Second Hand Sales and Their Effect on the Gaming Industry.

GothPunk

ScumLord wrote: »

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.

I think you're missing the distinction between developers and publishers that Dark Onion is making. This discussion would benefit from people understanding the differences between the two.

CKWPORT wrote: »

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

I agree but if you trade-in with GameStop they'll rip you off on the price you get for your wares. If you sold them on Adverts.ie for example you'd make more for each game, albeit with a bit more leg work.

ScumLord

GothPunk wrote: »

I think you're missing the distinction between developers and publishers that Dark Onion is making. This discussion would benefit from people understanding the differences between the two.

I think I am making that mistake.

GothPunk

ScumLord wrote: »

I think I am making that mistake.

I'm enjoying reading this discussion but I thought that people were getting their wires crossed. Developers usually make very little money as they are funded by the publisher for x amount of time on x amount of money. Publishers are the ones who make the profits, publishers are the ones who set the RRP, publishers are the ones holding back the digital distribution of games.

Whilst it seems like semantics or passing the book, I think it's an important point to make as I think that the actual hard working creators of the games make a valid point. Confusing them with the publishers whom you might not like and think are greedy is a shame.

For example, the quote in the OP comes from Realtime Worlds, who are a relatively large Scottish developer.

noodler

Selling between ouselves doesn't solve the problem for devlopers, it just makes it harder to measure.

They can lower the prices, make digital distribution ALOT cheaper, or they can talk to the retailers becasue, as I said, it is not our problem.

MooseJam

Unbelievable people complaining about the second hand market, do these guy's think they are special or what.

No other industry have I ever heard complaint bar these guy's - someone needs a sharp kick in the balls , might cop them on.

Whats the market in second hand cars , ever heard a complaint.

What about houses - those builders spent months building the things then they get sold on and they don't see a dime , oh the injustice.

gizmo

CKWPORT wrote: »

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

Yup, here's the source along with some other interesting figures such as what that percentage actually represents in real money terms.

ScumLord wrote: »

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.

You don't blame a retailer who sells employee used games to the public as new? Who offers pittance for traded in titles and then slaps on markups of up to 400%? Or what about GAME who have prices of second hand titles higher than brand new titles yet gives the former units the most prominent shelf space? I'm the first to wave the GO CAPITALISM banner but I also expect some form of responsibility on their part or even a modicum of respect for their customers.

That being said, it's still the developers who are being hurt the most by this either through loss of direct income to them or indirectly via their publishers...

noodler wrote: »

They can lower the prices, make digital distribution ALOT cheaper, or they can talk to the retailers becasue, as I said, it is not our problem.

They can't lower prices as development costs have skyrocketed in the last few years, they can make DD cheaper but not by as much as some people want - bandwidth ain't cheap after all, and they can't talk to retailers as they've tried that already and been stonewalled by the simple "outlaw reselling of games and we won't stock your new games anymore" threat.

Bearing all that in mind it's obvious why so many are turning to Digital Distribution but that still doesn't mean we as consumers should just throw our hands up and accept the situation saying it's not our problem. It is our problem when original IP titles don't get funding because publishers don't want to risk sinking millions into development costs for a title that may not succeed.

D4RK ONION

GothPunk wrote: »

I'm enjoying reading this discussion but I thought that people were getting their wires crossed. Developers usually make very little money as they are funded by the publisher for x amount of time on x amount of money. Publishers are the ones who make the profits, publishers are the ones who set the RRP, publishers are the ones holding back the digital distribution of games.

Whilst it seems like semantics or passing the book, I think it's an important point to make as I think that the actual hard working creators of the games make a valid point. Confusing them with the publishers whom you might not like and think are greedy is a shame.

For example, the quote in the OP comes from Realtime Worlds, who are a relatively large Scottish developer.

That's right, Devs make the game and the Publishers fund/package/pr and sell it. That being said most publishers have some sort of inhouse gaming dev, like Activision has Neversoft etc. but that's another topic for another day. Perhaps a poll would be nice, on how many here trade in, and those who don't?

MooseJam wrote: »

Unbelievable people complaining about the second hand market, do these guy's think they are special or what.

