers. The more money Gamestop makes off of gamers, the less publishers get.

Gamestop's model is diabolically clever. If you have a game that you are finished with, the value of that game - to you - is pretty close to zero. You might try to resell it on eBay or something, but that often takes some time for not much gain. Just dropping it off at Gamestop is easy, and it's basically free money.

For the Gamestop customer, on the other hand, a used game is worth almost as much as a new one, since Gamestop offers the same guarantees as for new. Even if you only save a few dollars, that's at least a few dollars saved - and what are your options? Buying new is more expensive and you get nothing for it except for the warm feeling that you have supported the production of new games - and how many people understand that?

[jokell82]

Originally Posted by P 

I'm just speaking in averages here. Perhaps you do drink up the money for a used game, but you know when buying a new game that you can resell it for $40. That makes it easier to shell out the $60. You are not the middleman, because you are a consumer of games. You do not try to pay for food and rent with your used game sales.

I don't? Who says? What does it matter where the money goes? Money changes hands for a game that the publisher gets nothing for. If I sell Modern Warfare 2 to a friend for $40, Activision gets nothing. And even if I then go out and buy a new game, who says I'm buying an Activision game? It's just as bad for the publisher as if Gamestop had sold it.

Originally Posted by P 

This is all like old brain teaser with the 30 shilling room or whatever. There is a group of gamers who are potential customers. They have a certain amount of money that they might spend. This pool of money actually varies very little with the quality of games coming out. The games compete with each other, but the total market doesn't particularly grow or shrink (usually - the Wii has grown it, for instance, but in general.). This pool of money must be shared between Gamestop and the publishers. The more money Gamestop makes off of gamers, the less publishers get.

Is there any actual proof of this, or are you just making it up? I know that I only buy what I consider to be quality games, and if many quality games come out at once it means I'm spending more money. I know that's anecdotal, but where is the evidence that what you're saying is true?

Originally Posted by P 

Gamestop's model is diabolically clever. If you have a game that you are finished with, the value of that game - to you - is pretty close to zero. You might try to resell it on eBay or something, but that often takes some time for not much gain. Just dropping it off at Gamestop is easy, and it's basically free money.

For the Gamestop customer, on the other hand, a used game is worth almost as much as a new one, since Gamestop offers the same guarantees as for new. Even if you only save a few dollars, that's at least a few dollars saved - and what are your options? Buying new is more expensive and you get nothing for it except for the warm feeling that you have supported the production of new games - and how many people understand that?

So if Gamestop were to disappear overnight, would the industry start going after pawn shops? As long as games can be resold, they will. It doesn't matter if it's Gamestop, another company, or users selling to each other. Making Gamestop the "evil" in this doesn't make any sense to me.

If it's that big of a deal the publishers should just go 100% digital. If they aren't going to do that they need to deal with the fact that their games will be sold used. It's just that simple.

[The Final Dakar]

*sigh* Don't have the time to post right now, but I plan on pulling some points from the ongoing discussion and addressig them later. Apologies in advance as there may be some repetition.

[P]

Originally Posted by jokell82 

I don't? Who says? What does it matter where the money goes? Money changes hands for a game that the publisher gets nothing for. If I sell Modern Warfare 2 to a friend for $40, Activision gets nothing. And even if I then go out and buy a new game, who says I'm buying an Activision game? It's just as bad for the publisher as if Gamestop had sold it.

It's all about averages here. If it helps, think of it as taking a $40 resale price into account when buying the game new.

Originally Posted by jokell82 

Is there any actual proof of this, or are you just making it up? I know that I only buy what I consider to be quality games, and if many quality games come out at once it means I'm spending more money. I know that's anecdotal, but where is the evidence that what you're saying is true?

Look up the entire size of the video games market, or really any business, over a significant period of time: If a business changes size by 5% on a yearly basis (up or down), that's a big change. The reason is that it's all relative, and all reviews are relative as well. If there were 10 great games in one season, you wouldn't see 10 10.0 scores. You wouldn't even see 10 scores over 9. What would have been a hit in another competition becomes a dud.

