An old dog, new tricks

Many in the games industry have been very vocal in decrying the business of selling used games. Their arguments are numerous and homogenous: games purchased second-hand don’t compensate the creators for their hard work; second-hand resellers are exploiting the industry for their own greedy ends; second-hand sales leech revenue from the industry and will ultimately lead to less games being produced.

It’s not hard to see their point when they’re decrying the policies of a retail partner that actively encourages its customers not to buy the games new. At the same time, as a consumer, I value my rights when it comes to purchasing their product. If I don’t care for the game, I can sell it to someone else. If I’m not sure I’m going to like it, I can rent it. I can borrow it from a friend. I can trade it with someone I know for a different game. I can even bring it into a chain video game retailer and get credit for a different game.

My response to the games industry when they call for a halt to these kinds of activities is that they shouldn’t punish me because they can’t figure out a business model that works in the current climate. The recording industry is years behind where they should be, because instead of reworking their models to work in a digital, connected age, they resorted to lawsuits and legislation to save their old, outdated paradigms. People always traded music, but the Internet made it easier to do so on a much wider scale. Likewise, people have always sold and traded their games, but the rapid expansion of retailers that lean heavily on used game sales has made it much easier to do on a wider scale.

It seems like they’re finally taking my advice. When you buy Rock Band 2 new, it includes a one-time-use code that lets you download twenty additional songs. Late in the retail cycle of Call of Duty 4, they started packing in a code that let you download four multiplayer maps for free. The newly-released NBA Live 2008 has a redemption code that lets you access one of the most highly-touted new features, the ability to download real-time stats from the actual NBA into your virtual league on a daily basis. If you buy the game second-hand, you have to pay an additional twenty dollars to download this feature. All of these can be seen as ways to incentivize consumers to purchase new rather than used, reversing the training that the biggest games retailer has been barking for years. The first time Joe Consumer buys a game and finds out that he can’t take advantage of all the features because he bought it used, he’ll think twice the next time he has the choice between a new or used copy.

Unfortunately, as these moves become more prevalent, the consumer is ultimately going to be caught in the crossfire. If you’re the type to rent a game before trying it out, some features won’t be accessible for you. If you buy a game and end up not liking it, you’re not going to see much resell value for something that’s incomplete for all but the original user.

Luckily, these aren’t the only models the industry is examining in order to staunch their perceived loss of profits from the used games market. The game that’s doing it right, in my opinion, is Burnout Paradise. While other models rely on negative reinforcement (“buy this game used, and you don’t get everything”), Paradise instead employs positive incentive. On a regular basis since the game’s release, the developers at Criterion have been releasing substantial content updates to the game, doing everything from adding new cars and reworking the game’s HUD to offering the addition of motorcycles (a Burnout first) and building a whole new level progression to go with them. Now, a lot of games offer a lot of DLC; the difference is that the DLC in Paradise is free. Instead of punishing you for buying a used copy, they are rewarding you for not selling the copy you bought. Not only that, but they earn revenue on people who buy used copies — not by forcing them to pay for things that come for free in new copies, but by adding non-intrusive advertising into the game.

Another fairly new practice that seems to be aimed at this struggle is being tested with the release of LittleBigPlanet and Dead Space. Both games offer free DLC that is only going to be available at the launch of those games. If you wait for a used copy of those games, you miss out on exclusive costumes for Sackboy in LittleBigPlanet and an exclusive, platform-specific suit for Isaac in Dead Space. The suit in Dead Space offers gameplay advantages like additional inventory slots and reduced damage taken, and only people who get these games when they’re first released will get this DLC free of charge. Perhaps this is only trying to boost the games’ all-important first-week sales, but I’m sure that at least part of the reason for these promotions is to convert used buyers into new buyers.

I really hope that the consumer-friendly models exemplified by Burnout Paradise, LittleBigPlanet, and Dead Space are successful. I don’t want games to be tiered, with people who buy new getting a superior experience over those with less disposable income, who buy used or rent their games. I’d like to see more companies give me a reason to keep their games for longer periods of time, or at least rewarding people who buy their products new without removing significant features from everyone else.

24 thoughts on “An old dog, new tricks

  1. Call me cynical, but it strikes me that in addition to encouraging new buyers, including extras for, specifically, the first week the game is out is also going to have the side bonus of discouraging people from holding off until they get some trustworthy peer reviews.

  2. Don’t forget that Gears of War 2 is also including a voucher for five free maps for online play that certainly won’t be found in any used copies (and apparently won’t be even purchasable after the fact). Plus, no used copy of the limited edition will have the code left for the gold-plated Lancer DLC, and buyers who go to a midnight release get a code for the gold-plated Hammerburst. I was definitely planning on picking up the game used a long time down the road, but now I have to add it to my shopping list, which also includes other special DLC games like Dead Space, LittleBigPlanet, Rock Band 2, and Fable 2 (which also contains some exclusive DLC in the limited edition).

