Two articles on how the "second-hand" market is damaging gaming.

[Admiral Ackbar]

This first article is by a guest gamespotter (frankly, no one with any actual credentials) who does make some interesting points. I thought were pretty much common knowledge though, and his article was more like a rant than anything interesteing. So, read this first to get an understanding on how Gamestops and Ebgames make profits off second hand games and none of that money goes to the actual publishers. That's if you didn't know that already.

Second-Handed Compliment (http://www.gamespot.com/features/6099560/p-9.html)

And just tonight I found this new article discussing the second hand market and predictions it's about to reach critical mass. And how, if that happens, it will have a huge negative effect on publishers. Frankly, I have to agree that maybe the second hand market is about to take off. For example, in my area, there are five gamestops. It's easier to buy used games online in excellent condition from sites like ebgames.com. Blockbusters heavily promote used games to go along with your videos. We see all these $5 and $10 sales recently from major retailers in the past three months at BB and CC.

Market analyst warns of "explosion" in second hand game market (http://www.gamesindustry.biz/content_page.php?section_name=ret&aid=3585)

Maybe Defender is right about that crash. And maybe the second hand market will help bring it to critical mass.

[bignick]

I hardly ever buy used games. They are scratched and somtimes incomplete.

[secretvampire]

Right. And second-hand sales of books, DVDs, and CDs (no wait, downloading is at fault :roll:) have killed those markets. Please.

The real culprit is there are too many games being produced, and the price point of $50 is no longer correct. People don't want to pay that when it will be discounted (to where it should be) within a matter of weeks.

Movie studios have figured it out and have the perfect price point for DVDs. Very few people wait to find DVDs used if they want them. Record companies are starting to figure this out with CDs as well, and such you see new CD prices getting closer to the $8.99-$12.99 level instead of $14.99-$18.99 level.


I hardly ever buy used games. They are scratched and somtimes incomplete.


If you are a careful shopper, this can be avoided. I have built a quality library of games at a fraction of the price of buying everything new. I will still buy new when the price is right, don't get me wrong.

[red flare graf]

Yeah, the only used games I buy are PSone games, Dreamcast games, and the occasional PS2 game that the non-GH version is hard to find.

[PittsburghAfterDark]

The only reason to buy used games is for stuff you can't find new anymore. Otherwise the stuff they try to pass off for a $5 savings is a ripoff. Missing books, no bonus discs, torn directions, scratched discs, people that took the cover inserts out and that's all before I get to the cases that now have up to 5 stickers on them that never come completely off... need I go on?

Used games are a colossial rip off for everyone concerned, unless you're an EB or Gamestop worker or stockholder.

EDIT: I'll agree completely that the $50 price point is not realistic anymore with the amount of games being released. For a Halo, Gran Theft Auto, Jak and a few other notable franchises it's a fair price. However until you've proven yourself in the marketplace who is going to buy Sphinx, I:Ninja, Beyond Good & Evil, XIII or Armed and Dangerous for full boat? Games need to be at the $29.99 or 39.99 price point.

[Missingdata]

... yea i don't buy second hand... unless i have no choice....

[secretvampire]

Not to be a bastard, but can we debate the actual issue brought up by the articles instead of just why "buying games used sucks"?

[CaseyRyback]

almost every game I have bought used has been more mint than any of the discs I have owned since I bought them brand new.

and the second hand market is what keeps most stores that only sell videogames alive

[Spacepest]

I'm not a real used game buyer either. I only buy a used game only if I have no other choice and I can't find a new copy of it anywhere else. I hate buying used beat up games.

Personally, I think there are just too many games on the market at one time. So I usually buy when the price drops. Why pay $50 for a game that I wont be able to get to in months...and by the time I do get to play it, its gone on sale for a fraction of the price?

[suprsaiyanMAX]

I was always under the impression that game makers and publishers don't see a portion of used games sales because...well they already sold them. Think about it for a minute. Game developers and publishers sell their products to the retail stores. Those are bought and paid for and the company has made its money. The store buys the games from pulishers and distributors after that no one in the gaming market sees any more money unless the game sells well and the retail stores order more copies. That is how developers and publishers make money, they don't sell directly to the consumer.

Also don't forget somebody bought those games at one point. The second hand market rarely kills anything in the entertainment industry And as for trade-ins, I admit trade-in prices aren't fair, but the stores can do as they please.

[soulwish2003]

What crack pipe you been takng hits from? Used games are a great deal...


Used games are a colossial rip off for everyone concerned, unless you're an EB or Gamestop worker or stockholder.

EDIT: I'll agree completely that the $50 price point is not realistic anymore with the amount of games being released. For a Halo, Gran Theft Auto, Jak and a few other notable franchises it's a fair price. However until you've proven yourself in the marketplace who is going to buy Sphinx, I:Ninja, Beyond Good & Evil, XIII or Armed and Dangerous for full boat? Games need to be at the $29.99 or 39.99 price point.

[soulwish2003]

Where are you buying your used games? Damn near every used title I have bought has been like new. If it's not I just ask them to find a cleaner one for me... and I have only had to do this once or twice. Used games are an excellent value.

I bought Mario Party 5, Ninja Gaiden, and Lord Of The Rings 'Return...' for $80 last weekend... and got a free magazine subscription to boot.




I hardly ever buy used games. They are scratched and somtimes incomplete.

[Valkryst]

It's easier to buy used games online in excellent condition from sites like ebgames.com.

Lol... excellent condition

yeah ok.

[epobirs]

Much ado about nothing. This is the second time this week we've had a thread driven by the comments of a Euro executive who is apparently completely oblivious to what has been established practice in the North American market for a decade. They've already fought the losing legal battle in Japan and never got past the stage of floating it past the lawyers here.

THere is one real defense against the second-hand market. Change the price structure for new games to be more in line with the temptation level of the average consumer. There is no reason why games should be over twice the price of DVD movies with identical material costs and approximately the same production cost when comparing games development to direct-to-video products. When new games aren't seen as a major premium expense the attraction of used games will decrease. At the same time those used game will open up the market to lesser income levels who might otherwise resort to piracy, which is considerably more damaging.

[alongx]

I hardly ever buy used games. They are scratched and somtimes incomplete.

There's only 2 games I have which I bought second hand. One was Tony Hawk 4 for Xbox, cause I got it relatively cheap on ebay. The disk was in mint condition, but the box looked like it had been in the rain for a few days before it got to me. The second was Contra for PS2, which is in good condition, but the box is sticky, and I can't seem to get it clean.

[soulwish2003]

'Second-Handed Complaint' does not hold much water because he states that used games are only a couple of dollars less than the new/sealed version. He does not mention that the store he works for has 25% off used software sales almost every week -- this is where the great deal is... and he does not mention it.

Also, the NEW games they sell are usually opened already with at least 3 STORE STICKERS on them... so, the new game is really not new.



This first article is by a guest gamespotter (frankly, no one with any actual credentials) who does make some interesting points. I thought were pretty much common knowledge though, and his article was more like a rant than anything interesteing. So, read this first to get an understanding on how Gamestops and Ebgames make profits off second hand games and none of that money goes to the actual publishers. That's if you didn't know that already.

