Game developer: Pre-owned games are worse than piracy

By Matthew · 70 replies
May 12, 2010
  1. There's no denying that second-hand games dig into the profits of developers, but just how bad is it? Citing statistics that suggest games are traded as many as four times, Blitz Games Studios' co-founder Andrew Oliver says used game sales cut publisher and developer royalties by as much as 25%. That figure, while far from scientific, is staggering.

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  2. dustin_ds3000

    dustin_ds3000 TechSpot Chancellor Posts: 887   +19

    i can see it now. "Steam is coming to a PS3/XBOX360/Wii near you, Summer 2010."
  3. yukka

    yukka TechSpot Paladin Posts: 861   +67

    Okay. Funny story - I agree that preowned games in their current state damage sales for full price games and obviously reduce the money received by the game developers. This is bad.

    But.. I also find that £39.99 for a console game at release is too much money for a single game. How can kids afford to buy more than 3 games a year at these prices? I am an adult and when I look at my stack of £39.99 games that I do not want to play, it hurts me to think of the value lost. The hundreds of pounds I no longer use.

    Then what do I do? Well, I take them to the shop and trade them in to purchase new games as alot of kids obviously do as well otherwise they wouldn't be able to afford new releases.

    I think the EA idea is a good one. 10 dollars to buy an online pass if you get the game preowned seems fair enough to me. Its either that or find a way of taxing shops that do preowns so the prices go up a bit for secondhand games but the publishers get a cut of the sales.

    Either that or a sales cut combined with an enforced ban.. but how would it be enforced and would reducing the cost of each game to £29.99 still amount to a loss of 25% of profits?
  4. gobbybobby

    gobbybobby TS Guru Posts: 555   +9

    I also think EAs idea of charging pre owned users to play online is a good idea. However if you have say 4 Children in your house. All paying £30-40 a month for Xbox live then u have the 1 user activation code. U would end up have to pay $10 (£10?) for 3 of the gamertage to be able to play online. And I for one hated it when my brother shared my gamertag so don't argue that!

    MW2 RRP was £55! thats too steep. I think £35 maybe as much as £40 for a AAA title. anything above that unless its a limited version or comes with loads of goodies is a rip off! I hate buying games pre owned. Always have hated it. I never trade in or buy games from trade in shops/ websites.
  5. PanicX

    PanicX TechSpot Ambassador Posts: 669

    For as much bitching and moaning these companies do over piracy and their lost millions of profit, they sure do everything they can to increase the lure of it.
  6. This is the worst story yet. Businesses are digging their hands into areas that are in no way, affiliated with their business. Buying pre-owned games is synonymous to piracy, except it comes with a small payment. Behind that cruel truth, Piracy is synonymous to sharing a video game software, that you legally owned, with your friends--so you can play a game together on a LAN Weekend.

    Back in the Nintendo/Super Nintendo days we use to lend our copies to friends everywhere. Did the business world grow corrupt in this last few centuries?

    From the way I see it, companies want to create a rule that you can never share your video games with friends or family. It feels like paying the president taxes and have it thrown into the furnace. Ever paid for something and was told that you do not own the product?
  7. TomSEA

    TomSEA TechSpot Chancellor Posts: 2,718   +860

    Hmmm... I've never bought into the "games are too expensive" argument. Simple reason is look at the time vs. expense. Take for example Fallout 3. When released, that game was $59 for X-Box and $49 for PC. But if you played every aspect of the game - looked under every rock, peeked in every house, shot every critter, completed every mini-quest, it took a minimum of 130 hours to finish the game if you raced through it.
    Most folks took150-170 hours to finish it off (my "score" was 153 hours). That comes out to around .25-.30 cents for every hour of play. Now not every game is going to take that amount of time to finish. But the point being, computer games are an incredible entertainment value, and a consumer needs to look beyond just the purchase price.

    As far as pre-owned games, I'm a PC gamer only, so have never really got into that. It's more a console phenomenon. It does make sense that the developer and publisher should get some sort of royalty for the sale of a pre-owned game, but how to do that effectively and consistently is a mystery. Be interesting to see how this EA program pans out.
  8. If it was any company but EA I'd give them applause for thinking outside the box. But it is EA. The granddaddy of greed and corruption. They had better offer a number of goodies in exchange for the $10 online pass.
    Although this doesn't effect me since I don't buy their stuff anymore anyways. My $0.02
  9. I think this is where companies get into trouble. Instead of wondering why the first user brings the game back they want to make sure the second user doesn't buy the used game. Most likely they are aware most games are just crap but they want to bleed as much money out of them as they can. Used games are the same as piracy, it can't be assumed that every copy is a lost sale. Maybe the reason people are buying used games is they can't afford to buy new games. Also the people selling the games are most likely doing this so they can buy the next new game.

