Wired: killing used games could be profitable or suicide

Doppel

Lifer
Feb 5, 2011
13,306
3
0
I see a lot of conjecture in threads about whether used games on consoles are good or bad and in which ways.

Well, Wired can quiet a lot of the incorrect arguments for or against:

http://www.wired.com/gamelife/2013/05/nyu-used-games-study/

If the marketplace of used videogames were to disappear, game publishers would see their profits decline — unless they massively lowered game prices.
...
“We find that the optimal price would be on average about 33% lower than the current price level, if the used game market were eliminated,” said Ishihara in an email. “So roughly speaking, in the US, game prices should go down to about $40.”

My favorite quote is this one, because I have hated reading people argue this obviously incorrect point:
At any rate, the study is certainly compelling evidence against the belief that the sale of a used game constitutes a lost sale for the publisher

The crux is: Used games prices (and this goes for most products, obviously) help prop up the prices of a new product. A seller can't expect that removing the used market means all those potential buyers are now buying new.
 

smackababy

Lifer
Oct 30, 2008
27,024
79
86
Well, I think everyone can agree with Wired's wonderful conclusion of "it will work out or it won't."

The reality is, publishers understand not every used game sale would result in a higher (even if only slightly) new game sale from which they benefit. However, they understand that if ONE person is swayed from used games, their sales increase.

Furthermore, I don't think used games help prop up sales for anything except retailers. Publishers don't sell games on consignment. A retailer buys (at a discounted price) a volume of games and resells them for market value. The retailer is the one who stands to gain extra money from used games, because they buy at a diminished value and resell for a higher one. The "money" the consumer sees does not effect the publisher, because the new game is already purchased by the retailer.

Now, this would seem, that without the influx of cheaper games, retailers such as Gamestop can either lower the price of NEW games to gain shelf space OR let the games sit at a high price. Obviously, publishers restocking would have to take into consideration the lowered price, and lower theirs accordingly OR not restock as often.

Now, what will happen? We don't know. We are not exactly sure how the deactivation of licenses on Xbox One will work (if indeed that goes to production). It has been implied the used game market will not "dry up", it will just switch to retailers like Gamestop rather than private party sales.
 
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purbeast0

No Lifer
Sep 13, 2001
53,038
5,920
126
ive never really looked at wired before, but after reading multiple articles on their site after the xbox1 reveal, they seem like a buncha idiots over there.
 

Nintendesert

Diamond Member
Mar 28, 2010
7,761
5
0
ive never really looked at wired before, but after reading multiple articles on their site after the xbox1 reveal, they seem like a buncha idiots over there.



They usually are. There are better sites out there to do your reading than Wired.
 

American Gunner

Platinum Member
Aug 26, 2010
2,399
0
71
ive never really looked at wired before, but after reading multiple articles on their site after the xbox1 reveal, they seem like a buncha idiots over there.
I came here to post something like this. I can't take them seriously after the way they put out a bunch of crap last week.
 

mmntech

Lifer
Sep 20, 2007
17,501
12
0
Well, they are right in the sense. When you take away re-seller's right, it does reduce the value of the product.

I was having this discussion with my mom a while back. I was thinking of getting my Grandma a kindle for her birthday. She reads a lot. Chews through a book in a day or two then gives them away. I said that the Kindle would give her access to all kinds of books. My mom asked if they were cheaper than paper books. I said no, not usually. At least in my experience, the price difference isn't that big. She then asked if my grandma could trade or sell the eBooks when she was done. I said no. My mom retorted that it was outrageous that the books cost the same as the physical copies.

This I think says a lot about how casual gamers will react. Kotaku made a good point stating that the problem isn't used games but a lack of focus in the industry. Poor performance at the management level is driving profits down. Compounded with unrealistic sales expectations (Square), nickle and dime-ing (EA), aggressive tactics and hostile takeovers without adequate funds (EA), closing talented studios before the games even hit stores, releasing lacklustre and incomplete games to retail. Frankly consumers mistrust the game industry.
 