Originally Posted by jokell82 

So if Gamestop were to disappear overnight, would the industry start going after pawn shops? As long as games can be resold, they will. It doesn't matter if it's Gamestop, another company, or users selling to each other. Making Gamestop the "evil" in this doesn't make any sense to me.

The difference is that Gamestop is often the main supplier of new games. They compete directly with new sales, actively pushing people towards used games. If you go to a pawnshop to buy a game, you have no reason to believe that they have it in stock. You have every reason to believe that Gamestop has a game in stock - new or used.

Originally Posted by jokell82 

If it's that big of a deal the publishers should just go 100% digital. If they aren't going to do that they need to deal with the fact that their games will be sold used. It's just that simple.

They are going digital, but they have to do it slowly to not anger said Gamestop overmuch. Retailers have lots of power in how they display games, and publishers can't really fight back together without angering the FTC. They also have MFN deals, which mean that they can't sell a new game cheaper to (say) Steam than they do to Gamestop, even if they don't have a resale problem on Steam.

[-Q-]

What about the gamers that sell games back to Gamestop and then turn around and use those funds to purchase new games? Doesn't this used economy allow for those gamers to stretch their dollars a little further (this does ignore the pittance Gamestop gives back, but in all cases, some $$ is greater than 0 $$) and perhaps purchase a few more games than they might otherwise?

I think places like Gamestop are a convenient scapegoat, but I don't think developers really have any idea of how this whole "ecosystem" really, truly works.

And I think Dakar has an excellent point that these developers don't need to be spending Hollywood blockbuster numbers to develop a good game.

[The Final Dakar]

Originally Posted by -Q- 

What about the gamers that sell games back to Gamestop and then turn around and use those funds to purchase new games? Doesn't this used economy allow for those gamers to stretch their dollars a little further (this does ignore the pittance Gamestop gives back, but in all cases, some $$ is greater than 0 $$) and perhaps purchase a few more games than they might otherwise?

I made that point early in the OP.

Developers also fail to acknowledge that all those used games that GameStop is buying and reselling likely help fund a gamer's habit. People aren't selling their games to gameStop and then going out to a nice dinner - most are selling their games to GameStop and then buying more games to play.

[-Q-]

Originally Posted by The Final Dakar 

I made that point early in the OP.

Well, it WAS 750 words.

Yeah, an excellent point, indeed. I'll read more closely next time.

[The Final Dakar]

Now worries, I'm guilty far too often of skimming and missing vital info.

[lpkmckenna]

Originally Posted by Tycho

I honestly can't figure out how buying a used game was any better than piracy.

That's because you're an idiot, Tycho. Used games, used books, used movies, used furniture, etc. Game publishers just want to squeeze every penny from the consumer possible, and more fees is how they plan to do it. That's not to say GameStop aren't scoundrels, too. They are.

I'm really tired of the shenanigans of the game industry. I can't believe I still have to insert game dics into my Mac to play the games I buy.

[Brien]

You can't really lay the blame at the door of the games industry; companies in general are trying to squeeze us dry. Problem is, the sheep out there are ruining it for the rest of us by putting up with it. For example: our lovely Ticketmaster overlords charged me $100 for a $15 ticket. Or the fact my insurance company charges me a $5 payment fee, another $20 in other random fees, a $2 transaction fee, and, the best part, a $0.50 'fee processing fee'.

[The Final Dakar]

Originally Posted by ibook_steve 

I probably should have mentioned that I don't buy my used games at GameStop/EBGames. I have a Gamefly subscription and I use the "Keep It" option all the time along with the bonus credits and dollars I get from them for being subscribed now for about 7 years. I just got Uncharted 2 for $18, impossible at Gamestop, and the box and manual are always perfect since they don't get shipped with rentals.

Yeah, that's an important distinction.

Originally Posted by subego 

Any thoughts on Best Buy and Target starting to take trade-ins?

Competition is good?



jokell: I realize I'm about to take some of your posts out of context, but I'm using it as a jumping off point to make some larger points about publishers and the industry in general. Please do not be offended, as i hope it opens a discussion about what I think the real problem is.

