Preowned - It's Killing The Industry!!!

[Alex W.]

But not all preowned items are necessarily games; GAME sell pre-owned consoles and accessories.

[Alex W.]

Come to think of it, how can you draw any conclusions for unit sales of pre-owned and new games software from target profit or gross sales (never did state which...) values of pre-owned games and hardware for one store chain?

[whohe]

Retail is the only branch of gaming to actually make a year-on-year profit.

Simply not true (proved many moons back, and I'm not gonna do it all over again just for the sake of argument).

I wonder how different games sales would be if GAME's prices were closer to Amazon's prices (just what are the wholesale prices on games? If Amazon/Play.com/everyone else can sell them for £30 and still make a healthy profit, it can't be much more than £25).

The only reason Play can make a profit selling games at the prices they do is, of course, because there's no VAT element in their selling price.

The whole world and his dog know that Amazon have only recently started to make a profit. For the quarter ending 31/12/03, Amazon's net income was less than 4% of net sales.

FWIW, Game's market share of the UK video games market is around 25%. Simply put, that means there are a shed load of games being bought out there (generally by your average Joe on the street) that are not being traded in within 10 days.

Game's net income for FY02/03 was only 2.2% of net sales.

Odd that. Given the views of many in this thread, you'd expect Game to be raking it in because of the "massive" profit margins they make on second hand games.

Or maybe it's simply because we have an extraordinarily biased view of "the industry" from our viewpoint as "hardcore" gamers. Hardcore gamers could disappear overnight and it probably wouldn't even effect the size of the UK games market by a single percentage point.

[Alex W.]

Simply not true (proved many moons back, and I'm not gonna do it all over again just for the sake of argument).

Well I'd appreciate something a little bit more conclusive than that. Did the folk who first made the statement only base it on GAME's published profit figures and compare them to game publishers' ones or something? I don't think GAME are raking it in, I do think they're making a healthy profit (healthy enough to become a quarter of games retail, as you pointed out), and I do believe that things would be different if prices lowered. I'm not a hardcore nob, and I'm trying to prove the point that pre-owned games aren't particularly harmful to the industry (nor are 10-day returns) and that they would be even less of a problem if consumers were more convinced that a game is something worth keeping a hold of, so I don't appreciate the attempt to throw out my arguments as being "biassttt!11".

[bplus]

In some uni lecture i had , there was some test case about software licenses, (cant remember what about) but the judge ruled that software is niether goods or services but has or shuld have its own category. I think this relates to selling second hand games if you see what i mean.

I think that if game sells a second hand game it should have to pay a percentage of the profit to publishers etc, but then what about ebay??

As far as developers are concearned there is no diffrence between piracy and pre owned games.

[Alex W.]

I'm not sure whether I like or despise the idea of games being licenced, not sold. On one hand, there's all this malarkey with stuff in the US where you agree to a licence agreement held inside the box when you unwrap said box, and on the other, you have the legal right to back-up your games and hold onto them for eternity, and the idea of publishers getting money for second-hand sales is an appealing one (although it would obviously be a major headache for anyone trying to obtain/sell games on ebay or via car boot sales etc.)

[Hitcher]

I still believe that a lot of new release sales are made on the basis of trading in an older game.

I know for a fact this happened at an indie a friend used to run every week.

[whohe]

Well I'd appreciate something a little bit more conclusive than that. Did the folk who first made the statement only base it on GAME's published profit figures and compare them to game publishers' ones or something? 

Sorry to disappoint, but I can't be arsed. Believe what you will.

I don't think GAME are raking it in, I do think they're making a healthy profit (healthy enough to become a quarter of games retail, as you pointed out), and I do believe that things would be different if prices lowered. I'm not a hardcore nob, and I'm trying to prove the point that pre-owned games aren't particularly harmful to the industry (nor are 10-day returns) and that they would be even less of a problem if consumers were more convinced that a game is something worth keeping a hold of, so I don't appreciate the attempt to throw out my arguments as being "biassttt!11".

Forgive me - I picked up on a particular point in your post, and then went on to make some more general points not necessarily related to what you posted - I should have made the distinction clearer.

I agree that the existance of a pre-owned games market can't be making a significant impact on the industry, simply because I don't believe the pre-owned market is actually as big as many here would have you believe. Despite the numerous apocryphal stories here, the mere fact that Game only have a 25% market share - and the fact that the 2nd hand game proportion of their sales will be a fraction of that - proves it.