  3. I find the Burnout Paradise model to be the ideal solution. Incentives for buying a game early can take a turn for the worse. As Googleshng stated, peer reviews are important for some to avoid wasting their money. Also, I would find it discouraging that I’m unable to receive the complete package just because I held off buying a game for a few months. I wouldn’t mind missing costumes, but equipment that is advantageous in a game? That should be accessible to all.

    Developers should focus on extending gameplay and replayability, not on simply getting the initial sale. I know it’s a business, but a game worth keeping is less likely to be resold. (Well, in theory.)

  4. That Dead Space thing sounds suspiciously close to giving people a gameplay advantage for ordering early and often. That can backfire and put a game on the used shelf early.

    I can foresee this going to bad places in the future. “God Mode available to early purchases only.”

  5. Y’know, I think the Dead Space suit is already up for download on the PSN. I don’t know if you need a code to activate it, but if you don’t, you could always download the suit and sit on it until the price goes down…

  6. The next logical step is to discourage people from sharing games – not illegally mind you, I mean to actually let someone borrow the disc to give it back later….”Can I borrow your copy of Burnout Paradise???” “No my brotha, you gotta buy your own!”

  7. Yeah, I’m a fan of the LBP model. I’ve never been a fan of obsessively buying games right when they launch – I know publishers like launch-week numbers, but I’ll buy when it’s convenient for me, thanks. But if publishers want to give me an incentive by offering extra free goodies (above and beyond the gameplay features that should be available to everyone), that’s peachy. It’s essentially just an in-game pre-order bonus, except since it’s direct from the publisher or developer rather than the retailer, “pre-order” just means “buy it real soon please” in this case.

    (Of course, honestly I would buy LBP day-one anyway because LBP is that awesome, but I’m speaking in general here.)

  8. I think the big difference between Dead Space / LBP contrasted with what NBA Live / Rock Band is doing is largely the value of the content, and how integral that content is to the game. NBA Live removes one of it’s bullet-point features if you buy it used. Rock Band 2 is marketed as a “music platform” with “hundreds of songs”. You’d think EA / Harmonix wouldn’t mind people buying used since it gives them additional customers to sell DLC to. My “free” copy of Rock Band 2 has cost me $30 in song downloads. :) LBP just has one less costume — there are already dozens of costumes available. Dead Space offers equivalent costumes for sale @ $1.25.

  9. What is the fifth word of the second paragraph on page 8 of the game manual?

  10. I’ve often wondered why selling used isn’t treated on par with piracy — after all, pirates at least don’t make a profit (assuming it’s for personal use).

    The best solution to the used game problem is online distribution. You can’t sell an Xbox Live Arcade game. Obviously the situation is hopeless with PCs, but developers seem to have quite a bit of success with consoles, as mainstream consumers tend to shy away from mod chips and the like. Simply provide users with a decent hard drive and a user account that allows them to delete and re-download games.

  11. The only people really saying this are the crazy NeoGAF types. Gamestop being evil doesn’t make used games in general bad.

  12. I don’t personally feel used games are per se evil. Same goes for piracy.

    However, insofar as used games directly correlate with decreased profits for a game design company (they do), one can safely say they present a nearly identical issue as piracy. I would go further — because a company can legally profit from used game sales, they present an even more formidable problem. It’s astounding how much money Gamestop makes off used sales.

    Because the product is essentially digital, the consumer loses virtually nothing by purchasing the used product vs. the new. Gamestop is exploiting the game design companies by selling their products “new” without sharing the profits. All Gamestop offers is a storefront, a service not worth nearly as much as they earn by providing it.

  13. Citerion and EA also had the sense LOWER BURNOUT’S PRICE with the $30 PSN release. If people are willing to save the $1.50 that Gamestop offers them on a used copy, think of how much publishers could make off of minty new copies of games if they just had some kind of reason or rhyme that led to prices dropping over time. One of the things I miss the most about last gen is consistent and additions to the “Greatest Hits” line for PS2 :/ but Halo 3 is still 60 bucks if you buy it new…

  14. I haven’t bought a new release in probably a year or so mainly because I already have enough games on my backlog to play and I don’t enjoy paying full price for games that go down 30 bucks if you wait 3 to 6 months. So no amount of incentives like DLC or free maps will get me to waste my money. Gears of War 1 and Fable 1 here I come!

  15. A big thing about the second hand market that publishers seem to forget to mention when they claim they’re losing royalties is that many people trade in their games for brand new releases. Lose the second hand market, lose half the sales of new games as many people either can’t afford or are not willing to spend full price on games.

