Second Hand Sales and Their Effect on the Gaming Industry.

D4RK ONION

Probably one of the biggest, yet most subtle changes at the turn of this decade/century/millennium for videogames was the birth of a new sales technique. The "second hand sale". Perhaps you might not even think of it at first (or ever), but the sale of second hand games has had a big impact on the gaming industry.

Everytime you give a game in for trade in and it's sold again, one more person gets to play a game that hundreds of man hours went into (for cheaper, of course), but the developer gets zilch for the fact. The store however make 100% profit.

"So what?!" I hear you say, quite loudly "I gets my game, and the dev loses, what, €50?". Well, no not really. Lets look at one example, Crackdown.

"With Crackdown we sold about 1.5 million copies, but even at that we pretty much only managed to break even," says Realtime Worlds boss Dave Jones. "It was due to the amount of factors that were out of our control as the developer, influences such as GameStop's amazing used-game sales; we know 1.5 million new copies were sold, but it's likely there were 2.5, three million sold when you include used.

That's up to 1.5 MILLION copies they could have sold, that would have gone back into a fledging game company. If they sell the games to Gamestop for €35, that's €52,500,000 of lost revenue (obviously not all going to be profit, but you get the point, I assume.

So enough of me talking at you, what do you think of 2nd hand games? Is it good? Is it bad? Is there any way around it?

source: http://www.destructoid.com/crackdown-developer-hates-used-games-too-140057.phtml

ceegee

most people will trade the game in against a new game, Without 2nd hand sales the number of new games sold would be way down.

AlmightyCushion

I'd like to know where they got the "3 million total sales when you include used" part. Most likely they plucked it out of their ass.

If people want to give their game away or sell it once they're done with it then it's fine in my books. The only way to stop it is to add replayability to the game. Make a kick ass multiplayer that's more addictive than heroine and you'll limit the amount of trade ins.

D4RK ONION

Highly likely, a lot of people only bought the game in the first place to get the halo 3 beta I believe. Regardless of Crackdown it is hurting the industry, to an extent.

But that is a good point ceegee. But then those games they buy are sold second hand, and so on, it's a vicious cycle

mayordenis

I don't do it on the principal of the matter - firstly very rarely is there a good deal - the idea of even when you get the Gamestop offer of €30 euro off when you trade in a new game of making a €30 loss on that within about a month is pretty much something I'm not interested in.
And sure if you want to be short sighted like AlmightyCushion it's our choice what to do with something we bought - but the industry could be brought to it's knee's by something that only props up retailers, the Developers and generally the players are getting a poor deal on this.

Mossy Monk

It is something I don't do either. I couldn't bring myself to do so.

D4RK ONION

mayordenis wrote: »

I don't do it on the principal of the matter - firstly very rarely is there a good deal - the idea of even when you get the Gamestop offer of €30 euro off when you trade in a new game of making a €30 loss on that within about a month is pretty much something I'm not interested in.
And sure if you want to be short sighted like AlmightyCushion it's our choice what to do with something we bought - but the industry could be brought to it's knee's by something that only props up retailers, the Developers and generally the players are getting a poor deal on this.

Precisely. The only person who genuinely benefits is the shop selling it on. Money out of the devs pocket for their next game.

johnny_adidas

i would rather hold onto the games ive bought than give them up for a couple of euro and see them on the shelf for 4 times what i go (min). its the huge profiteering that annoys me more than the practice to be honest. that said doh, i rent a lot of my games, from gamesenders. its works out perfect for me as i complete them and then move on to the next in my list. however, is this the same thing except they make even more on the same initial purchase with multiple rentals?

Coriolanus

Second hand book sales haven't killed off people authoring books.

Plus, a second hand game buyer isn't automatically going to buy a game new if they can't get it secondhand.

Anyway, I collect games as much as books, so it's not something I do.

With digital distribution this problem is largely eliminated though, afaik. (for those games that are exclusively sold that way only, of course.)

Gummy Panda

Well think of it another way, what games would you have missed if there was no used games market?

I know i would miss a lot of great titles from PS2 as they're no longer in print. Some games go out of print very fast and i'm not prepared to pay full price and get every game at launch.