Second-Handed Compliment (http://www.gamespot.com/features/6099560/p-9.html)

And just tonight I found this new article discussing the second hand market and predictions it's about to reach critical mass. And how, if that happens, it will have a huge negative effect on publishers. Frankly, I have to agree that maybe the second hand market is about to take off. For example, in my area, there are five gamestops. It's easier to buy used games online in excellent condition from sites like ebgames.com. Blockbusters heavily promote used games to go along with your videos. We see all these $5 and $10 sales recently from major retailers in the past three months at BB and CC.

Market analyst warns of "explosion" in second hand game market (http://www.gamesindustry.biz/content_page.php?section_name=ret&aid=3585)

Maybe Defender is right about that crash. And maybe the second hand market will help bring it to critical mass.

[PittsburghAfterDark]

There is no reason why games should be over twice the price of DVD movies with identical material costs and approximately the same production cost when comparing games development to direct-to-video products.

I never thought about using that anaology. Look at what the Mary Kate & Ashley, Disney direct to DVD and other stuff makes. The totals are astounding. You're exactly right.

[lau]

Buying used video games is immoral, yet he work at a used video game store....nice touch. Todd Friscia looks a little to shady in that picture for me.

I'm sure that guy checks out every used gamecube game that gets traded in, and if he finds one in mint condition he proceeds to use his handsome employee discount to stick it to nintendo.

[CaseyRyback]

Frankly I thought the one about dedicated servers for consoles had a stronger point as I have been wanting to see them since consoles went online

[suprsaiyanMAX]

That does make a lot of sense. Yet movies, even direct to DVD ones, have a much larger market to sell their products to. There are many more people that own DVD players than people that own game consoles.

[Admiral Ackbar]

It's easier to buy used games online in excellent condition from sites like ebgames.com.

Lol... excellent condition

yeah ok.

Actually, I've bought5 fifteen used games from ebgames,.com. HAlf are in mint like condition. In other words, you would never know they were used if you had bought them in shrink wrap. The other ha;lf are in good condition. Better than the cases you'll find on shelves in gamestop. Speaking of gamestop, I';ve bought four games from them online and returned them all because they were in such horrible condition.

Now I'm not saying that every used game from ebgames is like new. There are certainly some bad eggs. But the quality is much much better than I expected. And after buying so many, I think it's more than just luck. It wouldn't suprise me if they had a certain quality level for selling used games at ebgames.

[defender]

The article is speaking of Europe so it doesnt exactly apply to us. I have mentioned the rise of Ebay as a real problem for publishers. Which is about the same thing. My experience is that places like EBgames or GameStop have HORRIBLE prices on used items. Normally a new $50 game is like $45 used...sure after its an older title they might lower it or after they have too many in stock. But $45 for a used game!!! Cmon! That's more than a new game at the wholesale level.

Books- Sure used books are widely sold in small bookstores and now Amazon and while I am NOT in the book business. I do not think that books are as disposable to most people as games. I have hundreds of books and I have NEVER sold even one nor do I intend to. Books after they are read are a personal experience and I even reread good books.
Also there are returns to the manufacturer when a book doesnt sell.

Movies(DVDs)- As pointed out..DVDs are cheap now. I think that games will have to follow that model soon and be at the cheaper price point if they expect gamers to play as many games in a year as they watch movies. With hundreds of games released every year and with most games getting shorter and shorter...well...prices should be at $29.99 tops. Maybe special editions could be more but hey..

Music- Thre music industry is screwed. We all know it. They need to reinvent themselves and fast.

Bad news for the game industry will only continue...you will see very little great news for it.


Right. And second-hand sales of books, DVDs, and CDs (no wait, downloading is at fault :roll:) have killed those markets. Please.

The real culprit is there are too many games being produced, and the price point of $50 is no longer correct. People don't want to pay that when it will be discounted (to where it should be) within a matter of weeks.

Movie studios have figured it out and have the perfect price point for DVDs. Very few people wait to find DVDs used if they want them. Record companies are starting to figure this out with CDs as well, and such you see new CD prices getting closer to the $8.99-$12.99 level instead of $14.99-$18.99 level.


I hardly ever buy used games. They are scratched and somtimes incomplete.


If you are a careful shopper, this can be avoided. I have built a quality library of games at a fraction of the price of buying everything new. I will still buy new when the price is right, don't get me wrong.

[The Successful Dropout]

call me stupid, and im sure you will....but what type of affect is gonna happen to us if the gaming market crashes...i personally have enough games to last me a good 10 years either way

[Cracka]

what pisses me off, is when i go to gamestop... find a used PS2 game or Xbox game in reeeally good condition.. case in perfect condition.. has manuals..

then i take it to the register and the guy goes in the drawers, and instead of getting the disc out of a binder of discs, he pulls out the shittiest copy of the game they have... the case is all fucked up.. theres no manual.. and then he scans it and hands it to me like it aint shit to him...


those assholes...

[defender]

call me stupid, and im sure you will....but what type of affect is gonna happen to us if the gaming market crashes...i personally have enough games to last me a good 10 years either way

That's the problem. Most gamers won't be buying games at $50 anymore.

You can read in this forums a 10 page thread about my opinion of a current game industry crash. I state often that in general the gamers will benefit.

[suprsaiyanMAX]

I don't think you can accuately compare other entertainment industries to the game industry. Yeah, the music business is falling but that is due to piracy more than second hand markets. The movie industry is a completely different animal too despite the fact the use the same technology. Like I mentioned earlier the market they cater to is much larger and not segmented like the game industry. Also, the age technology has allowed the prices to fall as well. And let's not forget the double dipping that goes on, At least, there is only one game on the market compared to the 4 different versions of a film, and many will buy that same movie over again each time. The movie industry also sees a much larger profit from rentals too. Books, well books, don't really follow patterns dealing with technology like the other markets (however e-books and such are starting to change that). Books have a market ran by niche stores (yes that includes Barnes and Noble & Borders). Face it those books on the shelves at Target aren't really flying off ('cept maybe the Harry Potters). Still, there is a fairly big second hand market for books. Yet, authors are generally paid by publishing deals and books are used as educational tools and purchased by organizations and libraries as well which help expand the market.

As for game prices, Do I think games are over priced? Hell yes they are, and maybe they'll drop down about $10 in the MSRP but the market is too segmented and small to see them going for $25 each new anytime soon. Second hand buying has become an alternative to those high prices and like defender said I think they may have to slighty drop MSRPs to compete, but you won't see them for the same price as a movie. In all, I think it is far from crashing or ruining the industry.

[punqsux]

i almost exclusivley buy used games. i see no reason not to as i dont care if it has box and instructions

[defender]

I don't think you can accuately compare other entertainment industries to the game industry. Yeah, the music business is falling but that is due to piracy more than second hand markets. The movie industry is a completely different animal too despite the fact the use the same technology. Like I mentioned earlier the market they cater to is much larger and not segmented like the game industry. Also, the age technology has allowed the prices to fall as well. And let's not forget the double dipping that goes on, At least, there is only one game on the market compared to the 4 different versions of a film, and many will buy that same movie over again each time. The movie industry also sees a much larger profit from rentals too. Books, well books, don't really follow patterns dealing with technology like the other markets (however e-books and such are starting to change that). Books have a market ran by niche stores (yes that includes Barnes and Noble & Borders). Face it those books on the shelves at Target aren't really flying off ('cept maybe the Harry Potters). Still, there is a fairly big second hand market for books. Yet, authors are generally paid by publishing deals and books are used as educational tools and purchased by organizations and libraries as well which help expand the market.