  16. Lower the price of new games. The second hand market will still exsist but the trade in value will drop as will the margin that the Gamestops in the world will make less money while gamers are more likly to keep their old games out of circulation if they are only worth the price of a candy bar if they were to trade them in. Less second hand games but more games for your bucks.

  17. I personally see a lot of people using their used games as “currency” to purchase new games. I don’t know how significantly week-one sales would drop w/o this currency, but it would. Would those sales be made up in the long run when late-comers are forced to buy new because the used option doesn’t exist? It’s hard to say.

    As far as used games being equal to piracy, you’re out of your mind. Selling your game is transferring ownership of ONE legally purchased copy to someone else. Piracy is making infinite perfect copies and distributing them widely. There is no comparison. Transferring ownership of something you buy is a legal right written into the legal code. Is selling your car the same as high-jacking a truck full of cars? Obviously not.

  18. Levi — Piracy and selling used games are equal insofar as they amount to the same problem for game publishers — a middleman distributing their product without profit sharing. I obviously don’t have the data on the impact of piracy vs. used games on publisher income (nobody has anything but rough estimates, in any case). It’s worth noting, however, that many people download or purchase pirated products who would otherwise have no intention of buying that product, whereas anyone who spends $40 on a used copy of a $50 dollar game would likely have spent the full $50.

    I’m not making a moral argument here — that is, trying to say selling used games and piracy are equally “bad.” However, because selling used games actually generates real profit (most piracy, especially web-driven piracy, does not generate anything comparable), I’m surprised I here piracy discussed so much more frequently than used game sales.

    Finally, as to the argument that games = currency, I would imagine that profits lost due to used games being purchased is in no significant way compensated by increased sales of new games purchased with that “currency.” Keep in mind that many people use the money from used games to purchase unrelated items.

    Again, I don’t find anything wrong with people selling their used stuff (morally speaking), though it’s important to keep in mind that selling used games is like selling used bubblegum — games are sold as a one-off things (digital experiences), not an objects (the medium on which the game is delivered). Of course, this only applies to relatively new games.

  19. “I’m surprised I here [sic] piracy discussed so much more frequently than used game sales.”

    Why? Do you actually think that piracy is more than merely a scapegoat? I don’t, and neither do the software companies — it’s just bad karma to try to tell people that they can’t sell a copy of their game. Look at the recent DRM issues with EA, for example. It’s not preventing piracy at all. Instead, it’s a Trojan horse sort of thing intended to prevent people from reselling their games on eBay or whatnot. They just call it an “anti-piracy” measure because in most cases, people have no problem with accepting “counter-piracy measures” — most people would agree that stealing is bad. Most people would flip out if a “counter-second-hand-market” measure were to be enacted, even if it were the exact same thing by another name. (Take the rumors around PS3 launch of Sony possibly tying each copy of a game to a specific machine for example — people threw a fit.)

    “[I]t’s important to keep in mind that selling used games is like selling used bubblegum — games are sold as a one-off things (digital experiences), not an objects (the medium on which the game is delivered)…”

    That’s funny, I didn’t know that a specific copy of a game loses its sweetness (i.e. becomes less of a game) if it is resold. :) Terrible analogy aside though, this is the same kind of B.S. business model that software companies have been trying to push hard for the last five years or so, and though I totally disagree with it, it’s unfortunately the way the industry is going if people let it. Software companies really need to do what Levi is suggesting in his post — find a way to make the added value of purchasing new worth the extra cost. That’s what happens with pretty much every other consumer good (cars, lawnmowers, etc.). Software companies can certainly do the same thing instead of adopting that sleazy business model… because honestly, if as you said, “anyone who spends $40 on a used copy of a $50 dollar game would likely have spent the full $50” were actually true, it would mean that there would be some inherent added value to entice the customer to buy new. Obviously, that’s not the case, because the market suggests otherwise. That’s basic business.

  20. Prymusferal — never said people shouldn’t sell their games. Gamers tend to take things so personally, making it difficult to discuss the actual financial impact of piracy or used game sales on game publishers. I’m not at all interested in what people SHOULD do; rather, I find the issue interesting from an abstract economics standpoint, i.e. How to make the most of money selling games?

    As for the “bubblegum” analogy — of course games don’t lose their “sweetness” after being used. That’s precisely the problem I was pointing out — the game publishers desire that their products be treated as user licenses, not objects (just like when you attend a movie playing at a theater, to use a clearer analogy). Bubblegum manufacturers don’t have this problem because you can’t resell bubblegum. The problem facing the industry today is that you CAN resell a DVD or cartridge, even though they would prefer these physical mediums be treated more like a one-time transfer of data.

