Preowned - It's Killing The Industry!!!

[Alex W.]

I have absolutely no idea what you just said.

[Dimahoo]

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

Where?

[Alex W.]

You know what's interesting- if games were cheaper, then people would buy more, but as a result, you'd lose the selective pressure you have now on the industry to create a commercially-successful product. While this could mean that titles like Rez which are doomed to commercial failure might sell a few more units, I could see a horde of low-budget titles flooding the market and completely hiding Rez etc. in behind a wall of averageware.

[whohe]

Where?

http://ds.dial.pipex.com/thumbs.aloft/wos/...ndie/mots14.htm

"And what’s more, with two new-to-him games to play instead of one, it’s probably going to be twice as long before he comes back again."

Games at £20 a pop eh? Cool. But oops - I'm still buying the same number of games over a given timescale, so I'm actually spending half the amount of cash on games.

That's the problem with poorly constructed arguments - you end up completely contradicting yourself when faced with different scenarios.

It was more of an aside rather than anything else - I'd hate to go through all that again.

[Alex W.]

That's amazingly true. The average gamer will generally only buy a few games each year that he/she really wants, and not buy any more until they've exhausted their current games. They've certainly not got any shortage of disposable income.

I'd say that the current "Fight that gaming flab!" thread shows a similar attitude is growing here too.

[Dimahoo]

Games at £20 a pop eh? Cool. But oops - I'm still buying the same number of games over a given timescale, so I'm actually spending half the amount of cash on games.

Thats a very good point. I must admit though, if i want a game that bad, i'll impulse buy there and then.

The games i buy S/H are those that i'd never have intended buying at full price anyway, become i'm completely against the overpricing of many games.

[Kyoshiro]

People just consider games a throwaway experience, especially your average Joe. There is no sense of property involved in having a nice copy of the physical game on your shelf as opposed to books, dvd's and music cd's, though music cd's seem to be heading that way now according to a lot of the people I talk to

In a way the games industry itself feels that way when you consider the shoddy effort put into the box art and all these online distribution scheme.

[Dimahoo]

People just consider games a throwaway experience, especially your average Joe. There is no sense of property involved in having a nice copy of the physical game on your shelf as opposed to books, dvd's and music cd's, though music cd's seem to be heading that way now according to a lot of the people I talk to 

In a way the games industry itself feels that way when you consider the shoddy effort put into the box art and all these online distribution scheme.

I can't help thinking the throwaway expirience is brought about by either shoody games, and (in both music and games) complacently through piracy.

[dumpster]

It's me again. I refer to my original post.

I have just rewritten the original post, clarifying points that I was leaving unclear originally. Its here:

Dumpster

For those who disagree, please bear in mind that I was a retail manager at Game for seven years - I'm not here to reveal company sensitive information, but I do know the figures, and the profit on preowned games is way higher than new ones.

I am now stuck between a rock and a hard place, because I have the information I need to basically say "I AM RIGHT" but I can't because I'm not revealing anything company sensitive out of respect for my ex colleagues. So I have to ask you to trust me.

There IS a company policy of recommending a preowned over a new game at all times.

I was offered £15 for Project Gotham 2, its on the shelves now at £29.97, and trust me, with a lower tax braket on used goods, thats a lot more money that they will make selling a new one.

Lets say in the future, as Broadband becomes more standard, that 50% of all Xbox owners get Xbox live. Microsoft have an opportunity to sell them Project Gotham 3 direct, as a download, or by mailing the DVD directly to the customers. Do you think that they would ignore this very lucrative possibility? I don't.

My original post is basically to say that, in such a small industry, the emphasis on preowned by the MAJOR PLAYERS is far too high. Preowned is deliberately putting all the profit in the store and none with the developers. Developers go bust = no games. Retailers move along and start to sell something else (anyone else know that Electronics Boutique originally sold greetings cards? They could go back to doing that if the games sales dry up).

Thats all.

[Hitcher]

...and the profit on preowned games is way higher than new ones.

So if pre-owned games were banned that would definitely result in lower profits for game shops and maybe higher prices for new games or even even closure of the shop.

Let's face it, any business wants to make the biggest profit they can.

[Alex W.]

If the kids weren't buying them via GAME, they'd probably be buying them off eachother. I know there was a healthy trade in games at might school- hell, come to think of it, few people bought new games, electing to temporarily swap their recent purchases with mates upon completion.

*Prepares for Spacey taking the piss after that FF7 Disk 1 incident*

[whohe]

It's me again.  I refer to my original post.

