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Used Game Retailers, the Legal Pirates

By on October 30, 2008 in General Gaming, Microsoft, Nintendo, PlayStation 3, Sony, Wii, Xbox 360 14

It never seems to fail. Every year, one or two major games get leaked early via pirates and the industry sounds off alarm bells and talks up the staggering loses that piracy is causing.

The situation certainly doesn’t get helped by stories of idiotic employees stealing hundreds of copies of un-released games and being caught by police, especially when said thieves have reportedly already sold and undetermined number of games.

This all just fuels the argument for stronger DRM or new ways of preventing piracy. Reaction from these talks and attempts inevitably bring about backlash from the gaming community at large. The industry and community turns on itself, pointing fingers and claiming damage to each side with no real solution in sight.

While piracy undoubtedly exists, I think there is a bigger culprit to point the finger of “lost sales to piracy” at. That finger goes squarely on second-hand game retailers. Major retail chains like GameStop, Blockbuster & GameCrazy are just a few of the players who rely on buying back games and reselling them at a discount.

On the surface it seems all well and good, but when you consider that 100% of the revenue charged for re-sold used games goes straight to the retailer, effectively cutting out the Publisher & Developer from getting any kind of royalty, then it is clear the system is broken. These retailers are the real pirates, and its totally legal.

We as gamers embrace used games as they offer us a cheaper alternative to the hefty “new price” most games carry. But those days may now be in danger. Microsoft will be testing out a new attack plan with Gears of War 2 this November. By purchasing a new copy of the game, inside is a one time use code for five extra maps. Gamers buying the used copies might be able to buy the map pack online at some point, but nothing has been confirmed in that regard. If Microsoft does keep this map pack off the marketplace, it will effectively kill off the used copies of Gears of War 2.

What can be done? From a consumer stand point we are essentially caught in the middle. Buying a used copy of any game, while legal, only fuels the argument for publishers to continue to seek out ways to kill of the used market. What truly needs to happen is some kind of agreement between publishers and the used game retailers for a reduced royalty fee on the used games sold. This would help keep the used market a viable space for not only the consumers but also the publishers.

Without these two sides coming to an agreement, I fear we will see continued strides from publishers for stronger DRM, and special “One Time Codes” that can only lead to consumer headaches when you accidentally lose it.

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  • http://intensedebate.com/people/Steve519 Steven Artlip

    if game developers and publishers lower the price the their games it will squash the resale market, and it will also dent the pirate market (my belief and the reason for that is why I think Apple makes so much money in the iTunes store, you make it so affordable so that it isn't worth the effort to pirate).

    and by dropping price you will also open more and new doors to potential buyers, thus saleing more copies of said game.

    If you make games cost 60 dollars each though you are limiting your potential buyers market and creating a need to get games for a lower price, thus retail stores that resale games cash in and you miss out.

  • J

    Well they cant do nothing about it!

    If you impose DRM on gamers ,all that you will do is to encourage MORE downloading because of the hassle involved.

    I´m for lower prices too!

    In Europe we get ripped off anyway(especially in the UK).

    When i buy a game its my right to sell it again,privatly or to a second hand shop.

    EA is gauging for profits with 2nd class games-Instead of improving the quality and making its games cheaper.

    It wont work and will backfire!

  • GDL

    @Steve, that is an interesting argument. But do you really think game publishers are going to roll back pricing when clearly they are still selling well enough? I think Gears2 and its one time DLC code for the map pack is going to be interesting to watch in terms of its impact on the "reselling" of Gears 2.

  • http://www.geminiace.com/ Gemini Ace

    Until games go completely digital, there is no way that retailers like Gamestop will share their profits with the publishers over the re-sale of games. They have no reason to.

    Prices won't drop because these companies are spending so much on the development that they need to recoup their money and try to make a profit.

    It is not legal piracy to re-sell a game. It's a business like any other. I really don't like how the piracy label gets put on everything these days just because it's perceived as taking money from the publisher/developer. If the company wants to know why their games aren't selling as well, maybe they should take a look at the games they are making. Instead they blame us.

  • http://intensedebate.com/people/Silverthorne Silverthorne

    Digital distribution will fix it. Just wait for a decade; it'll happen. Games will cost less because they can sell direct to consoles. Publishers only get about $48 per game. The rest goes to retailers and distributors; and there's a certain amount of that $48 that goes toward packaging and manufacturing. We'll hopefully be looking at digitally distributed games that cost an inflation-adjusted present value of $45 at some point soon.

