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Businesses The Almighty Buck Entertainment Games

Publishers Want a Slice of Used Game Market 664

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 Lordfly ( 590616 ) on Thursday June 04, 2009 @07:19PM (#28216455) Homepage Journal

    Steam only works on PC games. If you notice, a Gamestop stocks only the top... 10 or so PC games (in a tiny shelf hidden from everything else). That's because they can't resell them. They have more PS2 games than they do PC.

    Seriously, about 60% of the store is resold merchandise. They stopped being a games retailer and became a pawn shop years ago. When will they buy my gold watch?

  • by thule ( 9041 ) on Thursday June 04, 2009 @07:34PM (#28216613) Homepage

    I hadn't purchased anything from Gamestop until recently. My employer moved offices recently and now we are across the street from a Gamestop. I went over to purchase LIttle Big Planet and they assumed I wanted the used copy. There was only $5 difference between the used and the new and I figured I'd rather get the new. I knew something was up when the guy behind the counter kept telling me I could save a few dollars if I got the used one. Was I really sure I wanted the new one? Are you really sure? I figured they must be doing very will with their used games. Most of the store is full of used games.

    What does Gamestop pay for used games? They must have some soft of dynamic system that keeps track of demand and quantity on hand before they quote a price. Is it worthwhile to sell games to Gamestop? They wanted to sell me on a membership card that would give me 15% when I sold a game to them.

    The few games that I have bought used were from Gamefly. The nice thing about Gamefly is they at least give you a *new* case (not a beat up and gross one), cover art, and the booklet. I supposed I'm picky though, I don't buy a game unless I know I really want to keep a copy for a long time.

  • by tepples ( 727027 ) <> on Thursday June 04, 2009 @07:36PM (#28216647) Homepage Journal

    If a bookstore can sell used books without giving any money to the publisher, I fail to see why a game store can't sell used games.

    First sale laws already distinguish among formats of works. In the United States, for instance, you can't rent phonorecords (copies of sound recordings) or copies of PC games without the copyright owner's consent (17 USC 109).

  • by tepples ( 727027 ) <> on Thursday June 04, 2009 @07:39PM (#28216673) Homepage Journal

    Good luck getting that done. []

    I see your 17 USC 109(a) [] and raise you a 17 USC 109(b): Record Rental Amendment [].

  • by Brian Gordon ( 987471 ) on Thursday June 04, 2009 @07:42PM (#28216699)
    USC Title 17 Chapter 1 Section 109(a) [] (phonorecord = album, software, game, etc)

    Notwithstanding the provisions of section 106(3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord. ...

    That section also specifically exempts console games from the law prohibiting the rental of phonorecords without the copyright holder's permission:

    blah blah rental blah This section does not apply to a computer program embodied in or used in conjunction with a limited purpose computer that is designed for playing video games and may be designed for other purposes.

  • by sexconker ( 1179573 ) on Thursday June 04, 2009 @07:45PM (#28216733)

    What does Gamestop pay for used games?

    Jack fucking shit.

    Buy a $60 game on release day, return it tomorrow and get $40 TOPS, typically $30.
    They sell it for $55.

  • by jrronimo ( 978486 ) on Thursday June 04, 2009 @07:54PM (#28216827)
    Courts here in the US have already affirmed the rights of a user to re-sell software, despite licensing agreements. See Autodesk: [] I can't find any follow-up, but I like to think that the decision stuck. I understand their *wanting* more money, but yeah: First Sale Doctrine. I think a MUCH 'better' way for them to deal with this is through first-sale exclusives. i.e., "Buy Gears of War 2 and get a multiplayer map pack code." That way, anyone that buys a new copy, gets the code. I would also recommend that they ALSO offer the same map packs online for, say, $10, so that even if a person buys the game secondarily, if they want the "full" multiplayer experience, they can still get it. I guess they could 'force' users towards brand new retail copies by not offering the map pack except as redeemable by a code, but that just seems like lost sales to me. I really think that game publishers need to stop being crybabies about secondhand games and find a way to make their product more valuable to the consumers. Or make the games cheaper: I'd certainly rather spend $40 on a new game than $60. (Although that's being generous: Gamestop's policy seems to be the Wal*Mart approach "New = $60, used = $57.99"). Ideally, though, games (both new and used) would be cheaper.
  • by cpt kangarooski ( 3773 ) on Thursday June 04, 2009 @08:05PM (#28216925) Homepage

    Of course, that's a fairly recent change in the law (1990, IIRC), and not a good one.

    Why shouldn't it be legal to rent those things? It was asserted that it was because people would rent them, then unlawfully make a copy to avoid buying one. However, events have shown that 1) That's not a serious problem, given that movies are rented and are thus susceptible to this sort of piracy, yet rental-related piracy hasn't noticeably harmed the movie industry; 2) With the advent of the Internet, it's unlikely that anyone would go through the inconvenience of renting music or games to pirate them, making the restriction on rental ineffective and thus in need of being eliminated.