I think the Devs and pubs need to change their model. COD4 maintained the best used price going well after release but there was not much DLC. They could have made a fortune from DLC for that game.

grizzly

Digital downloads – why don't the publishers offer bigger discounts for this? They would cut out the middleman very quickly. Too often the price to download and the price to buy the disc are the same. This seems shortsighted – once someone has bought the digital version it stops the disc from being sold on 5 times and hurting 1st hand sales.

I would like more profits going to the makers of the games – more profits would mean bigger investments in future titles. More investment would mean a bigger chance on projects that are a little more risky (but interesting) getting a green light. Instead of the safe bets only going through (Gears of War 12 or Uncharted 6 : Drakes pension)

noodler

mayordenis wrote: »

I don't do it on the principal of the matter - firstly very rarely is there a good deal - the idea of even when you get the Gamestop offer of ?30 euro off when you trade in a new game of making a ?30 loss on that within about a month is pretty much something I'm not interested in.
And sure if you want to be short sighted like AlmightyCushion it's our choice what to do with something we bought - but the industry could be brought to it's knee's by something that only props up retailers, the Developers and generally the players are getting a poor deal on this.

Shortsighted? Don't preach, we have arguably being paying through the nose for 50c worth of plastic and 49.50e worth of 'everything' else for way to long.

If theres a problem here it is to be solved between retailers and devlopers, say a cut of the shop's profits or a licence fee.

Don't expect the consumer (rightly imo) to hve too much sympathy.

Overheal

The problem started with 360's launch, when games were retailing for 60, even 70 euros per title. And Gamestop and the likes conned people into thinking that was going to be the new 'norm. And as a result, 50 has now become 60. When a game ages, it becomes 50 instead of 30. It gets resold for 40 instead of 20.

the problem is the barrier on buying new is just to thick for most wallets. But sure enough gamestop cornered that market too, like balancing out the other side of a goo tower, they started incentivising pre-orders in cooperation with developers.

Would it be as much of a problem if we went back to $40 new releases? I think not. Gamestop would sure have a conniption though. Likewise if the developers of Crackdown wanna moan, they should have set MSRP somewhere under 60. Honestly.

Shortsighted? Don't preach, we have arguably being paying through the nose for 50c worth of plastic and 49.50e worth of 'everything' else for way to long.

For ****s and giggles, I challenge those figures. Anyone in the know knows the developer and the humble code monkey get by leaps and bounds the smallest share of the net earnings. more than half goes to the publisher, and about 1/3 goes to the retailer, iirc. So thats over 80% of that sum that goes to "plastic"

Shryke

Digital downloads are one way in which you can challenge the whole pre-played business but there are those, such as myself who wish to own an actual hard copy of a game.
When a game is sold first hand a large slice goes to the publisher and then to the developer, also to the retailer. There are other smaller costs that also go into the package, such as the actual packaging, shipping costs etc. All of these add up.
Is it worth paying for? Most of the games I own were bought first hand. Some posts on this topic make me wonder if I've been shopping in the wrong places. I can only spit on the price of pre-owned games. Lets say a fresh copy is 50, the pre-owned is going to be forty five, forty at the least. It's disgusting. I'll gladly pay an extra couple of euros for a new copy knowing that some of that money will actually reach the developer. I wouldn't do it with any old game. But from any studio I respect or any game I'm looking forward to then certainly.

I'll only add a thankyou to Overheal. I haven't heard or thought the word conniption in years. Seriously. It's like welcoming a relative home.

D4RK ONION

I too am one of those people who likes to have a big library of games. I've only ever bought one pre-owned game and that was Burnout: Paradise because it was €20, and at the time that was a steal. I respect the amount of work that (usually) goes into making games, and that's generally why I buy first hand only. I've also never sold a game back to Gamestop. I reckon renting is the better option if you're going to go down that route.

Mr Freeze

I never buy used games. I never trade in really good games, I will hold on to them and replay them at some stage again.

But I do trade in any game that I don't deem good enough to be worth hanging on to, if I can get €20 off a new game.