As for game prices, Do I think games are over priced? Hell yes they are, and maybe they'll drop down about $10 in the MSRP but the market is too segmented and small to see them going for $25 each new anytime soon. Second hand buying has become an alternative to those high prices and like defender said I think they may have to slighty drop MSRPs to compete, but you won't see them for the same price as a movie. In all, I think it is far from crashing or ruining the industry.

You absolutely can compare other entertainment media to the game industry. At this point most media entertaintment companies have a game division. In the largest retailers they are sold side by side. Music, Movies, and games are on the same general CD format. The end user on all these forms of entertainment are about the same. This is all media entertainment. Previously games might have been considered part of the toy industry but no more. Anyone calling video games toys would be laughed at. Most people use their game consoles not to play movies and music and some to browse the web even. Some of the current problems are because the game industry is too slow to establish itself within this medium. Soon I predict that for the game industry workers may unionize like SAG (screen actors guild). As it stands most games are getting hollywood talent involved in voices. It wont be long until Steven Spielburg makes a game..oh wait..he did. And you say they dont compare?

[CaseyRyback]

i almost exclusivley buy used games. i see no reason not to as i dont care if it has box and instructions

well I do like to get all the instructions and manuals, but it does not kill me not to have them.

and on the 50 dollar front, I will be buying more 50 dollar games next christmas than I have in a long time. I know for a fact, RE4, MP2, and MGS3 are getting bought day one (killer 7 as well when it comes out). aside from those I will probably buy the new RE:outbreak first day as well.

[punqsux]

i almost exclusivley buy used games. i see no reason not to as i dont care if it has box and instructions

well I do like to get all the instructions and manuals, but it does not kill me not to have them.

and on the 50 dollar front, I will be buying more 50 dollar games next christmas than I have in a long time. I know for a fact, RE4, MP2, and MGS3 are getting bought day one (killer 7 as well when it comes out). aside from those I will probably buy the new RE:outbreak first day as well.

i like to get them aswell, but if i can buy a disc only game for 5$ or a brand new game for 10, ill take the disc.

as long as games work, im happy

[epobirs]

I don't think you can accuately compare other entertainment industries to the game industry. Yeah, the music business is falling but that is due to piracy more than second hand markets. The movie industry is a completely different animal too despite the fact the use the same technology. Like I mentioned earlier the market they cater to is much larger and not segmented like the game industry. Also, the age technology has allowed the prices to fall as well. And let's not forget the double dipping that goes on, At least, there is only one game on the market compared to the 4 different versions of a film, and many will buy that same movie over again each time. The movie industry also sees a much larger profit from rentals too. Books, well books, don't really follow patterns dealing with technology like the other markets (however e-books and such are starting to change that). Books have a market ran by niche stores (yes that includes Barnes and Noble & Borders). Face it those books on the shelves at Target aren't really flying off ('cept maybe the Harry Potters). Still, there is a fairly big second hand market for books. Yet, authors are generally paid by publishing deals and books are used as educational tools and purchased by organizations and libraries as well which help expand the market.

As for game prices, Do I think games are over priced? Hell yes they are, and maybe they'll drop down about $10 in the MSRP but the market is too segmented and small to see them going for $25 each new anytime soon. Second hand buying has become an alternative to those high prices and like defender said I think they may have to slighty drop MSRPs to compete, but you won't see them for the same price as a movie. In all, I think it is far from crashing or ruining the industry.

Don't kid yourself. Book publishers take outlets like Target and Wal-Mart very seriously as they do a fair mountain of sales, often to people who aren't inclined to visit dedicated bookstores. If you compiled a list of the top 10 retailers of books in the US I guarantee you Wal-Mart would be on that list. Not near the top perhaps but a mover and shaker none the less. From the author's perspective having your book carried by Wal-Mart can be the difference between writing on the side and writing as a full-time career with an upper middle-class lifestyle.

[The Successful Dropout]

i almost exclusivley buy used games. i see no reason not to as i dont care if it has box and instructions

well I do like to get all the instructions and manuals, but it does not kill me not to have them.

and on the 50 dollar front, I will be buying more 50 dollar games next christmas than I have in a long time. I know for a fact, RE4, MP2, and MGS3 are getting bought day one (killer 7 as well when it comes out). aside from those I will probably buy the new RE:outbreak first day as well.


a little off-topic, but...did you like the first re outbreak? if i got it, it would only be for the offline play (i dont like online play)....with all of the mixed reviews, i passed on this one

[suprsaiyanMAX]

No they don't because the market is quite different, which makes their marketing and selling strategies totally different. Just because a entertainment company has a game division doesn't mean the sell everything in the exact same manner. Phillip Morris (or whatever they changed their name too) has all kinds of divisions, but I'm sure the market for Marbolo cigarettes is different from Nabisco Oreo cookies.

Retailers stock them side by side because they may converge like my Xbox being able to play DVDs, but there are plenty more people that have two DVD players in a household than there are people who use the Xbox to play movies. Odds are that the 40-55 couple walking around in Target have a DVD player, but they don't have a PS2. When I worked at Best Buy I would ask people interested in game consoles if they were going to use it for movies and music. 7 out of 10 times the answer was I don't know/didn't know I could or just a no, especially after I told them that they'd have to buy a $30 remote for their Xbox. You can buy a DVD player that has a couple more features and is about the same quality for $40. And music? C'mon how many listens to music on the game console?

Yes, game production has become very similar to hollywood film production. Yet, production of something is only a fraction of an indusry's market, instead you have to look at the consumers, the competitors, and all the other elements that complete the industry's market.

What I'm really trying to say is (and I admit I'm not very good at it) when its comes down to things music and movie industries have a totally different way to view their market than the game industry does and the market not the production is what you need to consider when talking about second hand buying/selling.

[CaseyRyback]

i almost exclusivley buy used games. i see no reason not to as i dont care if it has box and instructions

well I do like to get all the instructions and manuals, but it does not kill me not to have them.

and on the 50 dollar front, I will be buying more 50 dollar games next christmas than I have in a long time. I know for a fact, RE4, MP2, and MGS3 are getting bought day one (killer 7 as well when it comes out). aside from those I will probably buy the new RE:outbreak first day as well.


a little off-topic, but...did you like the first re outbreak? if i got it, it would only be for the offline play (i dont like online play)....with all of the mixed reviews, i passed on this one

I am going to rent it tomorrow. I held off on playing it until I got the hard drive as people said the load times were hella long.

I have been wanting to check this game out for a really long time and so I figure even if it is not great, I will still have fun.

the next one coming out looks like more of the same, but with improved controls(all analog control) and goodies for replaying the game and getting good, I will probably put down 50 on it

[suprsaiyanMAX]

Don't kid yourself. Book publishers take outlets like Target and Wal-Mart very seriously as they do a fair mountain of sales, often to people who aren't inclined to visit dedicated bookstores. If you compiled a list of the top 10 retailers of books in the US I guarantee you Wal-Mart would be on that list. Not near the top perhaps but a mover and shaker none the less. From the author's perspective having your book carried by Wal-Mart can be the difference between writing on the side and writing as a full-time career with an upper middle-class lifestyle.

Good point, but Wal-Mart is also higher on that list due to the outrageously large number of locations. Still, you are right I could see lots of publishers pushing a book to get on Wal-Mart's shelves. It also depends greatly on the kind of book however. Some author's hard-line social commentary on the new breed of American politician or a new poet's breakthrough collection isn't going to sell as well at Target as it would in Barnes and Nobles.