Originally Posted by jokell82 

Sorry, but if I sell a used game to my friend, how am I not the middleman? How am I not exactly like Gamestop?

You: A Gamestop: B Friend: C

A sells to B who in turn sells to C
or
A sells to C

Gamestop is the very definition of a middleman.

Originally Posted by jokell82 

If Gamestop really did pay so little for used games, no one would sell to them. And if they charged so much for used games, people would buy new. Gamestop can only exist if people are satisfied with what they're getting in return. If everyone thought they were getting screwed by Gamestop it would be out of business.

The word you're looking for isn't satisfied; It's accept. Most people will accept this deal in comparison to the alternative. What is the value of a used game? For most people it approaches zero. (Example: In the PS2 days I took some games to trade-in and was offered like $2 each for a few. Did I take it? Yes I did. Why? Because the alternative was them taking up shelf space. Doesn't mean I was happy about it).

Let's face it: They have a monopoly on the used games market.

Originally Posted by jokell82 

But with the online play, free downloads, patches, etc, games cost more money these days after they have been manufactured. The problem is that used players get that same support but they didn't actually pay the publisher for it - they paid someone else

Online play isn't a big deal unless you're hosting dedicated servers. Free downloads? Cost the same to create for 1 player versus 1 million (and are rare to begin with). Patches? This benefits the developers as now they send out bug-riddled games rather than withhold a release until the product passes QA. They see money earlier and then are able to use a smaller amount of people to polish the game.

Seriously, you talk about it that way, it almost sounds like they'd want a shorter life-span for online play (Actually for EA this looks to be true).

Originally Posted by jokell82 

Why publishers are so against the used market, [w]hen selling to a friend (or even giving to a friend) is no different from buying from Gamestop when it comes to the publisher. They still have to support a new player that didn't pay them any money.

It's not the same and the publishers aren't admitting the reason why this has caught their attention: Scale. Gamestop took something some people did, and made it a positive experience for the consumer while making it a profitable experience for themselves. And that's to their credit, and I think it's been mostly a boon to the industry (for reasons outlined above).

Do you think the industry cares that people sell their games on eBay and craiglist? I don't. The reason for all the outrage is because they see GameStops numbers. They want a piece of the pie, but they can't justify how they deserve any of it. So now they're creating "new" components to their games to exploit that market. They're purposely reducing the value of their games. It's kinda ****ed up when you think about it.

(After all, why didn't they care ten years ago? Scale.)

Originally Posted by jokell82 

Also, why do you assume that if you sell a game to your friend the money goes to new games? The only time that is guaranteed to happen is actually at Gamestop, where you get trade-in value instead of cash. But if my friend gives me $40 for a game I sold him, that's drinks this weekend, not another game.

Agreed. Which is why I argue publishers are lying to themselves about how this affects them. It'd probably be worse for the industry as a whole, but they really can't quantify it. And in an absence of hard data, the problem doesn't exist.

Originally Posted by jokell82 

So if Gamestop were to disappear overnight, would the industry start going after pawn shops? As long as games can be resold, they will.

No, they won't. Not unless they threatened to grow to a scale that rivaled GameStops'.

Actually I can predict what would happen: GameStop disappears. People who sell their games drops to a fraction of what it was. As a result, new game sales slow. The industry sees this and automatically accuses everyone of now pirating games instead.

[P]

I have a better prediction. Gamestop disappears. All publishers ever embrace digital distribution because the last thing keeping them from doing so was the threat that Gamestop would mess with them. Everyone wins.

Actually, it's more likely that we'd see subscription models for all networkable games, but that's OK as well, because now there'd be a way to compete with that.

[The Final Dakar]

I don't deny we're headed in that direction. But you have to admit, the platform would make it pretty easy and for some reason its not happening. Why?

[P]

Most Favored Nation. Most Favored Nation means that noone can get a better deal than you. All publishers (or if they use distributors) have them with GameStop and any other big reseller. They can't sell the games cheaper digitally, so that doesn't take off. Since it removes the resale opportunity and distribution cost, there is certainly a saving for them there, so they could cut the price quite a bit to make the transition happen.

