Preowned - It's Killing The Industry!!!

[ChrisN]

The reason that the motor trade works in such a manner is due to the fact a car is normally the most expensive item you will buy apart from your home. Due to this people wish to get the most from the vechile in tems of life span, so I'm not convinced that comparing a £40 product with one that is £10,000-ish is a good call.

The only difference is scale. The fact a copy of Rocky can be bought and sold 7 times with the game studio only getting the money once, and a Nissan Micra can be bought and sold 7 times with Nissan only getting the money once is exactly the same.

[ChrisN]

A better comparison in that way would be to compare downloads to upgrades made to vehicles, which is a far smaller market and would be comparable to the "hardcore gamer" market that Onion originally dismissed.

I didn't dismiss it, I said that the games studios should ignore it if they want to stay in business.

Just like Ford, Nissan, Volvo etc ignore most of the upgrade market in cars.

[Hawkeye]

The only difference is scale. The fact a copy of Rocky can be bought and sold 7 times with the game studio only getting the money once, and a Nissan Micra can be bought and sold 7 times with Nissan only getting the money once is exactly the same.

No it's not.

Does a game require repairs to be made that filter money back down through many sectors of the industry? Are you legally required to keep the game to a set standard that force you to carry out these repairs?

No. It's totally different.

[DJ Sack]

To undercut the highstreet significantly enough to make purchasing a second hand CD attractive to the punter, the store would have to give me pittance for my CD in the first place - I may as well keep hold of it.

But how does game charging 34.97 for a second hand game compared to 39.99 mean that people buy the second hand game more often? Games preowned prices used to be alright but now they are very expensive. Personally i dont find saving a fiver attractive enough, but many people do.

[Hawkeye]

I didn't dismiss it, I said that the games studios should ignore it if they want to stay in business.

Just like Ford, Nissan, Volvo etc ignore most of the upgrade market in cars.

No they don't.

They actively pursue it, but tend to price themselves out of the market. Plus looking at your mental comparison like this brings up another issue. In the motor trdae third parties make many un-official upgrade parts, so what if your "mission pack" is up agianst a third party "mission pack"?

This is how it works in the motor trade. What if people prefer the third party extras?

[George Clooney]

But how does game charging 34.97 for a second hand game compared to 39.99 mean that people buy the second hand game more often? Games preowned prices used to be alright but now they are very expensive. Personally i dont find saving a fiver attractive enough, but many people do.

Prices vary from store to store. Where I work, a £40 game would be put on the shelves at £30. A lot of people would rather save £10.

[Venice Cull]

But how does game charging 34.97 for a second hand game compared to 39.99 mean that people buy the second hand game more often?

Does it? I don't go in all the game stores but £10 usually seems to be the saving, older titles sometimes knocked out at around £12 - £15.

I'm not so sure £5 savings on original titles make up for the majority of second-hand purchases, given that punters may as well purchase a brand new sealed copy.

[Ste Pickford]

This is very interesting. Thinking about my second hand purchasing habits raises another point relevant to the subject.

I buy a fair few second hand books, some second hand comics, and very rarely a second hand video (so maybe one day I'll buy a second hand DVD) or game. Part of the reason is I disutrust second hand optical media, but the main reason for all the second hand purchases I make is availability, not price.

Books and comics in particular are often difficult to find - so many are published and not everything is in print, so second hand is often the only way to get an item you want. Movies suffer from this to a degree, and music hardly suffers from this at all, in that back catalogue items are usually available (for relatively mainstram stuff from the last 50 years at least).

Video games are the absolute worst case; nothing other than the last 3 months releases are reliably available for sale. Game etc will usually have unsold stock going back further than this, but looking for Rocky, Ico or Rez (all games I've tried to buy in the last 6 months) is pot luck, and pre-owned is virtually the only way to play these games.

I agree with some of what the original poster says, and while there's nothing wrong with second hand goods in general, its very strange for the main retailers selling new games to be also selling (and heavily promoting) second hand goods in the same store.

