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Businesses The Almighty Buck Entertainment Games

Publishers Want a Slice of Used Game Market 664

Posted by timothy
from the you-wanna-piece-a-this? dept.
grigory writes "GameStop's business model depends on a healthy flow of used games: incredibly '[GameStop] enjoys a 48 percent profit margin on used games.' Game publishers do not see a cut of the secondary sale because it falls under the first sale doctrine. Now, some publishers and manufacturers want a piece of the pie. 'One marketing executive, who did not want to be identified for fear of angering GameStop and other retailers, said the used game sale market is still depriving publishers of money because it gives consumers an all-too-easy alternative to buying a new game.' Interesting picture of companies fighting for your business, and (surprise!) complaining about being left out of the money stream."
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Publishers Want a Slice of Used Game Market

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  • by kheldan (1460303) on Thursday June 04, 2009 @06:20PM (#28216463) Journal
    So they want to sell only a LICENSE for a game, which is not transferrable? Screw them! We're not talking about a $10,000USD business software package here, we're talking about a fuckin' GAME. Greedy fucks.
  • What older machines? (Score:5, Interesting)

    by tepples (727027) <<tepples> <at> <gmail.com>> on Thursday June 04, 2009 @06:29PM (#28216549) Homepage Journal

    There's no Steam for the Nintendo DS. (as an example)

    The Nintendo DSi has the functionally equivalent DSiWare.

    While Sony and Nintendo are slowly moving towards more and more DLC and downloaded games, they don't come with manuals or boxes

    You're right that they don't come with boxes, but all WiiWare and Virtual Console games that I've tried have an instruction manual under the Home menu.

    The "downloadable" option isn't available for older machines - the heart of the used market

    Apart from the Nintendo DS and PlayStation 2, older machines don't have any commercial developers to complain about them. There aren't any new SKUs for the GBA, the original Xbox, the GameCube, or any pre-PS2 system, unless you count the few games sold by homebrewers [retrousb.com].

  • by e9th (652576) <e9th@NOSpaM.tupodex.com> on Thursday June 04, 2009 @06:35PM (#28216635)
    Over the years, paperback publishers have attempted to cut into the used market simply by narrowing the inside margins of their books. This forces you to spread the book open farther, leading to increased deterioration of the spine. Combine that with crappy glue, and you have a book that will fall apart after just a few readings.

    I have paperbacks from the 60s that are holding up better than ones from the 90s.
  • by Jerf (17166) on Thursday June 04, 2009 @06:43PM (#28216715) Journal

    The game companies get their cut at the time of first sale. The selling cost of the game already includes in the price the value to the customer of the ability to resell the product. The assumption the game companies are making is that if they lock this out, they can sell more product at the current prices, but instead what will happen is that they will be have to drop their prices some amount to account for the fact that it is less valuable to the purchasers.

    This is a fairly standard element of elementary economics; for instance, see this chapter of Price Theory [daviddfriedman.com], where virtually this exact problem is problem number 12 in chapter two of the book.

    Which just goes to show that for all the supposed value of an MBA, people in business still routinely fail to apply even the simplest economics to their own worlds.

  • Re:devil's advocate (Score:3, Interesting)

    by MoonBuggy (611105) on Thursday June 04, 2009 @06:46PM (#28216739) Journal

    In my experience PC games make up a small percentage of the resale market due to all the DRM they tend to come with. Many big chains simply refuse to take a lot of PC games now because of things like limited reinstallations. I'm guessing that if the shops were forced to stop reselling PC games altogether they wouldn't kick up too much of a fuss.

    The argument that you posit that the publishers are using does not in any way, however, apply to console games and yet they're still trying to bully the resellers on that issue too.

  • Re:WTF? (Score:5, Interesting)

    by interkin3tic (1469267) on Thursday June 04, 2009 @07:30PM (#28217099)

    A modern game cost what? 15 millions on average? When was the last time you paid 15 millions for a game you played?

    The car manufacturing plant is a lot more than they sell the car for. Using your logic, we can see that you don't buy a car, you can drive it as a reqard for you giving money to the car manufacturer. When you sell the car, you act like a car manufacturer yourself. The problem is that you never made the car, you just use the work of someone else to make money. To me, the best word for this is normal.

