A Market without Used Games: A Discussion Worth Having

What remains of sticker residue after it's GooGone? </koan>

by Cameron Walker

Everyone is mad about the rumors that the next gen consoles are going to restrict the use of used games. On the face of things, this seems like a bad direction for the game industry, and people are angry — especially GameStop. I want to consider this widespread frustration and challenge the discussion to go further than hurt feelings.

Two Disclamers:

A) In this article I discuss rumors. The details on all this stuff are still sketchy; however, there are some issues that warrant consideration, should these rumors be true. So, take the discussion for what it is: pondering on the very notion of a used game prohibition.

B) I don’t like corporate greed. It is a driving force in our society that should NOT be idealized. The arguments that I make are grounded in the acknowledgement of the “force” behind capitalism. Whether it is moral or not is irrelevant to this article. This article addresses capitalism as it is and how our marketplace of products, services, and ideas function within that ideology.

These companies are behaving as they are supposed to in a capitalist market.

Don’t consider this a defense of corporations. They do, and have done, many reprehensible things in and to our history. But, acknowledging this, are game developers and hardware manufacturers doing something “wrong” by securing more revenue?

Developers are potentially taking steps that benefit them, their companies, their future, their side of the industry, their corner of the video game world. As a strict business decision, I see no reason why they shouldn’t take efforts to try to reduce the size of the used game market and increase new game sales. If you can technologically shut out or curtail a market that benefits you none, why wouldn’t you take those steps?

And consider the used game companies. They profit off of what developers and manufacturers create and do so without having to contribute or put their profit at stake in the progress of the market. Big Used Game Store (BUGS) resells products that have already been developed. They do not “make” products, they essentially facilitate the exchange of products between two individuals. Much like a very elaborate Kijiji, but one that takes a large cut of each sale. Hell, they can even profit multiple times off a single game. Developers only really profit once.

Now, considering the relationship between developers and consumers, things are a little trickier. I’m less open to the “get whatever you can business model” when it comes to interaction between corporation and consumer. However, developers aren’t taking something away from their customers; rather they are changing the product that they are selling. The games that they will be selling us, in a poorly defined future with used game limitations, are products that lack some features that they previously had. No longer can games be resold, or lent to a friend. Moreover, it might not even be contained in or on a physical media. The rumored future games seem to be more like the digital copies of games that we buy, like indie games, arcade games, or games purchased on Steam.

But wait, these are not unpopular products themselves. When games go on sale on Steam, people lose their shit. They buy games they don’t even play. Consumers are angry because the product they are accustomed to is changing in a way that prevents them from using it in the same way that they have previously. Some gamers are frustrated about this potential change in the game industry, but let’s acknowledge that the product gamers will be potentially buying has not changed drastically, nor has the product become something new and foreign, something that we don’t already accept and even like.

As for BUGS, if I were them I’d be pissed. But again, as a company that competes with other companies, you have to compete. Developers might have been able to render the business model for BUGS obsolete, but that’s BUGS’s problem. When markets change, some industries see their profits shrink. Should we not have developed laser disc technology because it hurts Vinyl manufacturers? I don’t know about you, but I prefer blu-rays to VHS.

Physical Media is becoming obsolete.

Preempting a counterargument grounded in nostalgia: I do not suggest that there is no market for games on physical media. However, we can see in multiple ways already how games are becoming more and more disassociated with physical media. I do not think that this is a wild sentiment. As with many entertainment products, the video game market is moving away from physical media.

There are a few problems with this path of course: some people have restricted bandwidth and there are limits to digital storage. I certainly acknowledge that these are currently significant problems for a media-less game market. Some people just can’t download all their games because their internet isn’t fast, or they have bandwidth limitations, or god forbid, they don’t even have internet at all. Furthermore, digital games require console hard drives. This adds more cost to gaming consumers, but in a way that doesn’t have long term cost savings. Xbox HDDs are not like Hybrid cars.

These problems are solvable, though. Both Netflix/other streaming services and iTunes have dealt with and are still dealing with these problems. While not necessarily solved, progress has been made and I see no reason to assume that these problems for digital game distribution can not likewise be minimized or made less prohibitive. Technology moves forward in both predictable and unpredictable fashions. Just because we have problems now, doesn’t mean they are problems forever.

