Used Consoles 101
Published: Tuesday, September 10, 2013
Updated: Tuesday, September 10, 2013 23:09
If there has been one issue that has become the poster child of this year’s PS4 vs. Xbox One debate, it has been the subject of the future of used games.
Despite the fact that the industry is seeing record increases in digital sales, at least for the near future, physical media will still be an integral part of console gaming.
When Microsoft announced that the Xbox One would tie single player titles to a single Live account, in addition to requiring a constant internet connection to authenticate the title, people everywhere were outraged.
Disregarding used game sales, many were bewildered by the fact that they would not have the ability to loan their friends a copy of a single player game, and that a separate Xbox Live account and copy of the game would be required if someone else sharing the console wanted to play.
Sony played right into this hand. Despite it making total sense from a business perspective for Sony to follow Microsoft’s lead to help curb the used game market, Sony saw an opportunity to retake the market share it had lost to Microsoft in this past generation.
Therefore, Sony gleefully used their 2013 E3 press conference to proudly state that the Playstation 4 would not impose any new restrictions on used titles, satisfying gamers everywhere and forcing a bewildered Microsoft to change their planned polices in the months that followed. But the damage had already been done.
The downside of this turn of events is that it effectively skirted a serious issue that has been plaguing the industry for years: used games.
With the dawn of the HD era of gaming, and development costs now soaring into the millions of dollars, used games are making it harder and harder for struggling developers to stay afloat.
When a game is sold new, the developer directly profits from the sales of the game. When a game is sold used (or pre-owned, as a certain chain likes to call them) the store makes 100 percent of the profit, the developer receives nothing.
The results can be devastating. For example if a game is sold new for $59.99, the developer would receive a significant portion of the profit as well as the publisher and the retailer. However, even if a title is sold used for as little as $5 less ($54.99), the retailer receives 100 percent of the profit. The developers and publishers who took the risk on the games development receive nothing.
From a developer and publisher’s financial standpoint, it is no different from outright game piracy.
Due to the devastating financial losses that are incurred, the motion picture and television industries decided to pass rules years ago banning the sale of used DVD’s and other media from sharing the same shelf space as new copies, which is why you don’t see them at chains such as Best Buy, Target, etc. However, the games industry has failed to pass such restrictions.
Now this is a two-way argument. While it is in the best interests of the developers and publishers to attempt to eliminate used game sales, it is currently not in the consumers. Why would any customer want to pay $20 or $30 for a new retail or digital copy of Halo 3, a six-year-old title, when you can grab a used copy at GameStop for under $10?
While PC gaming services such as Steam have greatly circumvented this by frequently offering generous sales and discounts on titles throughout the year, it has not yet been implemented on such a large scale by console manufacturers.
The $60 entry point for games is also becoming dated, especially in a struggling economy. While people will hardly blink an eye before laying down $60 to buy Grand Theft Auto V, a title from a proven franchise that will almost certainly have dozens upon dozens of hours of content, it’s hard to convince people to pay that same amount for an ambitious new Intellectual Property. Unless people can try an unknown title out before they purchase it, they are less likely to jump in and purchase a product they know they cannot return once opened (or downloaded).
Used game sales must be stopped. What Microsoft failed to realize was that restricting the rights of the consumer to do what they wished with the content they had purchased was not the answer. If you truly want to curb used game sales you must create a better value for the consumer to purchase your product first hand and at the same time, restrict the retail sale of new titles alongside the used.
Therefore to fix the problem for everyone, the following changes must take place in the best interests of consumers, publishers and most importantly developers:
First, the sale of used games sharing the same shelf space as new games in retail stores must be restricted.
Second, demos and/or timed trials for all titles must be available to the consumer before he or she makes the significant financial investment required to play the title.
Third, prices of digital and new retail games must be lowered significantly to a fair price for the consumer. When Halo 3 launched in 2007, it was absolutely worth its $60 price tag. But six years later? That title should cost no more than $5 - $10. And $20 - $30 is absolutely ridiculous.
Finally, developers should have the ability to set their prices. If you feel your game doesn’t have nearly the amount of content (a.k.a. value) as a title such as GTA V, you should be able to set the entry price accordingly rather than charge the same $60 standard price.
While these steps won’t curb used game sales entirely, people can still find other avenues to sell used games such as eBay (as they should be able to) it will significantly end the abuse of used game sales made possible by publisher over pricing and an unrestricted retail model.