BoberFett

Lifer
Oct 9, 1999
37,562
9
81
The reality is, publishers understand not every used game sale would result in a higher (even if only slightly) new game sale from which they benefit. However, they understand that if ONE person is swayed from used games, their sales increase.

Fail. If one person is swayed from a used game, then one person who would have sold them that game is swayed from buying the new game to begin with.

Furthermore, I don't think used games help prop up sales for anything except retailers. Publishers don't sell games on consignment. A retailer buys (at a discounted price) a volume of games and resells them for market value. The retailer is the one who stands to gain extra money from used games, because they buy at a diminished value and resell for a higher one. The "money" the consumer sees does not effect the publisher, because the new game is already purchased by the retailer.

Megafail. The value of something purchased from a retailer is based on perceived value by the consumer. Without being able to resell the game, the value to the consumer is less than it was previously, and sales will reflect that. The retail value of the used market is now being borne completely by the new retail market.

Now, this would seem, that without the influx of cheaper games, retailers such as Gamestop can either lower the price of NEW games to gain shelf space OR let the games sit at a high price. Obviously, publishers restocking would have to take into consideration the lowered price, and lower theirs accordingly OR not restock as often.

ULTRAFAIL! Retailers have little control over the price of games unless they intend to sell them as loss leaders.
 

desura

Diamond Member
Mar 22, 2013
4,627
129
101
Single player games especially are priced way too high. If games want to be taken seriously as art...then they should be compared to most other art out there. A blu-ray is like $30 tops. Most blu-rays go for $10-$15 nowadays. A Novel is like $26 tops. The most common new format for novels is the trade paperback, which goes for around $12 or so.

Games should be similar. Like, $20 for a novel-esque game sounds appropriate. It's the job of the API's and shit to make it easy and cost effective for devs to make intricate worlds.
 

SyndromeOCZ

Senior member
Aug 8, 2010
615
0
71
I wouldn't ever get a console that doesn't do used games. I just purchased my first PS3 a few months ago. And the most I paid for a game is $20(due to the online pass) I got the game for my brother not for me. Other than that the prices have been between 5-10.
 

Anteaus

Platinum Member
Oct 28, 2010
2,448
4
81
I think people are missing the point. Many still see games as single units, which is antiquated reasoning.

Until somewhat recently if someone purchased a game, the developer profited but after that they were completely out of the loop. Used game sales didn't help the developer, therefore the developer saw used sales as the enemy. Ignoring the idea of whether these sales are ethical, the bottom line was that the developer felt they were being robbed of potential revenue.

Fast forward to today. Developers still need that inital sale and by extension still despise the used sale market, but what they truly crave is the ability to pipe advertising and additional pay content to players. Because the vast majority of development costs occur during the creating of the base game, once those costs are paid for with initial sales games can become profit engines. Additional content costs pennies on the dollar to create compared to the base game, so a $10 DLC here and a $5 DLC there actually amounts to a far greater of profits versus revenue.

Keeping internet connectivity optional means they are limiting their potential pool of buyers, so it is in the developers best interest to keep as many people connected as much as possible. Sure many will refuse to buy DLC, but many will and even if only 5-10 percent more people buy that can account for hundreds of thousands to millions of additional revenue.

Bottom line, all of this push for account activation combined with always on connectivity is less about piracy and used games than about additional revenues from content sales and advertising. The fact that it doubles as a silver bullet against used game sales is icing on the cake.

This is why I find it so funny when people talk about Sony versus MS and their new machines. In the long run both consoles are going to have the same DRM requirements, regardless of what either company says. Sony says it's up to the developers, and the developers are what drove MS do to what they did, therefore Sony is going to end up doing what the developers want also.

What surprised me is that instead of killing the used market completely, MS is attempting to convert it into another revenue stream. Much the same way that part of the sale of blank cds marked for music goes to the music industry, part of the sale of used games will go to the game developers. Simply amazing.
 

Arkaign

Lifer
Oct 27, 2006
20,736
1,377
126
I think people are missing the point. Many still see games as single units, which is antiquated reasoning.