So again I ask you to consider the game content that we currently purchase digitally. That product is bought and downloaded but cannot be lent to a friend or resold. We can log in to play them on another console, but they are essentially tied to our gamer IDs. The rumors surrounding the changes to the console predict a very similar kind of game licensing. Games that are tied to a gamer ID.

How do no used games affect the market and the gamer community?

There are different kinds of casual gamers. FarmVille fans are not going to be affected by a no used game market. But occasional gamers, people that buy used games (games that are several years old for instance), are going to find the market very different.

For instance, what about the man that buys three-year-old basketball games at the grocery store or the couple that picks up Halo Reach to play together? Do these people stop playing games? What happens when a used game also costs a certain amount to activate, and there are issues with ID linking? Do they walk away because video games are more expensive or more complicated? Does this change alienate potential gamers?

From a business perspective, this market seems negligible. After all they are buying used games anyways. What concerns me, however, is how it changes the makeup of the gamer community.

I believe that greater diversity in a community makes it stronger, more richer, and more capable of enacting change and dealing with the complexities of community issues. Losing part of the gaming community diminishes the community as a whole. Do not discount the multiplicity of voices in your community. Homogony stagnates.

Conclusion

For developers to eliminate the used game market is rude as shit. It changes the product that people are used to purchasing in a way that they dislike. It essentially cripples an entire industry. It will shut businesses down and eliminate jobs. While the increase in profit for developers might lead to more employment opportunities with them, these are not the same kind of jobs. A used game store owner doesn’t necessarily get a job in game development after his or her store goes out of business.

That said, developers are producing the products sold. They have the power to change the product they sell to their customers; they are allowed to make these kinds of decisions. The market will react and either reward or punish their decisions. If enough gamers refuse to accept this new model, the new systems will underperform. If gamers begrudgingly accept the new kind of market, developers will simply make more money. And developers making more money doesn’t even seem like a bad thing.

Gamers might be angry that the product they have become accustomed to will have more restricted use. What I don’t like reading is the discussion of “rights.” Consumers don’t have the “right” to own the product they want; consumers have the freedom to choose to buy the products that are available or to not buy them. This isn’t about the constitution.

Developers aren’t hurting people more than companies hurt people every day. They are changing their products to be more restrictive for consumers, but far more financially beneficial to themselves.

When we consider the motivations of developers, the direction of video game technology, and the effects on the gamer community, the topic of a market without used games warrants a conversation that recognizes the complexity of the implications, a conversation without binaries or knee jerk name calling; essentially, it requires us to exemplify the community that we want to be.

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  • This push for all-digital consoles, being nothing but a dumb terminal for software developers and hardware manufacturers seems dangerously short-sighted. It makes about as much sense as movie producers yanking films from theaters because the theater owners make a higher margin selling overpriced snacks. This comparison is a little extreme, considering first-run films, at this point, have become loss-leaders to get people in the theater in order to sell them high priced snacks.

    Cutting out the used game dealers cuts out another outlet that still sells many games at full price. Not only that, but these dealers also sell new and used consoles, which are useless without games. It seems the game developers are falling for the same self-induced fallacy that the MPAA and RIAA have touted for years: that one used sale equals a “lost” new sale. (Just replace “used sale” with “pirated copy” for full effect.)

    Part of the mostly unconscious arbitrage that occurs in every gamer’s mind is that thanks to a used game market, their purchase still retains some sort of value that can be used against the purchase of another new game. By taking this value away, game developers will need to seriously consider lowering the prices on new games. If they don’t, those are tied exclusively to consoles will very likely see their market shifting to PCs, where cheaper games are more readily available and where cracked versions are free for the taking.

    Developers have loved consoles for their ability to make piracy troublesome. Removing used games from the ecosystem will hurt more than just players looking for a deal: it will hurt them as gamers with limited funds (and that’s pretty much everybody) turn to cheaper alternatives. Being locked into a console puts your pricing structure at the mercy of the console developers who receive a cut of every piece of software sold.

    If console software sales dip, hardware prices will likely rise as console developers have historically used consoles as loss leaders to drive game sales. Of course, the argument can be made that used games contribute nothing to their bottom line either, but removing options and placing roadblocks on the path to legitimate purchases tend to push consumers towards cheaper options, and nothing’s cheaper than free.

