Thursday, February 02, 2012

I Feel Used


Most Game Developers will agree that the Used Games market is significantly impacting the revenue we receive.   I think what most consumers don't realize is that every time they buy a used game, there is ZERO money making it back to the Game Developers.  All of those profits are going directly to the re-seller and making it more and more difficult for us to continue making higher quality products.

The Question is, what can we do about it?

Game Developers have recently been trying to figure out ways to address this on our own over the last few years and have come up with some ideas that I'm actually beginning to like!  Supporting the game with DLC is always a good idea since it not only encourages the buyer to keep the game longer, but that content is also tied to their account when purchased.  Great Idea as long as your DLC is compelling and a good enough value to bring in plenty of consumers.  It seems to be working since this article says DLC generated over one billion dollars as of May last year.

One of the newer ideas cropping up is including a unique code in the box that gives you access to certain parts of the game...like Co-op or multi-player.  Buyers who do not purchase new, will have the opportunity to pay around $10 to get access to that part of the game just like everyone else.  Some consumers complain about this method because the precedent has always been that it's included in the price and should come with it.  It did for the person who actually bought it first...so was saving that $5 at Gamestop worth it for you?

These methods are doing a little bit to help offset the loss in income for Game Developers, but it's really just a band-aid on a large wound. So that's where we are currently, where do we need to go?

I saw a rumor today that the PS Vita is going to have a lower price point for digital editions of their games compared to the retail versions.  I like this idea a lot and the price reduction COULD be significant if you consider the simple cost of production as well as the cut that retailers take.  Sony says just a 10% price reduction(meaning higher profit margins for them), but at least this could reduce the amount of used games out there.

There's another big rumor about the next Xbox console that could really start to shake things up...it won't play used games at all!  Personally I think this would be a fantastic change for our business and even though the consumers would be up in arms about it at first...they will grow to understand why and that it won't kill them.
The system is already there for Microsoft, all they'd have to do is use the DLC and codes model they have to tie a game to your Xbox live account.  Each retail disc would likely need that unique key somewhere in the code so the account would be able to link it properly.  Ideally it would tie a full version to the console it is registered on so family members can play even if the main account isn't signed in, but this is exactly how their model works now anyway.

It does have it's faults that would have to ironed out...like game rental.  I'm a fan of rental companies because they have to buy copies of the game to be able to rent them out and if someone likes the game, there is a chance they would purchase it for themselves.  I could see Microsoft implementing their own rental service which would maybe give them a code that activates the game for X days and they are charged a small amount.  This could work when you borrow the disc from someone or even with digital download of the full version.  It would also send a percentage of the rental to the Developer with each rental...likely improving the overall revenue we would receive from it.

Another issue would be with simply lending the game to a friend, but maybe they could implement something similar to what Amazon is doing with their Kindle Books lending policy.  The license of the game could be transferred for a set time to another Gamer Tag and the original owner won't be able to play during that time.  Seems like it could work.

In the end, I fully believe that we have to do something about these issues or our industry is going to fall apart.  People often don't understand the cost that goes into creating these huge experiences that we put on the shelves for only $60.  They also don't seem to realize how much they are hurting us when they buy a used game and how pirating a copy is just plain stealing.  Maybe something as simple as educating them could help solve the problem...

I know that some will say I'm not considering the retail games stores and the impact something like this would have on them...but remember they were doing fine well before the Used Games market became such a staple of their business.  The truth is, they aren't concerned with how this business is affecting us so why should I care how these changes will affect them?  Every game I buy is NEW from Amazon.com and it arrives at my door on or close to release day, shipped free with no tax.  The proper revenue also gets to the Developer that created it...how could a retail store ever get more convenient than that?


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19 comments:

Sarah said...

