The Used Game Market -OR- You Can't Own Ye Bytes!

[Brian]

(Warning: I'm biased to think the gaming industry sucks and is stupid for trying this.)

This is not a new discussion, but we don't have a thread for it.

On the slim chance that anyone's not familiar with this argument, in a nutshell (and as unbiased as I can portray it): The gaming industry doesn't like the used game market.  The reason for this is pretty straightforward; Gamestop/EB Games make money on selling used games.  The original manufacturer doesn't see a dime from those sales.  Game manufacturers have tried to work around this with various methodologies.  For example:

Giving the game a certain number of 'activation' attempts (a flat number of times you can install it) -- ever (this is rare on console; I know the idea was proposed, but think the manufacturers backed off from actually using it because of backlash).  Giving the game a one-time use code that unlocks additional content (that is already on the physical disk), but only for the first person who ever uses it.  Just as the former (unlock codes), except the manufacturer sells extra codes specifically for second-hand customers (as close as they come to embracing the second-hand market, and the gamer reaction to this one tends to not be pleased).

The industry wants to make money off every game sale.  Well, that's reasonable, but are any of you old enough to remember before consoles had HDs and internet access?  I remember swapping NES carts back and forth with my friends all the time as a kid.  But if that doesn't apply -- I've also been buying used games for over a decade because, hey, digital information.  It's not like a second-hand-copy is typically inferior, so long as it works!

...except that's not true anymore.  So, I spotted this post on games.slashdot: http://games.slashdot.org/story/12/01/30/0216258/anger-with-game-content-lock-spurs-reaction-from-studio-head-curt-shilling

Cut Shilling asks: "Companies are still trying to figure out how to receive dollars spent on games they make, when they are bought. Is that wrong? if so please tell me how."

To put my own argument into this: If I sell my car used, Honda doesn't get a cut.  If I sell my craftsman tools used, Sears  doesn't get a cut (and they get a burn, because all of their non-power tools are warrantied for a lifetime).  If I buy a movie or TV series on DVD used, Fox/whoever doesn't get a cut (burn in hell, DivX).  If I sell my furniture used, etc. etc. etc.

Why does game manufacturing get to be a beautiful and unique snowflake, instead of the same decaying organic matter as everyone else?

What entitles game manufacturers more than any other industry to sell their game, and then profit again when they fail to satisfy a customer enough to want to keep the game, and someone else buys it used?

For the sake of discussion, let's limit this to consoles, where the 'piracy' argument holds significantly less weight.

[Anastasia]

100% agreement. This has been going on ever since Nintendo raged against game rentals back in the NES days. They want more money so they try and force the issue. How coherent or reasonable this is doesn't play into things one lick. I've largely fallen out of console and serious gaming because of these attitudes. Between this and DLC I'm not interested in getting constantly squeezed for every penny and harassed if I want to reinstall a game or locked out if I want to play it online.

Fuck it.

[Halbarad]

I can see both sides of this somewhat. On the one hand, you're absolutely correct - no other industry really demands to see this kind of return on a single unit sale. On the flip side, however, very few other products have such a fast turnaround between initial sale and resale/used sales.

If you buy a car, you're likely going to be using that car for at least several years before you resell it. The same applies to furniture or tools or most other durable goods that you're likely to see for sale either used or new; you don't really expect to see someone turn around to resell a car within six months in order to get a new one and put the used one back on the market (folks that do this tend to lease rather than buy anyway).

Games, on the other hand, tend to be fairly short-use, limited-duration items. The majority of them are not going to be things that you buy, then keep around for years in order to replay later (in general; I personally happen to be a packrat that will -still- go back and play Final Fantasy Tactics sometimes). Due to the quick turnaround from time of original sale to the point of a possible sellback (particularly when most used game sellers offer premium buyback prices for newer games) you have the somewhat unique position where a new game is going to be directly competing with used copies of the exact same media - and the only real difference between the two is the price (used being lower) and who profits from the sale.