Other than price, what this industry really needs is some mechanism allowing the consumer to purchase back catalogue games. Perhaps machines in-store which burn discs & print boxes on demand, or some recordable media. Hell, even just allowing cheaper downloads of already released games (if security issues could be addressed). This would reduce some of the demand for second hand games, and bring in increased revenue for developers (and publishers) over time, making everybody less dependant in short term hits & licenses.

In the example given, Rage would have continued to earn from Rocky - a game that needed word-of-mouth support - but the game was gone from the shelves by the time word-of-mouth kicked in. Maybe not enough to save Rage, but who knows? I know Zed Two would have had money trickling in every month if Wetrix continued to be available after the 1 month it had on the shelves, judging by the constant emails I've had over the last 6 years asking to buy a copy, and that, along with revenue trickling from our other well-received-but-low-selling releases over the years, might have been enough to keep us alive as an independent developer today.

[Jack]

Perhaps machines in-store which burn discs & print boxes on demand, or some recordable media.

I can remember reading about this kind of service being provided in WHSmiths. It didn't take off, judging by the disappearance of the machine.

[routeburn]

I don't think that any attempt to control the second hand market would work. It would just meet resistance and people would resort to piracy and blatantly ignoring any sort of "laws" covering this type of trade. It's unenforcable.

I do like the comparison with the car industry. So, the reason I buy new or ex-demo cars is that they are covered by a 3 year warranty. Anything goes wrong in the first three years, I just go back to Mr and Mrs Audi and say "it's wrong, fix it". Problem solved.

Taking this over to games, I really liked the distribution method for Time of Defiance (if you've not played it, take a look at http://www.nicelycrafted.com). You can download the software from their website OR you can buy the CD from your local store, which comes with a few months' subscription thrown in.

So let's generalise this a bit more, with more and more games having an online component, and more and more people having broadband or at least some Internet access. How about having a "pay per download model" (or like someone saw in WH Smiths above a sort of burning system in-store), with a kind of subscription for online features, content, or generally the stuff that will make the game "fun".

I was quite happy to pay 15 quid for Time of Defiance from Play.com which came with 3 months of subscription. As it happens, I've not renewed the subscription, but I did enjoy playing it for a while. People should realise that nearly every game has a finite life and after that will sit there gathering dust. Therefore, the cost of the item itself should be minimised and the user should only really pay for the time during which it is being played and ejoyed. This time could be 1 month or 12 months. This is why stuff like Everquest etc. works.

I'm not sure how this sort of thing would be built in to the majority of games, but what I'm trying to get across is that perhaps there needs to be a shift in the business models adopted by games developers and publishers. Move away from the "how many units of game X can we shift" to the a more renewable model. Think how much more money Valve could have made if the original Half Life CD had been based on this? For years after the original game was completed, people are still installing the Half Life CD to play Counterstrike.

This type of business would also encourage sustained development on a given title, technology and game world. Much better than the "$sportTitle 200x" approach at the moment.

[dumpster]

Hello, It's me again.

I can't believe i got 38 replies so quickly, just wanted to clairy a couple of points raised so far.

Stuarts Campbells article in Indie was based on my usenet post when I first left the company I worked for over these and other similar issues. Apparently in the following issue there were letters from industry bods saying "You are wrong" but not giving any reasons as to exactly how.

Most stores aimed for a preowned target of 20%, that is to say, for every £1000, £200 is preowned. When you sell a full range of hardware, accessories etc, and your game sales maybe are 60-70% of your business and 20% of that is preowned, thats 1 in 3 games being sold are preowned. My crazy maths may be a factor, but isnt that at least a third less revenue for the devcos? And also a much shorter shelf life for the new product, as no buyer will purchase new copies of a game when they have preowned ones freely available. Wetrix is a cracking example of this in effect, I would be confident to say we only ever had one shipment of that, of maybe 3 copies???

The analogy with cars is relevant, but it should be noted that a game which is 6th hand, still commands the same secoind hand price, where as a car will wear out and fall apart after a smaller number of owners. Also, someone buying a 6th hand copy of Rocky would probably be doing to thinking it to be second hand. Also someone who buys a very old car would usually do so because they cannot afford a new one. Anyone who pays 34.97 for a preowned game (as given in someones reply) would be able to afford £39.99. Cars is pretty much the only industry that you can make this analogy with.