    First sale should not distinguish amongst types of works, nor should it be limited. That is just yet another example of the corrupt practices of the copyright industry, having the law twisted so that it no longer serves the public interest.

  • It does. (Score:4, Informative)

    by langelgjm ( 860756 ) on Thursday June 04, 2009 @08:28PM (#28217071) Journal

    I don't think PCs are ruled out.

    They are (or at least my IP law books says so). IIRC, neither software nor music CDs can be rented. But books and video recordings can. BTW, the relevant distinction in that language is probably between "limited purpose computer" and "general purpose computer."

  • Re:What's Next? (Score:5, Informative)

    by mabhatter654 ( 561290 ) on Thursday June 04, 2009 @08:39PM (#28217169)

    That's the really funny thing, is that for durable goods there are very clear laws that car manufacturers can't interfere with resale or used car markets and have to honor warranties and such. It seems that "copyright" related iterms keep grabbing more and more power when the power for actual manufacturers is consistantly kept in check.

    Automakers tie diagnostic tools and engine codes to "IP" rules all the time even using the DMCA and Congress routinely takes that away from them when they try to hide behind the "weenie" IP laws that game publishers are trying to hide behind.

  • by amicusNYCL ( 1538833 ) on Thursday June 04, 2009 @08:43PM (#28217199)

    Now come back in 10 years and tell me GameStop are still making money from used games.

    o...k... I'll be sure to mark that on my calendar. I don't think used games are going anywhere for the foreseeable future.

    Just because a company's short term business model is pulling in a profit doesn't mean your shares will be worth anything in a few years time!

    Yeah, no shit Professor Obvious. But considering the fact that GameStop's business model is 25 years old, and isn't exactly what I would consider "short-term", I really don't think drastic changes are going to happen in the next "few years" to substantially alter that model. People will always be buying games, and GameStop is one place that will always be selling them. The only way a place like GameStop would go out of business is if *all* game distribution switched to an online model. That isn't going to happen as long as people want to play games on devices that are not online.

    If you disagree with that, perhaps you'd like to buy my shares in the company that made Tamagotchi?

    Are you really trying to compare a decades-old multibillion dollar industry with a Japanese fad? And were you really stupid enough to buy those shares?

    I hope you can understand my writing even though I'm not using exclamation points, let me know if that's a problem for you.

  • by mdmkolbe ( 944892 ) on Thursday June 04, 2009 @08:53PM (#28217265)

    US law says otherwise. As defined by 17 USC 101, a "copy" is a physical instance of the physical media (game cartage, CD, etc.). Under 17 USC 117, ownership of a "copy" of software confers the right to install and use the software on that copy. As long as the transaction at the store counter relative to the physical media is a physical property purchase, then you get the intellectual property rights to install and use the intellectual property contained in that physical property.

  • by konigstein ( 966024 ) on Thursday June 04, 2009 @09:02PM (#28217343) Homepage
    They give you about 20% back on your games (my estimate, never calculated when selling them my used games). This is why they are able to turn a huge profit, when they resell for almost the price as a brand new one.
  • by CastrTroy ( 595695 ) on Thursday June 04, 2009 @09:27PM (#28217479) Homepage
    Personally, I never buy a game unless I think it's something that I want to keep. 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. Personally, I think publishers of all media (games, books, software, music, movies) would do a lot better if they sold their products for a cheaper price. Don't make me think about buying it. Make it pure impulse, and you will set a lot more product.
  • by Firethorn ( 177587 ) on Thursday June 04, 2009 @09:29PM (#28217489) Homepage Journal

    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.

    Given that I don't buy things I anticipate selling anytime soon, considering resale value is secondary to meeting my demands. For example, with computers I still have mine from a decade ago. Given the depreciation rate of computers, resale value is pretty low on the list. Basically, paying extra for a feature I don't want in order to increase the resale value doesn't motivate me because it won't increase the resale over the additional cost. Why spend $500 on something to increase the resale $200?

    Cars? I buy them to last a decade or more in my possession - Of course, the reason toyotas have higher resale values when used is that they last forever - that's a consideration.

  • by benedictaddis ( 1472927 ) on Thursday June 04, 2009 @11:12PM (#28218019)
    An identical situation - where the original producer gets a cut of every subsequent sale - has been happening across Europe in one particular very high value market for nearly a decade now. It's called droit de suite, and it's granted on art sold at auctions to make sure that impecunious artists get a cut of the multimillion resale values of their art. [] It's a pretty contentious issue, especially for us mercantile Brits.
  • by Swampash ( 1131503 ) on Thursday June 04, 2009 @11:49PM (#28218229)

    Valve Software recently announced that during the recent "75 percent off" sale on Steam, Valve made more revenue than when the games were at full price. Lots more people bought the games.

