Monday, September 13, 2010

Used Games Part One: Your E-mail

Tomorrow, I'll have the modified "rant" that I wrote last week, and Wednesday, we'll discuss the Verner vs. Autodesk decision handed down last Friday by the Ninth Circuit Court.

Today though, your e-mail.

As a general introduction, the idea that consumers shouldn't be allowed to resell their games pisses you off. A lot. Add exclamation points.

It's interesting to note that in the European Union a law has actually been passed to address the notion of resale (thanks James Brisco), although it appears to be narrowly tailored toward artists. It's called the Resale Rights Directive, and it "creates a right under European Union law for artists to receive royalties on their works when these are resold."

For sales under €50,000, the royalty rate is set at 4%, although member states are allowed to set a minimum sale price under which this law does not apply (as long as the minimum is not above €3000).

Philosophically, that's an interesting approach, because while it's not eliminating the right of first sale, it's taxing it.

Would this work for the gaming industry? I don't think so, for two reasons. One, there would be tremendous consumer backlash, and two, in spite of that backlash, the gaming industry would perpetually be lobbying to raise the tax rate, which would piss all of us off even more.

Now, if the idea was broached that a 4% tax would be added to used game sales, and that this 4% number would be etched in stone, never to be altered, and that as part of the agreement, gaming companies would have to forever shut the hell up about used game sales, would consumers be willing? I doubt it, although a 4% surcharge to get people to shut the hell up sounds, conceptually, like a great idea in most cases.

Also, on the legal front, I received this from Mike Stinchfield:
After a bit of late summer cleaning I found some games just taking up space. I decided to take them down to the local Gamespot (Sand City, CA). Well, the cashier let me know if I wanted to sell the games to the store, they would require my fingerprints. Errrrr... So I inquired. Apparently, Sand CIty has classified Gamestop as a pawn shop and are mandating Gamestop abide by all regulations relating to such a fine establishment. Needless to say, I want no part of it. I can imagine this hurting the used games business, at least for that store.

That's an interesting strategy legally, to get Gamestop legally classified as a pawn shop.

John Krepps asked this question:
On the topic of selling used games, I was wondering how game companies view their products. Would it be like a Broadway play (you buy a ticket that entitles you to a set amount of entertainment, at which point the ticket has no value) or like a book (which can be picked up again and again or sold to another).

Well, I think the gaming industry would be thrilled if, once you finished playing a game, the physical media spontaneously combusted, leaving only a hot pile of ashes and a confetti shower.

Failing that, I'm surprised no one has tried the Flexplay model (although it was a colossal failure in the DVD market).That's the technology used for DVD rentals where once you opened up the package, some flesh eating virus escaped and destroyed the disk after a certain length of time (I'm slightly modifying the facts for entertainment purposes only). Fortunately, it was a miserable failure.

Here's a comment from Matt LeMayabout used game sales fueling the purchase of new games:
Anecdotally, I trade in a lot of games to Gamestop and every bit of that credit goes to new games. I typically only do this when there's a promotion involved that makes it worth my while, and thankfully, they have promotions for most of the games that I buy. If I didn't have this option, I would buy fewer new games, period...I also worked on and off at Gamestop over a period of 6 years through high school and college and I consistently saw the same behavior. Trade-ins fueled new purchases the majority of the time, especially for new games. Most of the trade-ins for used games were done by more value-conscious or less informed gamers, and this group wouldn't buy new games anyway unless they were drastically marked down.

I wish it was possible to get hard data on that relationship--used game sales fueling new game purchases-- but the only "data" is coming from Gamestop, who I would hardly regard as unbiased. I do believe that there is a category of consumer, though, that only buys new games with the proceeds of their used game sales (I certainly fall in that category).
Here's a comment from David Gloier on game pricing:
If they priced a new game at $39.99 instead of $59.99 maybe I might be willing to pay $10 or whatever to activate a used game online. The fact that Gamestop buys a game back for $15 or $20 and then sells it for $54.95 instead of the retail $59.95 ought to be telling them they are gouging us on new games. Might that be part of the reason for the huge used market?
I don't think there's any question that if new games cost $40 instead of $60, the used games market would be less robust. I think that's true for any retail product.

Here's a very interesting comment about the gaming market in general from Simon van Alphen:
Back in my day (I'm 31) why didn't have any sort of a used games market.

We did have several dozen budget games labels.

Now that they're gone, is it so surprising that something else filled the niche, that market demand? There's a lot of money there and if the game developers/publishers aren't willing to fill it in themselves anymore then, well, it really is their fault entirely isn't it?

I certainly wouldn't still be a gamer now if it wasn't for first budget releases of games and then used copies of games that were available during the time when my parent's wouldn't buy games for me and I din't have the cash to spend on games at their release price (throughout high school and college, basically).

That's both very interesting comment about budget labels as well as a very pertinent point about becoming a gamer--how many fewer games would kids play without the used market available to them? And how would that affect them when they become adults? Would they still be gamers,  or would they have instead moved onto one of the many other entertainment options at their disposal?

Warning, danger.

From James (via the curiously thriving DQ audience in New Zealand):
What I haven't seen addressed yet is the question of renting games via stores or mailed subscriptions services. Wouldn't this cause a significant loss to game publishers? Or are they compensated for every rental? 

To the best of my knowledge, gaming companies receive nothing from rental services (other than the purchase of the original discs used for the rentals). That's probably far closer to a parasitic relationship than the used games market. 

Finally, and this is a very thoughtful point from Neil Sorens, a reason to be interested in some of the strange things that game companies are trying:
I am in favor of the current experimentation, if only because it will generate more data about how many sales publishers are losing because of the used game market. It won’t be exhaustive by any means, but any additional data points are helpful.

Well said.

Site Meter