That dynamic really doesn't exist so much with other used-item sales; if you're buying used furniture or a used car, there are some things you know you're getting into: lack of warranty, pre-existing wear and tear, etc. The used version of the item isn't equivalent to a new version of the same type of item. With a used game, in most cases there's functionally no difference between the used copy and the new one, and of course, who's going to pay more to get the same product when they can get it for less?

I don't really agree with the current solutions, though; the problem is that the game companies aren't punishing the real source of the problem (the used game retailers), they're punishing the consumer - and consumers understandably don't like that. Personally, I think the real solution to this would be to start building in some contractual obligations with outlets that sell their games both new and used - e.g., "Okay, we'll let you distribute Band of Wars 32 new for us, but in order to receive copies you agree that any used copies of the game will be sold at the same price as new for a period of six months from the game's release." I think this would put the pressure on the source of the problem without punishing the consumer - unless making them wait for a few months to get the game cheaper is a punishment, which I don't think it is; you either pay full price or you be patient, that's just a decision for you as a consumer to make.

It wouldn't fix the entire problem, obviously, since there are used game outlets that wouldn't agree to it, but I think it's a step more in the right direction.

[Jon]

I think part of the solution to this would be "If Gamestop is ruining your business, stop giving them exclusive preorder bonuses, you dumbass."

Hal's right that used games are a bit different from used cars. Try used books instead. (We have things called libraries where people can share books! It's insane!)

[Brian]

To Halbarad's post (as I see in IRC that Jon's posted while I'm typing this reply out):

Okay.  The contract with the game re-seller idea sounds reasonable -- though I expect that if it's done, the game manufacturer has an obligation to respect the customer's purchase more.  And that means recognizing used-game sales as being valid for terms of warranty (not the 'free replacement within 90 days' part but the 'send in the old copy and get a new replacement for 10$/15$' part).

But to bring things back to 'no one else does this' you're right that comparing a (largely) digital product against a more physical one isn't the most apt analogy.  For that I point back up to used movies and television shows on DVD/bludisk/hypercube.  On VHS, the media would wear out much more quickly (and was just more vulnerable to degradation).  Modern formats are much more resistant to that (once more, die in a fire, DivX!).

So, the rest of the entertainment industry hasn't made this shift.  There probably is a legitimate argument that used video sales aren't as common as used game sales -- but Gamestop carried used DVDs a while back, and I think they still do.  I'd also be willing to bet that a great number of used media sales within the TV/Movie collections are much much larger -- sort of a, "I need money and am liquidating 50% of my stack of hong-kong action movies," or, "massive horror movie library I can't afford to keep," deals--  And probably those bulk sales command a much higher dollar amount per transaction than games.

Edit: Okay, used books (another form of media) is another great argument.  The only times objections come up to buying/selling used books is when they're stripped, and the ISBN barcode page has been removed (because then it's been reported as destroyed, and the manufacturer actually issues a refund).

[Dracos]

While mostly I am agreed on this and that specific guy comes off as a jackass...

I do have a slightly different angle on the included DLC stuff that I think bears awareness.  Game studios don't work in a void.  Both physically and digitally, they require storefronts to stock and push their product.  A discovery of the last year or so has been that companies getting something unique about the version of the product they are selling are more willing to put it up front and pay to advertise it themselves.  In this case, the only reason that these aren't ending up as just a stashed block of pre-order bonus/special edition options is because if they split it up and give one to target, one to amazon, one to best buy...each of those will gladly cut a deal favoring the developer over other developers.  The sales fronts like having something they can put up saying "Hey, our version is more badass than their version, buy with us!" and the developer likes having a sign go up about their game (instead of it just being in the pile).  The sales front adding to the marketing muscle generally means the money that would otherwise be spent on ads can be spent on producing that bonus content (and then more ads, because hey, they're marketing).

  Also, there being some kind of advantage for prebuy sales is actually something that goes way back to the 90s, with the change that instead of it being a Free T-shirt, it's now a Free T-shirt for your character.  The reason for this is simple and has nothing to do with dissuading piracy: Day 0 sales are super important.  Good momentum leads to additional sales, so adding in special 'only get once' toys for them that make that micro-group feel special is advantageous.  These guys are generally paying more with less assurance of the game being good.  The notion of packing in something to reward the early buy seems really sensible, without taking a villianous angle at all on it.