[The Final Dakar]

Originally Posted by P 

Most Favored Nation. Most Favored Nation means that noone can get a better deal than you. All publishers (or if they use distributors) have them with GameStop and any other big reseller.

Do you think that's official or unofficial? I think publishers are beholden to GameStop in much the same way companies are trapped by Wal•Mart. However if it was more official, like your answer would suggest, that would make publishers both incredibly stupid and giant hypocrites.

Originally Posted by P 

They can't sell the games cheaper digitally, so that doesn't take off. Since it removes the resale opportunity and distribution cost, there is certainly a saving for them there, so they could cut the price quite a bit to make the transition happen.

Well its pretty obvious that when developers are crying foul of the used games market, they'll die before they make games cheaper for digital distribution.

I wonder if these people secretly hate Steam too.

[Brien]

Probably. You just know that, when we do go digital, they're going to find new ways to **** us over. Probably try to pull that "you don't own the game, we do" crap the movie studios did.

[The Final Dakar]

Originally Posted by Brien 

Probably. You just know that, when we do go digital, they're going to find new ways to **** us over. Probably try to pull that "you don't own the game, we do" crap the movie studios did.

Isn't that the case now? I think it was Ars where someone commented that they were surprised no one has sued to enable the right to resell for digital purchases. (IIRC)

[The Final Dakar]

A peek into our future with Digital Downloads?
LGJ: Where's my refund? | Joystiq

But the UCC is limited to sales of goods, and digital downloads are not goods (and arguably not sales) but licenses to use intellectual property (though this debate is an entirely separate issue). Accordingly, by most expectations, the UCC terms wouldn't apply to the sale od DLC. Which leaves you with the terms you get from the Xbox Live Marketplace, which is where you bought all of this stuff. This is, unfortunately for you, not exactly good news as Microsoft's FAQ states: "All items purchased or rented from Xbox Live Marketplace, using the Web or your Xbox 360 console, are non-refundable."

Is DLC considered a different type of good from a digital game?

[jokell82]

Originally Posted by The Final Dakar 

No, they won't. Not unless they threatened to grow to a scale that rivaled GameStops'.

Actually I can predict what would happen: GameStop disappears. People who sell their games drops to a fraction of what it was. As a result, new game sales slow. The industry sees this and automatically accuses everyone of now pirating games instead.

Been away for a few days, so I haven't been able to respond to anything. However, what I wrote here was unclear. Here's what I meant:

So if Gamestop were to disappear overnight, would the industry start going after pawn shops? As long as games can be resold, they will [be resold].

[lpkmckenna]

Originally Posted by P 

Actually, it's more likely that we'd see subscription models for all networkable games, but that's OK as well, because now there'd be a way to compete with that.

This makes no sense. Not all networkable games function the same way. For instance, Unreal Tournament still plays online today, and it doesn't cost the company a penny in support costs. On the other hand, World of Warcraft provides so many support functions that subscription is the only way it's even possible. Subscription models only make sense for very few games.

[P]

Originally Posted by The Final Dakar 

Do you think that's official or unofficial? I think publishers are beholden to GameStop in much the same way companies are trapped by Wal•Mart. However if it was more official, like your answer would suggest, that would make publishers both incredibly stupid and giant hypocrites.

As I understand it, they're official. There's nothing illegal about it. This is the problem with monopolies or near monopolies - they force everyone else to play by their rules, or lose a significant chunk of their business.

Originally Posted by The Final Dakar 

Well its pretty obvious that when developers are crying foul of the used games market, they'll die before they make games cheaper for digital distribution.

The thing is, they (as in current publishers) don't have to. This is the wonders of free market economy - anyone else who can get their stuff into the same store can sell things cheaper and compete with the "AAA" titles. Current market has a fairly high cost of entry (pressing little pieces of plastic and shipping them across the globe). Downloads have a much lower cost of entry - if everyone can move to that (with Steam or straight downloads or their own system, I don't care) it will even the market and in the long run push prices down.