    The “added value” suggestion is really just an extension (or rather a scaled back version) of the MMO model — keep content server-side where it’s easier to regulate product ownership. The problem with this? It’s not free to create extra content (meaning you’re still cutting into profit margins), and not all games lend themselves to this model. Story-driven single player experiences don’t much benefit from most new content, and the sort of content that’s worthwhile (new levels, enemies, etc.) is expensive to produce. It may be that publishers should pour more resources into fewer games that are constantly updated (as Blizzard does) — that’s a valid question.

    While digital distribution models face a variety of hurdles, it still seems to me (as I stated in my original post) that digital distribution + regulated consoles (e.g. Xbox 360 or Wii) = easiest way to control both piracy and used game sales.

  21. Adam, I never said that you were. Also, I’m with you on that one — I’m interested in it from a theoretical standpoint as well. I really find this whole topic fascinating, and I can tell that you do too. :) I do buy most of my own games new, but these days I mostly buy old stock of “new” PS2 games — I’m still trying to figure out exactly how that fits into the paradigm. :) I’m of the opinion, however, that at some point pure abstraction needs to give way to some actual “common sense” (and coming from a lifelong academian, that’s kind of tough for me to say, haha).

    The problem that I have with the “one-use” model is that the videogame medium does not fit well to that model. Bubblegum is a consumable good, videogames — despite how much the companies want them to be — are not. Also, it’s much easier to sit for ninety minutes at a passive screening than it is to make an interactive 30-hour game a one-use item. I understand your point, I was just saying that I think it’s a poor business strategy that alienates consumers… again, look only to the DRM issues with Spore and other such measures for supporting evidence. At the theoretical level, it might promise higher profits, but I think it’s bad on a practical level because of the nature of the medium. (And furthermore, many films make more money off of DVD sales than theaters these days, which would suggest that customers prefer the ability to use items whenever they want as opposed to one-shot.)

    I’m not saying that added value necessarily means additional content, and I am certainly not suggesting an MMO model. What I am saying is that people obviously feel that it’s worth buying a game used to save ten (or, let’s face it, most of the time 2 or 3!) dollars instead of buying the game full price. Instead of trying to enact draconian control measures (which ultimately alienate your consumer base and lead to decreased profits and unnecessary expenses) companies need to find a way to compete, offering a lower priced product or something along those lines… that kind of “value.” Besides, that competition makes things better for everyone (especially consumers) in the long run.

  22. I completely agree that one cost of the one-use model, perhaps the biggest cost, is that it pisses off consumers. I also think it’s probably true that companies need to focus primarily on pleasing consumers while increasing the incentive for them to be paying customers — in all media industries. Just to clarify, I don’t mean people should only use games once. Rather, I think that it’s the desire of the industry that only one person ever own any particular copy of a game or DVD movie (or, at least, that they only give it away rather than sell it). As things stand, people view game discs as objects, just as they would chairs or appliances.

    But a couple of thoughts: The fact is that ownership insofar as it pertains to digital media is tricky, as the cost of production is astronomically high and product resellers (in this case Gamestop or individuals through classifieds and auction boards) are essentially allowed to reap all the benefits of the middleman with almost none of the costs (at least relative to the overall cost of creating the product). The obvious result of this is that either games cost more or fewer companies make fewer games.

    Ethics aside, any gamer who buys a new copy of a game is funding companies like Gamestop beyond the value said consumer receives from the existence of a company like Gamestop.

    I would be really, really interested to see what the profit margins look like on XBLA titles — I imagine there is basically zero reselling and piracy, though again, I may be wrong. In any case, aside from the ridiculous Microsoft Points system (or Nintendo bucks or PS3 bucks or whatever), I haven’t heard much griping about buying games online — it’s basically a convenience. However, the fact that there actually aren’t that many leads me to believe there’s more to this picture than I’m understanding (I often here Parish discussing how unprofitable it is to release niche titles over Wii’s online distribution system).

  23. Agreed, and I think it’s asking a whole heck of a lot for people NOT to view a tangible object as NOT a tangible object. :) That’s why I think that approach is lacking. I’m just totally against any sort of measure that tries to tell me what I can and cannot do with something that I buy. It’s borderline nonsensical to suggest to people that a physical object is not actually a physical object. If you want me to buy your product, show me why it’s worth my money in the first place.

    I think the used car industry is a pretty comparable concept. Instead of trying to eliminate the second hand market, companies provide some incentives to get people to buy new, such as warranties and servicing, etc. that do not always extend to used sales. Something comparable could be incorporated into game sales.

    As for GameStop, et al’s “leeching” from the game industry, well, there are always leeches in any industry — trying to get rid of them is akin to Mr. Burns trying to block out the sun to monopolize electricity. :) Again, I don’t buy used games from GameStop, though I do buy new from them occasionally. I just get mad about companies trying to eliminate smallest-scale (one person to one person) second-hand sales.

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