  • by Chaos Incarnate ( 772793 ) on Friday June 05, 2009 @12:19AM (#28218385) Homepage
    It's the only way to make a net profit on used sales; otherwise, the store has to eat whatever books or games it bought but wasn't able to resell.
  • That hourly rate neglects risk. Not all games are created equal. There's a certain risk that you're going to get a game, open it up, start to play it, and realize it sucks.

    If you realize a $60 game sucks, you're out $60, or at least ($60 - (resale value)). If you've only paid $10, that's the most you risk losing.

    Consumers are understandably wary of plunking down more than a couple of bucks unless they're very sure they're going to like the game. This is why it's a lot easier to gain traction and marketshare in the low end "casual game" end of the market, but also why there seems to be so little innovation at the high end. People are willing to take risks only when they don't have too much skin in the game.

  • by Mr2001 ( 90979 ) on Friday June 05, 2009 @02:45AM (#28219103) Homepage Journal

    A combination of government interference through CAFE standards, EPA emissions standards, a host of other regulations going far past the point of reasonableness [...] killed/is killing the US car companies.

    There are many things wrong with that statement, but the most obvious is that those regulations apply equally to all automakers who want to sell in the US. GM and Chrysler didn't have to meet higher standards than Honda, Toyota, or even Ford. They failed because of their own poor management (plus rising health care costs and legacy obligations from contracts signed decades ago).

  • Laws CAN be amended. (Score:3, Informative)

    by tepples ( 727027 ) <> on Friday June 05, 2009 @07:02AM (#28220219) Homepage Journal
    Anonymous Coward wrote:

    Console games CAN be rented out.

    As of June 2009.

    So you just turned up a blank card, doofus.

    I mentioned 109(b) to show that the law already discriminates among formats and that major video game publishers could lobby the U.S. Congress to have the law amended to discriminate further.

  • by tepples ( 727027 ) <> on Friday June 05, 2009 @07:07AM (#28220239) Homepage Journal

    But you can lend it out for free at the library?

    Yes. From the statute in question [], with my emphasis:

    Nothing in the preceding sentence shall apply to the rental, lease, or lending of a phonorecord for nonprofit purposes by a nonprofit library or nonprofit educational institution. [...] Nothing in this subsection shall apply to the lending of a computer program for nonprofit purposes by a nonprofit library, if each copy of a computer program which is lent by such library has affixed to the packaging containing the program a warning of copyright in accordance with requirements that the Register of Copyrights shall prescribe by regulation.

  • by commodore64_love ( 1445365 ) on Friday June 05, 2009 @08:26AM (#28220749) Journal

    Precisely. And I think this quote is frakked up:

    "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." Ahhhh. Poor baby. What's next? Chrysler's going to demand a piece of my profit when I sell my Avenger? Honda's going to demand a percentage of my Insight, because my poor neighbor bought used instead of new??? Judas Priest.

    Fuck em.

    (pulls out gun). Come on Chrysler and Honda and RIAA and Squaresoft and Sony and Toshiba. I DARE you to try to take the money I earned when I sold my used games, computers, cars, VCRs, or any other object your greedy mafia-like hands try to grab. You might get the money, but it will cost you your life Mr. Mid-level manager, because I'm not letting go out it voluntarily. Frakking bastard.

  • by mcgrew ( 92797 ) on Friday June 05, 2009 @09:31AM (#28221397) Homepage Journal

    I paid ten bucks for a Schwartzenegger (sp) double feature, Terminator 2 and Total Recall. I've seen both these movies several times (I loaned my previous copies out and never got them back), and will probably watch them a lot more.

    That's five bucks per movie. Terminator 2 cost $102,000,000 to make, acording to Wikipedia []. How much did that sixty dollar game cost to produce?

    If the idiot game publishers would sell games at a reasonable price, they would make a hell of a lot more money. Games are WAY overpriced.

    When movies first came out on tape, they were priced as stupidly as games, $60-100. They didn't sell very many. Now that you can buy a movie at Wal Mart for five bucks, they're making shiploads of money off of them.

  • by Jerf ( 17166 ) on Friday June 05, 2009 @10:46AM (#28222401) Journal

    You don't appear to have actually read my message, you seem to have read what you assume my message would contain instead. If they "understood perfectly" that they will reduce their net incomes with this move, they wouldn't do it. Therefore, they don't understand.

    Read that link I sent; in fact, read the book. It's quite interesting. It's counterintuitive, but quite simple and you can see examples of this stuff where ever you look.

Truth is free, but information costs.