Quantcast
Destructoid - GuitarAtomik's Community Blog




About Me
XBL: GuitarAtomik
PSN: GuitarAtomik
WiiFC: 522-4350-2969-6417
Smash Bros FC: 1934-0349-2206


My Art: GuitarAtomik.DeviantArt.com
My Music: I KILL PXLS


DEMO ALBUM IS OUT
Download it Now 4 Free!



More free music at the offical site
www.IKILLPXLS.com












Gamer Profile
3DS friend code:
Steam: GuitarAtomik
Battle: guitaratomik
PSN: GuitarAtomik
Mii:
Gamertag: GuitarAtomik
Following (79)
-D-
AgentMOO
Andrew Benton
AngelsDontBurn
BahamutZero
BigPopaGamer
BlueWolf72
brainderailment
BritiniMartini
Butmac
CaffeinePowered
ceark
Cheeburga
Colette Bennett
Coonskin05
CosbyTron
CountingConflict
CronosBlade
DestructoidArtisans
DestructoidFNF
DigitalD562
DJDuffy
droobies
DtoidOrlando
dTunes
FAILCAST
Garbz
Hamza CTZ Aziz
HarassmentPanda
Hollie Bennett
Hoygeit
itemforty
Joe Burling
Jonathan Holmes
Jordan Devore
keener
Knivy
Kryptinite
Liz Alexander
LostCrichton
Macca
madninja
masterledz
mid3vol
Mr Wilson
nademagnet
Niero
Ninoog3
nopk
Pangloss
Pedro Blandino
Pedro Cortes
PetiePal
Phist
PwnyBownz
riomccarthy
Riser Glen
Sadie G
SakuChan
Samit Sarkar
Snaileb
SnakeDude4Life
Suff0cat
superflossy
swiftkaratechop
tazarthayoot
Tehmtnlion
The GHost
The Incredible Edible Egg
Tiff
Topher Cantler
Tristero
Tubatic
Virtualgirl
wardrox
Wedge
Zac Bentz
Zen Albatross
ZServ
Why the VideoGame Used Market is Different From Everything Else
GuitarAtomik | 7:09 PM on 08.16.2010 34 comments


The extremely short answer is...


Surprise surprise!


But let me get a little more in depth than that.

So if you haven't noticed, developers have been complaining about the used market a lot for the past few years. Essentially they're pissed because they feel like the used game market is significantly eating in to new game sales so much so, that they should get a cut of those used sales. Now first things first, whenever developers talk about the "used game market" they're not really talking about the mom & pop stores, they're talking about Gamestop. According to this 2009 Gamasutra article Gamestop accounts for 21% of the U.S. video game retail marketshare (excluding accessories and PC game sales). That means almost a quarter of the entire industry's product is being sold through ONE retailer. ONE! I think a lot of you guys don't realize the power that comes with that figure.

Why the Car/Book/Whatever Physical Good Analogy Doesn't Work



The main reason is that they're physical goods. A used version of any of those things (especially a car) won't be in the same condition as if you bought it used. Used cars are going to break down sooner, used books might fade or have pages torn or water damaged, and used furniture could have rotted out or have weaker joints, so on and so forth. A used game on the other hand is going to play exactly like a brand new one and if it doesn't, you can get it replaced no problem. "Ok, so what about music and movies? They give me the same experience used or new too!".

Why the Music/Movie Analogy Doesn't Work

There are a lot of factors here but the main thing you have to keep in mind is how different the revenue streams are for these industries.



Let's start with music. I don't know if you noticed but the music industry is hurting right now. Actual CD sales are way down and that's mainly because people like to download their music (and the record companies were slow to capitlize on that). Because of this, the big brick & mortar stores that specialized in selling CDs have been shutting their doors left and right (Sam Goody, Virgin MegaStore) and, at this point, it's pretty much down to stores like Best Buy and Wal-Mart who sell CDs at a loss just to get you in the store to buy other things. At this point you realize there isn't much of a used CD market anymore because there isn't much of a CD market anymore. Artists (and increasingly labels) nowadays make most of their money from playing shows and selling merchandise, not the actual music. Video games don't have those alternate revenue options (not to those levels at least).