The comparison with second hand books is not relevant, because the point is that the major high street stores are pushing preowned over new. You do not get second hand books at waterstones, nor second hand cds at HMV.

Finally, if the stores all ditched preowned, then the sales of new would increase, the price of games could become much more realistic, and the industry would grow much more. It seems that buying preowned to save money prevents any movement on the price of new, so the whole thing is totally self defeating.

If the stores continue this logic, the games developers will have to come up with ways to get them out of the loop. This will be downloads (xbox live etc) or direct sales. And it is happening. You can get any new release title online new, for the same price of a preowned one in store. I have a £10 reward card voucher at home, but by buying online, it has become worthless and unusable. Why should I go into the store and just give it away?

Thanks for the responses so far, I am finding this fascinating. Keep it up!

[dumpster]

Should have proof read that last paragraph.....

I mean to say that my £10 voucher is worthless because I can buy online for £29.99 and keep the voucher, or I can go in store and pay £39.99, effectively throwing the voucher down the drain.

I bought Silent Scope Complete yesterday in store - but only because I found HMV doing it at the online price, and got Game to price match.

[George Clooney]

Ste raises a good point. Without preowned, it would be damn near impossible to get some games. Stuff like Ico, Gitaroo man, Rez, all of which people may have missed the first time around.

[dumpster]

Quick one - Tyagi, some good points made there. Only one thing I would like to add, which is, if preowned was banned and everyone turned to piracy, then the only people who would lose out would be the stores - it would make no difference to the devcos at all.

Of your £40, how much goes to the developers?

If it is 10%, does that mean that Rockstar could double their profits by selling GTA as a download from their website for £8?

It seems to me that retail is very close to being removed from the loop.

[theredstar]

I wonder how much sales would increase were pre-owned to cease. We can't agree how many people trade it to enable them to buy new.

If it's loads then you'll only see a small increase (perhaps even a decrease).

My gut instinct is that price is the key factor. People trade in games to:

1. Get some money back

2. Because it galls them to see something of their shelf which cost them £40 which they'll never use again.

Although obviously, the fact that Game make it so easy to trade has got to be a factor.

[dumpster]

Ste and Clooney:

You are right - if there was no preowned, then you would not be able to get a copy of Ico, Guitaroo et al.

Although, if preowned was not an option, then surely, if the demand for the game was there, the publishers would make more to satisfy demand.

I think there would be a big demand for a game like "Metal Gear Solid 1" on PS1 (maybe for fans of the new ones), at a budget price of a fiver for example, but it wont happen because shops already have it at that price in a way that benefits no-one but themselves.

[Venice Cull]

Finally, if the stores all ditched preowned, then the sales of new would increase, the price of games could become much more realistic, and the industry would grow much more.

The industry would certainly not lower the price of games if everyone bought them at full price.

[TheSlugFormerlyKnownAsNap]

I do agree with the points raised in this post, but the industry itself is to blame as well. While you can happily buy a book, DVD or CD for quite a reasonable amount of money new, or with a good discount a few weeks later, games are VERY expensive and REMAIN expensive. There is a huge market for cheaper games, and more and more games are short and not really suit to play through again. So you get a lot of people with finished games who want to buy new ones, so they trade in their old stuff. You also have a group of people who think games are too expensive, and they buy the pre-owned stuff. In an industry were the prices are on an artificially created high level, supply and demand creates a balance eventually. So basically the businessmodel of the publishers are wrong. The shops and it's customers are just the messengers.

[Halo]

I believe this is an easy way for games prices to increase. Pre-owned prices push new game prices down. For example, a game would be released at £40. And it would stay at £40 until they are sold since there is no alternative way of buying the game cheaper. 3 years later I wouldn't be have been suprised if GT3 was still at that price, as people who want the game have no other sources for it.