    As you point out, high speed internet is far from universal. And even supposed “high speed internet” get slowed down immensely when everyone has to use the same set of doors to get in and out (see: PSN, for example. An update of 20-30mb takes 30 minutes or more on my high-speed connection, which easily pulls down 4-5 mbps on my computer, but is somehow cranked back to dialup speed when connected to Sony’s network). This is another strike against continuing on as a console customer if Sony/Microsoft/Nintendo should insist on delivering the next-gen with nothing but a hard drive and an ethernet jack.

    I completely understand that there is little apparent downside for game developers to make this switch. However, I believe they’re underestimating the collateral damage they’ll do to themselves by effectively telling customers that they no longer have any option but to purchase everything at full retail. Add to this the fact that an online-only system means never actually “owning” your purchases and you’re asking for trouble. All it takes is one distribution negotiation to go bad and gamers could find their purchases locked up, removed or at the very least, temporarily bricked until the contract is sorted out or the check clears.

    And what happens when a console manufacturer goes under? Imagine if this was in place when Sega got out the hardware business. Suddenly, an entire group of gamers would (possibly) find their investment of hundreds of dollars rendered completely worthless.

    The biggest problem I have with digital-only distribution is that it puts ALL control in the hands of the developers. The customers are left with virtually no defense against contractual changes, on-the-fly TOS revamping and other sorts of post-purchase dickery. Much like you can’t take an opened DVD back to the store, online purchases are almost universally one-way only and operate outside the fraud protection laws set up with brick-and-mortar in mind. Instead of being able to produce a receipt and get some satisfaction, end users will be limited to hidden-in-the-small-print arbitration and class action lawsuits.

    And finally, are game developers REALLY hurting that much? Has it really been that much of struggle to turn a profit that they can afford to lose retail outlets and customers just to ensure that they make SOMETHING every time a customer purchases a game? I don’t expect businesses to operate as charities, but I also expect them to show a little respect for the people they’re hoping to have as lifelong customers.

  • BitterAlmond

    “Corporate Greed” IS the capitalist spirit. They are inseparable. It’s the one flaw of a great system. It’s that same spirit that looks softly on other people cracking DRM to play the game they just bought off their friend. For as long as physical media is still the norm, let me use it the way I like.

  • Joseph Hilgard

    I’m not concerned about the extermination of BUGS. These are an artifact of the flawed business model, and as a consumer, I will be pleased to see them go out of business, in much the same way I was pleased to watch Blockbuster’s horrible business model fail. The developers should be getting paid for their games – increased profit margins may even mean that it becomes more viable to make games for more niche demographics.

    The real problem is that, currently, new console games sell for $60 no matter whether they’re new releases or 2 years old. Compare to Steam, where games tend to drop to a delicious $10 or $20 after 6-8 months – probably the amount you would pay for a used game! Excepting possible logistic problems (internet bandwidth) If the prices adjust accordingly, I see no problem with the end of used game sales.

    Used sales would also seem to be moreso a problem for overpriced games meant to be played only once and discarded. Linear interactive movies like Asura’s Wrath certainly aren’t worth $60, and thanks to its own limited length and replayability, it will suffer especially badly in used game sales.

    Like the article says – if you don’t like it for $60 with zero resale value, don’t buy it until it’s $20. Use your self-control and vote with your price point accordingly.

    • Not to be cute, but bugs are an artifact of the software development process and will not go away if you change distribution vectors.

      • *shakes head*

      • Joseph Hilgard

        How do you mean? sure, we’ll be replacing Gamespot with Steam or whatever, but I feel like it’s easier to manage royalties & cuts of profits & etc with DD services.

    • Patrick Lefebvre

      One problem I see with that argument, is that developers will no longer have any incentive to drop prices after a length of time. Right now after 6 months, you can find the used copy for 70% or 50% of the original price, sometimes even less for the bad games. his forces the developers to drop the prices of new copies in order to compete and keep selling copies. With a digital only and no used games market, this competition, this incentive is gone.

      I wouldn’t be surprised to see new game prices rise sharply once this system is in place for lack of any competing product. Then after six months… you MAY see prices “reduced” by 10%.

      As for myself, well there are enough titles on xBox360 available used to keep me busy for years to come. If the next generation of consoles goes new/digital only… I’ll be voting with my wallet, and maybe I’ll spend more time outside from then on…