Until somewhat recently if someone purchased a game, the developer profited but after that they were completely out of the loop. Used game sales didn't help the developer, therefore the developer saw used sales as the enemy. Ignoring the idea of whether these sales are ethical, the bottom line was that the developer felt they were being robbed of potential revenue.

Fast forward to today. Developers still need that inital sale and by extension still despise the used sale market, but what they truly crave is the ability to pipe advertising and additional pay content to players. Because the vast majority of development costs occur during the creating of the base game, once those costs are paid for with initial sales games can become profit engines. Additional content costs pennies on the dollar to create compared to the base game, so a $10 DLC here and a $5 DLC there actually amounts to a far greater of profits versus revenue.

Keeping internet connectivity optional means they are limiting their potential pool of buyers, so it is in the developers best interest to keep as many people connected as much as possible. Sure many will refuse to buy DLC, but many will and even if only 5-10 percent more people buy that can account for hundreds of thousands to millions of additional revenue.

Bottom line, all of this push for account activation combined with always on connectivity is less about piracy and used games than about additional revenues from content sales and advertising. The fact that it doubles as a silver bullet against used game sales is icing on the cake.

This is why I find it so funny when people talk about Sony versus MS and their new machines. In the long run both consoles are going to have the same DRM requirements, regardless of what either company says. Sony says it's up to the developers, and the developers are what drove MS do to what they did, therefore Sony is going to end up doing what the developers want also.

What surprised me is that instead of killing the used market completely, MS is attempting to convert it into another revenue stream. Much the same way that part of the sale of blank cds marked for music goes to the music industry, part of the sale of used games will go to the game developers. Simply amazing.

Wait, what? With the push towards mobile, 4g, etc, and the decline of the traditional PC in homes, I see a lot of people simply skip home internet entirely. Add to that a lot of people playing consoles in places where internet isn't available or fast enough to be adequate/worth buying.

One could just as easily say that by requiring internet access, they are limiting their market as well.

There was a game crash before, too many repeat shovelware games and bad value, and the market fell out, before being rebuilt by Nintendo, who offered a compelling product with better QC. It's not impossible to see a possible 2nd crash if enough gamers aren't pleased with the new way things work. It also remains to be seen how Sony will handle the used game front in conjunction with the publishers.

Regardless of how they put it, linking games to accounts and ending traditional ease of use/trade will fundamentally change how people perceive the value of what they're getting. In the PC world, people simply skip most titles outside of the AAA for any substantial numbers unless the price is really low. That's because they simply have no retained value as a non-transferable and largely digital-only 'item'. This is in stark contrast to the days of Wing Commander, Doom, Quake, Warcraft 2, etc, when people didn't mind spending $50-$60 for a boxed game en masse, complete with great artwork/manuals, etc.

If they lower the perceived value substantially, their number of buyers will decrease. I also know of a ton of gamers who will trade in recent games for credit, and you can get $20-$25 for a new release game most of the time, so you trade two games, and that gets you most of the way into buying another new game. Take that trade ability away, and the person has to come up with an extra $50-$60 that they might not actually have to spend in the first place. So some of the potential sales will actually decrease. I also know of a lot of gamers, myself included, who might pick up a used title in a series, decide that I really like it, then decide to go ahead and pull the trigger on a new release in that same series.

In short, there are a ton of negatives about this path, and very few positives. It's a distinctly anti-consumer model. Of course it's definitely unavoidable, but this first path, combined with the hostility towards the indie devs, is pretty crappy sounding. US internet also sucks balls compared to many countries.
 

exdeath

Lifer
Jan 29, 2004
13,679
10
81
I havent paid more than $20 for most of my still unopened 3DS games. I just pick them up when I see sales at Best Buy and places for $19.

Good games like Kingdom Hearts and Mario.

We need to go back to tangible cartridges. Screw this indefinitely lease something you can't own bs.

The game industry WILL crash again. Greed, shovelware, etc, they are killing the golden goose.
 

purbeast0

No Lifer
Sep 13, 2001
53,038
5,920
126
Wait, what? With the push towards mobile, 4g, etc, and the decline of the traditional PC in homes, I see a lot of people simply skip home internet entirely. Add to that a lot of people playing consoles in places where internet isn't available or fast enough to be adequate/worth buying.