As to "I'm not a hardcore nob", how many games do you buy a year? If it's more than one a month or so, you most certainly are when compared to your average punter.

[Alex W.]

I already used PES2 as an example; I looked bemusedly at some 60 copies of PES in GAME Prince's Street's pre-owned bin, and a member of staff kindly explained that they'd advertised the reduced price of PES2 when you trade in PES. Seeing as PES2 is more or less an upgrade pack, PES-fans had shown up in droves. If PES2 had been a more significant change for the series, things might've been different.

[whohe]

I still believe that a lot of new release sales are made on the basis of trading in an older game.

I know for a fact this happened at an indie a friend used to run every week.

And your friend's share of the UK market was what?

[Alex W.]

Forgive me - I picked up on a particular point in your post, and then went on to make some more general points not necessarily related to what you posted - I should have made the distinction clearer.

As to "I'm not a hardcore nob", how many games do you buy a year? If it's more than one a month or so, you most certainly are when compared to your average punter.

Sorry, I guess it was quite obvious... and in the past 12 months I have bought... 1 piece of hardware, and about 9 games. I consider myself a serious gamer, but unless a title strikes me or I have >£100 left at the end of a term, I don't really buy games.

[Alex W.]

This seems as good a time as any to sum up what I'm saying before I become too confusing:

Pre-owned titles are not a major threat to the games industry, but they'd be even less of a threat, and games would be more profitable in general, if games were more worth keeping a hold of. At the moment, there are a huge number of gamers who think "Well, I'll probably not play this again, and it would get me £10 off that new thing..." and immediately pop down to the Black and Purple.

[whohe]

I already used PES2 as an example; I looked bemusedly at some 60 copies of PES in GAME Prince's Street's pre-owned bin, and a member of staff kindly explained that they'd advertised the reduced price of PES2 when you trade in PES. Seeing as PES2 is more or less an upgrade pack, PES-fans had shown up in droves. If PES2 had been a more significant change for the series, things might've been different.

PES sold well over 200,000 copies in the UK

Game have 335 or so stores in the UK. Even if we assume there were 60 copies in each and every store, that would only represent less than 10% of the total sales for the game.

[Alex W.]

PES sold well over 200,000 copies in the UK

Game have 335 or so stores in the UK. Even if we assume there were 60 copies in each and every store, that would only represent less than 10% of the total sales for the game.

Well, quite. I imagine it was an exceptional situation, too- it's probably one of the busiest GAME stores in Scotland.

[whohe]

This seems as good a time as any to sum up what I'm saying before I become too confusing:

Pre-owned titles are not a major threat to the games industry, but they'd be even less of a threat, and games would be more profitable in general, if games were more worth keeping a hold of. At the moment, there are a huge number of gamers who think "Well, I'll probably not play this again, and it would get me £10 off that new thing..." and immediately pop down to the Black and Purple.

I simply don't see any evidence presented in this thread whatsoever to back up a statement such as "there are a huge number of gamers who think...".

hasty edit -

that could be misinterpreted!

... a statement such as "there are a huge number of gamers who think "Well, I'll probably not play this again, and it would get me £10 off that new thing..." and immediately pop down to the Black and Purple."

[Alex W.]

Huge in vague, nebulous terms. I think "reasonably significant" would've been a better description. Like I say, it's not enough to be a major threat to the industry, and if the industry has a problem with it, the main way of fixing it is for them to make people want to keep their games.

[Dimahoo]

If the industry is that bloody worried about retailers selling their games more then once, then they need to bring the prices down.

They'll get more first time sales.

Fuck, if i'm gonna pay 40 for some crap like Die Hard Vendetta

('better then Goldeneye' - With twat comments like that, its no wonder the industries going to die)

I mean, its not hard is it.

Stop the two 'potentially' biggest killers to the industry.

And they just want to make money. Well it deserves to die.

No disrepect to the Devco's but you'll be fine.

People forget there will always be someone left to pick the the pieces.

There is a DEMAND for games.

And there always will be.

[Alex W.]

That's what I'm getting at- not just the price thing (prices have a lot of inertia, seeing as so many parts of the industry are used to them being fixed), but the idea that a game is something that you'd want to hold onto in general. I wouldn't part with Metroid Prime, ever, but I probably would part with something like Die Hard, even if it cost £20 (as someone pointed out quite rightly and I didn't take seriously).

[whohe]

Huge in vague, nebulous terms. I think "reasonably significant" would've been a better description. Like I say, it's not enough to be a major threat to the industry, and if the industry has a problem with it, the main way of fixing it is for them to make people want to keep their games.