I have just rewritten the original post, clarifying points that I was leaving unclear originally.  Its here:

Dumpster

For those who disagree, please bear in mind that I was a retail manager at Game for seven years - I'm not here to reveal company sensitive information, but I do know the figures, and the profit on preowned games is way higher than new ones.

I am now stuck between a rock and a hard place, because I have the information I need to basically say "I AM RIGHT" but I can't because I'm not revealing anything company sensitive out of respect for my ex colleagues.  So I have to ask you to trust me.

There IS a company policy of recommending a preowned over a new game at all times. 

I was offered £15 for Project Gotham 2, its on the shelves now at £29.97, and trust me, with a lower tax braket on used goods, thats a lot more money that they will make selling a new one.

Lets say in the future, as Broadband becomes more standard, that 50% of all Xbox owners get Xbox live.  Microsoft have an opportunity to sell them Project Gotham 3 direct, as a download, or by mailing the DVD directly to the customers.  Do you think that they would ignore this very lucrative possibility?  I don't.

My original post is basically to say that, in such a small industry, the emphasis on preowned by the MAJOR PLAYERS is far too high.  Preowned is deliberately putting all the profit in the store and none with the developers.  Developers go bust = no games.  Retailers move along and start to sell something else (anyone else know that Electronics Boutique originally sold greetings cards? They could go back to doing that if the games sales dry up).

Thats all.

Two points -

Firstly, you still appear to be unwilling to provide a single reference where "the industry" is decrying the existance of a second hand market in video games.

Secondly,

I was offered £15 for Project Gotham 2, its on the shelves now at £29.97, and trust me, with a lower tax braket on used goods, thats a lot more money that they will make selling a new one.

is complete rubbish.

The VAT rate for second hand goods is exactly the same as it is for new goods - 17.5%. The only way to reduce the amount of VAT paid when selling something second hand is under the Margin Scheme (HM Customs and Excise Notice 718 - available to read here if you're suffering from insomnia).

Under the Margin Scheme, retailers of second hand goods who purchase those goods from non-VAT registered sources are able to charge VAT on the margin between the cost and selling prices.

In order to comply with the Margin Scheme, Game would have to individually track every single SKU that has either been purchased outright from a customer, or traded in by a customer (because obviously - the effective cost price to Game is different whether or not a game was traded in by, or purchased for cash from, a customer). Think about it logically -

If I sell a game to Game, then they might give me £15. If I trade it in against a new purchase, then might give me £20. Clearly, when Game then sell that game on, the cost price to them (and hence the VAT due on the margin between the cost and selling prices) is different.

Can you confirm this is done?

Can you confirm that if I ask for a VAT receipt on a second hand game that it will detail the cost price paid by Game to the customer before calculating the margin VAT?

FWIW, I don't believe Game could possibly be operating under the VAT Margin scheme for one simple reason -

One of the prerequisites for operating under this scheme is that you must keep records of the name of the purchaser of the item when you sell it on.

To the best of my knowledge, if I walk into Game and buy a second hand item with cash, they show no interest whatsoever in who I am.

[Alex W.]

whohe in putting-in-a-lot-of-effort non-shock! I'm glad I'm on your side here.

I've got to admit to never being pressured to buy traded-in games... certainly lots of stuff advising folk to trade their games in, but not to go into the pre-owned buckets.

[Parasol_Star]

Surely the degree of interest that this topic has produced displays an element of confusion on this issue - despite the slightly skewed contribution of certain posters.

I feel an obligation to support Dumpster on the pushing of preowned, mainly because when I was employed by him, the pushing of anything over and above customer wishes was a significant element of discussion, and Game DO encourage the preferential sales treatment of preowned games.

I bow to the immense amount of effort whohe has put into his responses and have neither the expertise nor the energy to argue against the majority of his points, but if what he says is correct then surely Game as a company are operating on a misconception at best, if not complete incompetence. This is a worry for the games industry because, like them or loathe them, Game are an important aspect of the retail environment and their purchasing power can directly influence developers and publishers if they are making such fundamental errors.

Personally, I have benefitted from preowned games, not least when working at Game, but the sad truth is that most preowned titles sold are not a gaming fan tracking down a copy of Gitaroo Man etc but simply the pushing of whatever title has been traded in most recently in great numbers to anyone and everyone.

On a related note, the fact that Game have begun to push their preowned prices upwards may suggest that their sums have been wrong, althought the level of greed and obsession with targets is perhaps a more likely cause.

Apologies if this is somewhat unclear, but it's not often I have to write about something other than the sixteenth century, and it tends to hurt my head when I try.

