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"You can walk alone, on the lonely street of green"


So used games sales again are coming up. Iíve written about this before when the rumour was Sony going for it in a cBlog called ďHere We Go Again on Preowned.Ē Well after the Xbox One reveal and all the thing so far I have to say ďIíve my made up my mind and Iím wasting some more timeĒ (sorry couldnít resist). I feel itís time once again to tread into the murky waters of pre-owned sales and talk a little about how the industry itself is part of the problem and if pre-owned is killed off al that quick green the publishers make could leave them a little lonely.

Iíd advise if you havenít already you see the two main sides for this argument before I carrying on.

TotalBiscuit against used games
Jim Sterling for used games

So rather than retread too much old ground Iím going to be looking at industry practices etc that have lead to the pre-owned sales.

AAA or go home

This is the biggest problem in the industry so far. Thereís no lower tier market on released. Iíve talked before about bloating budgets and how Tomb Raider Anniversary cost $2.5 Million dollars while the reboot cost $105 million to make when compared to the film which cost $115 million to make. Traditionally films and other media have multiple distribution routes and as such the argument goes that with only one, thanks to the basic death of the arcades, means it has a problem. Well compared to films games used to cost 1/50[sup]th[/sup] of the price tag with new games that were AAA selling for 3-6 times the DVD price (depending on the film etc) so there was a clear price divide. Now as said in the Jimquisition stores donít take that much from new sales. I believe at the start of this generation it was between †20-30% per sale now itís at best 10% or less per sale. Now how do cinemas who face this kind of cost get round it ? They sell refreshments at 50 times cost (or there about) so then you look at games stores and what can they sell ? Hardware, oh dear, with hardware around consoles like consoles themselves being heavily subsidised then Manufacturers canít afford to pass on the profits there so about 1% money from the sales going to the shop isnít possible to sustain the sector .

So to address this companies need to get real, weíre not the government, theyíre not the banks they canít keep on spending like mad and expecting consumers to be the ones bailing them out. Sorry itís true. Sure the cost of making a game will go up slightly but a 50 times jump in about 8 years is huge and shows part of the problem. Publishers and developers need to stop with the insane pushing of a game and throwing all their money into one basket.†

Be real to the shareholders and investors and not promise them unrealistically huge returns. Sure being able to offer these huge returns sounds nice and pulls in investors however how many will return having not made the kind of money they were told they would ?

Not that many I bet.

This is almost how the comics speculator bubble happened when the investors just left the market as companies were pandering specifically to the speculators and not delivering.

Companies need to realise its acceptable to release at a lower price if they want and that it can be helpful. Iíve talked before about The Orange Box which saw a UK release for †£25, far less than the standard retail price really here and was a runaway hit. Iíve recently bought a used game. I bought Lollipop Chainsaw for £15 my other recentish purchases include new games: Bioshock infinite for £35, WWE 13 for £25 and Defiance for £25 you know what I was happy to pay those prices as thatís the level I felt they were worth to me. Defiance in particular is a very good example as itís an MMO of sorts and in the Christmas Steam sale I also bought an MMO, one kind of similar is some aspects in The Secret World. Both (now at least) operate without a subscription but with an initial cost and optional micro transactions. I bought The Secret World for £15 and I was happy with that price. The problem is no developer wants to move from the premium price, other than Activision who want to move it up, the reason for this is the development costs etc so the industry needs to look at and sort out budgeting.

The industry is growing up the be an adult now and its time it learned to handle its own money and budget properly rather than spending lots of money of things because ďooohhhh shinyĒ.

The Lack of distribution paths

^If cinema floors are this clean I really worry about why I stick to them so much.†

Ok this is a big issue as with films thereís TV syndication, cinema and DVD release. With music thereís ††live performances, related merchandise and radio play royalties.

So firstly and this is a controversial one. People might have to accept a revenue sharing system on lets plays. I know people are mad and transformative media and all that but hey if companies can be reasonable (and thatís one hell of an if) this could work out well for them. They should at most take 20-30% revenue and thatís absolutely all from the lets plays, no more. You hear me no more than that or you begin to cause damage and Lets Players won't be too mad as hey its mutually supporting now also Publishers will need to promote the lets players and feature them so more exposure for the lets player themselves.

^If someone ever manages a series out of this they will probably win the internet†

The Second Revenue stream is actually one Music and Films use a lot. Keep the printing going. At present games for the most part have a print run before release and a window of about 1 month 2 weeks either side of release where the games are still in print thatís it. Plenty of films and Music CDs have a longer print run with the print run being far lower after the initial sales period but still there and to an extent waterfalling the prices so while not making as much money on the print run youíre still making some money beyond the initial sales boom games presently use. Games need to realise they can and should play the long game a bit more and not rush for all their money right away and if they canít make that super high profit point giving up. Attempts are being made to do this with Games on demand but then you can see how thatís failing quite badly at present. Heck working it out itís what $1 a disc with box. Iíd pay $5 for Dead Rising or some of the other Xbox 360 launch titles so even if it costs you $1 to the store and $2 on distribution youíre still making $1 on a game if you play the long game and keep the print going even on a far smaller degree.