If pre-owned became illegal, I wouldn't be able to afford any games as I'm a poor student. Simple as that. That way no-one makes any money... the retailer, the publisher, the developer, the console creator. The "industry" is also how you define it - what isn't part of the industry? I think you'll find the games shops are part of the games "industry" as a whole. I also think that without pre-owned games, many retailers would be in trouble.

You also seem to assume that without preowned the money would go to the developers because people will buy more games. Alternatively, the money would go to someone buying CDs instead of buying games at their new, rip-off, prices. Assuming that people would buy more new games is a false assumption... chances are many people would buy other stuff instead.

I also have to mention that many pre-owned games are traded in to buy new games. I bet a suprising amount of games sales are made out of the cash from buying pre-owned games.

[Hitcher]

Preowned is self defeating anyway- I am sure that, if there were no preowned sales at all, the sales of new games would be that much higher, so therefore they could be cheaper, negating the need for preowned in the first place.

Chicken and egg situation.

I think it's fair to say that most trade-ins result in a new game being brought which does help the industry, so I fact stopping this could result in less games being sold.

[TheSlugFormerlyKnownAsNap]

Maybe retailers should pay a percentage of revenues of pre-owned games to the publishers as well.

[Robo_1]

Maybe retailers should pay a percentage of revenues of pre-owned games to the publishers as well.

Exactly what I was just thinking. Surely if Game were forced to pay a percentage of each second hand game sold, back to the original publisher, there would be no problems.

[Venice Cull]

Exactly what I was just thinking. Surely if Game were forced to pay a percentage of each second hand game sold, back to the original publisher, there would be no problems.

That would be a logistical nightmare surely, and what would the independants do? Who would monitor this?

[Hitcher]

I personally think it helps the industry but without any hard facts and figures no-one knows.

[Venice Cull]

I personally think it helps the industry but without any hard facts and figures no-one knows.

Yeah, it's a difficult one. I've personally traded in second hand games for second hand games before. But I do understand your point.

[JPickford (retired mod)]

Is Pillage less likely to be traded than FFX-2?  If so why?

No of course not. The point is nobody needs to trade a game in order to afford a $19.99 game. A $50 game is a different matter. I don't know what the UK price will be for Pillage.

Getting £10 off a £40 game (by trading in an old game) is far more attractive than getting £5 off a £20 game.

[routeburn]

Something I was going to add to my post about a more subscription-based model for games - if the price of the actual media (or initial item purchase) is kept low, then it's feasible to suggest that more units would be sold. The game store would make their margin on this and that is fine. After the initial purchase, the developers (and/or publishers) would continue to make money without a portion of it going to middle men.

I'm a very big fan of direct sales from developers/publishers to the consumer. Ideally, even ruling out the publishers although these are the outfits who can add a lot of publicity, marketing and a commercial angle to development effort, so do add quite a bit of value. The greater the percentage of profit that is given directly to the developer/publisher, the healthier the industry.

Let's face it, the only reason game stores exist is so that people can walk in and buy a piece of media off the shelf. We need to ask whether this function is required any more (see other another thread on rllmuk about the end of game stores compared with online sales).

Personally, I think the fact that games come on a piece of physical media is an inconvenience. With XBox, for example, I'd quite happily pay a subscription for the games I play and just download them straight to HDD. Saves clutter in my living room from stacks of game boxes.

[theredstar]

No of course not. The point is nobody needs to trade a game in order to afford a $19.99 game. A $50 game is a different matter. I don't know what the UK price will be for Pillage.

Getting £10 off a £40 game (by trading in an old game) is far more attractive than getting £5 off a £20 game.

Sorry, I meant traded in rather than traded for.

Didn't make that very clear did I ?

[Meh]

dumpster, you so keraaazzzyyy!

Once the developers put the game prices down to second-hand prices, I'll buy brand new every time.

They have no reason not to.

[JPickford (retired mod)]

Sorry, I meant traded in rather than traded for.

Didn't make that very clear did I ?

I know what you meant. I don't think the price makes it less likely to be traded IN I think the low price makes it less likely for the buyer to NEED to trade in another game.