Used Games are *not* Damaging

filed under Gaming/PC by in5ane on January 18th, 2008 [blogs index]

Over at next-gen, Editor Colin Campbell has gotten his knickers in a twist over used games. Over four pages he offers spurious arguments supporting the headline "Used Games are Damaging". Unfortunately for the 'first of a weekly opinion column', it's not a very solid start. It has however prompted a length blog rant! Yay!

Basically, Campbell has taken the fact that the second hand market for games is earning retailers $1 billion a year, and spun it on it's head to claim that this is $1 billion not going back to publishers. It's a massive leap, and generally comes across as one big whinge.

The pieces starts as it means to go on, focusing exclusively on GameStop. This to me is a mistake, as to isolate one company who have recently done well from the second hand market moves attention away from the fact there are numerous other avenues for buying and selling second hand games, and that it has been going on for the past 20 years. From eBay to the market stall I visited in my youth, second hand games have always existed alongside retail games.

Publishers don't see a penny from resales, and they're not happy because 'there isn’t a darned thing they can do'. On the one hand, this is a very good thing for us gamers. Publishers should not be able to 'do' anything about 'their' games once sold. The only things they could possibly do involve draconian-DRM or legal intervention-- neither of which are any good for us. On the other hand, this highlights the closed mindset of the gaming industry; obviously there are lots of things publishers could do, but it would have to be positive and pro-active. What they really want to do is control gamers and retailers.

In fact, it's interesting to see the law mentioned in the article, as it parallels the bleating of concert promoters, recently in the news complaining that they don't get any more money when a ticket is touted (either legitimately sold on, or nefariously bought up for resale). Why should concert promoters have control over the tickets once out of their hands, and why should they get any second revenue for their tickets if it's resold? Unfortunately this is the sort of thing they want, and they want legislation to enforce this. You can't have your cake and eat it as the saying goes, and this applies to publishers as well as anyone. Do something while you can (i.e. before sale) rather than complain about what a consumer and retailer can do.

Apparently, second hand games keep 'new game prices high'. Really? If anything, that seems to me the very reason why the second hand market is so attractive! At worst, we have vicious circle, half of which is under control by the games industry. The prices of games is a thorny issue, but in this context, the publishers could set cheaper price points to grow the market and close the gap between resales and new sales. I'm sure there are some clever maths that could determine the discount which results in two new sales over one new sale and two subsequent resales, but I'm not the person to be working them out :)

(As a gamer, and even as one with a decent job, in my opinion games are too expensive. Despite sizeable amounts of disposable income, games appear to me to be a bad deal. Just one new game would cover the cost of a decent night out, one months TV or phone bill, several trips to the cinema, lots of books or CDs/DVDs. How much games cost to produce is not my problem, getting value for my money is!)

The article goes on to propose that second hand sales are 'depriving the publishers of investment income'. To that I would I say the publishers must be using some shaky business plans if this is a real concern. The producer of any product essentially has costs to cover, and sets the wholesale price accordingly. If the wholesale price doesn't cover your costs, either cut costs or increase prices. It's so obvious, writing it down seems silly. Yet companies (and it's not just games publishers) see an alternative strategy to balancing their books, and that's screwing the customer repeatedly for the same product. EA getting a cut from you reselling one of 'their' games is as ridiculous as getting a bill from The Times because you later used their paper as kindling in your fireplace.

This leads me on to the next point: Second hand games have to come from somewhere! For every second hand resale, there was an original purchase, and from this the publisher received money. In terms of money going to publishers, how is one game being resold any different to that of a game simply gathering dust on my shelf? Nada. Publishers should therefore ensure the first hand market place covers their costs, and not eye the $1 billion resale market. If anything, the more you think about it, the more it starts to sound like the greed that drives people like the Recording Industry Ass of America to hound people for hundreds of thousands of dollars in fabricated 'lost revenue'.

So why aren't publishers following new business models? Because it's easier to drag your feet and moan, rather than innovate and respond to a changing market. There are numerous ways to generate revenue from games legitimately, without gamers feeling ripped off. Subscriptions, add-ons, downloads, online communities, merchandise: they can all help eke every last penny out of a game, and if anything, a second hand market only helps to sustains these activities. Let's say I could sell a friend my copy of World of Warcraft, Blizzard just just got a whole new chance to hawk their subscriptions and add-ons.

Campbell continues on page two with 'Timing is a big issue'. He has less beef with older games being sold on. It's those 'hot' titles, those games just launching when retail prices are highest. 'But games often turn up second-hand days after on sale date' I wonder why? Seriously, rather than worry about GameStop's profits, why not take a moment to contemplate why this is happening in the first place. Perhaps it's because the game industry might have to face facts on their output.

What would cause a gamer to sell a game so early after a launch? Maybe the game was worse than the paid-for reviews implied? Maybe the game was inappropriately short (did anyone trade in Final Fantasy 7 after two days?) Maybe the game was so expensive, trading it in early is the only recourse a gamer has to get as much back on their investment as they can. I could list many more, but what I can't do is list a likely reason that is out of the control of the publishers in the first place.