No other industry have I ever heard complaint bar these guy's - someone needs a sharp kick in the balls , might cop them on.

Whats the market in second hand cars , ever heard a complaint.

What about houses - those builders spent months building the things then they get sold on and they don't see a dime , oh the injustice.

Cars, being a much more extensive market, can support such an industry. BMW make new kinds/upgraded versions of cars every year, and they need people to sell on old cars so that there's actually a market for this. Game developers spend years making one game, and people are capable of storing more than one game in their garage, drawer. Also the price difference between the two is too different for this to be a viable comparison.

Houses, are a slightly more viable example, but it's still flawed. Builders get paid by the hour to make a house, then move on to the next one (up until recently), that next one was always there ready to be built. Devs need a game to sell well, because each bit of sale revenue goes back into development of the next game. On top of this, if a game doesn't appear to sell well (ie: massive second hand sales aren't going to show up on the balance at the end of the year), a publisher might not see the point of putting money into the next project, or worse still, the dev will shut down due to a lack of funding.

Gamesnash.ie: Pat

Vegeta wrote: »

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

We would be quite happy to try it - as things stand cost prices to us coming in are going up all the time whilst the RRPS are coming down. If a publisher said to us here is a 15% cut in your cost price in return for a profit share of pre owned titles we would jump at it. It would make us more competitive and would ultimately increase sales for us.

D4RK ONION wrote: »

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

We make more margin on a pre owned game than we do on a new game. Our margins are as low as 7-8% for new games ( after postage, packing and credit card processing ) pre owned games are anything from 7-20% for us - this is heavily effected by the sale price - we have paid postage into us and then pay postage back out which costs approx €3.00. For example a game we sell pre owned for €9.99 will have a very low margin because of the relatively huge postage costs. That said we currently sell a lot more new games than we do pre owned. People are slow to trust posting off their games to a website

gizmo wrote: »

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.


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.

I think that the how little people get for their trade ins is a bit general
I don't think for arguments sake that we take the proverbial with our trade ins but I am aware that Gamestops pre owned margins are approx 46%. Thats in my personal oppinion excessive but their resale prices for the pre owned games can be as little as €5.00 less than the same game new for the latest releases. But all that said if margins on new games are kept very low then stores are going to try and make as much as they can from pre owned trading - again it's a bit of a circle that could be broken if a system like I mentioned was adopted. All be it that the bigger players would most likely not want to go near it.

Just worth pointing out though that each sale is not "pure profit" to the retailer as they have given credit / paid for it in the first place.

gavredking wrote: »

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.

I agree with you - that kind of mark up is crazy.

MooseJam

D4RK ONION wrote: »

Houses, are a slightly more viable example, but it's still flawed.

You are trying to suggest these people are special.

They are not special , there is a secondhand market in most things bar toiletpaper. Accept this and move on.

Now in Game New Supermario Bros - new price 39.99

2nd hand price 37.99 lol

ScumLord

GothPunk wrote: »

I'm enjoying reading this discussion but I thought that people were getting their wires crossed. Developers usually make very little money as they are funded by the publisher for x amount of time on x amount of money. Publishers are the ones who make the profits, publishers are the ones who set the RRP, publishers are the ones holding back the digital distribution of games.

The consoles contributed allot to the current situation allot by luring in developers with promises of great wealth and huge markets but it shouldn't have been to much of a surprise when the likes of Microsoft and the publishers did a runner leaving the people who did all the work holding the bill at the end of the night. That's what they do, that's why they've so much money.

It's not something that will change either it's happened so many times where developers worked their way up the ranks making great games for the open PC market, then they jump into bed with the big boys thinking they've made only to be rode like a cheap whore and bitch slapped out the door when pay day comes.

gizmo wrote: »

You don't blame a retailer who sells employee used games to the public as new? Who offers pittance for traded in titles and then slaps on markups of up to 400%? Or what about GAME who have prices of second hand titles higher than brand new titles yet gives the former units the most prominent shelf space? I'm the first to wave the GO CAPITALISM banner but I also expect some form of responsibility on their part or even a modicum of respect for their customers.