The Third potential revenue stream is arcades but back in a brand new form. Iíll talk about it in depth a bit more further down the line probably in its own cBlog and itís this.

This is a machine setting its sights on saving the arcades. Itís a fully 3D game experience. You go in there, get given a special controller designed for the game and get to play. This is motion control and a surround sound dome where your physical movements in the dome adjust gameplay. Rather than using the controller to turn, you turn yourself and the dome adjusts the projections with you to show youíre turning along with adjusting the surround sound effects too. You aim the gun yourself to aim in the game. As Iíve said this will probably get its own blog saying more and showing off more later but the plan is to give arcades something no user could really do at home.

But But the retailers are evil

Look Iím not saying retailers are saints here, theyíre far from it and considering here in the UK the chain Game almost went under fairly recently, it would be stupid to paint them as the bogey man here when Publishers have taken larger cuts and forced these business practices to begin with which again comes round to console makers charging higher licences due to selling at a loss (to an extent). Yes stores have bullied publishers and made demand in the past and thatís wrong of them. However they also act as storage for the copies of the game for up to a month before release and free main highstreet advertising for the games so if you want to claim the retailers are evil and Publishers are only taking ďtheir fair cutĒ then maybe retailers should take their fair cut and charge for the storage and advertising they do for new games. It would still be in this stupid stalemate so how do you sort this ? The answer is either Publishers back off with and leave more revenue and stores in turn back off asking for special deals and pre-order exclusives or people accept the industry as is and learn to live with it. Thatís all that can be done as such as while the stores arenít the evil Boogey man many would have them appear. They arenít perfect but then again you have companies pulling in in Activisionís case $1 billion on a single game before DLC then turning round pointing at the retailers and claiming they are costing them money and the phrase thatís cropped up ďWell donít we have the right to turn a profit and stay in business ?Ē To which you have to laugh and say ďYeh but so do the stores and theyíre having more of a problems than youĒ.

Now that thatís out the way I can tackle the next bit and itís a nasty one.

Creating a reason to buy the game new.

Oh this is a bad one. The abandonment of the Online pass system claiming it was not working is or at least was an attempt to bring in a negative aspect to used games. It was a way to artificially degrade the product. To use the highly flawed car argument going round it would be the car maker coming round with a sledge hammer and hitting the car a good few times to degrade it as its not degrading on its own.†

Users didnít like this because firstly it was a hassle they had to remove the automated sledge hammer as such before they could use the game. They had to put in the code to get it functional to begin with so it was more hassle. Further down the line the online pass system became a further problem because it prevented the entry of new customers into the online environment. Games normally unless they hit it big see two main boosts on online community, firstly on release when people get the game, then down the line when the price point of most likely pre-owned reaches a level a large amount of people are happy with. When the price point is hit the word spreads and people will buy the game. Itís the Reason despite being a launch title Shadowrun was active about a year ago still it caught people in with the price point changes.

With online passes they donít do whatís known as ďWaterfallingĒ the price of that pass does not go down compared to the games price so when people see the game used for $5 but being savy consumers they know thereís an extra $5 charge to play online as such, they wonít buy it, theyíll buy something else that doesnít have a pass.

So Passes are bad because they actually give new consumers a reason to trade the games in down the line as the community dies off quicker due to people less willing to pay the additional fee so with no-one else to play online that mode publishers have insisted be tacked on to hold customers in was almost completely wasted anyway and has now caused there to be a section of the game no longer functional anyway with no real way to sort out that problem. You see to bring back the car analogy the problem is by having the sledge hammer hanging there as it turns out the thing drops on its own and damages the car of those who bought it new so you suddenly face all the new owners wanting trades on their cars because you broke it and did it in such a way its irrevocable damaged.

Now the industry have managed very successfully to give people reasons to not buy new, far more than they have to actually buy the thing new.

Pre-order bonuses. Oh this is a big one especially if itís seemingly a big chunk out of the game or something important. As someone who rarely pre-orders and honestly happily so I miss out on these. The problem is there are plenty of people out there willing to support a good product if theyíre shown it who wonít show blind faith alone in your product. Heck Publishers are more to blame for the lack of consumer faith than anyone else with them preventing reviews or information from being released before certain games they believe will fail. People who have shown blind faith have been lead along by marketing and controlled media like lambs to the proverbial slaughter so no wonder everyone isnít pre-ordering (Alien Colonial Marines, Star trek or walking Dead survival instincts anyone ?). Now those who want to buy new and support the publisher are being alienated by the Publisher. Why ? well is simple: buying new you face all the bugs and issues as the pre-order customer however youíre also having to pay more to get the pre-order bonus DLC down the line† so youíre being shown no love for supporting them then being hit with the sucker punch of having to pay more out down the line. Why buy new when you could wait and buy pre-owned down the line and make up that cost to that of a new copy by buying pre-order DLC.