Now as for movies, you might say "Ok, here's a pretty comparable market. Movie budgets are comparable to video games nowadays and DVDs and BluRays are a comparable product since you might buy it and consume the experience once or twice before you're done with it. Why don't they complain about the used market?". That's because movies make the bulk of they're money on their theatrical run and the home market is just bonus to studios. It's become a bigger and bigger bonus over the years but all it really is in the end is an extra revenue stream for that product. Again, video games don't have that.

Why No Analogy Works

Again, no analogy works because no other industry has a Gamestop. There isn't one other industry where one company controls 21% of the market and consistently pushes the used version of the product they specialize in over a new one when the used version is an identical experience. That's why it just doesn't compare. That's why developers bitch about it.

So let's get some more shit out of the way.

"Games cost too much. Why don't they lower the price of games?"
Because those giant games you love so much (Uncharted 2, Halo, Metal Gear Solid, Call of Duty) cost a fuckton to make and unlike movies, the only money they'll ever see from it (until digital distribution is cemented at least) is if you buy it new. If you want significantly lower prices, than expect significantly different products whether that be shorter games, lower budget games, etc.

"If Gamestop is making so much money, why don't the publishers start their own stores?"
Are you fucking serious? Do you know how small the commercial viability of a Square/Enix store would be that only sold used and new Square/Enix games? Do you really think they could compete with Gamestop at this point because they would have to.

"Well they should provide more incentive for me to keep the game longer."
They are. That's why almost every game has multiplayer nowadays whether it makes sense or not. That's why almost every game has DLC. There really isn't much more they can do other than that. You're basically asking why movie companies don't provide more incentive to keep a DVD past your one viewing of the movie.

"What's the solution then?"
Ultimately there's only a few of options here. Digital distribution is one but a lot of you want physical copies of things. Developers getting a cut of the used market is another but a lot of you seem to have a problem with that as well. Publishers selling the games to retailers at a lower price point could help in discouraging them from pushing used so hard but I don't know if that's commercially viable for them (that could be another topic on its own). So yeah, if I knew I'd try to get the word out but the situation at this point is pretty complicated.

Do I want to see the used market go away? No. Are developers completely against the used market across the board? No. But you are kidding yourselves if you try to say any other industry is in the same boat. Gamestop isn't evil. They're just a company like any other trying to make as much money as possible but the way they're going about it at the moment is eating the industry from the inside and ultimately it's unhealthy for it as whole. You can't be pissed off at developers for that.



Attached photos:

Photo Photo Photo Photo

Is this post awesome? Vote it up!

15

Those who have fapped:  mjw282  


Post a comment! You can also post a photo below:

Comment with Facebook





Click connect and comment instantly!

Comment with Dtoid





New? SIGN UP - it takes 5 seconds

30 comments | showing # 1 to 30
prev next

Wedge's Avatar - Comment posted on 08/16/2010 20:04
Wedge
Woops.

Yeah pretty much. I do think in 10 years retail will be pretty much gone in favour of DD... for better or worse (depends a lot on how both the internet and game publishers evolve in the country).
robotbebop's Avatar - Comment posted on 08/16/2010 20:17
robotbebop
Obligatory steam is the answer comment.
Tascar's Avatar - Comment posted on 08/16/2010 20:36
Tascar
I wrote something that sort of shares some overlap on this a few months ago though I like that you also tackle the comparison to used music and used movies and do a great job showing how the analogies to that industry is flawed. I also like that you introduced a lot of concrete numbers that I did not: http://tinyurl.com/2fpxtro

