Ask a Dork: Used Games

This is a new weekly Nerds on the Rocks series where we respond to the inquires that only massive dorks can properly address. Feel free to submit question in the comments below. This week’s question is all about the pre-owned video games market:

“What is your stance on used games? Is it killing the industry? How would you fix it?”

The concept that used games are killing the video games industry has been thrown around a lot, mostly by developers who haven’t been performing too well lately. In an interview with GamesIndustry International, Silicon Knights (Too Human, Eternal Darkness) head Denis Dyack stated that used games were “cannibalizing” the industry, limiting the amount of money that game companies can typically expect after the first few months. Much to the same effect, THQ’s creative director for their wrestling titles said in an interview that preowned games “cheat” developers (hence the inclusion of single-use codes in their recent releases). The guys at Penny Arcade have also added their voice to the pro-developer side, pointing out that unlike a used book (which degrades over time) the quality of a used game’s content is essentially the same as that of a new video game. Overall, developers seem to be of the mindset that a strong launch is the only way in today’s marketplace to make up production costs due to the scourge of used titles.

Now, there is no questioning that the standard production cost of a video game has dramatically increased from what it was just a few years ago (from about $15 million per title to an average of $25-30 million), but why is it that the pre-owned market has suddenly become the whipping boy for every game developer in a financial crunch? Used games have been around in one form or another for at least 30 years. People got tired of Atari, Sega, and Nintendo games just as easily as they get tired of PS3 or Xbox 360 games today. Does the blame really fall on the pre-owned market for the financial shortfalls of the game industry?

In my opinion, these developers take more issue with the consumer behavior of their market than they do used games. In a video game producer’s ideal world, every time you were to purchase a video game it would be a new, fully-priced copy. That sale would add on to the total units sold and directly benefit the studios and publishers backing the game. Unfortunately, that same mentality goes against basic market economics; people will alway buy the products they want at the lowest price possible, providing that those products are readily available. Stores like GameStop make a pretty penny by streamlining the trade-in process and providing multiple copies of the hottest games at the cheapest prices. Does this mean that these retailers should receive the ire of these disgruntled developers instead? I don’t think so.

Mike Masnick at Techdirt recently pointed out that a healthy secondary market actually helps drive sales in the primary market. If there’s a healthy secondary market for products, it reduces the risk for the buyers in the primary market. That is, if they buy the product and don’t like it, they know they’ll be able to resell it and recoup some losses. Gamers (especially those who are short on cash) need that kind of safety net to ensure that they are getting stuck with a $60 dud. Masnick also stated that these secondary markets help bring gamers into franchises – increasing the probability of gamers later buying sequels at full price. Clearly stores like GameStop aren’t exactly doing a disservice to their industry. If anything, they’re expanding audiences and enabling gamers.

Personally, I love purchasing previously enjoyed titles and trading in games that would otherwise collect dust. I don’t think that the pre-owned market is inherently bad for developers or the industry as a whole. People never used to complain about GameStop or used games because production costs had never been as absurdly high as they are now. Making games has become foolishly expensive because studios have been utilizing the latest technologies, employing bloated development teams, and spending too much time in the development cycle. My solution would be for developers to stop focusing on producing AAA titles with inflated budgets and to start focusing on creating conservatively budgeted titles with plenty of quality DLC to supplement post-launch sales.

Unfortunately, big name publishers like EA, THQ and Activision have instead chosen to implement single-use product codes to spurn the purchase of pre-owned titles and it looks like the next Sony and Microsoft home consoles will be unable to play previously owned titles due to forced DRM protection.

Trent Seely

I'm not that crazy about me either.

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