This leads into a potential solution for the used games system which has been tried but not to a big extent. The ďjustificationĒ for day one DLC is this ďWell our developers are still being paid so we get them to make some more things for the game before we get the sales figures and decide on potential DLC making, weíre paying them anyway so we think itís right for them to be making a product we can then sellĒ. Now companies area already making content, heck theyíre already making exclusive pre-order content.

Hereís an insane idea why not rather than have it as pre-order DLC or day one DLC include it with new copies of the game. Put a code in and allow people to download the content if they bought a new copy of the game, this would have to be content not cut from the game as seen in some Pre-order exclusives and to work best it would have to be a visual thing if itís a multiplayer game. Would I have bought Mass effect 3 new on day one if the Prothean DLC thing the robot dog and the Normandy bathrobe in game had come with the game ? Oh course I would. Some games have tried this such as Fable II and The Saboteur already but itís not gone out much further than that most companies have seemingly been unwilling to provide content free with the game. Rather than seeing the content made before launch as something to sell separately why not simply make it something that adds to sales of the game itself ? Day One DLC detracts and people think theyíll wait a bit if they have to buy DLC. Pre-order DLC does the same. DLC in the box is a nice thing.

†I received Saints Row 3 as a gift and due to something going on Amazon had included the pre-order DLC with all new copies not just pre-ordered ones. I was very happy with this as sure it was a gift so I hadnít paid but it was adding more to the gift. With WWE I waited till I could get it for £25 then you know what I did ? I bought the DLC season pass for £15 meaning in reality I paid £40 (the normal release price) for the game and the DLC now from that DLC pass sale Microsoft would have taken a cut so if that DLC season pass had been with the new game rather than the 30% cut going to Microsoft it could have been going to the store instead. Heck even a 20% cut from the store price going to the store would mean youíre making 10% more than you would from Microsoft. Also youíre getting in those all important early sales which could more as it means stores are more likely to buy another copy to replace the sold one from the distributors, who due to it being early on still have copies from the print run to shift even not making more money via the sale initially it could prompt further sales.

Why did I used to keep going back to the same independent shop mostly to buy my games and even browse ? Because they made me feel valued. I bought a game and it was ďhey we got given a load of posters by the publishers, take a fewĒ or when I bought a fair few games it was ďYeh the Publisher sent us through some randoms bits, here have a limited edition Halo key ring and an exclusive Xbox 360 Stranglehold faceplateĒ. They made me feel like I was being rewarded with something I could see for buying from them, not simply numbers of some kind on a screen or some points numbers. Hence the need to actually include content not something you can unlock easily with normal play.

Online the Gold Weapons in previous Gears of War games were something very desirable so it shows how having something cool, silly and cosmetic can reward gamers by allowing them to show off to an extent. Does it make them better ? No. Is it bragging rights ? Yes to an extent it is.

With many games DLC is used to fund further support of the game, unless your name is Activision who who will charge high premium DLC prices then abandon support for COD a year later anyway. With the Idea of DLC supporting the game in the long run this should give you the perfect incentive to have people wanting to play and pick up the game down the line. If you donít want to reform the new sales market then this is a separate way to do it. The present problem is DLC is released at a price point then it very rare it slides in price. Some games have done this with combined map packs down the line and it has upset consumers who bought the DLC earlier on however they already did that with the game. So why shouldnít DLC water fall too ?

I came later to this gen and as such bought up some pre-owned copies of launch games and was kind of shocked when Iíd paid £5 for Perfect Dark Zero (I like it no matter what people may say) only to find there was paid DLC which cost £5 to buy. Now am I going to spend as much as I paid for the game, or now potentially more than I paid for it, to buy the DLC ? No Iím not unless itís the best game ever and was a forgotten 1 mile wide gold nugget of a game. If DLC were price appropriately and fell in price Iíd happily buy into it. The £15 season pass on WWE was good because it was less than the price of the game, when youíre releasing a £40 game and the season pass is £40 worth of points or £35 worth of points on top, people wonít be happy. Sure down the line they might buy the pass if its available but they wonít buy it right away for a high price theyíll buy it when they feel like another game or would normally buy another game. By allowing DLC prices to waterfall it will mean down the line users will be more interested in buying DLC as its cheaperish and the DLC is now also reaching this price point consumers want. It seems mad that games will happily drop in price in stores but the content for them doesnít online.