Note, this has nothing to do with 'limited install' bullshit or other copy protection.  That's all bullshit.  But both the existence and variety of day 1 bonus content actually do have a positive reason for them that doesn't have a ton to do with the used game market.

On a weird aside: Those really lame achieves right at the beginning of games?  Most console devs compare that number versus sales.  I recall being told on TR8, something like a few million more than total sales were registered on the 360.  Lots of ways to explain this, but when I see stuff like that, I can totally understand how GMs descend into paranoid fits about it.

[Brian]

Well, a counter-argument to that:  If you don't want players to buy/sell games used ... move to the Steam format.  If my console could register my user ID and say, "You own these games," and gave me unlimited ability to install/play that game on any console (limited to the fact that I could only log in and play one instance at a time on any given machine), I'd actually be okay with that.

For me (and I realize this is very personal; not everyone is cool with online authentication, but Steam has made me grow very comfortable with it after multiple system re-installs and always bringing my entire library back to me), that's okay because there's no physical disk.  Nothing to get destroyed or lost (and also nothing to sell/trade).  And if my system gets ripped off with all my games on it, I can get a new one, punch in my info, and tell the game servers, "Ah, yeah, screw whoever else is trying to use my account; you have to put in your password to change your password -- so I'll do that now."

Throw in cloud support for saves and settings, and the console manufacturers are now providing me something I think is a sweet deal.  This still lets me go over to Drac's place, log into my account on his console, and both of us to play Super Co-Op Forces, or Mushroom Kingdom Murder Simulator, and then go back home and play Final Oxymoron 12.  Or, hell, load up my own saves on Drac's system so he can show me how to beat Puzzleboss: The Gimmicking.

I realize the current generation of consoles isn't set up to do this, but if GMs want to move in that direction, I think console manufacturers would be able to help them.  This does reduce stores to demo booths to buy one-time codes and hardware ... but before there were gaming stores, there were game sections of toy stores.  Yes, this could kill game retailers ... but to me, honestly, this feels like it's somewhat within the GM's goal do do that anyway.

[Halbarad]

Used movie sales still differ a bit, though. The rental market for movies is pretty huge; customers that only intend to watch a given movie once are going to rent it, not buy it (through Netflix or whatever single-use service they prefer to use). The actual DVD/Blu-Ray sales are going to go more to those customers that have some attachment to that movie and are aware that they're going to want to keep it for a longer term to watch it multiple times; see parents that go insane from having watched The Lion King for the 583rd time for an example. In that sense, someone that buys a movie outright is again not terribly likely to put it back into the used market in enough quantities that it's likely to be major competition with new copies of the same media. While I'm not as familiar with used movie sales, I'd suspect that most buybacks occur with customers that are cleaning out a collection and decide 'nah, I'm really not going to watch this again, might as well sell it' rather than customers that just purchased it and said 'okay, I'm done with it, time to sell it back and get something else'.

[Brian]

I have to concede that it's most likely that used tv/movie sales probably are dwarfed by used game sales, even though the  tv/movie disk sales undoubtedly exceed game sales.  But the entertainment industry is just as zealous about protecting their IP pretty frequently, yet I've never really heard of overtures to prevent used tv/movie sales (beyond DivX, which, really, was more of a rental scheme where you never had to return the disk).

Edit: Something semi-relevant that occurred to me.

Additionally, having worked in a rental store for many years, one interesting aspect of movies for rentals is that Blockwood Video typically paid $99.00 for their rental copies -- each.  This was back in the 90s.  The arrangement was that the movies weren't available for sale for some time until after the rental market had a chance to get some money.  I expect that now DVD costs for rental copies are similar (or higher).  Some movies went for sale and rental at the same time, and then the rental store paid the same cost for rental copies as for retail copies.

If Nintendo had issues with rental stores, they could have tried to make partnerships with the stores and do similar things with games -- and with most classic NES games using passwords instead of saves, that probably would have worked out decently.  If someone didn't like it, they could wait 2-3 months for the game to become available for purchase after the rental release (at a more reasonable price).

