Online retailer Amazon recently announced that they were going to enter the used game business, effectively competing head-to-head with Gamestop and other ‘brick and mortar’ outlets.
While many consumers (myself included) hailed this as a win for cash strapped gamers in a tough economic climate, several publishers voiced their displeasure. Developers also weighed in with opposition to game rentals and trade-in programs.
I wanted to get clarification on exactly how much used game sales meant to the bottom line of retailers, publishers, and developers, as well as how anything that could be a cost saving for consumers could be considered bad.
I found that I didn’t really understand the situation at all, there were a lot of myths that had no basis in reality, and that when it came down to brass tacks… the consumer is losing.
It took about five minutes for the employees to question what I was doing. I’d managed to snap four pictures in that time, and was feeling pretty good about things.
The previous attempts at other stores had gone badly, and I hadn’t even managed to get a single usable photo before being asked to leave. It usually went down like this: I entered the store, compared prices of used game versus new games, pulled out my cell phone to take pics to back up my findings, and immediatedly was cornered by employees asking me to leave.
I’d then ask to speak to the manager.
I only asked the managers two questions: how do you think consumers benefit from your Used Game program?
At Gamestop, Blockbuster Video, and F.Y.E., I got the exact same answer: it allows consumers to save money by purchasing previously owned games.
The second question was always a follow-up: if consumers are saving money by purchasing used games, why are most of your used games priced higher than new games at other retailers, and in most cases higher than new games IN YOUR STORE?
All three locations escorted me from the premises without any further comment.
The photos below are from F.Y.E., and demonstrate my point dramatically.
As you can see, a used copy of ‘Stranglehold’ for XBox 360 is clearly marked at $34.99 while a NEW copy is priced at $19.99. A quick check with other retails that DO NOT have a trade-in program show that $19.99 is standard pricing for the title.
‘Unreal Tournament 3’ for XBox 360 is shown at $49.99 used and $19.99 new. Again, $19.99 is a typical price for the game new.
I saw the same situation at all three retailers. While these are extreme examples, it was almost a rule: used games were listed at the same price or higher than other retailers that did not have a used game program and carried the same title new.
Perhaps Used Games don’t save consumers much money, or any at ALL… but there are other considerations.
It would seem that a possible solution all-around would be to reserve additional content for ‘first time’ buyers, through the use of single use registration keys. Consumers get a lower price on used games, retailers make their money from trade-ins, and publishers make their money from selling the exclusive content to consumers that buy used copies of their games.
Everybody wins, right?
Gears of War 2 included a one-use key for downloading the Flashback Map Pack in an effort to curb trade-ins for the title, I wondered if this was a model that could be used in other games to extend the life of games, and also if this had an impact on the ability of game stores to resell Gears of War 2.
I called, emailed, and had face-to-face conversations with 28 different game store owners and managers across the Western United States.
I also received a LOT of referrals to a corporate PR number in Texas, where my calls were never returned. Draw your own conclusions.
Out of the 28 retailers that were willing to speak to me, they reported unanimously that Gears of War 2 was one of their top selling used titles, even though most stores informed consumers through signs, box stickers, or required verbal warning that it did NOT include the Flashback Map Pack, and that the maps were available for purchase online for $5.
In the course of these conversations, I was surprised to find that the average price of a USED copy of GoW2 was only $4.50 less than a NEW copy. Apparently consumers are math impaired, or aren’t interested in the additional maps.
One store manager stated that some used games can be tracked via ‘frequent buyer’ programs, and it’s not that uncommon for a single copy of a game to be sold, traded in, and resold dozens of times.
You’d think with that kind of profit margin, they could afford to give a deeper discount to consumers.
My experience with retail on this matter can be summed up with one snippet of conversation with a retail manager. When asked what developers and publishers could do to sell more new copies of their games, this manager replied immediately: ‘I don’t care. I have my own store to look after and we make more money on used games… make better games, I guess.’
Not only does the inclusion of exclusive material for ‘first time’ buyers not help the situation for publishers, and is questionable when it comes to claims of savings for consumers, there has been an unintended consequence: single player experiences are being phased out.
In conversations with developers, it was made clear that publishers are VERY aware of rental and used game markets. Multiplayer titles can extend the life of a game, encouraging gamers to hold onto their copies instead of trading them in, or purchasing a game rather than renting it. The difference is so marked that many publishers are not funding projects unless developers can promise an online component.
One developer I spoke with (who wished to remain anonymous) said:
We have to pitch an online element for every project now. If you don’t have something to extend the life of the title, keeping it out of the used market, you’re not going to get funding. It’s like getting punched in the stomach when you realize you’re going to have to earmark part of your budget for online when nobody wants it, it’s going to be tacked on, and it’s going to be shit.
And then you release the game and get lousy reviews because the multiplayer sucks, and while the single player is great, the reviewer always says ‘why did they waste time on multiplayer when they could have put the money towards the singleplayer game’.
You just can’t win.
Another developer noted:
It threatens to put some game genres into extinction as it becomes unprofitable to make a compelling single experience in a game. That’s why you have a lot of poorly done online/multiplayer components in games that don’t need them and take away from the core design.
Developers are forced to try to include some online or forced replay component in order to try and avoid the rental and resale markets instead of focusing on the story or vision that they want to convey. Worse are all the brilliant ideas for new titles that are killed because marketing can’t find a way to position it away from those profit killing markets.
In all, I spoke with 12 developers, each with a similar story… and many stating that were afraid of publisher reaction and retribution from retailers if their names were connected to comments critical of the used game market.
What is most surprising is what I DIDN’T hear from developers; not one mentioned that retailers were taking money that should be going to them.
I went into this project thinking that developers were just complaining because they wanted more money, and that consumers were benefitting from lower prices.
I have to say, after doing the research and talking to both sides of the argument, I’m left with the sinking feeling that retailers are raping consumers, raping developers, and laughing all the way to the bank.
Although my used game experiences have been few and far between, I think I’ve lost my taste for ‘saving’ a few dollars.
The cost is too high in the end.