Part Two
DQ reader Miles Lippincott (also a Gamestop manager) had information to add concerning yesterday's column about used games:The game industry itself is somewhat to blame for the move to the used market. They have increased the price they charge retailers over the last 10 years while holding the MSRP steady at about $50. They can't have it both ways. While 20% margins may seem like a lot to the average person, it's extremely low in retail terms.
That's a good point, and it also illustrates the number of competing interests involved. Consumers, Retail, Publishers, Developers--each of these groups have certain objectives that are mutually exclusive to the objectives of the other groups. Big publishers squeeze the retail channel, the retail channel fires back, and it just goes on and on.
And even after all that, I never hear them talk about us. How often have you heard a big publisher say that it's a priority to ship bug-free games?
Well, never.
As a consumer, I'm nothing short of outraged that I can't return games for refunds. When I buy a PC game and it's in early-beta condition, or worse, I'm screwed. We're all screwed. What is the incentive to publishers to ship completed games if they can't be returned anyway?
So when I discuss the used games market and the impact on publishers and retail, I'm sympathetic to a certain degree, but I also feel like they've abandoned us.
Now yesterday I said I wanted to discuss a few more things, but I was just too tired to get them written. Primarily, it was a discussion of markets for used products and how they affect markets in general.
My boss Neile, who is a very intelligent guy, started a discussion with me this week about the market for used books. Authors are up in arms over the degree to which Amazon has made the used book market more efficient--the same book can be resold many times, but the author is only getting paid a royalty once. That's essentially identical to the used games market. And the size of the used book market has exploded in the last few years--also very much like the explosion in the used games market (in the U.S., at least).
Neile believes that anything resulting in more books being read will increase the size of the market, and increasing the size of the market is going to be good for authors. Yes, a percentage of the purchases will be used, but there are collateral benefits to more people reading more books, and that will increase new book purchases.
Is that true? I don't know. It's very difficult to quantify. I think a more active market is potentially beneficial, but without numbers on the percentage of used versus new purchases, it could never be measured. I think there has to be some kind of breakpoint beyond which the size of the used market is actually harmful to the sale of new goods.
This concept doesn't include piracy. Paying for one copy and selling fifty isn't the used goods market--it's stealing. So that's not part of the discussion.
Do I expect the games industry to respond to Best Buy's pilot program if they roll it out to their seven hundred stores? Absolutely. It will be indirect, though. The gaming industry can't suddenly roll out online activation and screw everyone who purchases a used game by refusing to activate them. That would be a public relations nightmare.
Here are a couple of things they could do, though. One is to join with the film and music industry (Hey! It's the Freedom Alliance!) to have a "campaign" to "educate" people about used games/DVD's/CD's. Along with this would be a back-door effort to get Congress to pass some kind of restriction on the sale of used games. It's highly unlikely that anything like this would be successful, but that doesn't mean they won't try.
Here's another possibility. It's possible that in the future, you'll buy the initial episode of a game at a retail store. It could take you five hours to complete the initial portion, and it would be sold very cheaply--maybe even $9.99. Then, you would have the option of purchasing the rest of the game online. A product registration key would be downloaded to your hard drive to unlock the rest of the game. That product key also wouldn't transfer between systems.
That's not an inelegant solution. You still get game boxes in Best Buy, and they can still sell used games--but it will be a $9.99 game selling for $7.99. In other words, Best Buy is no longer eating into your margins, because 75% of the purchase price comes from an online purchase. At that point, the used game market IS beneficial, because it gets the game into the hands of more people who can purchase additional content. It's not a dead-end transaction for the game publisher anymore.
There's probably a part three coming tomorrow, but that's it for now.
<< Home