It's really interesting hearing about this from the perspective of someone who makes games. I feel like the used game debate has many shades of gray; at one point in my life I couldn't afford new games and had to wait many months or even years to buy them, at which point they were usually discontinued and only used copies were available. I also know, from working at GameStop, that some gamers can only support their gaming habits by trading in games towards new purchases. They're buying games new, but their trade-ins end up on the used wall. (Obviously piracy is stealing and anyone who thinks otherwise is a jerk.)

All that said, I totally support DLC and incentives to buy the game new. I want to support game developers and publishers more than I want to support GameStop. I don't know if a console that will not play used games is a great idea, but I think some big changes are coming to the used game market in the next generation.

Jameson Durall said...

I totally understand those points. But keep in mind that games are now often discounted a few months on the shelves so if you need to wait you can still buy it new and get the money to the developer.

Games that only have used copies available is a slightly different story and I understand that one. Luckily most companies are putting them out in Digital versions now and they can get a renewed revenue source from a past title.

Terry said...

Jameson,
I don’t want to come across as a –for lack of a better term- dick, but I feel that everything is kind of one-sided one way or another. Trust me I know a developer needs to get paid, but both sides of the argument I think have it all wrong.

I personally never buy used games; I do not like the idea of someone handling the disk before me. Not to mention the benefits of buying a new game (such as Season Passes), but I do not agree with binding to one account. For instance if I wanted to play Halo 3 with my wife, and the Mythic Pack was BOA, she would not be able to play the same maps as me because of this. This could ultimately cripple co-op (local) gameplay, because not only will you be paying $60 for a new game, but an extra $10-$15/account / DLC. The flaw in this is simple; gaming is targeted at a particular group: those that cannot afford it. I personally spend roughly around $400 / month of gaming in general ($20-XBL, ~$50-DLC, $200-misc games, $130 accessories, not including my website where I buy everything), I don’t like the idea of having to pay more for my wife and I to be able to play together.
Now, I would be more than happy with BOA if it allowed the primary account (myself) to have to be active in order for my wife and I to play on the same map pack without purchasing another. There are downfalls to this I suppose, but it has the potential to revive a mechanic that is now a dying breed: local multiplayer.
I am sorry to say that I dislike season passes and online passes, both seem kind of pointless. I am not sure what the numbers are like for Saints Row, but how many codes where redeemed for Online Pass? , both seem kind of pointless. I am not sure what the numbers are like for Saints Row, but how many codes where redeemed for Online Pass? Now don’t get me wrong this is a great strategy to get gamers to buy new instead of used, but then turning around and offering it (the season pass) on the marketplace seems kind of counterproductive. I don’t want to question why these methods are in place, but from the outside looking in it appears to encourage new game sales.
On the other hand, stores that sell used games such as Gamestop will still be in place down the road because of the emerging digital market, as well as pre-order promotions. Used game sales, are a huge chunk of their business, but they could still function without it. In 2010 (only info I could find) they opened up 220 new stores open up in the United States ALONE; internationally they seen around 400 total. I can see how this gives a nice swift kick in the nads to the industry, but can it TRULY be slowed down and not see an increase in pirating?
Long I know, and my view will more than likely change in a few months :D

Jameson Durall said...

Also good points Terry and I agree with them. To be clear, I'm presenting what I think is a problem and throwing out some radical ideas as solutions :)

Terry said...

I understand, and I for the most part agree with you.

I am all for developer getting every penny they are deserved, because working for no incentives is not what the industry should be about.

The technology is in place, that much is very clear. I just do not see Microsoft implamenting it for fear of more users jumping ship to the Playstation 3 or whatever platform they come up with by the "720" time.

However, this has an impact that could be a huge refresher. There is virtually no more competition it seems between Sony, Microsoft and Nintendo.

GameDesignGeek said...

Jameson,

As an aspiring designer at Full Sail, I can see both sides of the fence.

Online Passes, and other things that cost players more for a game are a bad idea. That's like buying a pair of pants, but having to pay extra for pockets or belt loops. You kind of expect them to come with the pants.