In short, I posited that the problem of video game used sales, specifically in the way that Gamestop is aggressively pushing it, is that it erodes the perceived "value" of new games in a way that is not true with the used car market. In other words, the existence of a used car industry does not significantly affect the perceived value of a new car (i.e. probably lasts longer than used car, etc). However, with the way that Gamestop is pushing used games, they make a fairly convincing argument that a used game has no difference from a new game, which erodes the value of a new game.
GuitarAtomik's Avatar - Comment posted on 08/16/2010 20:38
GuitarAtomik
@Tascar Also very true. Especially when you can get the used game the day after release a lot of the time.
LK4O4's Avatar - Comment posted on 08/16/2010 20:43
LK4O4
Great post, and nicely argued! To be honest, I'd like to see the industry move toward the lower budget model to lower the price of games, but who am I kidding? That'll never happen. I really don't know the solution either, but I like your take on what the causes are.
Tony Ponce's Avatar - Comment posted on 08/16/2010 21:24
Tony Ponce
Bravo!
Corduroy Turtle's Avatar - Comment posted on 08/16/2010 21:27
Corduroy Turtle
Just a few points.

- A lot of the trades that GameStop takes in go towards the purchase of new games. I can tell you personally that I would not buy as many games as I do (mostly new, mind you) if I couldn't trade in the ones that I'm done with to offset the cost.

- The condition of games (especially discs) do slowly deteriorate over time. Not on their own, but just the fragility of the bottom side leaves it open to wear and tear over time. Not everyone takes as good of care of their games as you or I might.

- Gaming is a disposable hobby. Sure, there are collectors out there but most gamers jump from game to game, looking for new experiences. The games that I personally keep are the ones that either have infinite replayability (Rock Band 2 or Tekken) or ones that I cherish due to their undeniable awesomeness (Super Mario Galaxy 1&2, Super Smash Bros. Brawl & Melee, No More Heroes 1&2).

- GameStop is terrified of digital distribution, but I really don't see it completely taking over physical games. That is unless they figure out a way for me to sell of digital versions of games I no longer want or charge a significantly lower price for those digital games. Otherwise, I'll be sticking with a mostly physical option as it's something that I can control.
Malik's Avatar - Comment posted on 08/16/2010 21:36
Malik
Best blog I've read since I've joined.
NateT's Avatar - Comment posted on 08/16/2010 21:58
NateT
I can't afford to buy alot of $60 games, and I know allot of people are in the same boat as me, especially in times like these.

How smart is it to have a busness model where people lay down that kind of cheddar when we have an effective unemployment rate at around 17% (counting people underemployed and who have stopped looking for work)? I bet the unemployment rate of people in game's key demographic (say Males 18-35) is higher than the average.

What you are skirting around is the lack of innovation by gaming companies around cost in a maket that has become more cost sensitive. I am not saying to release the same amount of content for less. Rather there has to be some kind of tradeoff between amount/quality and cost.

The thing is making games is so capital intensive, involving quite a bit of risk, gaming companies in general have been gunshy about innovation in other areas.
Mr Andy Dixon's Avatar - Comment posted on 08/17/2010 00:17
Mr Andy Dixon
You bring up some great points!
the7k's Avatar - Comment posted on 08/17/2010 01:41
the7k
For the Fat Cat publishers that want to keep making Uncharteds, Assassin's Creeds, Halos, etc. - the answer is to deal with it. If you want to make the most money possible, you're going to have to go with a big retail release, because no one has the bandwidth to DD these games.

For the smaller publishers that make smaller games - you actually have options. You could go DD, and sell your game entirely that way. It's worked for many. OR, you could have a very small, limited release - this approach has worked well for Atlus and most recently for DeathSmiles.

One approach both could benefit from is having decent feelies. Sometimes, I've seen feelies that were so good they made me buy them even when I didn't care much for the game (Record of Agarest War0, but most the time it's crap. Whoever makes your Press Kits - THEY should be the ones making your Collector's Editions. It would be a ton better than an ugly tin case that has a DLC code in it.
mjw282's Avatar - Comment posted on 08/17/2010 02:45
mjw282
I agree, this was a well thought out and interesting post.