    Your logic is so shoddy I suspect you're a troll. If they were only selling one game, then yes, you'd have to buy it for 15 million in order to not be a parasite, but they're selling more than that.

  • by goombah99 (560566) on Thursday June 04, 2009 @07:53PM (#28217267)

    The price drop would actually not mean fully half revenue loss for the publishers because they would sell more games.

    I was just thinking the same thing. The presence of a used games market demonstrates that there are customers who prefer to buy games at a lower price. The real question is whether they would buy the game at the higher price if there were no used market (that is, they're out for a bargain) or whether the lower price convinced them to buy something they wouldn't buy normally.

    If there are enough of the latter, it's worth doing.

    that's a really good point. For example, I don't mind paying extra for a toyota or an apple computer in part because I know that when I sell it, I get more back too. I do take that into account when I compare prices of cars and computers. Oddly I think most people do not.

  • by BitZtream (692029) on Thursday June 04, 2009 @08:35PM (#28217533)

    They are just too fucking greedy to realize it.

    I don't sell games, though I have a couple of friends who do. Personally I just use gamefly and occasionnally buy a game that I've played and know is a keeper.

    But let me tell you about my friends. When they sell a game, the money either immediately is applied to the purchase of a new game, or is basically put aside until the new game they want comes out. Rarely does that money not get put back into again, hell, it must, their game library is growing, not shrinking, and I hear about the new games they've purchased (from places that doesn't sell used).

    So you go ahead and cut off used games and watch how your new game sales drop by an almost identical amount since those people no effectively went from paying $20 every month for the new bad ass game to paying $60, so they just don't buy games anymore. See how well it works out for you, ya greedy ignorant bastards.

    Yours Truely,
    Customer

  • It's simple, really (Score:2, Interesting)

    by aarroneous (973056) on Thursday June 04, 2009 @08:40PM (#28217561)
    Simply create content that either: A) Is worth keeping beyond the initial period it takes to complete your game, B) Is an evolving product which gets updates to retain your customers. C) Is geared toward online/interactive use with multiple users, so that the gameplay itself is ever-changing (think RTS) I *still* have my original copies of Starcraft, Diablo, and Warcraft, with all their sequels as well. Even without the CD-key requirements to play Ladder games on Battle.net, I'd still keep the original discs around.
  • by pugugly (152978) on Thursday June 04, 2009 @09:15PM (#28217727)

    The height of American corporate practice - we won't do anything to keep our customers but will spend millions creating artificial mechanisms to distort the market and end any competition for them.

    The good news is they're succeeding wildly - for instance I've neither pirated nor bought big corporate music in years because I can't stand either option. Instead I just buy direct from bands for half the price in a market *not* distorted by Sony and BMG, and by odd coincidence the artist gets to keep all of it.

    It turns out market arbitrage is not a constitutionally protected right.

    Pug

  • by Kyeetza (927172) on Thursday June 04, 2009 @09:16PM (#28217733)

    Use a game trading site. I've tried a couple, and the best by far IMO, is Goozex.com

    You send out games you don't want and accumulate points depending on their MARKET value (not rape-me-in-the-ass trade in value @ gamestop), and use those earned points to request games that you want, (which are also worth market value). The currency isn't $$, it's goozex points.

    You pay shipping (usually $2/game) when you SEND games to other people, and it costs $1 when you REQUEST a game you want. Great way to get rid of stuff you haven't played in years, and you save a ton of cash to boot. Plus no middle man bending you over.

  • by Swanktastic (109747) on Thursday June 04, 2009 @09:18PM (#28217745)

    I don't think it's right to give a publisher $60 for a game that I will only get 20 hours play out of, regardless of whether or not I can sell it later. I buy a lot of WiiWare games simply because they are only $10. I really don't mind if I only play it for 5 hours when I only pay $10.

    So you're willing to pay $2 an hour for entertainment, but not $3?

    That's a pretty tight range. Perhaps you should buy a game for $60, play it for 20 hours, and sell it for $30, so that you can get things down to $1.50 an hour? OR, my favorite option- renting at $7.50/20 or ~$.38 an hour.