  • http://www.geminiace.com/ Gemini Ace

    You think that the publisher will pass on the savings to us? That will never happen.

  • GDL

    I tend to agree with you. Games like WarHawk and Socom are sold over PSN and started at $40 a pop and yet they are only "online" games and dont really have a single player side to them. Games featuring both the online and single player undoubtedly will cost us more.

  • Bigmangriff

    After working at a GameStop myself, I tend to totally agree with this. When one of these stores sells a used copy of a newer game the mark down is only around 5 dollars, so where a 60 dollar new game has so much taht goes to everyone who helped to make that game; a 55 dollar newer used game only goes to the store. There should be a option for publishers to opt out of there games being able to have there games resold in such a way. Now I remember when Sony had the PS3 in delevopment they where planning on making a way taht when you popped a game in, that disk was then registered to the system, wonder what ever became of that?

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  • Meatloaf

    Bigmangriff while i agree with you on the point the writer was making, i don't think that the solution would have been for the game to be registered to an individual system. If Sony would have followed through with that, they would be facing a boycott much like people did on ea for spores DRM. Bottom line is that the game is your property you can do what you want with it. The fact is developers and such company's as Gamestop and Blockbuster, need to come to an agreement where when a game is resold at a company such as Gamestop they still get some of the profit that way neither is truly losing retail, Gamestop just doesn't get such a large portion for doing nothing. To be honest I do think Gamestop is the devil though, although i buy new games on occasion from them, so i might, to be honest have a somewhat biased opinion on the matter.

  • Alnilam

    I have to disagree. The used market is perfectly legitimate, and while I tend to buy new games myself, I will buy a used game on occasion when the store didn’t have the new one.

    What they need to do is make games people don’t want to sell back. If you look at the used stuff at gamestop, most of the games are games I wouldn’t buy anyway.

    But once a game has been purchased, it belongs to the user to do with as they please, including selling them. To change that would be to subvert the principle of property.

  • Timmay!

    What about the used vehicle market? I know of plenty of companies that sell used vehicles without paying a single red cent to the auto manufacturer.

    What about the used PC markets, they never pay anything back to the manufacturers. Then there’s the used CD market, used DVD market, and a plethora of other markets, some of them huge and hugely profitable, that don’t pay a thing back to the original publisher or manufacturer.

    The problem isn’t the used games market, the problem is that there just isn’t as much of an incentive to buy new as there is to buy a game for $45 used when you’d pay $60 new. Tack on an extra %10 discount on used games for paying $30-$40 a year to be part of the “chain club”, and a “buy X games get one free”, and you could potentially save enough money buying used games to pay for another used game, or even a new game.

    Gamers don’t have an infinite entertainment budget, and when you have a metric crap-ton of middle to high profile games coming out each year, they can A) Go into debt up to the stratosphere buying all of them new, B) buy a mix of new and used games, and even trade some games in towards the purchase of more games, or C) just buy a few games, and leave the rest unpurchased and unplayed.

    The game industry complains that gamers act with a sense of entitlement, that we complain every time we have to pay a subscription fee, or for DLC, or for expansion packs, but the industry is just as bad, crying about used games, how piracy is the only other reason why they’re not making as much money as they “should”, ect, ect.

    If they started giving us some real incentives to buy new games, and not just “if you don’t buy our game new, you’re going to have to pay $X to unlock multiplayer, or open up bonus content”, then maybe we’d be more inclined to buy a game new instead of buying the same exact thing for $15 or more less used, and put the savings towards something like the electric bill, or paying for our internet subscriptions.

  • Dirk

    I see no reason why developers or publishers should receive profit from the resale of video games. If they can tap into that market in some way – more power to them. However, there is no reason why they should feel entitled in the USA with the “First Sale Doctrine” in place.

  • Ped

    If I buy something it becomes my property, I have the right to resell that property to whom ever I wish, If I buy a car I’m not going to keep it forever, I’m going to trade it in after 3 years to the highest paying shop/garage… and the same applies for games too.

    Game companies really need to start rewarding there loyal customers, the more you buy the more discount you get on there future products, at the moment they charge an arm and a leg fill them with DRM and wonder why pirates/hackers pirate there products… They need to embrace the digital age like the Music Industry and get with the times, and reward there customer bases more instead of punishing them.

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