[suprsaiyanMAX]

I borrowed RE Outbreak from my buddy in mid-May. I'd pass, especially if you are only in it for offline play, plus it is kind of a chore to go at it without the PS2 HDD helping along the games speed.

[epobirs]

You absolutely can compare other entertainment media to the game industry. At this point most media entertaintment companies have a game division. In the largest retailers they are sold side by side. Music, Movies, and games are on the same general CD format. The end user on all these forms of entertainment are about the same. This is all media entertainment. Previously games might have been considered part of the toy industry but no more. Anyone calling video games toys would be laughed at. Most people use their game consoles not to play movies and music and some to browse the web even. Some of the current problems are because the game industry is too slow to establish itself within this medium. Soon I predict that for the game industry workers may unionize like SAG (screen actors guild). As it stands most games are getting hollywood talent involved in voices. It wont be long until Steven Spielburg makes a game..oh wait..he did. And you say they dont compare?

Indeed. When you have two products that are delivered by nearly identical means and packaging you have to wonder why one has an average price over double that of the other. THe video game is more likely to have a lengthy printed manual but that amounts, if you're being generous, to an added $1.50 cost.

THe other end to examine is the costs and revenues incurred up to the moment the master disc is sent off for replication. Compared to all but the lowest end of film production game development budgets are quite low. Some will argue that movies on DVD have their primary production and marketing cost covered by theatrical release. That would be true if the market for movies on DVD consisted solely of home versions of theatrical releases. It doesn't. (BTW, theatrical releases can have budgets well over a $100 million and fail to be profitable in theatrical release yet the resulting DVD is priced no higher than a theatrical blockbuster.)

Others will say that there is a much higher installed base of DVD players. That is true but consider the reduced price resistance of the format. (Don't forget also that the DVD industry counts the PS2 and much of the Xbox installed base as part of the total DVD movie playback installed base, not to mention tens of millions of DVD playback capable desktop and portable computers sold in the last six years.) Most consumers are bright enough to understand that their greatest expense with a movie player or game player in the long term will be the software. Even if one only rents instead of buys this cost will very quickly outstrip the initial hardware investment, especially if the consumer isn't an early adopter when the hardware is at its most expensive.

As I've said previously the game companies are engaged in a self-fulfilling prophecy. The installed base is X and we can only expect to reach Y percent of that base with this genre (assuming the game is also a good entry in that genre) so we must charge Z per unit to get to a profitable state of revenue. This neglects to consider that the installed base of the platform X is constrained by the price factor Z that compels a good portion of the platform owners to get their software entirely from sources that don't show up ont he sales charts.

Say you're considering a $150 game system. You've noted five items in its library that you really want to play. You can't afford to drop $250 (plus local sales tax which would add another $20 here in LA) over and above the cost of the machine so you either forget the whole thing or you find a cheaper way to get those games.

Two methods are immediately obvious. You can 1) wait for those titles to become Greatest Hits and fall to only 40% of their original price or 2) buy them used for a somewhat higher price if you're impatient. We'll leave aside piracy on the assumption our model consumer is an honest person. We'll also place deep discounting of less successful titles as equivalent to GH status for the purposes of anyone who really wants that game.

So we've got a scenario in which the consumer has a very high chance of choosing a venue that does nothing for the game's publisher and/or the producer of the platform. If price resistance is so high that well over 50% of you potential customers are tempted by used product then you need to re-evaluate your price model. I'm willing to bet that a much large rpercentage of gamers buy used product than those building home video libraries.

[epobirs]

Don't kid yourself. Book publishers take outlets like Target and Wal-Mart very seriously as they do a fair mountain of sales, often to people who aren't inclined to visit dedicated bookstores. If you compiled a list of the top 10 retailers of books in the US I guarantee you Wal-Mart would be on that list. Not near the top perhaps but a mover and shaker none the less. From the author's perspective having your book carried by Wal-Mart can be the difference between writing on the side and writing as a full-time career with an upper middle-class lifestyle.

Good point, but Wal-Mart is also higher on that list due to the outrageously large number of locations. Still, you are right I could see lots of publishers pushing a book to get on Wal-Mart's shelves. It also depends greatly on the kind of book however. Some author's hard-line social commentary on the new breed of American politician or a new poet's breakthrough collection isn't going to sell as well at Target as it would in Barnes and Nobles.

It's about a 4:1 ratio. Wal-mart currently claims about 3200 retail locations while Barnes and Noble has 800 stores including their B. Dalton chain. However, this leaves aside that Wal-mart only carries a tiny fraction of what is found in the smaller B. Dalton stores.

The same could be said for the video game department in a Wal-mart compared to a more dedicated gaming store like a EB or independent. Many titles have production runs so small that there wouldn't be enough to put five copies in every Wal-mart while ignoring every other retail outlet. So Wal-mart doesn't carry them at all. In turn those become the only products small independent stores have any hope of selling for full price if they're smart enough to cater to the niche audience and if their area supports a sufficiently large number of such gamers.

Wal-mart alone can make a game a major success but virtually no highly successful games reach that goal without Wal-mart. This is part of what makes things tough for folks like Defender.

If you want to know what mainstream America is reading or playing don't go to a full-service book or gamestore. The answer is at Wal-mart, Target, Costco, etc. Most people don't bother themselves with anything as silly as the very idea of a 'new breed' of politicians because they know all too well that they arise from the muck that has given them forth since the first human managed to convince a bunch of other humans he should relax while they did all the heavy lifting because he was 'supervising.' As well the great majority care as little for poetry by living authors as they do for the scam known as modern art. The last time they made a bestseller of a book of poetry through their primary sources of print material was when it was written by a busty blonde pop star who appeared on the cover.

If you're a tenured Lit professor who writes solely for the free dinners and the praise of reviewers who are themselves mostly useless Lit majors, then the shelves of book superstores that can manage the level of diversity to carry your tome is fine. If you want to be Clancy, King, Koontz, or Grisham you're hoping to reach Wal-mart just as much as Borders. If you had to chose between the two while looking at the latest bill from your kid's orthodontist you'll go with Wal-mart every time.

It may not be a classy place for a signing but they move a hell of a lot of books.

[defender]

This is VERY well said. Sorry suprsaiyanMAX but if you think the reason the products arent similar is because they are marketed differently then again..YOU ARE WRONG. Games used to be marketed to kids in toy stores...not anymore. And it will continue to evolve. You see strong game commercials on TV just like movie trailers. Music of course has MTV but since its a music it mostly gets advertised on the radio. Print magazines carry a ton of game ads. Maxim will display an ad right next to a movie ad...no problem. I dont know even why you mention Oreo's and Cigarettes...that's just dumb.

Games, Music, and Movies are all electronic forms of entertainment now sold in a digital format that often enough can be played in ONE unit. So how are the products NOT similar? I didnt say the EXACT same..I am saying similar. More similar than not. Of course each one maybe marketed slightly differently and even produced differently....nonetheless...the products and the consumer buying these products are the same. I dont believe I know anyone who doesnt watch DVD's but plays games. Or listens to music but doesnt play games. More people play games than ever before.



