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By Nelson Schneider - 07/24/11 at 08:08 PM CT
The fact that game publishers are becoming more and more like movie studios is difficult to ignore. Both games and movies have always relied on the old boogeyman of ‘piracy’ to explain lack of sales, even though studies have shown that each infringing copy does not equal a lost sale. Even Electronic Arts, one of the biggest and most vile game publishers in the world, admits to this fact.
So, if piracy is not to blame for lost sales, then what could possibly explain why game publishers aren’t raking in the hojillions of dollars required to gold-plate the CEO’s yacht while still providing a dented can of Pork & Beans for the development team to fight over? Obviously it’s the second-hand market!
Used games have been around for as long as videogaming has existed. While GameStop may have only been around since 1984 (in some form or another), I’m sure that real oldsters can remember buying used Colecovision or Atari games at garage sales and thrift shops. While Big Media lawyers may continue to argue otherwise, games and other media are all subject to the First-Sale Doctrine, a concept which has been beaten more badly in the last few years than any dead horse deserves.
Yes, it’s true: When someone, be they an individual or a huge retail corporation, sells a used copy of a game, the original developer and publisher don’t see any profit off of that exchange.
So what? Is that a problem?
The situation is the same for every physical object in existence. When I buy a shirt, it’s mine. I can sell it to someone else without consulting with the manufacturer, plus I can wear it as much as I want without paying a fee each time. Even service professions, in which work is performed once, only receive compensation once for the work performed. If a plumber wanted a kick-back every time someone used a sink he fixed, he wouldn’t see very much business. It would likewise be absurd for every contractor involved in building a house to demand a cut when the house changes owners. Intellectual properties don’t deserve special treatment. We are not French (to those readers who do happen to be French, I offer my condolences).
But, as I mentioned, used games have been around for decades. So why are we only hearing all of this weeping and tooth-gnashing from publishers now? Success.
Back in the ‘olden’ days of gaming, games were novelties aimed at geeks. People who made games were also geeks and they made games simply because they wanted to. There were no shareholders or fatcats looming over them demanding rampant success and profit. These developers were free to experiment and tinker. ‘Don’t Copy That Floppy’ aside, success was having people play a game and enjoy it.
Nowadays, gaming is a multi-billion-dollar mainstream industry. It is being corporatized at a rapid rate, leaving only indie developers to prop-up the old standard. Non-indie developers are being consumed right and left by huge publishing houses that expect every game to rake in loads of profit lest its developer be ‘liquidated.’ While it may be nice not to work with a shoe-string budget, skyrocketing production costs have resulted in entertainment media that must move an insane number of units in order to break even, let along rake-in those enormous profits that CEOs and shareholders demand. Games that sell less than a million copies are considered failures, and in order to get those numbers up, publishers can’t abide by the same copy being sold more than once. In addition to these outlandish expenses, the advent of online gaming has resulted in games that also require maintenance on the part of the developer and publisher. Servers and bandwidth aren’t free, but online gaming is increasingly moving away from the venerable subscription model.
So, instead of mindlessly attacking the second-hand market and non-commercial pirates, what would be the sensible thing for publishers and developers to do in order to move more new copies of games? How about reining-in budgets to sane amounts? How about only manufacturing as many copies as are guaranteed to sell? How about dropping retail prices to be on-par with movie discs (considering game and movie budgets are comparable) and selling new games for $5 to $25 instead of $50 to $60? Or how about – and this is really crazy – making games good enough that people actually want to keep them?
Instead, publishers are looking to move to digital distribution models, in which games literally can’t be resold by the purchaser. While digital distribution will supposedly result in lower prices, I see no compelling reason for the greedy fiends behind the curtain to let that happen once they control the only source for game purchases, not to mention what digital distribution will do to the availability of games years after their release. In addition, those games that publishers do deign to sell on plastic discs will include a one-time-use code to enable online play, meaning that used copies will only work offline.
These are not good solutions! I have personally been burned four times by the digital distribution model, leaving me with games I hate (They looked good in previews!) that I can’t get rid of. I’m less offended by online passes because I remember when online gaming was brand new and everything had a subscription. At least online passes are simple one-time fees and are reasonably-priced for the addition of online content. But the game companies have already made their beds and set the precedent of free online play. I don’t anticipate that those who frequently use online gaming infrastructures (i.e., not me) will be supportive of this move, especially those who own Xboxen and are already being charged for Xbox Live. It also raises the question of whether or not online play is compelling enough to pay for, or if most gamers only use it because it’s there and it’s free. Time will tell!
When it all boils down, most people just don’t care if developers and publishers get a cut of the money they spend on games. Nor should they! When someone buys a used game at GameStop, someone else paid a retail store for the game when it was new, and the retail store paid the publisher (who paid the developer). This transaction is not very different from two people chipping-in to buy the new game together. This portion of the economy is supposed to be invisible to the consumer.