    Think about it this way if I buy a $60 game. First game I ever buy. Now I want a new game buy don't have $60 more dollars. Currently I can take the game back get some credit maybe around $30 so the new game ends up being 30 instead. Well with the EA thing I am pretty sure the only party that will get screwed will be the customer. When you return your EA game you will only be getting $20 dollars instead of $30 and all the other parties still make there money. If I buy one game a month and return them and get 30 for all of them over a year I will be spending 60*12-30*11(first month didn't have a game to return)=330. Well if gamestop just decides to only give me back 20 dollars and I still want to spend 330 a year on games this means I have to buy less games. Which me buying less games sounds like a big win for game devs. Assuming gamestop does give back only 20 dollars the new equation to spend 330 on games is 60*8-20*7=340. Which means instead of buying 12 new games a year I would only be buying 8 new games a year.

    I am 100% sure whichever game dev made the comments doesn't take this like this into consideration. They just think the customer has an unlimited amount of money to spend on there sub par products. I could go on longer about this in business strategies but I just feel that all of these reports never look at any of the bad things that can come about from forcing people to only buy new games.
  10. PanicX

    PanicX TechSpot Ambassador Posts: 669

    This is how they profit off of pre-owned sales. When gamers sell their old games, its not a huge leap in logic that they will use the cash to buy other games. Games that they otherwise might not be able to afford.
    Adding additional fees to pre-owned games, cuts out a market of gamers that simply can't afford the over inflated release prices. yukka won't be buying as many new titles because he can't offset the cost anymore.

    Would you suppose that someone that really wants to play a game, but can't afford to pay for it, might get a cracked version for free instead? I think that's the case and why this is bad for the concern about piracy FUD.
  11. Relic

    Relic TechSpot Chancellor Posts: 1,379   +16

    I somewhat agree that second hand sales hurt more then piracy since a real sale went to someone else then the developer, but the solutions that are being forced onto consumers is the wrong direction. Second hand sales are important not only in this regard but other industries as well in the world (Books, CDs, Movies, Cars, Clothes, etc). And instead of complaining about it target the problem directly which is overpriced games. Games being released at $60 a pop is simply too much for 90% of what is out there. Not all games are created equal, but the price sure is equal no matter the quality. This reason alone leads some to buy used or resell their game when it turns out to be a bust.

    I remember when DLC was being promoted as a new way to lower game prices as revenue would be made up with it. And instead we now get $60 games with DLC that runs $10 - $15 dollars on top of that. The greed of publishers is the main culprit here and the solution is as simple as releasing games from $30 - $40 with 2-3 DLC packages in the waiting. And maybe not develop games with Hollywood like budgets and expect us gamers to foot the tab. Then again my views sadly are in the minority...but I'll still be fighting the good fight for you guys!
  12. Unbelievable the game industry is following the textbook industry.

    I don't see what the big deal is for online content. If you sold 2 million copies and all users us the online features, then one user sells the game and the buyer then gets online it is 2 million users.

    For most titles a $10 fee would simple lower to cost at which once would buy a preowned game and the price a seller would get for it.
  13. Relic

    Relic TechSpot Chancellor Posts: 1,379   +16

    @ Guest

    You're right, it's easier for them to blame EVERYONE else but themselves. Blame piracy, blame second hand sales, blame poor understanding of the game, etc instead of realizing that maybe that buggy game with poor game play and support was the cause of its poor performance. I can only think of one developer/publisher at the moment that blamed themselves on a bust instead of making excuses like most of the industry and excepted returns to those who requested it.
  14. @TomSEA why does it make sense the developer and publisher should get some sort of royalty for the sale of a pre-owned game. I can't think of any other market that works this way. Does ford go to your local used car dealer and ask for 17% of the sale of the used car. CDs is maybe a better example since it is also a digital copy of something yet you don't see the artist getting a cut of used CD sales. If I buy something I own it that is how the US works and if I choose to sale it I should be able to.

    I guess I just don't understand that I am not suppose to own anything I buy in today's world and I am really just renting everything.
  15. Matthew

    Matthew TechSpot Staff Topic Starter Posts: 5,333   +101

    Mind sharing who you feel that one developer/publisher is, Relic?
  16. whats next, are they gonna start giving out about us buying games at discounted prices. shame on us all.
  17. Relic

    Relic TechSpot Chancellor Posts: 1,379   +16

    It's Stardock, their failure of Demigod on launch resulted in ~2000 returns for full refunds and they ate the cost (Stardock Customer Report 2009). While that is a PC title it does show that some companies do care. They also established the Gamers Bill of Rights, 10 rights I think every game should be held up too.

    What's this ownership you speak of? I thought we live in a world of leases and loans.
  18. natefalk

    natefalk TS Rookie Posts: 78

    I do not see what they are complaining about. They received the money (and profit) from the initial sale. Put it this way, if you buy a brand new car and decided you don't want to drive it anymore. Would you sell it or let it collect dust in the garage?

    Bottom line: When you purchase an asset, you are the owner of said asset and you can do whatever you want with it (unless it's digital...then you can only delete it).