Semantics aside, as you rightly pointed out - the PES example was an exceptional one. Here was an instance where you were in a big store, and people were being specifically incentivised to bring back a particular game, and even then a tiny minority (I think it's fair to call 10% a tiny minority) of people traded it in.

But no-one's getting hurt by this - except potentially Game who are taking a risk that they can shift the traded in games for more than they paid for them (not forgetting they have to pay VAT on the resell price of the game).

The developers and publishers are actually winning here - the retailer is incentivising people to buy more copies of the new game, and the developers and publishers still get their full cut.

The people who use Game effectively as a rental market are in the tiniest of minorities. Apocryphal stories of the same SKU being sold 10 times over are meaningless - if this was happening on a significant scale then Game would be raking it in, and they're not.

If the industry truely does have "a problem with it", I'd love to see what they're basing their opinion on.

[Alex W.]

Well, that's just it- it's not clear that the industry has any problem. Hence the "if". I can't see Konami mourning lost PES sales post-PES2, but I could see them worrying that people are trading in MGS2 (and thusly there are some people buying second-hand rather than full-price MGS2) to buy, say, Splinter Cell 2. Even then it's a minor effect. Seems like many people in this topic (including myself) have become more concerned about arguing over why people trade in, as opposed to whether it has any significant effect on profits.

[Dimahoo]

The developers and publishers are actually winning here - the retailer is incentivising people to buy more copies of the new game, and the developers and publishers still get their full cut.

The retailer is incentivising people to by their *preowned* copy of the game.

Not an orignal.

*I'd suspect* most people would by a cheaper game if its available, and if its a parent (talking mainstream games), there even more chance.

[Alex W.]

The retailer is incentivising people to by their *preowned* copy of the game.

Not an orignal.

No, they're not- they're offering PES2, cheaply, when people trade in PES. This means that for every one of those PESes I saw there (60) one PES2 was sold. Now, this is going to hurt sales of new copies of PES, but I think the release of PES2 might've done that on its own.

[whohe]

Right. All the way back to square one:

So when you trade in your game for about £15 and it is sold for £30 to £35, that’s far more money than the store would make selling new games.

Cost price of a new game from the publishers is of the order of £25.

Selling price of a new game, without any discount is of the order of £40.

Gross profit to retailer, after VAT = £9.04

Cost price of old game traded in is of the order of £15

Selling price of that game is £30

Gross profit to retailer, after VAT = £10.53

£1.49 is not what I would call "far more money". And that's completely ignoring any associated costs with actually stocking the game. New games sell by the bucketload, but only require a minimum of shelf space to sell - simply put a handful out on display, and sell hundreds from the stockroom. I very much doubt Game do much allocation of costs against floorspace, but if they ever got round to it, I wouldn't be at all surprised if they found out they actually make less money on pre-owned than they do on new.

Now there's been a lot of mention of how supposedly "the industry" sees trade-ins as a threat - but can anyone actually point me to quotes? Because it looks to me as if it's mere idle speculation.

[Alex W.]

Actually most pre-owned titles sell for £25 or less, not £30.

[whohe]

Actually most pre-owned titles sell for £25 or less, not £30.

No need to do the maths there then.

Clearly you and I are in broad agreement on all of this.

Whilst it certainly makes for interesting and entertaining discussion, I can't help thinking that the premise in the very first post is fundamentally flawed on so many levels that it's unfortunately all rather pointless.

[Alex W.]

You could've just said:

o/\o

[whohe]

You could've just said:

o/\o

Well I guess I could've if I had a clue what it meant!

[Alex W.]

A high five for agreement. It's a gag.

[Dimahoo]

I can see the argument that if I hand back a title i've finished, and its sold again at a price cheaper then the full price game, then a person has the chance to by the game at the cheaper rate, rather then pay for another full game.

So the shop does not need to order another (and if done large scale, they don't need to order a new batch) - Is that right?

Okay, so bring the price down to 20 per game, and your *more likely* to sell both copies first time.

(Of course the flaw here is that you could still sell the game again, but at £10 I guess).

No actualy point here. I'm just trying to get my head around it (i don't actually work in any part of the industry. I just buy the games).

If i like the game, of course, i'll keep it until the next version

(but if the industry feels they have to pump out newer versions - then its their loss really).

[whohe]

Oh God. I've just read that "Man on the Street" article. What a load of tosh (not to mention the fact that its premise completely destroys the fairplay argument)