When you buy a new game, the "new" is less about physical condition and more about time. I can wait 2 months to get a game from Gamefly or I can wait a year or two for it to go Greatest Hits, condition has little to do with it. Even the little it does matter could be kept in check by keeping the new price reasonably close to the new price. I always pay the extra $3 for a new copy of a game when the used is $26.99 or something. Sometimes its just silly that developers charge $60 when a used copy goes for $34.99.

Why should developers maintain some sort of ownership of a game after they sell it to me. If I sell my games to my cousin for $3.50, they don't deserve a cut, that was all me baby.
Om Nom On Souls's Avatar - Comment posted on 08/17/2010 03:31
Om Nom On Souls
I kinda dig the 5 system install DRM idea if it didn't fuck up all the time. And yes bebop, - general agreement about steam is the answer comment - as well
Sexualchocolate's Avatar - Comment posted on 08/17/2010 08:21
Sexualchocolate
I don't really have anything to add, well said.
Occams electric toothbrush's Avatar - Comment posted on 08/17/2010 09:45
Occams electric toothbrush
Fair points and I'll just keep on bargain hunting for as long as I can. I've found that with age has come a bit more patience so I don't have to have a game day one. This allows me to get the game later on at a much more reasonable cost.
GuitarAtomik's Avatar - Comment posted on 08/17/2010 10:10
GuitarAtomik
I should add that as a consumer, you have every right to find the cheapest deal possible including used games. If you can't afford a game at $60 then you're not going to buy that game at all anyway unless it gets cheaper. At that point it's kind of on the publisher to realize the market value of it's own product and adjust the price accordingly and they could definitely be better at that.

So yeah, if the market can't sustain $60 games then at some point they're going to have to adjust their production model to make things cheaper (which again could be another blog entirely). People just have to realize that if they do, the gaming landscape is going to change significantly.
Jim Sterling's Avatar - Comment posted on 08/17/2010 10:19
Jim Sterling
It's different in that GameStop is so powerful, but it's not different in a way that makes the games industry a poor little victim. It's a simple byproduct of the same capitalistic system that games publishers benefit from in the first place.

I also believe that the eradication of used games would have a detrimental impact on the industry at large, but I have an upcoming Jimquisition to make that argument.
GuitarAtomik's Avatar - Comment posted on 08/17/2010 10:58
GuitarAtomik
@Jim
Yeah I agree. The complete eradication of the used market would be detrimental as well. My main point is that this industry bitches about it more than any other because no other industry is in the same position. Of course they're partly to blame (well, publishers are) for bringing us to this point but they're still kind of victims in this situation (in that it's essentially an abusive relationship) and it's understandable.
Kryptinite's Avatar - Comment posted on 08/17/2010 12:42
Kryptinite
Great article GA. I've been thinking of doing something in the same vein for awhile. Glad you could knock it out the park.
EdgyDude's Avatar - Comment posted on 08/17/2010 19:45
EdgyDude
Taking Jim's point, the used game market is just retailer's answer to DD, because let's face it, publisher would give'em the finger in a millisecond if they could sell games via DD and there's nothing retailers could do about it because that, just like the second hand market, is perfectly legal.

And that's basically the point here, all that bitching is just publishers and devs way to vent their anger when the system doesn't work the way they'd like.
GuitarAtomik's Avatar - Comment posted on 08/17/2010 19:56
GuitarAtomik
@EdgyDude

I'm pretty sure it's the other way around actually. The used video game market has been around since you could buy video games. It's just recently it's become giant business and that giant business is under the control of one company who the industry cannot afford to fuck over.