[Hitcher]

the pushing of anything over and above customer wishes was a significant element of discussion, and Game DO encourage the preferential sales treatment of preowned games.

Isn't that just the same companies pushing the customer into buying their insurance on product because they'll profit more from that than whatever you've just brought from them?

[whohe]

Surely the degree of interest that this topic has produced displays an element of confusion on this issue - despite the slightly skewed contribution of certain posters.

I feel an obligation to support Dumpster on the pushing of preowned, mainly because when I was employed by him, the pushing of anything over and above customer wishes was a significant element of discussion, and Game DO encourage the preferential sales treatment of preowned games.

I bow to the immense amount of effort whohe has put into his responses and have neither the expertise nor the energy to argue against the majority of his points, but if what he says is correct then surely Game as a company are operating on a misconception at best, if not complete incompetence. This is a worry for the games industry because, like them or loathe them, Game are an important aspect of the retail environment and their purchasing power can directly influence developers and publishers if they are making such fundamental errors.

Personally, I have benefitted from preowned games, not least when working at Game, but the sad truth is that most preowned titles sold are not a gaming fan tracking down a copy of Gitaroo Man etc but simply the pushing of whatever title has been traded in most recently in great numbers to anyone and everyone.

On a related note, the fact that Game have begun to push their preowned prices upwards may suggest that their sums have been wrong, althought the level of greed and obsession with targets is perhaps a more likely cause.

Apologies if this is somewhat unclear, but it's not often I have to write about something other than the sixteenth century, and it tends to hurt my head when I try.

I can assure you the effort was minimal.

Game's encouragement of sales of preowned games is only to be expected - afterall, I would suspect (although I don't know it for a fact) that contracts for new releases have some sort of sale or return basis and so there is very little inherent risk on selling a new title. Pre-owned however carries a degree of risk in assuming that you can re-sell the product you bought at a higher price than you paid for it.

The simple fact of the matter is that the pre-owned business is minimal compared to the size of the new market - the PES/PES2 example provided goes some way to indicating (though of course not proving) this fact, as does Game's gross margin on product sold (28% after VAT for the entire business - for a game selling at £40, with a cost price of £25, the gross margin is 27%).

Look at the title of the thread - "Preowned - It's Killing The Industry". And yet, not one solitary reference to back up the claim.

I think that says it all.

[Concrete Donkey]

I havn't had the chance to read all the posts on this thread, but I'd like to throw in my two cents.

I work as a clerk in a small computer game store, which sell both New and Pre-owned titles. I can tell you now that under the current structure, this store and many like it would no longer exist. Profit margins are slim on new games, slimmer still on new Hardware. Where the recomended prices are £40 we sell for £35, as does the other major players in town.

Those of you who have worked in the buisness can imagine how much our profit margins on these are, taking into account all the taxes that apply. Selling New games is often a big gamble. As mentioned earlier in the thread games don't sell in huge numbers after the first few weeks, so if a title underpreforms your stuck with multiple copies of a game you know arn't going to sell. Any profit made on the title is swollowed up by those that didn't sell or sold on sale at below cost. You dont get your money back from supliers if they dont sell. If you dont stock enough, you can't restock until after the weekend (which is when most copies sell.) By then it's too late.

Second hand products make up for all that. We as a store can set the prices for how much we take titles in for, and so can control how much we sell them for. We make more of a profit on them and can better componsate for those titles which dont sell and reduce titles over time.

My sugestion to the industry would be for publishers to eliminate the risk associated with selling new games, getting trade refunds on sealed copies of the game. It will eliminate our need to rely on preowned titles to pay the bills and we'll be able to stock more titles and for longer. I hope to post more on this thread later.

[ChrisN]

My sugestion to the industry would be for publishers to eliminate the risk associated with selling new games, getting trade refunds on sealed copies of the game. It will eliminate our need to rely on preowned titles to pay the bills and we'll be able to stock more titles and for longer.

There'll always be more profit in second-hand games. No amount of help from publishers is going to stop the greedy bastards who run games shops from raping the games industry left, right and centre. Frankly, if someone can't run their shop profitably then they should get the fuck out of the retail business, not have someone else come in all take all the risk away for them.

[Hitcher]

I work as a clerk in a small computer game store, which sell both New and Pre-owned titles. I can tell you now that under the current structure, this store and many like it would no longer exist. Profit margins are slim on new games, slimmer still on new Hardware.

Which backs up my previous arguement -

So if pre-owned games were banned that would definitely result in lower profits for game shops and maybe higher prices for new games or even even closure of the shop.

Let's face it, any business wants to make the biggest profit they can.