DLC is a viable option, but that keeps the designers busy with DLC and not working on a new IP or project which is costly. It does grant new content for the Gamer and makes them keep the game longer. Honestly though, I don't keep games for DLC for the most part. I played Skyrim 1.5 times. First time all the way through with a good chunk of side quests, and the .5 is me going back doing other side quests. I haven't touched it since.

Yet you have my friend who does nothing but add mods and continues to play it now. So DLC and Mods are a great way for people like him.

Does this honestly generate new income for the Designer? Nope. Cause he already bought the game, so him keeping the game doesn't really solve that issue. It just keeps certain people hanging onto the game.

Digital Distribution is a VERY real option to help combat this. I downloaded Skyrim, I cant trade it in. I would if I could, but I can't. Am I angry at this? Nope, nor am I upset in anyway. I got my game quick and easy, and I knew what I was paying for.

Xbox's new possible solution seems like a doctor cutting off the foot because the patients toe is infected. Not only will this hurt rentals, trading, going to a friends house, and so many other things that gamer's love. It also will create a uproar. No one wants the backlash or PR issues because of a new idea. You are correct in stating they can work around it and iron out some details, but that doesn't seem to me as a healthy solution.

The solutions to these problems are truly about understanding why the consumers use these stores like Gamestop in the first place.
When I was done with a game, or bought a game I didn't like, I wanted some compensation or help, to get a new game. Another reason was how close and how easy it was to go to Gamestop. If a Publisher / Game Studio want to combat that, then a few things need to happen.

1. Allow for people to return games to stores for a partial refund, then have stores like Walmart or Bestbuy, can sell used games that once again part of the funds go to Walmart and part goes to the publisher. The Game studio needs to be involved in the sale of Used Games.

2. Allow for digital distribution of their games and on top of that implement a code that once used is invalid, but then allow for the player to return this Digital Distribution to be returned for credit. So even people like me, who download games from Steam / Origin, can get the same benefit. Once returned the copy would be removed from the consumers Library and a new code would be generated for the next consumer.

3. Like Microsoft's system but less extreme, make save games tied to a CD Key that is implemented on the CD. Then a developer must make story lines that continue on and can be transferred over from game to game. Think of Mass Effect and how they read each story line of the previous game. Unlike Mass Effect though require the player to insert the first CD of Game 1, to unlock the save game content in Game 2. This will then have some deterrence of getting rid of or trading in games because said player would not be able to use his save game in the next game unless he purchases a new CD. When a new CD recognizes a saved game, it would prompt and ask would you like to assign this CD key to this Save Game? The Authentication then could be used on the next game.

This Idea just popped into my head as I was typing this comment. I am sorry if It is not worded as well as I would have liked.

The Issues at hand are larger than just adding content or adding like you said a bandage to a severed limb or other serious injury. To truly solve it though, the game studios need to truly look into WHY people do it, and solve those issues.

Billy Xiong said...

Thanks for the great post. I didn't really know how the money in used games go about. I never buy a used game, at all. I personally felt that if I spend 10 more dollars to buy a new game, I might as well. Sure, they claim that it's certified to be resold, but I just don't like knowing that it's been used and not a "new" game.

With this article, it's helped me understand more about this issue and with your point of views about this, it's got me thinking both ways for the better. Thanks again.

Anonymous said...

What utter rubbish!!
Second hand sales means more sales towards new games.
So if i buy say 5 games a year new that will take me down to maybe 3 at most who's losing out there?

If new games are tied to 1 console then i will just buy may be 1 or 2 and only go for games like skyrim etc plenty of hours game play to it.
If you made better games that lasted longerand work perfectly on release bug free, not just yearly updates to games each year with a tweak here and there.

Games are released with bugs rushing them out because of deadlines and sticking 2 fingers up to the people who buy them so were beta testing new games on release it seems.
If i buy a tv or anything else not fit for purpose it would taken back for a refund but you lot seem to think thats ok.
We then have to wait for fixes for it? It should be perfect on release.