Some games are hyped up by the developers and publishers beyond belief and have review embargo's, so we can't read a review before purchasing and we purchase the things on release day cause they looked so good in the run up to release, and they turn out to be unfinished buggy disasters. An example would be Alone in the Dark, I couldn't bring this game back to the shop to trade in fast enough, while thinking the testers and developers should all be sacked for letting such crap out (a tad extreme I know, but I was mad :mad:)

I completely understand what D4RK ONION is saying though, and if trade in's were gotten rid of, as a result I would buy less new games and I would rent more games. Now is Renting a game as bad as Trade Ins, it probably is.

noodler

Overheal wrote: »

Honestly.For ****s and giggles, I challenge those figures. Anyone in the know knows the developer and the humble code monkey get by leaps and bounds the smallest share of the net earnings. more than half goes to the publisher, and about 1/3 goes to the retailer, iirc. So thats over 80% of that sum that goes to "plastic"

What the hell are you replying to?

I said 50c worth of plastic (as in the actual physical cost of the material you are taking home) and 49.50e to everything else.

Why would I use plastic as an umbrella term for publishers etc?

Untangle your knickers, they are in a twist.

Absolam

Don't forget the near 20% that goes into the public purse.. Biffo loves video games too

Gamesnash.ie: Pat

This topic has a lot of twists to it.

It's very clear that without trading in there would be less sales of new games. People use them to offset the price of the new game.

Some would argue that the price of the new game is inflated in the first place to make up for the amount of times it will be traded in and resold. It was mentioned earlier that Gamestop / shops set the prices of the new releases but that isn't strictly true. The publishers set the RRP of the title and the cost price to the retailer who then decide what price to retail at themselves. In recent times the price of games has come down partly because of reduced cost prices and RRPs but also due to a reduction in margins that retailers are now doing to gain custom in the difficult times. Tesco have even been loss leading on some releases. Some of the publishers are now increasing cost prices and RRPS back to the €70.00 mark - Modern Warfare 2 being a prime example, even Nintendo are increasing the price of Mario Bros on the Wii when it releases later in the year.

Some say it's up to an individual if they want to resell their goods ( using the term resell instead of trade in as technically that is what you are doing - selling the game to the shop ) There is an argument that trading in is no different than trading in a car off a new car. This is an industry that relies on the reselling of it's products in order to drive ( pardon the pun ) sales of new cars. Some publishers feel that the trade of pre owned games has a similar place. There are others who argue about the loss in revenue etc. Publishers are now trying to get gamers to hold onto their games by offering downloadable content etc and expansion packs to increase the playabillity of the original purchase.

How much effect the trade of second hand games is effecting the price and supply of the new games is very hard to gauge. I personally think that there is a premium built into the new games to cover the pre owned reselling. If there was a scheme put in place where retailers split the profits on pre owned titles with the relevant publisher there could well be a price decrease but I can't see it happening.

Vegeta

Gamesnash.ie (Pat) wrote: »

If there was a scheme put in place where retailers split the profits on pre owned titles with the relevant publisher there could well be a price decrease but I can't see it happening.

Would you have the ability to try this with a publisher?

Increased sales for you because you have the cheapest games in town and an increase in profit for the publisher because they get a share of the second hand games.

Someone may do it, there's money to be made in it after all. Worth a conversation with them anyway I'd say

D4RK ONION

I agree. Out of interest, is a lot of your revenue made from second hand games or first time sales?

ScumLord

D4RK ONION wrote: »

Everytime you give a game in for trade in and it's sold again, one more person gets to play a game that hundreds of man hours went into (for cheaper, of course), but the developer gets zilch for the fact. The store however make 100% profit.

"So what?!" I hear you say, quite loudly "I gets my game, and the dev loses, what, €50?". Well, no not really. Lets look at one example, Crackdown.


That's up to 1.5 MILLION copies they could have sold, that would have gone back into a fledging game company. If they sell the games to Gamestop for €35, that's €52,500,000 of lost revenue

It's not lost revenue, I hate when companies do this crap making out their entitled to all kinds of money they would never have gotten anyway. It's whinging and childish. The reason people buy second hand games is because their cheap. They see it half the price and say I might as well give it a go.

They sell their product and that's it, that's all their entitled to This crying act is the usual disgusting corporate greed where companies want a cut of all kinds of money they have no right to. If they want to sell more games sell them for cheaper. It's obvious there's a cartel in the console market and overcharging is par for the course. They can't start complaining when the rules they set up to benefit them turn around and bite them in the arse.

People have the right to sell on their property if they want.