[The Final Dakar]

Originally Posted by jokell82 

Been away for a few days, so I haven't been able to respond to anything. However, what I wrote here was unclear. Here's what I meant:

So if Gamestop were to disappear overnight, would the industry start going after pawn shops? As long as games can be resold, they will [be resold].

Oh ok.

Originally Posted by P 

As I understand it, they're official. There's nothing illegal about it.

Didn't imply that there was.

Originally Posted by P 

The thing is, they (as in current publishers) don't have to. This is the wonders of free market economy - anyone else who can get their stuff into the same store can sell things cheaper and compete with the "AAA" titles. Current market has a fairly high cost of entry (pressing little pieces of plastic and shipping them across the globe). Downloads have a much lower cost of entry - if everyone can move to that (with Steam or straight downloads or their own system, I don't care) it will even the market and in the long run push prices down.

I'm having trouble parsing this into coherent thoughts, maybe because the statement it was replying to wasn't clear itself. What I'm saying is, they could reduce Gamestop's impact by focusing on digital downloads, but they lack the willingness to do what it takes to make those digital downloads to occur – reduce the price of purchase.

I mean, look at MS On Demand pricing; It not even competitive with online retailers of physical goods. And that's without getting into the library, which mostly consists of B to D level titles.

[P]

Let me try to rephrase it with fewer () and - and whatnot.

If a publisher has an MFN deal with Gamestop, it cannot offer its games cheaper to anyone else. If it cannot offer its games cheaper to anyone else, the only ways to compete with Gamestop on price is to reduce your (costs + margin) to less than Gamestop. Thing is, Gamestop's margin on new games is zero or possibly even negative, and they make their money on the used games business. For this reason, your costs must be way lower than Gamestop, and that is very hard to do. Today, digital distribution actually makes more money for the publisher if sold at the same price, because the cost for bandwidth is less than the cost for printing discs etc.

It becomes a chicken and egg scenario. Without MFN deals, publishers could break the cycle by temporarily reducing prices for digital distribution to get the ball rolling, transition the gamers to that method with the promise of lower prices making up for the lack of resale, and then charging what the market will bear. Make no mistake here: Game publishers are in the business of making money. They will charge what they think will maximize their profits according to that old friend of ours, the supply&demand curve. It may be in their long-term interest to cut prices temporarily, and the MFN deals prevent them from doing so.

[The Final Dakar]

Originally Posted by P 

Let me try to rephrase it with fewer () and - and whatnot.

If a publisher has an MFN deal with Gamestop, it cannot offer its games cheaper to anyone else. If it cannot offer its games cheaper to anyone else, the only ways to compete with Gamestop on price is to reduce your (costs + margin) to less than Gamestop.

I would very surprised if the legalese included digital goods. As we've seen with the 360/PS3 Netflix contract, these things are full of loopholes.


Still, suppose GS did manage to include digital products in their MFN status. That still makes the developers gigantic assholes for vilifying gamers for a marketplace situation they created.

Originally Posted by P 

Thing is, Gamestop's margin on new games is zero or possibly even negative, and they make their money on the used games business.

The numbers I remember from a few years ago were 20% on retail, 40% on used. If its not that, kalve the numbers - 10% on retail, 20% on used. The point was, their used games side business was giving them twice the margin of retail.

Originally Posted by P 

Today, digital distribution actually makes more money for the publisher if sold at the same price, because the cost for bandwidth is less than the cost for printing discs etc.

Yes, that's why I keep arguing they're gigantic assholes for not offering a better price on digital downloads and that's not even factoring in the loss consumer options/rights that come along with such a purchase.

In the current market conditions the most sensible pricing to me would be to match GS's used games prices for a digital downloads.

Originally Posted by P 

Game publishers are in the business of making money. They will charge what they think will maximize their profits according to that old friend of ours, the supply&demand curve. It may be in their long-term interest to cut prices temporarily, and the MFN deals prevent them from doing so.

The bottom line is I see the gaming executives falling victim to same type of out-dated thinking that has plagued the music, tv, and movie industry. Only they've somehow managed to start the charge into that territory by targeting people who are purchasing things legally.