[pancho]

Firstly, you still appear to be unwilling to provide a single reference where "the industry" is decrying the existance of a second hand market in video games.

Second hand game sales were banned in Japan for several years in a country wide "No Resale" camping backed by signifcant cash. The "No resale" logo was endorsed by nearly 100% of publishers who placed it on their game packaging. The law was only changed last year iirc.

I'm sure someone here (or more likely on ntsc-uk) knows the details of this campagin better than I. Its history is certainly extremely pertinent to this discussion.

[Alex W.]

EDIT- need sleep. This didn't make any logical sense at all.

[Monkichi 2.0]

Very interesting post, but I disagree in many ways. First and foremost, it' s not my responsability to keep publishers afloat, and I can't be expected to make "donations" by paying more for a product than I need to. The fact I'm expected to pay £40 for games, far in excess of the price of other media like DVD and music CDs (Who's production costs run just as high or more) means I'm unlikely to buy many full price games. I will and have taken chances on £10 games, and I will and have bought 4 second hand games in one go for £40. The fact is, I'm not going to spend £160 because Rage has decided it was a good idea to release a Beckham game and needs money.

It's sad many developers are going under, and I bought Rocky and thought it was great, but I also bough trash which had I not been able to sell it on I would have ended up with a £40 coaster. With the amount of sheer rubbish I see on the shelves I think the industry could actualy do with some weeding out.

I recently got a new job working for a big games company and although my job depends directly on the health of the videogames industry I would never expect the consumer to pay over the odds to keep me in a job. I have bills to pay, things to buy and a nest-egg to build, I try and save as much as possible and if that means I buy a game from a person who no longer wants it then so be it. When I can't pay my bills then development company X won't give me a discount to buy their game, why should I then go and willingly pay over the odds for a game in order to help them pay theirs?

But most importantly, what's this about giving back? The games industry is that, an industry. They're not making games out of the kindness of their hearts, theyre not doing me a favour. I owe then games industry nothing, I have paid for many games at full price and have gone through many years of utter bullshit when games companies have been able to do.

[whohe]

a lot of sense

[The Liberal Elite]

The only reason that a second hand market is even entertained is because the games are too much to begin with, surely? why would game, CEX and gamestation, amongst others, even offer such a service if they didn't think that there were people out there willing to buy them in the first place?

So basically, if it's killing the industry, it's the industry's fault in the first place for pricing their games in such a way that it means that a certain percentage of games consumers would rather wait a few weeks to pick up someone else's cheaper version of the same.

In my opinion, obviously.

[Smeghead]

jus 1 question, I get thru a hell of alot of games, wtf wud I do with all these games I sell on if I cudn't do that? I'd have like 2000+ games and absolutely no way of getting rid of them etc. It jus wudn't be feasible, they'd only end up in 2nd hand markets and car boot sales.

I do think pricing is a big factor, I'm sorry but I refuse to pay £40 for a game, if I can have a decent nick 2nd hand copy for £25, its sad that it's the developers money that gets taken out more than anything else, but at the same time, very few games are worth £40 sterling of my cash and if I'm talked into buying a game then get it home to find out it's crap, of course I'm going to want to try and recoup my lost money by selling it on. if I'd known what the game was gonna be like I wudn't have bought it in the first place, so surely in that way it jus balances out as the person that buys it off me takes over as bein the person who paid for it (sort of).

[Unofficial Who]

Damn straight.

I'll add a couple of points quickly.

I did the whole buy stuff new at full price to 'support' the industry.

Didn't stop the Amiga dying though did it.

I buy more than half of my games second hand. I avoid EB most of the time due to highly damaged stock and prices that are close to retail. There are a couple of good indies down here, ask ypr, I put him onto a good deal.

Why do I buy second hand?

It comes down to price.

I can buy DVD's at a slightly lower price second hand but don't bother. Why?

A new DVD down here ranges from $15AU-$30AU (more for boxed sets obviously.) Second hand works out at about $5-$10 off.

Games are a totally different story. $50AU-$110AU new compared to $5AU-$50AU used.

There is no competition.

As for those industry naysayers that will crawl out of thwe woodwork and claim I'd still buy second hand...

I bought two new games over the past four weeks.

Beyond Good and Evil $50AU.

Midway Arcade Treasures $40AU.

Both could be had slightly cheaper second hand. I snapped them both up at the new price.

Waiting again for the industry to tell me yet again why I should be lucky to buy at $100AU.

Maybe you could also answer this old chestnut from http://ds.dial.pipex.com/thumbs.aloft/wos/...digi/digi35.htm

(Sorry to quote this in full Rev. PM me if you want me to remove it.)