Why the industry needs to change

At present in the industry itís reaching the point where publishers and retailers are facing mutually assured destruction. I know it sounds alarmist †and an exaggeration to say this but the following is true ďWe stand on the verge of the second great video games crashĒ. Publishers using the ďfriendsĒ the console makers have wheeled out the nukes and placed them in the cuban cigar shop opposite the retailers and are ready to fire. The retailers have no idea whatís about to happen and can only try their best to appease them. The problem being the retailers canít give in as was shown by Game theyíre not in a good way, not really, they canít take losing the pre-owned market too especially not to the extent thatís being talked about with £35 license fees or at best the store getting 10% and having to pay 90% to the Publishers. It will cripple them and unfortunately the big nukes of the retailers will end up going off in retaliation. The nukes being the market share they hold. If 30% of Xbox 360 consoles have never been online thatís 30% at least who buy physical games.

A 30% market capacity being wiped out from videogaming would be near lethal to an industry with already having hugely bloated costs and already not meeting these perceived required / target sales. Now that 30% is a minimum loss of market share. Yes Iím sure people were thinking 30% is maybe survivable but the truth is it will be more. I donít have my payment details saved on console, I donít have them saved on steam. Part of how I budget means I go to the store, pay money for the games there (or by card and be told how much Iím paying) for digital games I will buy a set amount of credit as such and then once that credit is gone I have to decide again to top up or wait. The cost doesnít mount up as I donít spend a small amount here and there, I buy in huge fixed blocks as such. Iím sure Iím not the only one who does this either. Heck unless you are old enough to have a card you can use to buy things then itís either convince your parents to let you use theirs or you buy in a physical store. I donít know how much children still account for the market but Iím going to guess itís enough to hurt if they stop. Not only will it hurt by removing children from the hobby initially but down the line thereís less of a consumer base. Sure some of us will be playing Legend of Zelda in care homes in the future no doubt but present customers wonít be around forever.

By killing retailers the children are mostly lost and so is the future of the industry, you also lose parents who buy the system for children and will buy games. Donít doubt the power of the pocket-money crowd, toy manufacturers definitely donít doubt that and pester power with it. No highstreet would mean the pretty unsustainable costs at present would suddenly become a giant problem. With it taken maybe 2 months for a store to go under full and 1 -5 years to develop games which will already have their budget etc, the explosion of the death of retail would cripple an industry already struggling to an extent, it would start a slide in revenue that could go on for many years into the future unless retail were re-established or a method created that allowed pocket money to pay for games without the use of credit cards or retail (and best of luck figuring out how to do that one).

The worst thing is being only one of many forms of entertainment if the convenience left then customers would too and suddenly online and social gaming get hit too. Less people playing means less people to populate games and they die quicker and quicker Social gaming dies its own undignified death and takes more of the market with it too.

This hasnít happened yet and may never happen but this is why Iíve been spurred to write this article, because I like gaming and while this is but one of many potential futures, this one is easily avoidable.

So to summarise what can be done and to an extent needs to be done to avoid this.

-Publishers need to start acting like responsible adults and working with sensible budgets and doing things like telling investors the truth before investors become disillusions and pull the money out themselves

-Retailers and Publishers need to start to talk again, theyíre meant to be working together and while you could each screw one another over it will only harm both in the end.

-Developers and publishers need to stop practices that put consumers off and reward people for supporting them, not just those who have complete blind faith in them

†-Companies need to adjust prices to the market and stop trying to have a monopoly control on all pricing. No company ever will when a consumer can simply not take the goods and go to another industry to be entertained they need to realise if they want money they have to meet the consumers on their terms

-Potentially look into other revenue sources or reform existing ones to provide sustained profit rather than quick flashes of cash.

† -Stop blaming used games for all their problems

So do you believe gaming can be saved or will mutually assured destruction happen as Publishers kill of retailers ?
Who will blink first ?
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About Dwavenhobbleone of us since 8:33 AM on 06.19.2012

A qualified Environmental Chemist who happens to live in a fairly dense city with no real environment or chemistry industry.

I review indie games on another blog and you'll see them pop up here if I think the review is a good or interesting one (along with a shameless bit of self promotion)

I also operate another blog reviewing films and I mean t pick that back up when I can.

I've been gaming since the SNES days. I've been in the pro scene before for tribes 2 but hate the present pro scenes and have no interest in going back into it.

I tend to get into quite a few Betas and love ones without NDA as it means I can write about them. I have even beta tested an xbox 360 game in my time (and no not a normal public Beta one )

In gaming I'm normally the guy looking at the shelf below the AAA titles first to see if there are any great hidden gems.

My gaming drug of choice: Timesplitters in any flavour (Why won't you make Timesplitters 4 Crytek, why ????? I need my fix of insanity )
Xbox LIVE:hobblejp
Steam ID:dwavenhobble


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