You absolutely can compare other entertainment media to the game industry. At this point most media entertaintment companies have a game division. In the largest retailers they are sold side by side. Music, Movies, and games are on the same general CD format. The end user on all these forms of entertainment are about the same. This is all media entertainment. Previously games might have been considered part of the toy industry but no more. Anyone calling video games toys would be laughed at. Most people use their game consoles not to play movies and music and some to browse the web even. Some of the current problems are because the game industry is too slow to establish itself within this medium. Soon I predict that for the game industry workers may unionize like SAG (screen actors guild). As it stands most games are getting hollywood talent involved in voices. It wont be long until Steven Spielburg makes a game..oh wait..he did. And you say they dont compare?

Indeed. When you have two products that are delivered by nearly identical means and packaging you have to wonder why one has an average price over double that of the other. THe video game is more likely to have a lengthy printed manual but that amounts, if you're being generous, to an added $1.50 cost.

THe other end to examine is the costs and revenues incurred up to the moment the master disc is sent off for replication. Compared to all but the lowest end of film production game development budgets are quite low. Some will argue that movies on DVD have their primary production and marketing cost covered by theatrical release. That would be true if the market for movies on DVD consisted solely of home versions of theatrical releases. It doesn't. (BTW, theatrical releases can have budgets well over a $100 million and fail to be profitable in theatrical release yet the resulting DVD is priced no higher than a theatrical blockbuster.)

Others will say that there is a much higher installed base of DVD players. That is true but consider the reduced price resistance of the format. (Don't forget also that the DVD industry counts the PS2 and much of the Xbox installed base as part of the total DVD movie playback installed base, not to mention tens of millions of DVD playback capable desktop and portable computers sold in the last six years.) Most consumers are bright enough to understand that their greatest expense with a movie player or game player in the long term will be the software. Even if one only rents instead of buys this cost will very quickly outstrip the initial hardware investment, especially if the consumer isn't an early adopter when the hardware is at its most expensive.

As I've said previously the game companies are engaged in a self-fulfilling prophecy. The installed base is X and we can only expect to reach Y percent of that base with this genre (assuming the game is also a good entry in that genre) so we must charge Z per unit to get to a profitable state of revenue. This neglects to consider that the installed base of the platform X is constrained by the price factor Z that compels a good portion of the platform owners to get their software entirely from sources that don't show up ont he sales charts.

Say you're considering a $150 game system. You've noted five items in its library that you really want to play. You can't afford to drop $250 (plus local sales tax which would add another $20 here in LA) over and above the cost of the machine so you either forget the whole thing or you find a cheaper way to get those games.

Two methods are immediately obvious. You can 1) wait for those titles to become Greatest Hits and fall to only 40% of their original price or 2) buy them used for a somewhat higher price if you're impatient. We'll leave aside piracy on the assumption our model consumer is an honest person. We'll also place deep discounting of less successful titles as equivalent to GH status for the purposes of anyone who really wants that game.

So we've got a scenario in which the consumer has a very high chance of choosing a venue that does nothing for the game's publisher and/or the producer of the platform. If price resistance is so high that well over 50% of you potential customers are tempted by used product then you need to re-evaluate your price model. I'm willing to bet that a much large rpercentage of gamers buy used product than those building home video libraries.

[BABETOOTH]

I've bought a couple of used games in the past, but only because they were mint and cheap. Otherwise I stay away from used games at all cost. The only time I will bite the bullet is for a game thats very rare and is no longer available brand new.

[Tromack]

I personally don't care about the case or instructions. As long as the case protects it from the elements I am happy. I never read the instructions, so no need to worry there. I only care about the game, and all places have a policy to replace if the game doesn't work so I love used games. And for all of you people who believe that the used game market is going to kill the real game market, you need a refresher in capitalism. You give the store money for the used game, they use the money for whatever they need to, i.e. pay salary, that employee uses that money, etc. As long as money is changing hands it all works out.

[epobirs]

No they don't because the market is quite different, which makes their marketing and selling strategies totally different. Just because a entertainment company has a game division doesn't mean the sell everything in the exact same manner. Phillip Morris (or whatever they changed their name too) has all kinds of divisions, but I'm sure the market for Marbolo cigarettes is different from Nabisco Oreo cookies.

Retailers stock them side by side because they may converge like my Xbox being able to play DVDs, but there are plenty more people that have two DVD players in a household than there are people who use the Xbox to play movies. Odds are that the 40-55 couple walking around in Target have a DVD player, but they don't have a PS2. When I worked at Best Buy I would ask people interested in game consoles if they were going to use it for movies and music. 7 out of 10 times the answer was I don't know/didn't know I could or just a no, especially after I told them that they'd have to buy a $30 remote for their Xbox. You can buy a DVD player that has a couple more features and is about the same quality for $40. And music? C'mon how many listens to music on the game console?

Yes, game production has become very similar to hollywood film production. Yet, production of something is only a fraction of an indusry's market, instead you have to look at the consumers, the competitors, and all the other elements that complete the industry's market.

What I'm really trying to say is (and I admit I'm not very good at it) when its comes down to things music and movie industries have a totally different way to view their market than the game industry does and the market not the production is what you need to consider when talking about second hand buying/selling.

If you're trying to say the demographic for home video is much wider than for games I would agree with you. However, the difference isn't as great as you might think and decreasing all the time. An interesting article in the current issue of WIRED covers how things like FPS get most of the hype when it comes to online gaming but it's services that attract large numbers of gray heads that are building the most valuable revenue streams. Millions of people who enjoy games and are increasingly restricted from athletic activity by age and growing infirmity are getting online for much of their entertainmetn and social interaction.

At the same time some of the first buyers of video game consoles back in the 70's (like my eldest siblings) are now grandparents who can use their experience and well-honed skills to compete against the grandkid's reflexes. Sure, some people gave up playing games as part of perceived adulthood but many never did and many others have returned to it. With each passing year the demographic range for gaming expands. Pretty soon it's the NES generation who'll be grandparents. Scary, huh?

Microsoft has noticed this and made an announcement at E3 that got very little attention but said a lot about the untapped parts of the market. This Fall Xbox Live is going to start offering a range of downloadable games already well known on the MSN Gaming Zone. This is stuff like the entrie gamut of card and board game, puzzlers like the Popcap series, classic arcade games and new games in a similar vein of simple to learn and quick to download games like those found in arcades in the early 80's. This stuff is turning into a serious business on MSN but there is a goodly number of potential customers who are more comfortable with their TV than with a PC.

See fifth paragraph: http://www.xbox.com/en-us/e32004/press-briefing-recap.htm

The prospect is that a highly managed service will be more accessible to older gamers who will never be able to handle installing new games on a PC but can get along just fine selecting a game from a menu while XBL does all the heavy lifting.

[Admiral Ackbar]

No they don't because the market is quite different, which makes their marketing and selling strategies totally different. Just because a entertainment company has a game division doesn't mean the sell everything in the exact same manner. Phillip Morris (or whatever they changed their name too) has all kinds of divisions, but I'm sure the market for Marbolo cigarettes is different from Nabisco Oreo cookies.

Retailers stock them side by side because they may converge like my Xbox being able to play DVDs, but there are plenty more people that have two DVD players in a household than there are people who use the Xbox to play movies. Odds are that the 40-55 couple walking around in Target have a DVD player, but they don't have a PS2. When I worked at Best Buy I would ask people interested in game consoles if they were going to use it for movies and music. 7 out of 10 times the answer was I don't know/didn't know I could or just a no, especially after I told them that they'd have to buy a $30 remote for their Xbox. You can buy a DVD player that has a couple more features and is about the same quality for $40. And music? C'mon how many listens to music on the game console?