Then you want more money for a few maps,tracks etc.
Look at super meat boy on xbox arcade for a example it really makes most full priced games seem rubbish gameplay wise!! graphics are not everything and when we have to suffer 30fps and rubbish aa just so you can add a few usless effects that nobody would miss if they were not there.

So until you stop going for eye candy graphics and give us brilliant gameplay everytime bug free i suggest you look at game developers first before having a moan at the people who buy them and may want to sell them on.

Keegan said...

Come on, blaming the used market?
Maybe companies should price games according to their content instead of LOL$60. For example, a short single-player action game like Vanquish shouldn't have the same price as a huge open game such as Skyrim which shouldn't have the same price as a multiplayer game like Battlefield where the actual content is somewhere in between. I'm sure more gamers would buy new if every game wasn't so damn expensive. It's insulting to say that so much goes into these experiences for "only $60", because the budget of the company creating the game cannot be directly compared in any way to the budget of somebody buying one copy. I buy games digitally on PC (that I know I can't resell) because of huge savings. I got Deus Ex Human Revolution during the release week for $35. I might not have ever bought it otherwise, used or new.
Giving reasons to buy new is actually different from taking away reasons to buy used. The sooner publishers realize this, the sooner we'll have a nice happy industry. You work for Volition, huh? Well, if the only consumer-side solution for saving money becomes "buy less games", then I know exactly where I'm starting...

Anonymous said...

A game that you can't transfer isn't worth as much money, so you'll have to drop prices. New titles will be a greater risk if customers can't unload them, so you'll have to drop prices more. People won't be able to sell or trade old games to get new ones, so you'll have to drop prices even more. If you eliminate the used market, you take money from some of the biggest retailers, which means they'll have less to spend on new titles, so you'll have to drop the wholesale prices or offer more incentives. And when "Saints Row 3" came out, wasn't it good to have "Saints Row 2" still changing hands and being played by potential customers? Would you rather have those copies sitting on shelves, or would you rather have them functioning as automatic advertising units? Not everyone can download huge games, and I have no idea why anyone would want to at the current prices. The average fully transferable used disc is worth far more yet often costs less than what PSN and XBLA offer.

If Microsoft enacts schemes to grab extra cash from customers, they'll end up losing customers unless they counter the extra income with price drops. There's nothing to gain except ill will, which you'll probably receive just by publicly adopting this stance.

Jubei said...

This is offensive and selfish, not everyone can afford to buy new. I have been playing games since the Commodore 64 days, and I still remember unwrapping my brand spanking new Nintendo on Christmas day. Gaming has been a big part of my life, through thick and thin.

I have purchased new and used. I have traded games in to buy new games, and I have traded games in to get used games. During my high school years and college years, I had to buy my own consoles and games as my parents thought they were childish. That is when I bought the Playstation used with Resident Evil 2 from a friend and it did not come with a memory card. I played through Resident Evil 2 for a couple of weeks without a memory card and enjoyed every moment.

Parasite Eve came out and I was so excited, but I couldn't afford to buy it new and had to buy it used.

I remember not being able to afford a new copy of Bushido Blade 2 and bought it used. Unfortunately, The day I bought the game I was knocked down and landed on the jewel case cracking the disk. I ended up buying that game new 6 months later.

If it wasn't for the used market I would not have been able to enjoy these products, it was not because I wanted to screw the developers out of extra capital, it was because I did not make enough to always to afford new games.

I gave my Gamecube kid to the next door neighbors kids because their mother couldn't afford to buy them a console. On top of that I took the kids down to the local Gamestop and purchased a game of their choice.

Now a days I purchase new games, and on occasions I will trade in my games that are collecting dust and preorder new games. Delight you customers and they will stick with you.

Anonymous said...

When I buy a game to 60/70 € became the owner.

So what I decide what to do and if I lend my business ... for free precisely because I paid.