    I suspect the next gen of consoles will be like the PSPGo. (No UMD/DVD/Bluray only digital content)
  19. jwdR1

    jwdR1 TS Enthusiast Posts: 33   +25

    Trouble is, for every Fallout 3 there's 10 Red Faction: Guerilla's. While I got hours of entertainment out of F3 like you, I got nothing but frustration with RF. At the time of purchase it's a complete gamble as to which you will get for your $60...and the odds aren't in the consumers favor. Considering the quality at release of most games, $60 is too much.

    IMO, this is their own doing. The initial price point is too high. I'm not willing and can't afford to pay $60 for a game. I wait until the price comes down to $40 if the game is good and well reviewed, I wait for $20 otherwise. The trouble is, they keep the new game price at the $60 price point for a year or more. By that time there are plenty of copies available in the used market at a price I'm willing to pay. Guess where I'm going to make my purchase.

    If they want to compete with the used game market, then they need to start dropping their prices around the time copies start becoming available in the used market. If they stayed within $5 of the used price, I for one would be more likely to buy the new.

    If Ford wants to make money off my purchase of a used Ford truck, then they can offer a service contract for a reasonable price (i.e. EA's approach). But CarMax, owes Ford nothing...and neither do I. If I really want a new vehicle, I can save a money by showing up at the beginning of the year to buy last years discounted model.
  20. Darkshadoe

    Darkshadoe TS Guru Posts: 571   +113

    Lets see...

    You buy Game X at full price. You wear out your copy of Game X so you have 3 options:

    1) Buy a completely new game of Game X for $60
    2) Buy a used version of Game X for ~$30 plus pay EA a $10 code fee
    3) Download and burn a copy of Game X for less than $10 (time and materials)

    EA..Which choice do you really think people are gonna choose?
  21. TomSEA

    TomSEA TechSpot Chancellor Posts: 2,718   +860

    For Guest: Royalty payments are common practice in nearly every industry. Television shows (even old re-runs of Gilligan's Island have to pay royalties), movies, music (radio stations have to pay royalties on the songs they play - usually packaged in a deal with the distributor), etc. Royalties are paid for artwork hanging in a museum. You can even say cars have royalty payments of a sort in that their components break down over time and need to be replaced. Some of the items - such as transmissions, drive-lines, electrical components have to be purchased from the original manufacturer. You never buy a car, drive it away and then never have to invest in it again.

    For jwdR1 - that's what reviews and demos are for (although admittedly demos are becoming fewer and far between). Anyone who goes out and pays top dollar for a game without waiting for reviews is just asking to get burned. I did recently with Silent Hunter V. Silent Hunter III & IV were terrific games and I presumed V would be as good or better. I pre-paid for it at top dollar and it's the biggest dog I've played in 20 years. Lesson learned. I won't be doing that again. There's a reason we have Metacritic around:
  22. @TomSEA Royalties are common practice in industries that don't sell to the end customer. If you buy a TV show on dvd and go to sell it you don't have to pay a royalty. Games are sold to the end customer so your example really makes zero sense. Now if say games where sold to xbl and xbl had a system setup to where you paid a monthly rate to play any games you want than yes it would make sense to have a royalty system but that isn't how it is setup. CDs, books, art don't have royalties when you buy them.
  23. Timonius

    Timonius TS Evangelist Posts: 647   +58

    Let's ban used book stores and libraries while we're at it.
  24. TomSEA

    TomSEA TechSpot Chancellor Posts: 2,718   +860

    "CDs, books, art don't have royalties when you buy them."

    Agreed. But they do have EULA's prohibiting the resale of those items. So if people are going to violate that EULA and applicable copyright laws by re-selling, then there should be a royalty fee for the creator/distributor.
  25. Darkshadoe

    Darkshadoe TS Guru Posts: 571   +113

    "You can even say cars have royalty payments of a sort in that their components break down over time and need to be replaced. Some of the items - such as transmissions, drive-lines, electrical components have to be purchased from the original manufacturer. You never buy a car, drive it away and then never have to invest in it again."

    Sorry Tom..bad example.

    When you buy parts, you don't have to get them from the original manufacturer nor do you have to send money back to Chevy or Ford. You can also get parts from a junkyard..oh wait..those are second hand parts...should Ford or Chevy have an employee at Bob's Junk Yard to collect money?

    "CDs, books, art don't have royalties when you buy them.

    Agreed. But they do have EULA's prohibiting the resale of those items. So if people are going to violate that EULA and applicable copyright laws by re-selling, then there should be a royalty fee for the creator/distributor. "

    Well I haven't bought a CD in 15 years so I'll take your word on that. Books and Art is resold all the time and has no EULA. You can't take those their intellectual ideas and make them your own because that would be plagiarism, but you can certainly resell books and art without paying a royalty. It happens everyday in used books stores and art galleries.
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