Why its good to be used

[Kaladron]

At this year?s Edingburgh International Entertainment Festival Epic?s Mark Rein labelled the sale of second hand games as ?effective piracy?.

What absolute rubbish.

As we are constantly reminded, the games industry just keeps growing and growing, with sales revenue often outstripping that of Hollywood. Now what?s the reason for this? Higher quality games? Not if the retro fans are to be believed. Better marketing? No. When was the last time you saw a decent games advert?One possible truth is that the rise of the second-hand dealer has actually helped to increase sales of new software rather than decrease them. Allow me to explain...

With most new releases costing between thirty and fourty pounds and with prices set to rise in the next generation most gamers simply cannot afford to pay full price for a new release. This is where the essential role of the ?trade in? comes in as the vast majority of new releases are not paid for with cash but with the trade value of old games that have lost their appeal. If stores stopped allowing trade ins tomorrow then there would be a significant drop in new software sales immediatly. Retailers would not need to pay for replensihment stock as quickly and publishers would lose sales or be forced to lower their prices and lose profit.

There are more positive effects of used sales. Take sequels and franchises for instance. A used copy of Burnout 3 can be picked up for as little as fifteen pounds. Now lets imagine that someone buys that copy of Burnout 3 and it is the first game in the series they have ever played. They love it and vow to buy Burnout Revenge as soon as they can, which would, of course, mean buying it as a new release at full price since used copies are very rarely available in the first two weeks of a game?s shelf life. The publisher would not have won that new sale without the initial used sale.Used games are, quite simply, the best possible advertising a publisher can get.

[nekotcha]

I think you've misinterpreted who Mark Rein was aiming his comment at; he's complaining at retailers, not consumers.

The problem is this - publisher and developer put money and work into producing a game. Retailer then takes the game, and for a slice of the profits, places it in their stores. The remaining money goes to the publisher who then pay a percentage of that to the developer.

That's all fine and dandy - everyone gets paid, everyone's happy. But when a game is part exchanged and then sold second hand, all the money goes to the retailer, and none to the publisher and developer. Which is what Rein is complaining about.

Fair enough, you might say - they made the profit on the first sale, but unfortunately only a minority of games ever make a profit these days. And in those sort of situations it's never the big hitters that suffer - sure, EA, Miscrosoft and Sony can stomach a game not turning a profit - but rather, it's the small, independant developers that suffer, and eventually go under. The same small, independant developers that tend to make the most interesting games.

And unfortunately, that's the bottom line - every time you buy a game second hand rather than new, the money you pay is 'stolen' by the retailer and never goes to the people who worked hard for (often) a matter of years to make it.

Er, and you may have guessed that I do indeed work for a small, independant developer, so I do have something of a vested interest in this.

[Kaladron]

I understand Rein's point of view but, as most people rely on trade ins to buy games, it is unfeasable to think that publishers/developers could survive without used trade.

[nekotcha]

Well, I don't know about 'most people'...and surely every new game sale generated by trade-in deals is more than offset by 3-4 second hand game sales made as the traded games get re-sold?

In all honesty, in an ideal world, rather than stopping second hand game sales, I'd rather see consumers able to trade and buy second hand games just as they do now, except with a percentage of the (considerable) profit made by retailers paid back to the publishers and developers. I'm a gamer as much as a developer, and I'd like to be able to play cheaper games too! But I can't see it happening with the current state of the industry.

Incidentally, game rentals are a similar problem, with repeated rentals of one copy of a game generating revenue for a the rental company while failing to generate any extra revenue for the publishers and developers involved with the title.

Again, I wouldn't want to stop consumers having this ability in an ideal world, but it's simply unfair on the people who worked on it in the first place. And when you've spent two years working hard on something (including 3-4 months worth of 7 day weeks and 14 hour days at the end of it) you do unfortunately tend to lose your sense of humour about such things.

[Kaladron]

I can completely understand the frustration that the development community feels towards used sales and rentals (though I always assumed that rental items cost more to buy in the first place).

it has to be said though that no-one ever complaigned about second hand book shops or music shops. Or maybe I just wasn't listening. Regardless, this is an interesting debate and its good to hear from someone on the other team, so to speak.

[Dirty Sanchez]

Do retail sales of 2nd user games artificially keep the prices higher than they would do in a private trade arrangement only?

I think they do.

[Bassman]

Firstly... if there were no pre-owned games then a gamer may not even buy the small developers game at full price, so the developer is not going to get the money anyway.

Second... Retailers have to pay "royalties" on pre-owned games. Price of pre-owned games goes up and the gamer does not like the price so still does not buy the title.

Am I missing something obvious?

[babs]

2nd hand games is where a huge part of retailers incomes come from, especially for the smaller and indy shops.

[nekotcha]

Firstly... if there were no pre-owned games then a gamer may not even buy the small developers game at full price, so the developer is not going to get the money anyway.

I think it's really quite hard to say whether someone would buy the game or not if the secondhand version wasn't available for less. And besides, even if they didn't all buy it, the developer would still do better:

So, say out of ten people buying the secondhand version of the game, five of them wouldn't pay full price for it and five would. Even though only five of them would pay full price, the developer would still get five more sales than if they'd all bought the secondhand version!

This holds true even if only one in ten people were prepared to pay for the fullprice version, it would still be one more sale than the developer would have had if they had all bought the secondhand version.

Second... Retailers have to pay "royalties" on pre-owned games. Price of pre-owned games goes up and the gamer does not like the price so still does not buy the title.

Am I missing something obvious?

Again, this is entirely speculation. Besides, retailers make a huge profit on preowned games anyway (how much do you get for a preowned game usually? 5-10 quid? And how much do they sell them for? ?15-25?) so it would work better if the price didn't go up at all. But like I said, it would never happen.

2nd hand games is where a huge part of retailers incomes come from, especially for the smaller and indy shops.

You know, I'd genuinely not considered indie shops and I'm sorry about that - I honestly think that, if anything, the indie retailers are even more harshly treated than the indie developers. But it's not like I'm suggesting that all the money they make from secondhand sales be handed over to developers - just a percentage to acknowledge the work the developer did originally.

It's hardly a simple problem though, and I'll say again, not one that's going to change in the near future. Thanks for letting me put my point of view across.

[Ish]

The trouble is you can apply Mark Rein's arguements to just about any consumer goods. How about your car? When it's sold on after new the manufacturer gets no money from that sale. Books? Same again. Kids toys? The same. DVDs? The same.

And as for rentals - don't publishers charge considerably more for a rental license for a game? If developers don't see a share of that then that's an issue for the developer and the publisher to resolve and not the consumer.

If his comments are targetted at retailers then why don't Epic pursue other means of distributing there games. Until recently they've been predominantly PC based yet you don't see them pursuing any Valve style Steam strategies to cut the publisher and retailer out.

He's whining like a bitch. If I'd have been there I'd have heckled. Idiot. And a rich idiot at that.

And as for the smaller independant developers. Frankly most of them know the state of the industry when they enter it. Personally it's not one I would enter unless I could come up with a business model that would enable me to sustain myself independantly of the traditional publisher / retail model.

As a game lover it might seem paradoxical for me to feel so little sympathy for the developers large and small but I just think quit whining and find a better way. You have developers whining about lack of creative freedom and now you've got Mark Rein whining about the retail model and none of these people really trying to buck the "system". Pathetic.