If you will listen to this crazy Durall then that their industry will fall apart ...

Then agree more that we need to fight piracy ... but not the second hand market.

arparso said...

I don't know what's so special about the games industry that they think they can take away more and more fundamental rights of their customers!? Other industries also have to deal with a second-hand market, be it movies, music, electronics, cars, clothing or whatever and I see none of them actively trying to kill it with the same level of aggressiveness as the games industry.

In the end, you'll be hurting your customers the most, forcing yet another DRM mechanism upon them and limiting even more what they are allowed to do with the products they paid good money for.

And what's the result of that? People will have even less money available and less incentive to buy new games and more people will turn to piracy because of all these frustrations... and then even more insulting DRM schemes will be invented to fight that, I am sure.

I understand your problem with the used games market, but I just don't think this is the right strategy... at all.

Sentmoraap said...

If A sells a used game to B, originaly priced at $60, selled at $30, with $3 of margin to an online store.

A earn $27, and will probably use this to buy new games.
B saves $30, and will probably use this to buy new games.

So, the shortfall is only 3$, 5% of the initial price.

With systems like games tied to accounts, there are a lot of users who will want to hack their Xbox to be able to play used play. The users who cannot afford new games will hack their console.
A lot of users will pirate their games, this is the worst thing that can happen.

This is the same problem as UbiSoft's DRM which forces players to download the crack to play offline. So the crack is easier to find, and the game is easier to pirate.
What a silly move !

Derek Stout said...

Battlefield 3 was a great game, but it was overshadowed entirely by the EAs online pass. I couldn't believe how difficult it made the game to play. Why do the publishers feel it's ok to inconvenient the player, who the game was made for.

How does every other market exist with used sales, but the game industry feels they are owed money when we sell things that we bought and therefore own. I understand that you don't gain money from the sale, but it's not like you're losing the money either. You earn the money from the sale of the individual unit, and when somebody sells that unit to somebody else there is still only that one copy, which means that game is still only being played by one party for which the license has already been bought for.

If it's middle parties like Game Stop you're worried about, than you should charge them the extra money. It's not like they aren't swimming in money from the sales already.

Chris said...

It's not the perspective that I personally find interesting when reading the blog entry... but it's the mentality which is going on in the industry these days.

To be honest, I wonder which other industries would think about letting their customers pay for their products(!) only as if they were services. Automobiles? Hell, no... Houses? Imagine a world without the option to buy used real estate. "Sorry pal, you have to rent your mobiliar as it is dongled to this house which you can only rent or tear down to build a new one." Ridiculous.

Why doesn't the movie industry think about this licensing model? Abandon DVDs and Blu Rays and introduce streaming movies as the only option to watch movies. People should already be used to it through cinemas and pay-per-view channels.

The upper limit of nominal game prices remained stable in the past 25 years - a big "THANK YOU!" to all who made this possible. The rate of inflation taken into account, games even got cheaper every year. Thank you, again. :-)

When they came up with DLC many people said that those games are "incomplete"... for me it is a way to spend more time with the game. I really enjoyed some DLC (Mass Effect 2) and thought that some DLC is plain impudent (remember Disgaea 3?).

When they came up with online passes... well, I work in the software industry, too, and servers and infrastructure do cost some money. This way or another (Xbox / PS3), yeah, let them pay for this "additional" feature as long as they are *really* using this infrastructure. If you are using P2P-protocols for online gaming, this is a rip-off by the developers / publishers in my opinion.
Let people pay for new features or services and not for providing them state of the art stuff. I guess then people are willing to pay for it without grumbling at all.

But connecting games to consoles or online accounts? Not even allowing used games to be started? When this will establish, I will turn away from my #1 hobby and completely become a retro gamer or independent games gamer. I grew up with my C64. I typed in listings for days to be able to play a single crappy game. I saw Codemasters raise from a bargain-bin company to Colin McRae Rally nowadays. I enjoyed games which are easy to learn but hard to master.