Yes, game production has become very similar to hollywood film production. Yet, production of something is only a fraction of an indusry's market, instead you have to look at the consumers, the competitors, and all the other elements that complete the industry's market.

What I'm really trying to say is (and I admit I'm not very good at it) when its comes down to things music and movie industries have a totally different way to view their market than the game industry does and the market not the production is what you need to consider when talking about second hand buying/selling.

I have to agree with sup's here. The three entertainment markets, Movie, music, games, have similarities. But just because they all come on the same wrapper, (is a digital disc) does not mean you can compare them as equals. Each market has different factors that make them wildly different from an economic standpoint. For example, take a movie or tv show. They're the first run in theateres or on tv with advertising revenue. Games and Music don't have a component like that. Also, music doesn't have a rental structure like games and movies. Games have a much shorter shelf life due to the nature of the business. Production and development are different enough between the three medium that even they can't be compared directly. Movie development has a different path than game development and music. Just because they all "spend a lot of money" doesn't mean they're economically similar...

And actually I think the peopne who run these things, the ceo's, the suits, the business component, don't get that. The music indusrty is a poerfect example. You'll hear an executive talk for hours about the differences between their cost structure and the challenges facing the industry. But they ignore the fact that when it comes down to the consumer, all they care about is the price on the sticker. Many don't even consider DVD's or games to be competitors for the same dollar, when they are.

[suprsaiyanMAX]

Well it's getting kind of late, but finally someone agrees with me, haha. Epobirs is totally right about the aging of the gamers or America in general really. And we can only hope the gaming market expands to the same size as the movie market, but I think I should clear up my comments that are "just dumb." First off, my comments about cigarettes and oreos was in response to defender's comments about industries being similar because entertainment companies have game divisions. My point was Phillip Morris has divisons that make Marbolo and Nabisco, but cookies and cigarettes are far from the same industry. Also, I never once said that products weren't similar due to different marketing strategies, I just said the industries weren't similar due to the different markets they cater to. And really the finished product of a movie and game isn't that similar if you think about it. Yeah they have the same case, same format of disc, but still a game is interactive, immersive and 3D, while a movie is something that is almost entirely passive.

As for that one thing, the original question or issue is whether or not second selling/buying of games could hurt the industry. This whole time we've been focused on the American game market, but when you look at the grand scheme a very good portion of the market is from Japan. I don't know if they are so big on the second hand selling and such, but their economy is sliding yet still have a similar, if not bigger gaming market then we have here in the states.
Like I said before, I totally agree the MSRP of games needs to get kicked down some to compete with the second hand market, but don't expect to see a price point similar to a movie on DVD because the market just isn't there yet.

[ElwoodCuse]

The best thing the used game market has going for it right now is the inherent laziness of the game-buying public, and their short attention spans. As long as people are willing to take $20-$25 in trade in for a game that goes back on the shelf at $45 (instead of selling it themselves for somewhere in the middle), the industry will thrive.

Of course, that attention span can work against the retailers too, because video games (especially sports titles), have ridiculously short shelf lives. Every video game will eventually hit the bargain bin; the question is, will it be weeks, like BG&E, or over a year, like GTA3? The CD and DVD markets do not see price drops anywhere near what video games do. A CD or DVD does not lose more than 50% of its retail value just because it has been out for a while.

I generally don't buy used games unless the difference in price is a lot. I don't bother with the $17.99 GH/PH games or the $44.99 new release games.

But really, I buy far more cheap games than I buy used games. Of the couple dozen games I have bought in the past year, the only used ones I bought were the Sega GT/JSRF disc (can't be bought new), Hitman 2 (wanted uncensored version), Max Payne 2 (Blockbuster had it for $20 when it was still $50/$45), and Frequency (it was $8.99, and hard to find new).

By that same token, I don't bother to buy used DVDs because you wait a long time and only save a couple of bucks. Blockbuster will have their scratched to hell $12.99 (or sometimes more) discs out weeks after the time when I could get a spankin' new copy for around $15 (depending on # of discs obviously).

I think all that the used game market shows is that people (in general) don't like the $50 price point. Yes, the AAA mainstream titles like Madden and GTA can command that from a large number of people, but the average Joe can and will wait for that price to drop.

We've already seen Sony launch many first-party titles at $39.99. I bet (and hope) that we will see more $39 or even $29 new release titles. Codemasters is doing great at this; Colin McRae 04 and TOCA 2 are steals at $19 and $29.

[epobirs]

I have to agree with sup's here. The three entertainment markets, Movie, music, games, have similarities. But just because they all come on the same wrapper, (is a digital disc) does not mean you can compare them as equals. Each market has different factors that make them wildly different from an economic standpoint. For example, take a movie or tv show. They're the first run in theateres or on tv with advertising revenue. Games and Music don't have a component like that. Also, music doesn't have a rental structure like games and movies. Games have a much shorter shelf life due to the nature of the business. Production and development are different enough between the three medium that even they can't be compared directly. Movie development has a different path than game development and music. Just because they all "spend a lot of money" doesn't mean they're economically similar...

And actually I think the peopne who run these things, the ceo's, the suits, the business component, don't get that. The music indusrty is a poerfect example. You'll hear an executive talk for hours about the differences between their cost structure and the challenges facing the industry. But they ignore the fact that when it comes down to the consumer, all they care about is the price on the sticker. Many don't even consider DVD's or games to be competitors for the same dollar, when they are.

I believe I've already addressed these issues. Having worked in the game industry and in film production I can say that the two are becoming very similar in structure. Compare the production operations for Final Fantasy X and Shrek 2. You'll find them to be nearly indistinguishable in many ways. One has playtesters while the other has test screenings.

As for the longevity of products, this has more to do with the transience of platforms and the great complexity of ownership in games. The film industry has a much narrower market for distribution, including on new formats. THere are very few single owner catalogs in the game industry that can compare to that of the major studios. If you wanted to revive an old game on a current system it can often be difficult to determine who actually owns it. A lot of products that might be revived in the style of the Namco Museum series lay fallow for just this reason.

Even so, Nintendo is now selling their fifth version of Super Marion Bros. (Arcade, NES, SNES, GBC, GBA) Pac-Man has brought new revenue to Namco from almost every commercial software platform to exist in the past 20+ since its first arcade appearance, often in multiple iterations on the more prominent platforms. All in all, Nintendo is reigning master of treating its library with the same consideration as a large film studio does when new formats for distribution arise. Super Mario Bros. will still make money off kids whose births are still decades hence. A classic will draw a paying audience no matter how old it is or how much the technology advances. It just needs to be very good on its own merits.

This is because Nintendo understands that it and Disney are in pretty much the same business and have more in common than separating them. The things that separate the way home video and games operate are entirely artificial, long separated from the conditions in which they evolved and subject to change if people decide it is advantageous.

[schultzed]

the current state of the market is a natural part of the industry cycle . . . because we are headed into a new generation of hardware.

this stage of hardware has peaked . . . yeah, you might have games to last you for "10 years," but in 2 years you will only play them for nostalgia purposes.

I just traded off Banjo-Tooie . . . I bought it in 2001 for $12 (used complete Blockbuster) . . . just before I finally bit the bullet and got a PS2 and GC . . . I played it for about an hour. And once I booted up GTA3 and Pikmin I barely touched my N64 again.

The positive thing for gamers is that this is the stage where we can enjoy cheap and plentiful games . . . in another year we will be licking our chops for the new systems . . . in 2 years we will be paying $50 to play the latest and greatest and those games will stay high--at least early adopters will.

