OMGN: Online Movies & Games Network

Used Video Games

Feature; Dec. 8, 2010; Channels: Video Games; By Robert F. Ludwick
Subtypes: Opinion
Should video games have a secondhand market?

A hot-button issue in the video game industry the last few years has been the current used video game market. Game developers and publishers only see profits from new video game sales, as they have no hand in the secondhand market. In tough economic times, such as these, businesses will try to find any way possible to keep profits flowing to stay in business and keep shareholders happy. But is the current publisher rage against the used video game market a good thing?

Used Gamer
"I like games that are just like me - old!"

I'm not going to delve into the countless interviews or other articles written about the used video games "issue." Chances are, by now, you know there's an "issue" within the industry regarding used games. If not, do a quick Google search on used video games or even Cliff Bleszinski. No, I'm just going to look at this from a business perspective as well as a consumer perspective.

Business

Let's play a little exercise. Assume you're a business owner. As a business owner, you want to raise as much money through sales of your products as you possibly can. Legally, of course. Being moral in business would be useful too, but you can achieve profits without any semblance of morality.

Now imagine that there is a secondhand market for your products in which you have no say. People can take the product they purchased from you and re-sell it to someone else. At this point, they can sell it for whatever price they like -- even a higher price than what they bought it for. All that is required is for the buyer to agree to the price and to pay for it.

As a business owner, aren't you a little perturbed that two people now got to enjoy your product while you only saw profits from the first person? Doesn't that tick you off a little bit? Wouldn't you like to have gotten your 20 percent product markup from that second person too?

This is the dilemma facing video game developers and publishers today. They spend all of this time developing great games for all of us to play and then they unleash them upon us! We reward them for their efforts by purchasing the game, right? Right? If the game is worth purchasing to play, then we should buy it! But if we want to properly reward the creators, then we need to buy it from them. And the only way to do that is to buy it new. And buying it new costs more than buying it used, naturally.

As a business owner, you want to find any way possible to make money off of your product. And in the video games market right now, one of the big pieces of the pie that game creators don't have any say in is the used games market. This secondhand market operates much like any other secondhand market -- owners of the product re-sell it to someone else. This person gives up any future enjoyment of said product for funds. Now someone else gets to enjoy the product. It's simple, right?

You don't think Hollywood or the global automakers wouldn't love to kill their secondhand markets? Imagine if that had happened. GM and Chrysler probably wouldn't have gone into bankruptcy, as they would have always made money on every sale of their automobiles. There would be no bargain bin of movies at your local grocer. You would always have to buy new or not buy at all.

From a purely business perspective, trying to kill off the used video game market makes sense. By crushing an avenue for gamers to play a game without paying the publisher, said publisher reaps the rewards by earning more profits as the only way to play the game is to pay the man. Logically, there's nothing wrong with this. If it's good for business, then publishers will try to get it done.

For a moment, let's take a look at two tactics being used to put a stop to the used games market. The first tactic is to offer an online activation code only with a new game. These codes will activate online playability, so if you buy the game used, you don't get to play online. The next logical step here is to make a new game fully playable only upon activation. This activation code can be purchased separately for $5 in most cases. Here is an instance in which a publisher is getting their "grubby little mitts" into the used game pot.

Grubby Little Mitts
The fingers are missing because the publisher can't afford a real mitten, you meanie!

The second tactic is to offer digital downloads. Unless there is a built-in mechanism to transfer DLC from one person to another, this one is nearly foolproof in making sure gamers have to buy the content at the same price as other gamers, and additionally from the publisher themselves.

There's one more piece to this publishers like to use: the idea of licensing the game to play. When you're talking about products with a physical representation, such as a car, the idea of ownership of that car is easy to understand. But when you're talking about data on a disc or data on a hard drive, this changes the equation entirely. I don't think anybody could seriously argue they own all of the 0s and 1s representing a video game. Owning that data would mean you literally own the game. Sorry, only the publisher does. In this case, you really only own a copy of a game.

Well... Maybe not even that. Remember, I said licensing. Video game companies and other software manufacturers are quick to point out you own a license to play the game and that's that. EA could swoop in here and require agreement to a non-transferable license the only way to buy one of their games. If you transfer that license, you've broken the license agreement, and anybody buying secondhand would also likely be breaking that agreement if EA structured it right.

This hasn't really come to fruition yet in the video games market, but don't be surprised to see it crop up soon.

We've talked about business quite a bit here, so let's move on to consumers before we analyze what should really happen here.

Consumers

Let's play a different exercise this time. Let's assume you're a consumer (what a stretch, eh?). As a consumer, you want to enjoy a product when you buy it. However, when you're done with this product, you get the urge to sell it to recoup some of the money you spent in the first place. Or, perhaps, you want to buy a used game that's been out a few weeks because you didn't care to buy it right away. So, you want to buy a used game from someone else for cheaper, rather than pay full price for a game that's been out for a while.