If(!) the industry would guarantee me that I can still play my original games in 30 years on a different hardware of the same kind (because my first Xbox 720 went out of order) and that I can make a legal, uncomplicated backup of my software to restore it and not having to depend on the publisher's download-servers (costs, see above) and(!) all that at a reasonable price... count me in. At once. That's a future I am willing to live in.

But then this promise is given per publisher and not by the industry itself. No gain for the customer here. And you mentioned price drops after the game was out for a while... I have seen far too many games that simply vanished from the shop shelves without price reductions. Good games that are now incredible hard to get (not even expensive, just hard to find).

Everything else is just a legal way of destroying art. Ever thought of people trying desperately to save the data on magnetic discs from the 80s? From games of publishers long gone whose rights have not been sold or bought? I am not even talking about copy protection at this point... but with SaaS?


I am a game collector since the 80s and striving to preserve games the way they were meant to be played (= on the original hardware _and_ the copy protection in place).

Rick Marcum said...

Here's the parts I see missing in this argument:

First, everyone is focusing on Gamestop, I assume because of their profitability. But to be honest, I don't know anyone that would buy a used game just because it is 5.00 cheaper. 5.00 is worth it to me for a copy no one has touched. But let's use Skyrim as an example. Gamestop is still selling it over 50.00 used. But a smart game shopper can get it at a pawn shop for 25.00 or less. Now, for those of us without a 400.00 monthly gaming budget, that could mean the difference between buying 6 games a year and 12 games a year. And when we have a month such as just came about recently, with the release of Skyrim, Saints Row the Third, and Assassin's Creed: Revelations all in a short span, we have to makie choices. Now, because I can buy them used, I have all 3 of these titles, and my fiance hates it.

To combat this, I read an article quoting Matthew Karch from saber Interactive who stated ""A $60 game has about $30 of waste in it in getting the game to retail. I really believe that with digital distribution you can get that same full-length experience for $30."

I am all for DLC. I have all the content released for Mass Effect 3. I bought the DLC for Red Dead Redemption. I am all for adding content to a game I like, and will pay for it, if it adds content. And if I could get a new game downloaded for 30.00, I would even likely pre-order.

I don't do much multi-player, so my feelings on the online passes are mixed, and not worth comenting on.

The number 2 thing that kind of chaps me about this kind of opinion, is that every Dev or publisher who is been interviewed in Game Informer makes a comment something along the lines of "We want to get our game out to as many people as possible, so they can enjoy it just like we do." And yet making used games obsolete does just the opposite. Unless they mean "get the game out to as many people who can afford to pay us as possible"?

Either way, I really believe making used games impossible is a wrong step, and will hurt the industry in the long run. There has got to be a better way.

Adam said...

I've never seen a convincing argument for why software should somehow be exempt from the first sale doctrine. All those used games you complain about are used because someone bought them new first. When I buy something it is now mine. I can do with it what I will. I can sell it to whomever I want, and then it will be theirs to do with as they will. The builder doesn't get a cut when I buy a used house, Toyota doesn't get a cut when I buy a used car, why should software be any different?

I test games for Microsoft, and I will not buy their next console if it keeps me from playing used games. Pirates are under-served customers. Punishing your customers is not a good business model for either short or long term.

Gilles said...

(excuse my english, I'm a foreigner)

Well, I'm sorry Jameson but I totally disagree with this idea. I mean, when I buy something, this thing is entirely mine, isn't it ? Why selling it when I don't use it anymore is impossible ?
Why this kind of ridiculous idea is only seen in the vigeo game industry ? When I bought an old car last year, Volkswagen didn't say to me I was a bad boy because I bought a used one !
If I buy an old furniture in a garage sell, will Ikea accuse me to kill their profits ?

Have you any idea that some people (who don't have a lot of money)use the money of their used games to buy the last killer app ?
I'm sorry but I can't understand this way to think. I think it's dangerous for the property rights of the customer.