Whether they want to admit it or not, game companies are still primarily marketing to a demographic of middle-school and high-school boys. These are kids who don’t have the money to drop on a $60 game that they will play for two weeks. Unloading games at GameStop that they have finished or didn’t like ensures that these gamers will have more money to spend on more games. If they choose to purchase other games used, it’s because the price difference between new and used is compelling. Instead of attacking consumers and implementing user-hostile policies, game publishers need to lower their expectations and stop treating game development like a strip mine. Eventually there will be no more games worth buying and no more customers to buy them.
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Nick
Wrote on08/24/11 at 11:13 AM CT
GameStop ranks 5th in retail sales per square foot. Company includes Apple and Tiffany and Co. Best Buy came in a measly 10th. Maybe games are overpriced?
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Nick
Wrote on08/18/11 at 01:39 AM CT
1. I see in almost every industry the option of cutting out the middle man that drives retail prices so the manufacturer and buyer can both save a little, but unfortunately, retail stores are the American way.
2. I think offering more digital only downloads of full games can save on manufacturing costs of the games and save money for both ends as well. But many people like their shiny new discs that they can love and hug when they are lonely at night.
3. When it comes down to it, $60 does seem steep to buy a game, but when you really think about it in terms of # of hours of entertainment, I spend more money doing many other things, so $60 games are not that bad.
Hope you enjoyed my two cents.
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Jonzor
Wrote on07/27/11 at 01:54 PM CT
I'm aware of how games travel from publisher to retail to player.
I'm not, however, sure what your point was. That these sales more closely approximate the prices would get expect if we all cut out the middle men and started selling all games closer to cost? That by the time these games go on sale 95% of the money the publisher will make has been made, so at this point the second hand market isn't costing them many sales?
Regardless, I fail to see why it's not a valid option for the industry compared to buying games second hand. The point was to illustrate that publishers aren't the only ones who have options regarding their response to second hand games.
I like the direct from publisher option, though I don't know if it'll pull costs down any. They may just jump at the chance to add that mark-up from Best Buy to their own wallet. It'd be nice if it worked they way it should, though.
I also suppose there's some sort of activation energy hump that you need to get over to set up the logistics for your own distribution. Maybe they just don't feel like setting it up.
It seems like that digital distribution model selling directly to consumers, and saving those costs, is going to end up being the saving grace of the independent publisher. Things like Humble Bundles 1, 2 and 3 selling on Steam or the XBLA Indie catalog get some fresh air in the industry, but without a digital distribution model I don't know 98% of those games exist at all.
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Nelson Schneider
Wrote on07/27/11 at 12:45 AM CT
Jon, when you mention discounted new games, you also have to pay close attention to retail profit margins and wholesale costs. While the gamers may think they're getting a bargain by paying $30 for a "$60 game," this is actually just the retailer eating some losses to get copies off the shelf. The publisher already got their money, which was far less than $60, for those copies, and counts them as "sold," even though they're just taking up inventory space.
Quite a lot of the love for digital distribution that I see revolves around the fact that it's a direct sale to the gamer, bypassing retail, and cutting the costs associated with retail. It makes me wonder if game publishers should open their own direct-sell stores for physical media.
However, my past experience with direct buying from publishers, though limited, doesn't follow this trend. Back in 1998, I direct ordered "Panzer Dragoon Saga" and "Shining Force 3" from Sega because I desperately wanted to get my hands on them and had read that they were going to be a 'limited print run.' I still paid full price (I think it was $40 each, plus tax and egregious shipping).
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Jonzor
Wrote on07/25/11 at 09:09 PM CT
Hey, I was wondering when this would show up.
You did it justice. That's a better case than I'm used to seeing for the case against "anti-secondhand market" policies. Don't know that it swayed me much, though. I appreciate the effort to include alternatives.
I agree that the frothing foaming-mouthed demand from publishers that each game either sell like Call of Duty or GTFO from is psychotic and killing the games industry. This demand drives up the budget, 'cause if you're going to make a blockbuster, you'd better spend like it. I'm not sure that a call to "lower budgets" is exactly reasonable by itself, so maybe enlighten us as to how you'd lower those budgets? Is this your call for more 2D gaming? 'Cause that money's not going to the writers and voice actors. If anything, I think they need to consider spending MORE for those people... good grief.
And I'm not sure you'll see original retail prices drop. Especially since we've been paying $50 (or more for some games) since most of us entered the industry. And that was before unreasonable publisher demands and giant budgets entered the scene. Some SNES games sold at retail in Gering/Scottsbluff when I was a kid for $70. Adjust that to inflation and... wow... I must've been out of my mind.