One could just as easily say that by requiring internet access, they are limiting their market as well.

There was a game crash before, too many repeat shovelware games and bad value, and the market fell out, before being rebuilt by Nintendo, who offered a compelling product with better QC. It's not impossible to see a possible 2nd crash if enough gamers aren't pleased with the new way things work. It also remains to be seen how Sony will handle the used game front in conjunction with the publishers.

Regardless of how they put it, linking games to accounts and ending traditional ease of use/trade will fundamentally change how people perceive the value of what they're getting. In the PC world, people simply skip most titles outside of the AAA for any substantial numbers unless the price is really low. That's because they simply have no retained value as a non-transferable and largely digital-only 'item'. This is in stark contrast to the days of Wing Commander, Doom, Quake, Warcraft 2, etc, when people didn't mind spending $50-$60 for a boxed game en masse, complete with great artwork/manuals, etc.

If they lower the perceived value substantially, their number of buyers will decrease. I also know of a ton of gamers who will trade in recent games for credit, and you can get $20-$25 for a new release game most of the time, so you trade two games, and that gets you most of the way into buying another new game. Take that trade ability away, and the person has to come up with an extra $50-$60 that they might not actually have to spend in the first place. So some of the potential sales will actually decrease. I also know of a lot of gamers, myself included, who might pick up a used title in a series, decide that I really like it, then decide to go ahead and pull the trigger on a new release in that same series.

In short, there are a ton of negatives about this path, and very few positives. It's a distinctly anti-consumer model. Of course it's definitely unavoidable, but this first path, combined with the hostility towards the indie devs, is pretty crappy sounding. US internet also sucks balls compared to many countries.

this post just made me think about how most cross platform games that are out on console and pc are $60 on console and $50 on pc. and even then, a lot of people don't pay $50 for games on pc and wait for $30 or $40 deals to come along.

i'm sure a lot of that has to do with the perceived value because they know that they can't sell it to gain any money back (not in the easy sense as a console game, for the most part), and i'm sure that is why the game makers price it that way as well. i wonder if this will drive brand new game prices down for consoles.
 

smackababy

Lifer
Oct 30, 2008
27,024
79
86
Fail. If one person is swayed from a used game, then one person who would have sold them that game is swayed from buying the new game to begin with.
And how many who can't resell the game to recoup that $20 will just spend buy a new game anyway? Yes, I know the internet is full of people taking these hard lines of boycotting every company and product that wrongs them somehow, but the reality is, they don't do anything but whine. Gamers are notorious for making a fuss about something and then buying it anyway. MW2 boycott? What a joke! D3 "outrage"? Yeah... 10 million copies sold.

Megafail. The value of something purchased from a retailer is based on perceived value by the consumer. Without being able to resell the game, the value to the consumer is less than it was previously, and sales will reflect that. The retail value of the used market is now being borne completely by the new retail market.
Wrong. This is not true, especially in the low priced market. Perceived value is not directly tied to resellability.

ULTRAFAIL! Retailers have little control over the price of games unless they intend to sell them as loss leaders.
I am not sure if you understand how retail works. You have a limited about of shelf space. You can either take a small loss on a product to move it off the shelf, or take a large loss to let it sit there, or throw it away and take the total loss.
 

Tweak155

Lifer
Sep 23, 2003
11,448
262
126
And how many who can't resell the game to recoup that $20 will just spend buy a new game anyway? Yes, I know the internet is full of people taking these hard lines of boycotting every company and product that wrongs them somehow, but the reality is, they don't do anything but whine. Gamers are notorious for making a fuss about something and then buying it anyway. MW2 boycott? What a joke! D3 "outrage"? Yeah... 10 million copies sold.

What? How can you prove the number of people that would only buy used that will now buy new is going to outweigh those just buying it anyway? In other words, why you can assume YOUR statement is right, but HIS statement is wrong?

Wrong. This is not true, especially in the low priced market. Perceived value is not directly tied to resellability.