Sure, publishers would ditch retail if they could go 100% DD but that's not going to happen anytime soon (10-15 years at least though I'd say 20 wouldn't be out of the question), and again, that's capitalism. The only difference there is that developers would actually get paid every time their game was bought.
berryrock's Avatar - Comment posted on 08/18/2010 05:00
berryrock
Well, Vido Game is just different from any other. Moreover used game market is significantly eating in to new game sales so much. GameStop is different in that it is so powerful, but it is different in a way that makes the gaming industry in a poor victim.

certified life coach
GuitarAtomik's Avatar - Comment posted on 08/18/2010 09:38
GuitarAtomik
@mattrodroid
I never said they didn't. Actually, I explicitly said they did.
GuitarAtomik's Avatar - Comment posted on 08/18/2010 09:40
GuitarAtomik
And that doesn't change the fact that the used video game market is a different beast from every other one.
EdgyDude's Avatar - Comment posted on 08/18/2010 11:07
EdgyDude
@GuitarAtomic: i didn't mean it didn't exist, i meant that pushing for it aggressively is the retailers answer to publishers attempts to ditch them and it seemed to be working fine, even better we are benefited from it.
GuitarAtomik's Avatar - Comment posted on 08/18/2010 12:06
GuitarAtomik
@EdgyDude
No, the aggressive pushing of it is motivated by the fact that they make a LOT more profit off of a used copy than a new copy.

How is it "working fine"? Are you trying to say it's working fine because it's slowing down the adoption of digital distribution because that's not the case. The slow roll out of broadband in the US is what's doing that. Or are you trying to say it's working fine in that they're making a lot of money because that proves my point.

Yes, it benefits us in that we get the option to buy games cheaper but it comes at the expense of the developers who make those same games you play.
brainderailment's Avatar - Comment posted on 08/18/2010 16:54
brainderailment
The hurting cd market makes me sad. I've never bought a used cd. But I always buy my music on cd and rip it to my iPhone.
EdgyDude's Avatar - Comment posted on 08/18/2010 20:38
EdgyDude
"Working fine" for them meaning the used games market has not been affected by publishers efforts to curb it (EA 10$ for online for example).

"Yes, it benefits us in that we get the option to buy games cheaper but it comes at the expense of the developers who make those same games you play."

I have no doubt that gamestop is not better that publishers, if they saw a chance to make more money at consumer's expense they'd take it, that said, right now it's best as a consumer to side with the second hand market, after all we've already had a glimpse at how publishers would handle DD if retail disappeared right, sure, Steam would still exist but that'd be a solution for PC only at best and who knows if devs would ditch it in favor of an option where they could set prices however they see fit.

Being completely honest, i'm quite sure we're gonna see the DD option as the only option at some point in the future and when that happens we'll be left at the (non existent) mercy of publishers and devs, but meanwhile i'll take whatever route i can to avoid it unless necessary (second hand, buy 6 months later, rentals, lending, etc.) and my answer to industry whining/claims is still "bo hoo, cry me a river", sounds assholish?, yeah, would they give me the same answer if the roles reversed? undoubtedly, so in my eyes it's perfectly fair.
RiotMonster's Avatar - Comment posted on 08/31/2010 11:28
RiotMonster
*fapped*
Indeed, this is a sticky situation.
prev next

Comment with Facebook





Click connect and comment instantly!

Comment with Dtoid





New? SIGN UP - it takes 5 seconds

Comments policy

Destructoid is an open discussion community. You don't need to "audition" to post a comment - just speak your mind. We respect differing opinions on the site, so have at it. Be smart, funny, insightful, clueless, or cute -- but back it up with substance. Keep your cool, keep it fun. We only ask that you act respectfully and above all: don't be a troll and ruin it for everyone else. Don't bring down gamers or we'll, you know, gently shoot you in the face and stuff you into a flaming mailbox. Each comment is your opportuntity to make this community awesomer. Is that even a word?

Avoiding the banhammer only requires common sense: spamming, trolling, racism, NSFW stuff, and other forms of sucking will not be tolerated. If anyone is griefing please report abuse. Be good. Don't suck!