[The Final Dakar]

No, you don't own it: Court upholds EULAs, threatens digital resale
More far-reaching than this thread, but this decision makes the future look bleak.

[P]

I agree. Glad I'm not in the US, that is one disturbing ruling.

[downinflames68]

This is such a stupid argument. Yeah, they aren't like the movies, they don't have two forms of revenue. But they charge like $50-60 PER GAME. A movie is what, $7-12? Furthermore, they DO have multiple revenue streams... xbox, ps3, pc, mac, and now... I think we're going to see older games being released for the iPhone, and other portable devices. So it comes out on something powerful, and a few years later, on something portable.

Also, I have NO PITY for game developers. What have they produced that is remotely as awesome as Deus Ex in the past decade? Oh, nothing. Instead they're sticking to the same basic formula, rehashing it again and again, and spoon feeding it to the retarded masses based on better graphics. Same stories, same experience, but in "hd". This is why I've largely grown disinterested in most games for the past few years.

Also, I've gotten ROYALLY ****ED by them in the past. I've gotten excited, and preordered stuff, and then it turns out to be the most godawful game ever. $50, gone. Oh, I can sell it back, the next day? For $7? WOW. THANKS. If they weren't responsible of churning out the same old crap and charging $50 each time, I'd have more sympathy for them.

[Hawkeye_a]

First off, good topic for discussion.

I have gone through the emotions of both sides of the argument. As a poor college student years ago, i can completely understand the allure of the used game market. And then after graduating and working in the developer industry(not games) and friends in the game industry, i can see how this cottage industry has devalued their roles.

While i don't agree with the ruling as a consumer. once you read a book all the way through, do you have the compulsion to do so again ? rarely, sure. but most of the time, probably not. The same applies to games IMHO.

Lets work with the analogy; books. A publisher sells books via a retailer. then these stores start dealing in second hand products, thus discouraging sales of new items and keeping all revenue from second hand sales. Let's say the publisher sells 100 copies to a store, and those copies are in constant circulation via that store, so no one buys any more new copies of the book. Lets assume 500 people who shop at that store end up reading(consuming the content) that book. the writers and publishers have only received payment for the initial 100, and the second hand retailer has probably made revenues/profits for 400-500 copies, while at the same time discouraging (by stocking second hand copies) sales of new copies (it''s almost like a rental model). The creators gets gipped. The retailer runs away with the goose that lays the golden eggs. Fair ? Not at all.

If on the other hand there was some kind of revenue sharing between publisher and retailer of second hand content, it would be more fair on the writers IMHO. but there isnt. Essentially, the retailers are selling copies of the IP they are probably not authorized to sell, at the expense of the owners of that IP. That is piracy. IMHO

We can argue about the price of the content(or anything really), and im sure we would all like everything to be cheaper. But that does not justify these sort of shenanigans which deny creators their dues. Point is, these retailers like GS are unfairly profiting from the work of others. If the prices are too high, people will not buy the product and the free market will correct that, but what retailers like GS are doing is, unfair IMO.

Personally, all the games i buy are brand new, usually months after the initial release when the prices come down anyway.

Cheers

[imitchellg5]

All it'd take for GameStop to be put completely out of business would be for Microsoft and Sony to offer all of their games on demand on the release date.

[downinflames68]

Used books can have worn bindings, covers, etc, but the delivery of the story is exactly the same.

Used games can have missing manuals, covers, etc, but the delivery of the story is exactly the same.

I do not see a difference between the two.

[P]

The difference is Gamestop aggressively pushing used games to complete with new games. Few bookstores do that.

I do agree that the quality of games has dropped in the last few years, though. I blame the consolification.

[downinflames68]

Amazon does. Why pay retail $30+ when I can get the same book used for $5?

[imitchellg5]

Better yet, rent games like you rent textbooks. Rentals aren't that expensive anymore either. $5 for a week at Blockbuster, and my local store has a very impressive selection. If you really like it, great, if it turns out to suck, then you're not out even the used price of the game.