Disclaimer: The proceeding article is editorial content. The views expressed are those of the author and do not neccessarily reflect the official position of the Advanced Media Network.
Have you ever purchased a used game? Then you’re part of the problem.
That’s what game publishers and some developers would have you believe. Every time you buy a game that is not brand new out of the box, you’re hurting the industry. You are a bad person, and you’re especially hurting original games. That’s right: It is your fault that so many horrible sequels and licensed games get made every year. I hope you’re proud of yourself.
You might have heard that retailer Circuit City recently got into the used game market, and that other companies that previously only sold new product are also getting into the business of selling previously-owned software. I don’t want to jump to conclusions, here, but I’m seeing a trend.
See, there’s a problem that no one is talking about. The problem isn’t that consumers are buying used video games. That’s like having a gangrenous leg oozing pus that flies are buzzing around and blaming the problem on the flies. Used game sales are the effect, not the cause. If you look around hard enough, you’ll see that the real conundrum here is that the whole retail model for video games is flawed.
You don’t have to look back more than two or three months to see how. Remember how nobody could get a PS3 or Wii at launch? Yeah, that was horrible. That’s what most of us remember. Not getting one, I mean. What we’re not remembering is why we couldn’t get one. Aside from the obvious answer of “they didn’t make enough,” there was also a chance that our store of choice didn’t even get any. Both Sony and Nintendo made sure that their new systems went to the top four or five retailers in the country. This wasn’t a huge secret at the time, but it was probably something that wasn’t intended for public knowledge,
either.
Why did this matter? Because of the idiotic trend of launching hardware in the holiday season, every single PS3 and Wii was a guaranteed sellout on the first day without a doubt. Why did these particular stores deserve product when other stores got none? I’m not just talking about a small corner shop in Dubuque, Iowa called “Game Dude” here, either. Big stores like Sears and K-mart received literally no units prior to or immediately after these launches.
The games retail flow is heavily favoring the largest resellers. It’s not by design; it’s because of the miniscule profit margin on game hardware and software. If you’ve ever wondered why retail employees are forced to push needless items like warranties, strategy guides, and carrying cases on you, it’s because the profit margins on those products are exponentially higher than on the things that you actually want. So when stores can’t make money on selling games, less focus is placed on them, and less are sold. Then, publishers reward the retailers which are selling more of their games with incentives, like actually getting hardware units during a launch or being the only store to carry that special collector’s edition of a game. As a result of this favored treatment, the “less important” stores will sell even less than before. Some of them discontinue game sales entirely, while others are turning to used sales. | “Used games carry two to four times the profit of new, and since consumers tend to get tired of software fairly quickly, there’s a steady supply stream waiting.” |
With a system that has so few rewards for selling low to moderate amounts of new product, it’s no wonder that even larger chain stores like Circuit City and Best Buy are considering selling used software as a viable alternative. Used games carry two to four times the profit of new, and since consumers tend to get tired of software fairly quickly, especially the ho-hum mainstream sellers starring Spongebob and whatever cartoon animal Robin Williams is playing this week, there’s a steady supply stream waiting. Add to that the fact that several customers trade in their games toward other games rather than for cold, hard cash, and the deal looks even sweeter.
Of course, some people are taking it too far. Judging by the prices on Circuit City’s website, someone in the corporate HQ has been smoking too many banana peels. Charging $47.99 for a used game that regularly retails new for $49.99 just isn’t going to fly. That wrapper’s probably worth the extra two bucks to most people (except at EB/Gamestop, of course, where new games are pre-opened for you. What’s up with that?). The whole draw of used product to the consumer is that it’s cheaper than buying new, so you really need to make that an appreciable difference. Even five dollars less isn’t really worth it to most people, depending on the original price, of course.
Make the used version of the same game significantly less, though, and few will be able to resist. There’s very little risk for the consumer in purchasing a used product from a retail store, too. While some games will possibly not work, a quick check of the disk will tell fairly quickly whether it’s in good shape or not. With cartridge games, there’s even less risk, as most of them literally have to be run over by a truck in order to stop functioning.
On the whole, though, consumers are embracing used games in a big way. If this wasn’t the case, then publishers and developers wouldn’t be complaining so much about it. Think about this. Why are Ford, Chevy, Toyota, and all the other car manufacturers complaining about used car sales? I don’t recall any major stink over that recently. I also don’t remember Corningware decrying the prevalence of yard sales in the public forum.
Outspoken critics of the policy are also assuming that a used sale automatically counts as a lost new sale. While this is probably the case a great deal of the time, there are consumers who consistently wait for games to show up on the used rack before buying. Would any given consumer buy the same game new if used were not available? Possibly, but he might just as likely wait and borrow it from a friend later on, or possibly not play the game at all, so the logic doesn’t quite jive, there.
What we’re coming back to again is that there is a fundamental problem with the marketing and pricing of video games. The most expedient solution would be to raise prices in order to cover higher development costs and increase retailer profits. Before you shoot me, let me say that I am obviously not in favor of that outcome. Nor should the software companies, as higher new prices would only lose even more new sales. The real solution is going to have to come through streamlining the development process and cutting costs in distribution. That’s easy for me to put down on paper, but it’s not something that’s going to be easily done. Using middleware like Epic’s Unreal Engine 3 should help lessen costs for current-gen development on platforms like the 360 would be a great start. Using the same engine as Gears of War ought to hold us for a while.
What are publishers and manufacturers doing right now? Microsoft is trying to use online microtransactions to attach extra revenue to software sales, and, in the case of Xbox Live Arcade, bypass them completely. It’s even charging some people to make their own games with XNA Express, and that’s a revolutionary concept — assuming we get to see some user-created stuff on the Marketplace. In time, we might even see some games released episodically over Xbox Live similar to Half-Life 2 and Sam and Max are being serially sold now on PCs. Of course, downloadable content also has the distinction of being non-transferrable, meaning it cuts out the possibility of being sold as a used product.
Nintendo seems to actually have a handle on the situation from the development end. Both of Nintendo’s most recent systems have specifically been made with ease of software programming in mind. It has resulted in the games retailing for slightly cheaper than those on competing systems, and in higher profits for publishers, and, in some cases, retailers. Unfortunately, it also means less visually impressive systems with a somewhat incomplete online network, albeit free of charge. Nintendo, of course, also has its own impressive back catalog of games available for download — for a fee, of course.
Although Sony has some digitially-distributed content available, as well, it alone out of the three hardware makers seems to have no interest in lowering development costs. From confusing development kits to force-feeding a new media format to the public, Sony seems to want to make the price of games go up, not down. Ken Kutaragi even said at one point he wants everyone to have to get a second job in order to afford the PlayStation 3.
Regardless of whether or not you have a second job, the problem of used sales is really blown out of proportion. Sure, it’s not unreasonable for software publishers to expect to profit from their efforts, but think about it this way: If used game sales were driving game makers out of business, then they would be. Out of business, I mean. Sure, everybody hasn’t had a record year, but most software companies are doing all right, for the time being. And, as we’ve talked about, the secret to counteracting the increasing presence of used retail sales lies in correcting the imbalances in the current retail structure.
All right. I’ve figured out the problem — you guys handle it from here.
About the author: |
|