PAGE 2

A couple of weeks ago, the games business held its annual awards ceremony at the ultra-posh Savoy Hotel in London. The "InDin" (as it's known) is a lavish black-tie event with tickets priced at hundreds of pounds.

The event is billed, you see, as a charity fund-raising evening, with money raised going to UK sick children's charities.

This year, the InDin raised a little over one million pounds for these charities. Stick with for me a minute.

PAGE 3

The InDin, of course, isn't the only reason that this is the big time of year for the games business. More games are sold in December than pretty much the rest of the year put together.

Last week, the top-selling five games in the UK alone brought in revenue of just under £9 million. Remember, that's just five games we're talking about. And that's the money they took in in just one single week.

I hope you're noting these facts down. There'll be questions in just a moment.

PAGE 4

The last fact to note is that at the moment, the games industry's trade organisation ELSPA is mounting a big campaign against piracy.

ELSPA is hoping to raise a total of £200,000 from its members to fund this campaign. ELSPA's members (over 100 of them) are pretty much every company involved in the European games biz. (Including the ones who made 9 million quid last week from five games alone.)

You might think, then, that £200,000 wouldn't be much of a problem for them.

PAGE 5

After all, the sum ELSPA are trying to raise to fight piracy comes to less than £2,000 per company. When you discover that Electronic Arts, for example, took well over £2 million just from FIFA 99 last week, you'd be forgiven for thinking that they could stump up their £2,000 easily enough.

Bearing all these facts in mind, then, you might be surprised when I tell you where the £100,000 donation ELSPA received last week for the anti-piracy campaign came from. Because it was stolen from the InDin Charity Fund.

PAGE 6

Of course, I'm using the word "stolen" slightly incorrectly here. The donation was made, quite publicly, by the organisers of the InDin.

(Who are, of course, nearly all also members of ELSPA.)

Confused? I'll make it simpler. The games business raised a lot of money by claiming it was for sick children's charities. Then it decided to give a huge chunk of the money back to itself to bump up its own profits. (The sick children, presumably, can just die.)

PAGE 7

Indeed, the amount the games business snatched back from the charity fund was the second-biggest chunk that went to anyone. Only ONE charity, out of 38, got more money than the games business decided to "award" back to itself.

(A major cancer charity, for example, received just a tenth of the money given to the anti-piracy campaign. Great Ormond Street Hospital got £35,000 less.) Clearly, the games business thinks of its profit figures as a more deserving charity than cancer research or hospitals.

PAGE 8

You might want to bear this in mind the next time a software publishers tells you that games have to cost as much as they do. You might want to bear this in mind the next time they try to make you spend £135 on three versions of the same game in a single year, or release another tired old second sequel.

And you might want to bear it in mind the next time they start whingeing on about all the cash they lose to piracy. Because, like me, you might just think that such greedy, immoral, sick-child-robbing pigs damn well deserve to.

[rylee]

I'm not that mad keen on buying second hand, so I certainly take notice of 'half price' new release games. Like tssk I recently bought BG&E - plus PoP & Flipnic - all at AU$45. I'm happy to pay up to an extra $30 for a title I really want new, but over that is just too much to pay regularly.

I believe we will eventually see cheaper prices, but am not sure what will finally trigger the lower price point. Good games at reasonable prices will have to have a strong impact on preowned game selling.

What really gets me is selling used, labelled as new. I can't agree with that.

[Jonathan_Kerr]

Was talking to a fella in a games store here in NZ and he said that the lower price points for newer (and perhaps not as demanded games) was the start of a new trend. In NZ, the new ones come out for about $129 and that's most likely going to be reduced to about $100 now. I think in Aussie, it'll drop from $100AU to about $80AU.

I also saw a few other games come out at BG&E price point of $59.99 NZ. Here's hoping.

[rylee]

Interestingly, prices for PS games at the end of the life of the original console before the PS2 was released, dropped from the usual AU$100 to $70-80, for many new releases, with some Sony titles going for $5-10 less than that. Hope we see a similar cost reduction for all games as the next generation make their way to the starting line.

Ubisoft no doubt had to make a decision to shift the numbers they wanted of 2 games they had pushed heavily for major retail success. Shame to see they had to reduce the price so quickly, but it means more people will potentially be interested to buy a new title at a good price. Surely, that is why the preowned stores do so well?

[Alex W.]

Same in the UK- prices for new releases went from £40 to £30, Platinum went from £20 to £15. I'm not sure how that affected sales, but I imagine it would've had a considerable difference...