[Dracos]

Steam (or steam-like) entities are a good thing that will be continuing to move forward.  I certainly cheer them on.  There is an audience that screams and yells every time a purchased game goes and registers itself with steam (Seriously, have seen this, its very sighworthy).

Definitely having digital cloud-space for records of ownership, DLC, and save files is the future that should come.  I definitely hope to see that be foundational with the next generation of systems.  Steam being dominant has helped a lot, even if EA is making its own steam-clone.

[Dracos]

I have to concede that it's most likely that used tv/movie sales probably are dwarfed by used game sales, even though the  tv/movie disk sales undoubtedly exceed game sales.  But the entertainment industry is just as zealous about protecting their IP pretty frequently, yet I've never really heard of overtures to prevent used tv/movie sales (beyond DivX, which, really, was more of a rental scheme where you never had to return the disk).

Price may have something to do with this.  DVDs and books both exist in a lower price point than games do, which make the potential profit add minimal for dealing with large quantities.

Running a used game area and a used video area has about the same fixed costs (Space, stocking, fail rate, etc) and about the same flexible buy the product cost (I'll give you 5 bucks for that).

A used game can easily be pushed for 40.  Pushing a used dvd for over 20 is eyebrow raising.  This provided with the viable and existing rental market (which yes, movie folks don't like), probably makes the market largely uninteresting.  Its small money.

Used game sales make up a sizable chunk of Gamestop's financials.   It's not small money.

That I think is the difference there.

[Jon]

Of note: http://arstechnica.com/gaming/news/2012/01/parcel-gamer-wants-to-share-used-game-profits-with-publishers.ars

[Jason_Miao]

obligatory disclaimer: I'm no copyright or property expert.


Just to throw in some law perspective here, my understanding is that there's a concept called the "first sale doctrine" that translates to something like this: if you sold someone a copy of something, you're not entitled to control what that person does with the copy.   In other words, if Rowling decides "Used book stores are cutting into my cashflow, so a condition to buying a license to my Harry Potter content (embodied on dead trees), you are not permitted to lend or resell the book -- now, everyone who wants to read Harry Potter must buy it at the new book price", that condition probably wouldn't be upheld in the US.  On the other hand, if you grant a license to something, then you get to control if and how the person can resell it.  And just because a company calls it a license doesn't necessarily mean that a court will consider it that way.  Usually (or so I'm told; I haven't done a survey of first-sale doctrine cases myself), the question gets decided by the recovery process of the item.

Here's a question: when you buy software, is it a license or a sale?   I think it works like this - If a company "licenses" you to use an operating system, and doesn't have or enforce a recovery policy once that license is expired, then that would probably be considered a sale.  If the company has a policy, but it never gets used, that's also probably a sale.  If that company, runs inventory checks on you and takes back the N operating system disks once your N licenses have expired, that was probably a license.  So, that seems clear....as long as we're talking about disks.

Once upon a time, all console games came in cartridges/discs/other tangible things that you could eat (not recommended), shatter (also not recommended) or hit people over the head with (still not recommended), so the first-sale doctrine was pretty clear cut.  Today, game content is delivered via download  to your console- what counts as a disposal policy?  Do they have to erase it from your hard drive?  If they do, could they be charged under whatever statutes they use to convict people who write viruses?  What about just disabling it so you can't use it - but if you still have the code, why couldn't you then sell the disabled code to someone else, and if they reeinable it, what's that have to do with you?    If neither option seems palatable, where do we strike the balance?

On top of that, there's also DMCA weirdness - the DMCA was supposed to bring intangible software into a legal model similar to how tangible media worked.   A nice idea, if you can pull it off.  But since the DMCA is so broad and badly worded, maybe putting any kind of access control at all on software means that it's a sale.  Also, the DMCA also states that it is separate from copyright, and I don't think anyone really knows how to interpret that statement, given how practically it is intertwined with copyright, so maybe we're supposed to completely ignore it.


So, I think I've thoroughly failed to answer your question.  But hey, discussion!