I'll add to your lower-prices idea that lower prices can sometimes generate more sales and in fact make MORE money. Some games go on sale on Steam and make more net profit the weekend of the sale than they do in a month selling at normal price. Ignore the fact that it's a vile digital-distribution engine and I think you could argue the principle would apply elsewhere.
And yes, making games that are worth keeping is a great idea. I have a similar beef with the music industry.
The point comparing second hand games to second hand clothes is fair to a degree, but (without looking into it) I would bet that the used clothes market doesn't have ONE company that's making $75.2 million in profit in a quarter, on top of countless other players in the market.
Houses (and cars, another popular option) are industries that make their fair share of profit, though. But these are HUGE dollar items. Were it not for used houses, there probably wouldn't BE a housing industry. Plus, houses are a requirement for some families. I'm not sure a $50 leisure-time expense compares with the thing that keeps me from getting rained on and holds all my food.
But like I said, the comparison between used games and other used items is still fairly valid. People could go back and forth on those all day and in the end it may be a matter of how you choose to characterize the issue.
However, I DESPISE the "gamers are poor, give them a break" routine in defense of the secondhand market. And congrats, you didn't dwell on it like most do. Lemme bend the powers of the internet to my will for a moment...
Halo Reach - $42.99, qualifies for free shipping from Amazon.com (released Sept. 14, 2010)
Dragon Age II - $39.99 (or $10 cheaper if you buy PC) according to Best Buy.com (released Mar. 8, 2011)
Portal 2 - $39.99 on Amazon.com (or $10 for PC) at Amazon.com. I personally got my copy from Kmart for $35 mere weeks after it was released brand new (released Apr. 19, 2011)
Crysis 2 - $39.95 on Amazon.com (or wow, $23.99 for PC) on Amazon.com (released Mar. 3, 2011)
Or maybe an older game off your backlog you haven't gotten to yet. If you'd waiting and bought White Knight Chronicles for PS3 today off of Amazon.com it would cost $24.98.
Marvel vs. Capcom 3, inFAMOUS 2, Ocarina of Time 3D, Resident Evil Mercenaries 3D, NCAA Football '12 along with about 100 more titles qualify for buy one get one 50% off at Target this week.
Sometimes, Best Buy, Amazon, or Target do buy-one-get-one or buy-two-get-one sales on their ENTIRE catalog of games.
I got Final Fantasy XIII for $30 a few weeks after release at Kmart on sale.
By now, I think the point's become clear. It's not the $5-$25 you're calling for, but this idea that gamers are being forced to choose between $60 for a new game or a cheaper used version is a lazy excuse and a delusion.
Granted, not every game in the world is on sale this week, but I listed all those release dates for a reason. That's the prices and sales this ONE week. Next week, a whole new crop of sales may show up.
Those are HUGELY popular games (the fuel for GameStop's war machine... that company isn't making billions of dollars reselling Etrian Odyssey III: the Drowned City) and they're on sale (probably not for the first time) less than a year after release, which means that most gamers probably could take advantage of them for a huge chunk of their gaming needs.
And let's not act like I'm combing the market with a flashlight and army of bargain hunters for deals. This isn't "Extreme Couponing" for video games. Searching Amazon.com for a game or six to see if there's something on the cheap you're interested in isn't what you'd call laborious.
Plus those are all physical, I'm-holding-the-disc-in-my-hand versions. If you dare brave the waters of Steam, they practically give games away. My co-worker bought Borderlands plus ALL DLC for $7.50 a few weeks ago off Steam.
It's not a perfect solution. Some games rarely go on sale. Super Smash Bros. Brawl is still $49.99 at Best Buy and $45.00 on Amazon, though it would qualify for those buy-one-get-one sales I mentioned. Some rare games also don't have long enough shelf life to see a sale at a brick and mortar store. And some are just too rare for Amazon, too. Etrian Odyssey III is still $39.99.
But these are a lot of exceptions. I fail to see why a little bit of consumer responsibility isn't called for as well. If I buy Final Fantasy XIII for $30, and it's brand new from a store, doesn't EVERYONE win and the debate becomes pointless? Except for the people that didn't (or in the future, won't) like FF XIII, that is...
And those people that have turned those living rooms into layover spots for video games instead of homes, destined to head back to GameStop to trade in for a new game... maybe consider a service like GameFly? You're clearly not attached to your games, so let's call this relationship what it is.
Point is... the people complaining about anti-secondhand policies have options too...
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Matt
Wrote on 07/25/11 at 08:01 AM CT
Or, instead of no more game worth buying and no more customers, new markets will arise that carte far less for games and also bring in billions of dollars to indie game developers, who sell their games for $1, $2, $5 or at the most $10. "Gaming" will exist and Be successful in these new markets and new ways of thinking.
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