  • by pwizard2 (920421) on Thursday June 04, 2009 @09:39PM (#28217833)
    What Gamestop is doing is hardly innovative; It's the college textbook business model. Buy it used, pay about 60-70% new price. (or worse) Sell it back at the end of the semester and you're lucky to recoup 40%. Back in my college days, I often did what I could to avoid buying textbooks because of rackets like that, but sometimes there was no other way.
  • by FooAtWFU (699187) on Thursday June 04, 2009 @09:50PM (#28217891) Homepage
    Singer - manufacturer of sewing machines - had a really good trick around the turn of the century or so, I hear. Sell your snazzy new sewing machines for a ridiculous amount of money... then offer an equally ridiculous trade-in credit for old sewing machines. Then, as soon as you get the old sewing machines, destroy them utterly.
  • How about... (Score:1, Interesting)

    by Anonymous Coward on Thursday June 04, 2009 @10:02PM (#28217967)

    Making the new games better than the old ones? Man! Where did the good creative minds that came up with great classic games go? I'll we have today is: "look! there is a new FPS and now with better graphics!". Stop with spending 90% of the game budget on Visual and a little bit more on fun and you might just convince people that your new title is actually more worth buying then an used one.

  • by toddestan (632714) on Thursday June 04, 2009 @10:10PM (#28218013)

    that's a really good point. For example, I don't mind paying extra for a toyota or an apple computer in part because I know that when I sell it, I get more back too. I do take that into account when I compare prices of cars and computers. Oddly I think most people do not.

    Most people tend to buy things they plan on keeping around for a while. I pretty much keep a computer around until I have no use for it, at which point I can hardly give it away because most everyone else has no use for it either. Cars are kind of the same way - though I do tend to get ones with higher resale value because there is a strong correlation between resale value and reliability.

    I find that most of the people who are concerned the most about "resale value" are the ones who are using twisted reasoning to try to justify something they can't afford. "It's not a $60,000 car, it's a $20,000 car because I'll sell it for $40,000 in a couple of years!" I leave applying the same kind of logic to real estate as an exercise for the reader.

  • by Anonymous Froward (695647) on Thursday June 04, 2009 @11:13PM (#28218347)
    and they're making more money for the lower price! I think this guy can learn something from what some of the Japanese publishers are doing in Japan.

    Take for example a successful title, Gyakuten-Saiban: Yomigaeru Gyakuten. This is one of the titles known as "Ace Attorney" series in the USA.

    There are three versions of this exact same title in Japan, i.e. the original (Sep.2005, sold at 5040 JPY or about 50 bucks), "Best Price" version (June 2006, sold at 3129 JPY or 31 bucks), and "New Best Price" (Apr. 2008, 2100 JPY or about 21 bucks).

    130000 copies of the original version were sold, but they sold 200000 copies of the "Best" and "New Best" combined [wikipedia.org], so apparently they made more money from the budget-priced versions.

    This is not an isolated case, it seems many publishers are lowering the price of popular but older games in Japan.

  • This is exactly how I view my entertainment expenditures, cost/hour is so much more comparable to other things as well, like movies and rentals and bowling and billiards etc. I'm a movie buff so I use the cost/hour of my average trip to the movies (inc. concessions).

    Now for those 60 dollar games with only 5-10 hours of entertainment ... well that's just unreasonable. 20 hours a much better number.

  • by Attila Dimedici (1036002) on Friday June 05, 2009 @07:37AM (#28220831)
    Retail margins are generally 30% to 50%. That is how much a retail store needs over what it pays for product in order to pay all its bills (electric, payroll, taxes, etc) and still have the owner show a bit of profit. I ran a college bookstore at one time and a professor told me that 10% over cost should be enough. The store I ran had around $400,000 a year in gross sales. 10% on $400,000 is $40,000 to pay rent (the university took 5% of sales for rent), salaries and still leave the owners with some profit.
    People look at the markups in retail and think the stores are making a lot of money without really thinking it all through.
  • by LordKazan (558383) on Friday June 05, 2009 @09:21AM (#28222059) Homepage Journal

    a lot of people, including those of us who are software engineers, prefer hard physical books. im not going to shell out for a kindle, books are portable easy on the eyes and shelves full of books in your house makes you look SMRT :D

    oh and some things i will NEVER, EVER switch to electronic media for no matter how much money I have. My field survival guides, edible plant guides, maps, etc that I take with me into the back country.

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