We will not hit this part of the cycle for PS3 and X2 until at least 2007.

I do wonder why publishers don't get smart and offer games more often at $30 right out of the gate.

I also agree with most of the comments about eb and gamestop . . . I rarely buy from them . . . but we don't have to.

[Machine]

The sale of used cars hasn't hurt the new car industry. The sale of used homes (if you're not the first person living in it, it's used) hasn't hurt the construction industry. Why should the game industry get special treatment or be looked at differently?

[defender]

Cars and Homes do NOT dramtically drop in price because a year has passed.

Both of these maintain a high value even in a used market.

[Tromack]

Defender, have you never tried to sell a car? As soon as it leaves the lot it drops about 3000 in value. That is a dramatic change in my mind.

[bignick]

Defender, have you never tried to sell a car? As soon as it leaves the lot it drops about 3000 in value. That is a dramatic change in my mind.

Thats not always true. My truck held its value remarkably.

[defender]

Figure out the percentage...

its still a good deal in comparison the entertainment media

[PittsburghAfterDark]

Hey defender do you maintain the same margins on Greatest Hits, Platinum Hits and the proposed ESPN NFL price point of $19.99 as you do on $50 games?

[suprsaiyanMAX]

Trucks almost always retain a higher resale value than cars. But I think Defender is right, when you compare the hit in resale value a car takes compared to the hit media takes, cars aren't that bad in the second hand market. Homes is kind of a totally different thing because that depends on so many different elements. Technically you own the property, not just the house itself.

[BigDirty]

I've come up with a little hypothetical explanation on how one copy of a game can circulate, and generate plenty of revenue for the retail level, but does very little for the developer/publisher. I used a hypothetical cost of $35 for a $50 retail game, and took in calendar depretiation, and cash trade values (credit would have other implications that would skew numbers astronomically), but for some who might not realize how publishers/developers get hurt, here's the explanation:


Bob buys Madden 2005 new at EB in August 2004 for $50, the development/publisher side of that sees ~$35 of that, and EB ~$15.

So far the financial stats for the game:

EA: +35
EB: +15
Bob: -50

In October, Bob trades it in, and utilizes the cash value option at EB, where he sells the game for $20, that leaves the financial stats:

EA: +35
EB: -5, but +1 copy of the game
Bob: -30

Two days later, Jimmy comes in the store and sees Madden 2005 used on the shelf for $45, and buys it, making the financial stats:

EA: +35
EB: +40
Bob: -30
Jimmy: -45

Jimmy decided that he didn’t like Madden 05, and is going to trade it in at EB, getting the cash value, which at the time is still $20, and the adjusted stats are:

EA: +35
EB: +20, also +1 copy of the game
Bob: -30
Jimmy: -25

During the weekend, Johnny comes in, and picks up that same used copy of Madden 2005, and pays EBs price of $45 for it, leaving the financial stats at:

EA: +35
EB: +65
Bob: -30
Jimmy: -25
Johnny: -45

Johnny keeps the game all the way until after the Super Bowl, which leaves us in January/February, when he decides that he’s going to bring it into EB, and take the cash option, which gives him a whopping $12. And the stats go like this:

EA: +35
EB: +53, and a used copy of the game
Bob: -30
Jimmy: -25
Johnny: -33

Sometime in the middle of March, Joey comes into EB and sees that Madden 05 is at $30 for a used copy, and picks it up, and lets look at the stats:

EA: +35
EB: +83
Bob: -30
Jimmy: -25
Johnny: -33
Joey: -30

Joey keeps the game until July, where he brings it into EB and only gets $5 for it. And a check at the stats:

EA: +35
EB: +78, and a used copy of the game
Bob: -30
Jimmy: -25
Johnny: -33
Joey: -25

Bob comes back into the store, and is amused to find on the shelf in August is his copy of Madden 2005 selling for $20, and just for giggles, picks it up, looking at the stats we see:

EA: +35
EB: +98
Bob: -50
Jimmy: -25
Johnny: -33
Joey: -25


Now class, if you payed attention, you'd see that after the inital purchase, EA's cut never changed, no matter how many times that game changed hands, however by selling it used and buying back, EB multiplied their cut 6.53 times, with possible potential to expand that even more throughout the passing of time.

With all things being equal, at the ratio of cost to sales (at the absolute retail level), EA lost out on $58.10 of profit on that one copy of the game because of the used circulation. (Formula being a 7:3 ratio). Granted numbers would vary, but this example comes from an economic vaccuum, with no impeding factors.

EB is doing what in the present is the prudent business decision, but in the long run, because of the revenue being syphoned from the developers and publishers, it may not.

[Squirms]

Cars and Homes do NOT dramtically drop in price because a year has passed.

Both of these maintain a high value even in a used market.

I will have to dispute this. I bought a new car in 2002 for $15,000. Now the value for me to sell it myself is only $7,000. It has low mileage, and is in great condition. Dodges have horrible resale value, and depreciate rapidly, just like games that don't sell well. So there is some similarity there. Houses are different. People buy tham as investments, and depending where you live, they can be very lucrative investments. Games typically are not bought as investments, just as most cars aren't bought as investments.

[kfkl]

god thats alot of adding and subtracting, however, it doesn't mean anything. so eb is making the most money, thats how it works. its no different than a real estate agent selling the same piece of property over and over, or something akin to that.

[suprsaiyanMAX]

Thanks for the math lesson, but your scenario is pretty outrageous. Why in the hell would bob buy it a second time? I also don't think a game like Madden would change hands that quickly...maybe after football season is over. And EA really isn't out that profit of $58. They SOLD numerous copies to EB for $35 each. That means a transaction already took place. If you bought a game from me for $35 then turned and sold it for more at a garage sale or something I can't come you to and demand a cut of that profit. The math is interesting, but if EB didn't turn a profit in the used games they'd be long out of business. Good math lesson, but it's not quite a lesson in the world of business.

[BigDirty]

god thats alot of adding and subtracting, however, it doesn't mean anything. so eb is making the most money, thats how it works. its no different than a real estate agent selling the same piece of property over and over, or something akin to that.

You're correct that EB makes the most money, but they do it at the expense of EA, who doesn't sell as many new units to profit from.

It is different, because the development and production of future game titles are directly dependant upon the performance of titles in the new retail market.

A house, first, doesn't have a consistantly depreciating value, and secondary, the sale of a several used homes doesn't have a direct impact on the manufacture of new homes, it may even determine that new housing complexes are needed. Also, housing is a very regionally based economy, where as video games, and other entertainment media, are national, and even international to a point. The same house on a same size plot of land may sell for $400K in NJ, but $125K somewhere in Wyoming, Madden 2005 will be $50 no matter where you buy it, Maine, Florida, California, or anywhere inbetween.


Thanks for the math lesson, but your scenario is pretty outrageous. Why in the hell would bob buy it a second time? I also don't think a game like Madden would change hands that quickly...maybe after football season is over. And EA really isn't out that profit of $58. They SOLD numerous copies to EB for $35 each. That means a transaction already took place. If you bought a game from me for $35 then turned and sold it for more at a garage sale or something I can't come you to and demand a cut of that profit. The math is interesting, but if EB didn't turn a profit in the used games they'd be long out of business. Good math lesson, but it's not quite a lesson in the world of business.