Now imagine that you cannot do this. You cannot sell this game to a friend or a secondhand store such as GameStop. You cannot buy this pre-owned game from another individual or aforementioned secondhand store. In these scenarios, you're stuck with a game you cannot sell, yet won't play anymore, and you're stuck buying a game for full price... respectively.

A Gamer
"Since I can now only buy new games, I can only afford just one game with my bling!"

This is the very scenario publishers want to make happen. As of right now, this isn't the case with the video games market, and as a consumer you likely want it to stay this way. As a matter of fact, I'd like things to stay this way too, despite the fact that I rarely buy used games anymore. Back in the day, when OMGN wasn't reaping millions of dollars for me (oh, wait, it never has), I tried to buy used as much as possible because it saved me money. That, and it also helped a fellow gamer put some of her funds toward a different game to play to continue enjoying more and more games.

As consumers, we all have rights to do whatever we like with our purchased property. If we want to resell a game we purchased, then we have the right to do so because we bought it and we own it. Sure, we don't actually own the intellectual property of the game itself. But we own the playable copy of the game and can do with it what we please. Damn you, publishers, for trying to take these rights away from us!

Well, technically they're not rights. This is just how the system is right now. They're more like privileges, and they won't remain that way if publishers can find a way to make these games non-transferable.

Let's make the translation between video games and other products. This time we'll take a look at furniture. Let's say I purchased a table at a really posh furniture store one day. A few years later I don't like the table anymore, so I want to sell it. I can take it to Craigslist or eBay or any number of other avenues to sell the table. I'll probably sell it and use the funds toward my next posh table that I'll get tired of. The point here is, upon purchasing the table, I own it and can do what I like with it.

In this case, I'm sure the table manufacturer would love to get his hands into the money that changes hands when I sell the table myself. After all, it was his original craftsmanship that allowed me to enjoy the table in the first place. He doesn't see a dime from the table being resold, and I may not even buy my second table from him when I need my replacement.

However, this is totally accepted behavior for consumers, and it should be. The video game market, really, shouldn't be any different. I'll repeat again, as a consumer, I should be able to do with my property what I like.

Analysis

The key difference between the video game market (and any software market for that matter) and tangible reproducable products is you're just buying a copy of the game and not the intellectual property. Software is not a real-world item like a table or a car. So does this distinction mean video games should be treated differently?

In my opinion, no. Unless there is a law put into place forbidding this behavior, the used video games market should exist to allow gamers to buy and sell their games to and from one another. There should be no exception. Additionally, there should be no law making this an exception for video games or any other market.

So what's my big argument and reason why? Why this opinion? Is that it? No, it's not. I have a very compelling reason here.

The greater good of the video game market is at stake here. That's why. It's one part goodwill and another part limited funds. As far as goodwill goes, publishers shouldn't take too strong a stand against the video game market. If they do, and it pisses gamers off too much, then those companies  taking part in these measures which attempt to kill the used games market will suffer decreased sales. These practices may even drive some gamers to pirate software just to spite these companies.

Goodwill
No, not that Goodwill!

Goodwill can go a long way. Make concessions and appear to be a good guy, and you can make some sales. Try really hard to suck all of the money out of your consumers, and you can fall behind competitively and go under. It's called customer service, and it's very important, even in video games. Maybe not quite as important in video games given some of the uniqueness of the market (parents buying games for kids, kids not caring about the practices because they want the game so badly, etc), but it's still important. If you can have your company come across as caring about gamers and being "one with the gamers," then you are likely to sell more games.

The other side of my argument here is limited funds. Nobody has an unlimited supply of American greenbacks with which to purchase every game their heart desires. Nearly every gamer is operating on a fixed budget or has parents that operate on a fixed budget. This means only so many dollars will go toward purchasing games in the first place.

Given these limited funds, no matter what you do as a publisher, you're not going to be able to force people to buy your games brand new if they can't afford them. You're not going to generate a groundswell of sales of new games by eliminating the used video game market. With my $120, I can buy two new games (not including tax). Or perhaps I could buy three used games. Sure, in this case, you may be the publisher for one or both of the new games I've purchased, and in the used games scenario, you get nothing. But in the used games scenario, I get to enjoy three games instead of two. Maybe that third game here is one of yours and causes me to buy a new game from you next time... Who knows!

The real end result here from killing the used video games market is you end up destroying GameStop and other used game retailers and outlets. If publishers are able to do that, then chances are they've devised a way where you cannot play a used game purchased by someone else, regardless if you buy and sell through places like GameStop or face-to-face with other gamers. If this happens, then you're still going to have the same limited funds in the video game market. You're going to get your hands on a little more of the dough, but at the expense of goodwill and a lot of people never getting the chance to play more games, simply because they cannot afford more than a couple here or there.

So which is it, publishers? Eliminating the secondhand market (and putting lots of people out of work, too!) or making some goodwill by backing off and telling gamers you care about them and their gaming experience? Decisions, decisions...

Money Money Money!

Editors Note: All images are copyright their respective copyright holders.

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