The article then takes a little bit of a philosophical turn, describing the system as *not* being fair and just. Sorry? What in this life is! Furthermore, a fair and just system wouldn't curb second hand sales, but maybe we'd see better quality, longer lasting games that are value for money. Maybe we'd see devs getting paid for their overtime. Maybe we'd see games priced at something other than arbitrary levels (not all games are created equal, but they all cost the same!) Maybe we'd see less theft of ideas and blatantly copy-catting. If it's going to be fair, it should be fair for all of us. (P.S. One upside to something that is unfair is having the power to change things in your favour!)

At the base of page two, this quote from Daniel DeMatteo of GameStop appears:
"The used games business does not cannibalize sales of newer video games. As a matter of fact, it does the opposite. We continuously increase the market for new games by allowing customers to trade in games that they are no longer playing. The used games business puts currency in people's hands."

Campbell refutes this wholeheartedly, claiming any currency gained from second hand games goes into more second hand games. However, these resales are physical objects, not copies that can be shared between lots of people simultaneously, and the sustainability of this buoyant resale market logically requires a buoyant first-hand market. If this weren't the case, I'd still be trading in my SNES games. I think this actually supports my theory that we have two predominant game purchasing habits. The new-release buying guys, who might at some point sell his new games on. Buying from this gamer is the used game player, who is compromising getting the latest games by getting them cheaper and perhaps worse condition. (Eventually of course, they'll be classed as retro and going to a different type of gamer.) The purported $10 different is not significant enough to sway different types of buyers either way. So if this cycle is going to happen, why does it matter at which point they are sold in? Suddenly, the 'hot game' problem isn't an issue.

Page three begins with the assertion that everyone has their role to play. It's OK that retailers try to make as much profit as possible, and that gamers try to get as many games cheaply as possible-- these are their roles and business is business. However, just because one party puts in all the creative effort, it doesn't give them any more right to control the other parties. We aren't serving them, they are making games for US.

So why aren't publishers doing something about it already? Campbell thinks 'antagonizing massive retail customers would be a terrible idea' - why? Aren't gamers a mostly savvy bunch? If anything, I would think this is one industry where traditional retailers are in the minority- how many millions of games are now downloaded from Xbox Live, and shipped by Amazon rather than bought in a real store. Clearly publishers have got wriggle-room here.

The inevitable comparison to books, DVDs and CDs is made at the tail end of page three, which doesn't support the gist of article at all when really considered. There are healthy second-hand markets in all these mediums, but something Campbell says does ring true: games are less 'keep-able' than other forms of entertainment. I know why as well! Because books, DVDs and CDs are cheaper and seemingly much better value for money.  This already lessens the necessity to sell older titles. I also think the hardware manufactures might be a little to blame on this one: I have books 30 years old, CDs 20 years old and DVDs that are 10 years old, and they all continue to be useful today. Gaming has succumbed to the bleeding edge, and with the move to the cheaper PS3, and the iffy software compatibility of the 360, save for the die-hard collectors, there is no point in keeping a game any more, even if it's only last 'generation'. If it's even older, e.g. cartridge, you are royally screwed. (The solution is of course to buy your old games again for the new consoles, genius!)

Barnes & Noble is used as an example of a retailer dealing exclusively with new stock and doing fine. Apart from the quaint assertion that everything is rosy on the high street, B&N sell a lot via their online store, including used books. They're also pretty small fry, bringing in less than $10m profit per quarter.

So what does Campbell want? 'Publishers quickly finding alternatives that don’t damage the game industry as a whole.' This boils down to 'them' and 'us', and whatever alternative is good for publishers (them) can't be good for us (gamers). *Anything* they do will probably damage the relationship we have with playing games, and will probably mean less revenue in the end. There are already a couple of 'alternatives' available, both bad:

DRM and locking games down to one computer/console- this is a bad idea, already in place with a lot of PC games. I didn't buy BioShock 'cos I didn't want the DRM crap on my PC. I actively avoid getting a PC version of a game when I know I'll need to be online to activate it, key in a serial here, install something else there-- it's too much hassle, and I know I won't get much for it second hand if I ever do try and sell (even if I have no intention of doing so). Sharing a book or DVD is great a social interaction,  completely lost on the locked-down gamer.

Download delivery- good in theory, bad in practice. Let's take Steam as one example: with less distribution costs, and no second hand market of their product, why is it the games aren't significantly cheaper? All the benefit goes away from the gamers. I would always take the boxed product option over steam if possible, even if I have to wait a day shipping over instant gratification. Now look at Xbox Live and its arcade games. The prices aren't exactly in the micro transaction range we all thought they would be. You can't lend these games to friends, you can't sell these games when you're done, and in a few years time, will we be even able to play them? And woe betide anyone Valve or Microsoft doesn't believe when their machine goes kaput, and the account holding all the games is lost.

If practices like these become more prevalent, the industry will only alienate the biggest spenders.

I like game boxes, I like the collectability, I like that games have resale value, I like lending games to and from friends, and I like picking up second hand games that I missed first time around. Gamers won't stand any of these being taken away. What's the point of a game so secure that can't be lent or resold when there is no one to buy it in the first place?

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