Thursday, October 16, 2008

Used Games (part three: your e-mails)

Multiple thoughtful comments from you guys (thanks, as always) on this subject, and here's a sampling.

First off, from Brian Minsker:
Two quick thoughts on why the cannibalization rate for used CDs is lower than that for used DVDs. First, the CD is an antiquated music delivery mechanism in that people want to buy "songs," not "albums." It used to be that an album contained about 45-50 minutes of music because that was what could fit on two sides of the LP. With the CD, that now tends to push up closer to the 60-70 minutes of music, again based on what fits on the delivery medium. However, very few musicians can put out 60 minutes of good (and commercially successful) music every year (which is what the record companies want, so CDs tend to have some less-than-good music on them. So if you want only a couple of songs off of a CD, it's easier to drop a buck apiece with iTunes (or Amazon or...) than to buy the CD. On the off chance that you find you like all the songs on the CD, you're still talking 12-15 songs, which comes out to the same cost as the physical media.

Second and somewhat related to the first, there is a thriving digital market for music, not so much for movies. I would guess that a large fraction of the purchases of used CDs are for those not available in digital format, just like many of the used LP purchases are those items that aren't available in CD format.

Next, from Dave Alpern:
One reason there are substantially more used DVD sales than used CD sales is because there are places that RENT DVDs. Check out any Blockbuster or Movie Gallery – the ones around here all advertise used DVDs “3 for $20” or “Buy 2 get 1 Free” as they sell of their old rental stock when the demand goes down. Even Netflix does that. The used DVD market is probably a very close model for the used Game market, with EBGames selling used games right alongside new ones.

Finally, from Garret Rempel:
Why do you find it puzzling that Books have a lower cannibalization rate than CDs, and CDs are lower than DVDs? Why not look at the rate of replacement or rate of significant improvement?

Books - Last major update: 1439 - Printing Press
Audio - Last major update: 1988 - Compact Disc
Video - Last major update: 2007 - High Definition BluRay/HD DVD

[note: that "last major update" entry for books cracked me up. And while SACD is technically a major update to CD quality, it never really got traction, so I think 1988 is still fair in a mass market sense]

If I am a consumer, why wouldn't I choose used over new if I expect the technology to age rapidly and a better technology to come out in the near future? I can save 50% off the price, and a used copy should last 5-10 years until a new, better format is released.

Now a book will last a lifetime if cared for properly, I could buy used (and have, for out-of-print books) but why wouldn't I spend the extra money and invest in a new copy that I know will last a very long time, instead of going through the effort of trying to find a used copy that has been treated well enough that I can be sure it will last as long? Buying a book is an investment, and it is easier and safer to buy new.

How about a CD? Again, same argument as a book, except that it is easier to find a well treated used copy that I can be certain will last a long time. But I am also fairly safe in assuming CD's won't be replaced in the immediate future, so investing in a new CD is reasonably safe for a couple of decades.

What about a DVD? Well I keep hearing about this thing called High-def that has been out for almost two years, people are starting to upgrade and I probably will in a few more years. What is the point in investing in a new DVD if I'm going to upgrade soon? People are starting to dump their well-preserved DVD collections for the next new thing, I can pick up some great movies cheaply used that are likely to last a couple of decades, and I won't have to fret about paying full price for obsolete technology 5 years down the road.

Now I can't say I make that rationalization consciously when deciding to buy, but I don't think it is hard to see why DVD sales are being cannibalized at a much higher rate than CDs or Books.

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