That's why I said an economic vaccum, there's several instances, such as Economies of scale, and extraneous factors that could dramatically change the figures. I also went on the smallest possible number of units, which of course is 1. Multiply it out by however many copies this may happen to, and when you start getting into the thousands of copies, you begin getting into 7 and 8 figure dollar amounts.

If that profit that "would" be EAs actually was, that money could be used to finance an experimental or creative project along with having the capital needed to milk the cash cow for another year.

It's hard to say how often this cycle goes on, because EB doesn't make these numbers easily accessable (or even public), but one can speculate, (which is what I did, based upon numbers)

[suprsaiyanMAX]

Actually, I still wonder if they'll keep that $50 tag on it should Sega and Take-two decide to go through with this $20 for ESPN Football idea. EA controls the MSRP, if they are having trouble competing with second hand sellers, why not just drop the price sooner? Hell, you got ESPN with $20 supposedly and Madden certainly doesn't need that price tag of $50 all the way to April like it currently has. Trust me EA Sports is not suffering one bit from the used game market, Madden still tops the US sales chart for months and I don't think they incluide used sales in that. In fact, using a game like Madden is a bad example because your larger retail stores like Best Buy and Target probably sell at least twice as many copies of Madden than your average game store does, and those large retail stores don't deal in the second hand market. And if this site has taught me anything, it's that a game is never always $50 everywhere you go, there are always sales or something that make it cheaper.

[kfkl]

you played an EA game lately? You know, theres advertising in them. The more people who see it, the more you make people pay for it. It's actually in EAs favor for as many people to play the sports games as possible, then they can charge the advertisers more money for product placement. Used games should help them boost how much they can charge for this.

and since we're on sports games, the real money should be from selling yearly updates, basically patches with new stats and such. the xbox has a hard drive (i know ea wasn't big on live till now), but why not just charge people 20 a year for updates? You buy the game at 20, then pay 20 every year. All money then goes to EA. It's their fault their business model is fucking retarded.

sorry, forgot to throw in the random buzzword. its all about the subscription model now. doesn't everyone learn from microsoft?

[BigDirty]

you played an EA game lately? You know, theres advertising in them. The more people who see it, the more you make people pay for it. It's actually in EAs favor for as many people to play the sports games as possible, then they can charge the advertisers more money for product placement. Used games should help them boost how much they can charge for this.

The numbers that the advertising are based on are off of new, retail sales. They can't gaurantee any advertiser that more people than purchased it will see their advertisement. Not to mention that advertising only minimally subsizes development and licensing costs and not all games have advertising in it. I don't see McDonald's ads (or any other) in most of the games I play that have some form of linear story.

Also, I only used Madden as an example, since it is a perennial example of this theory, where it is a commonly circulated game with a stable depreciation cycle. A game like Dance Dance Revolution wouldn't make an acceptable example because depretation and circulation are both very low, or a game like Haven, which had a very high depretiation cycle, dropping very quick, and has a low circulation.

[kfkl]

this argument is useless. people have the right to dispose of their property however they want. thats part of capitalism. if they want me to not resell games (wait, i never sell my games, my precious) make it worth my while not to do so. its my stuff, ill do with it what i please.

[repetske]

Man this has some long posts. Anyway, I totally agree about the current price being too high. Most of my original Nintendo games were all $30 for the first 2 or 3 years, then the $50 games started showing up.

If companies are also concerned about games selling well, maybe they should not release a ton of good games at once. Within a short period, Ubisoft released RS3, Prince of Persia, XIII, BG&E. Those were all great games depending on preferences, but I couldn't afford those with my usual sports game fixes and all the other holiday releases. I wish the companies would realize what Nintendo did when they released Goldeneye during the summer, and that is that good games will sell for a long time. Look at games like Halo or SSBM.

As far as the selling of used games, EB and Gamestop feel a lot of pressure from publishers to keep their used prices high, so as not to totally wipeout the new game market. Sure, some people want a brand new game every time, but that market seems to be shrinking. I also took a little offense at the guy claiming the stores gave him a bad copy of a game. As a former employee of not Gamestop the other one, I used to spend a considerable amount of time just picking out the best copy of a used game for the customer. If we didn't have a good one, I just told the customer and recommended just buying it new. I know every store isn't like that, but once you get to know the employees, they aren't all bad guys. I mean, I had regulars that I would hold trade-ins behind the counter for and call them when we got them, so that they would stay sticker free. And if you just tell the guy at the counter that you don't want that extra sticker on the game to seal it, they won't put it on there. Those pretty much exists for bums who want to swap out games constantly.

Oh and as far as the $45 dollar used price. That's like shopping at kroger and not using that stupid Kroger plus card. No one except suckers pay the price on the shelf. There are always sales, as everyone here knows.

[epobirs]

Cars and Homes do NOT dramtically drop in price because a year has passed.

Both of these maintain a high value even in a used market.

I will have to dispute this. I bought a new car in 2002 for $15,000. Now the value for me to sell it myself is only $7,000. It has low mileage, and is in great condition. Dodges have horrible resale value, and depreciate rapidly, just like games that don't sell well. So there is some similarity there. Houses are different. People buy tham as investments, and depending where you live, they can be very lucrative investments. Games typically are not bought as investments, just as most cars aren't bought as investments.

All I see here is an argument against buying a low-end Dodge. If you buy the equivalent of a $9.99 PSone game you shouldn't be surprised if it's secondhand value is only about $4 no matter how good it's condition. When you start with a low-end product you're going to face much stiffer competition from new units when trying to sell yours used. The perception is that if it wasn't of much value to start with it can only get worse on the second sale.

When you start off at the high-end a minor discount percentage-wise is more meaningful in the actual dollar figure. This is why a place like EB can do a good business only knocking 10% off a used copy of a new hot $50 game but the same discount on a $20 game isn't as interesting. Saving $2 versus saving $5. There is a certain threshold for each individual where the discount stops being trivial and begins to make the used product more attractive.

There is the additional expectation that the higher price product has a value greater than just the difference in purchase price. Most experienced consumers presented with what appears to be too low of a price will immediately ask, "What's wrong with it?" You can incur this penalty even if you have the exact same product the other guy sells for twice as much. It isn't always a rational behavior. Look at how discounted games in the original packaging are regarded as being of greater value than Greatest Hits packaging even though it's the exact same game except for a logo on the package. (This can be seen quite often on eBay where used copies of a game in original package are treated as being more valuable than the same game in GH packaging.) There is a weird aesthetic belief that having the original packaging will prevent you from being perceived as a CAG. As if that were a bad thing!

When it comes to cars this perception is backed up by reality. Most low-end models don't hold up well and are often sold at a loss by the manufacturer to satisfy state pollution laws while high-end models with poorer emissions to mileage ratios are the source of nearly all profits. The low-end units are a cost of doing business so little effort is made to make them good long-term investments.

The same could apply to a game where a project is deemed worth publishing but only as a low-end title. If a small team working quickly produces a worthwhile game for an older platform this is still worth releasing if the selling price is low. What you don't see are projects originally budgeted as $50 releases knocked down to budget status after testers give it a mediocre rating. Such projects are usually killed and made into tax writeoffs rather than given a low retail price. Some publishers try to go ahead and publish a bad game at full price but word of mouth quickly does its job. If a game is understood to be just bad and you've already got the sunk costs of a full priced game on your books it's better to give up before incurring the costs of manufacturing and distibution. Successful budget releases are such from the very beginning of their development.