D4RK ONION

ScumLord wrote: »

This crying act is the usual disgusting corporate greed where companies want a cut of all kinds of money they have no right to.

Yes, those bloody devs. have no entitlement to the money that arises out of the game they may have spent 2-3 years making. It's not like they that takes any kind of skill or training. How right you are... yeah...

dreamers75

AlmightyCushion wrote: »

I'd like to know where they got the "3 million total sales when you include used" part. Most likely they plucked it out of their ass.

If people want to give their game away or sell it once they're done with it then it's fine in my books. The only way to stop it is to add replayability to the game. Make a kick ass multiplayer that's more addictive than heroine and you'll limit the amount of trade ins.

Assume they know how many signed into Live or downloaded an update?



Buy a game for 60, trade it in against a new title which you get for 30 or 40, you end out paying nearly 100 quid for one game the more times you trade the higher the price of the one game your left with.

Would rather keep my games or lend/give to mates.

ScumLord

D4RK ONION wrote: »

Yes, those bloody devs. have no entitlement to the money that arises out of the game they may have spent 2-3 years making. It's not like they that takes any kind of skill or training. How right you are... yeah...

They make their money from selling the game to resellers. That's their money and they're perfectly entitled to it.

If I sold someone a table I wouldn't expect that person to give me a cut of the money when they sell it on again. That's the kind of business behaviour drug dealers get up to. I also wouldn't expect the table to be destroyed rather than sold on so that anyone who wanted a table would have to come back to me to buy a new one.

They're trying to blame everyone else for the problems that arise out of the business model they created.

gizmo

AlmightyCushion wrote: »

I'd like to know where they got the "3 million total sales when you include used" part. Most likely they plucked it out of their ass.

Yup, looking at the unique sign-ins on Live and factoring in rentals would be accurate enough.

Gamesnash.ie (Pat) wrote: »

It's very clear that without trading in there would be less sales of new games. People use them to offset the price of the new game.

See I don't believe this for a second, especially when you consider how much people actually get when they trade in their games. This also relates to the offsetting of the price of a new game as, since they are getting so little for their traded-in titles, it wouldn't be that much of a disincentive for new purchases if it were abolished.

What disgusts me most about the practice is the profits that the stores are making versus the loss to the developer. While coming up with a system where the profits of second hand sales are split between retailer and dev/publisher sounds great I can guarantee you the major stores wouldn't agree with it, why would they when this outlet accounts for approximately 42% of a company like Gamestop's overall gross profits.

ScumLord wrote: »

They're trying to blame everyone else for the problems that arise out of the business model they created.

No, if anyone is to blame it's said retailers who have turned the operation into a money making scheme for themselves, where each sale is pure profit. Thankfully they had their chance to change and now it looks like with the growing popularity of digital distribution their ability to carry out this practice won't last for much longer.

Mr Freeze

gizmo wrote: »

why would they when this outlet accounts for approximately 42% of a company like Gamestop's overall gross profits.

42% of their gross profits!!!!:eek: It can't really be that high can it????

ScumLord

gizmo wrote: »

No, if anyone is to blame it's said retailers who have turned the operation into a money making scheme for themselves, where each sale is pure profit. Thankfully they had their chance to change and now it looks like with the growing popularity of digital distribution their ability to carry out this practice won't last for much longer.

That's business, I don't blame the retailer really. There job is to make as much profit as possible and the consumer is the fool if he gets ripped off.

GavRedKing

The thing that is hurting them the most is the fact the shop will give you about 5 quid trade in and sell it for lets say 30. Thats where the problem lies, and the shop would not get the chance to do is if we didnt trade in games which I think is here to stay as more and more people are willing to trade when the complete or get bored of something.

dreamers75

ScumLord wrote: »

the consumer is the fool if he gets ripped off.

Somehow the conusmer (well most i know ) treat it as a way of gettign a cheap game

Mr Freeze

dreamers75 wrote: »

Somehow the conusmer (well most i know ) treat it as a way of gettign a cheap game

Well I look at it like this, it is getting rid of a game thats just gonna be gathering dust in my house, because I wont play it again. I hold on to any decent game I buy, the small minority that turn out to be pants get traded in.

Better getting a couple of quid for it, instead of leaving it, never to be played again.