So car buyers never take into consideration the resale value of the vehicle they want to purchase? Pretty dillusional. The scale is much smaller for games, but still applies. And I can definitively call you wrong, because it changes MY perceived value of the new game. Only need one example to make the blanket statement incorrect.

I can tell you that I don't even consider new game prices 99% of the time, and used game prices 98% of the time. They are both way too high most of the time.

I think the REAL pitfall is this:

Their goals are misplaced. Their goal should be to create the best content possible that will draw buyers by the masses. This will take care of their profitability problems. Wasting time and effort to PREVENT a consumer from doing something is lost time that could be used to make the game / system better.

In other words, they're focusing on the bottom line when they should focus on getting the consumer to buy. The bottom line will take care of itself when everyone and their brother wants the damn products.
 

smackababy

Lifer
Oct 30, 2008
27,024
79
86
The car analogy is so off and I am tired of hearing it.

Cars cost exponentially more money than video games. Car buyers take into consideration the amount of money they have to get a loan for. Sure, if I am buying a $50,000 car, the resale value of it in 5+ years might have an effect on it. You could recoup thousands of dollars, not the few hundred (if that) you get from games. Good luck reselling a 5 year old game for more than a few dollars. Does the resale value of the console itself factor into the "value" of it? For 99% of people, no.

My point that you quoted is, publishers already have the money from the retailer for the game. They only get more money if the retailer restocks NEW games. They make $0 from the used game market. If they put an end to that completely, they understand some people might not buy games new anymore, but every person that pays $10 less for that used game will probably go ahead and spend the extra $10, because it is only $10.

Now, if a single person who would buy the game used buys it new instead, the publisher benefits. The retailer will most likely restock that copy, thus generating income for the publisher.

And everyone wanting the product does not fix the problem the publishers see of lost potential sales. A single player game can be beaten and resold quite quickly, so your brother could forgo supporting the publisher by buying the game used. And even in multiplayer games, this can be a problem. The more copies in the wild, the larger the potential online pool is, thus the more enticing it is to play that multiplayer. Nobody wants to play older multiplayer games if nobody else is playing them.
 

Tweak155

Lifer
Sep 23, 2003
11,448
262
126
The car analogy is so off and I am tired of hearing it.

Cars cost exponentially more money than video games. Car buyers take into consideration the amount of money they have to get a loan for. Sure, if I am buying a $50,000 car, the resale value of it in 5+ years might have an effect on it. You could recoup thousands of dollars, not the few hundred (if that) you get from games. Good luck reselling a 5 year old game for more than a few dollars. Does the resale value of the console itself factor into the "value" of it? For 99% of people, no.

Like I said, much smaller scale.

My point that you quoted is, publishers already have the money from the retailer for the game. They only get more money if the retailer restocks NEW games. They make $0 from the used game market. If they put an end to that completely, they understand some people might not buy games new anymore, but every person that pays $10 less for that used game will probably go ahead and spend the extra $10, because it is only $10.

And what about the guy that only buys used games because they know they can resell those too? I'm glad you know all these things, takes the risk out of it.

Now, if a single person who would buy the game used buys it new instead, the publisher benefits. The retailer will most likely restock that copy, thus generating income for the publisher.

All fine and dandy if things go to plan in your fantasy scenario. You must be a developer / publisher.

And everyone wanting the product does not fix the problem the publishers see of lost potential sales. A single player game can be beaten and resold quite quickly, so your brother could forgo supporting the publisher by buying the game used. And even in multiplayer games, this can be a problem. The more copies in the wild, the larger the potential online pool is, thus the more enticing it is to play that multiplayer. Nobody wants to play older multiplayer games if nobody else is playing them.

I didn't say it fixes "the" problem. The problem exists but it doesn't mean they have to focus on it. You try doing the opposite: create a game NO ONE wants and see how much you care about the used market ;)

If you think it's a waste of time focusing on a game no one wants, imagine just focusing on eliminating the used market... how many people actively want that?

It's obvious you're pretty short sighted on this whole topic.