I'm the last to wave the go capitalism banner, it's the nature of the beast they will do whatever they can to make the most money. That's capitalism. It's people paying those prices that encourage them to act like that. It's quite simple really the only way people can stop them doing this is to stop giving them money. Complaining about it won't do a thing you have to vote with your wallet in this day and age. In business there is no moral compass and no right and wrong there's only profit.

D4RK ONION

Every product is going to have inherently different rules as to buying/selling demand/supply etc. If you insist on using the word, then yes, it's a special case, every second hand market is a special case. Just to clarify I'm not a sort of "G4MES7OP AR EV1L" type of guy, I buy most of my games in shop, but I do have reservations about the power of the second hand game market in the industry. I mean 42% of profits is a hell of a percentage.

PAT wrote:

We would be quite happy to try it - as things stand cost prices to us coming in are going up all the time whilst the RRPS are coming down. If a publisher said to us here is a 15% cut in your cost price in return for a profit share of pre owned titles we would jump at it. It would make us more competitive and would ultimately increase sales for us.

That's very interersting. Perhaps you could ask a publisher about it on a trial basis. Anything that gives you an edge and keeps the publisher happy at the same time has to be a good thing.

MooseJam

Why don't they just stick it in the EULA - not to be resold.

I'd be of the opinion that anything that is bad for consoles is good for PC.

citizen_p

sure shops make 100 percent profit anyway.... they buy games for 20 - 30 and sell them for 60...


look at the us its 60 dollars a game...
thats 40 euro..



and big games like cod 4.... that are still 60 70 euro is making them a fortune

noodler

Mousey- wrote: »

sure shops make 100 percent profit anyway.... they buy games for 20 - 30 and sell them for 60...


look at the us its 60 dollars a game...
thats 40 euro..



and big games like cod 4.... that are still 60 70 euro is making them a fortune

I am not sure the 60-70e game is as prominent as it was 2 or 3 years ago. So many of the big releases seem to be available between the 35 (In the case of FIFA 10 anyway) to 50e mark and thats not just counting online. HMV, XV, Argos and even Tesco seem to be offering solid alternatives to the specialist games shops.

ScumLord

noodler wrote: »

I am not sure the 60-70e game is as prominent as it was 2 or 3 years ago. So many of the big releases seem to be available between the 35 (In the case of FIFA 10 anyway) to 50e mark and thats not just counting online. HMV, XV, Argos and even Tesco seem to be offering solid alternatives to the specialist games shops.

That' just buying power. In the UK they'll always have the biggest new release for £10 in tescos (one time I was over there they were even giving away a free giant yorkie bar with the new release priced at £10, it was ridiculously cheap) but you won't get that price across the entire range of new releases just the one they know for a fact will sell. With the likes of Tescos it's just a matter of getting you in the door, the cheap price on that one item is just bait. Do the world a favour and don't ever buy anything in tescos.

Jazzy

i think a lot more crap games get into circulation with second hand. in all though i think its a good thing as its always the choice of the customer

D4RK ONION

Well it's good for the customer until devs. start colsing down due to lack of funding. Plenty of smaller devs either having to close or get consumed into one of the monster devs these days, and of course I'm not saying that's all second hand sales, but it's one of many factors. You are right to an extent though Jazzy.

ScumLord

D4RK ONION wrote: »

Well it's good for the customer until devs. start colsing down due to lack of funding. Plenty of smaller devs either having to close or get consumed into one of the monster devs these days, and of course I'm not saying that's all second hand sales, but it's one of many factors. You are right to an extent though Jazzy.

In fairness that's always happening. It's the nature of the beast, you're either good enough to survive or you die. There's always going to be a turnaround in artistic endeavour nobody or nothing is popular forever, even the big boys are destined to fail.

All any individual can do is support the companies they like with their cash and do everything they can to keep their money out of the pockets of companies they don't agree with. If that means missing out on games then so be it. I still avoid valve and steam due to half life 2 and the fact I still can't play the legal version of half life 2 I bought no matter how many times I email the support team and send them pictures of the case and every other hoop they make me jump through. I bought that game played it once and haven't been able to play it again due to the restrictions they put on it. I will do my level best to never, ever give either of those companies a single cent of mine ever again.

Jazzy

sounds like me with apple
i download a patch, it breaks my ipod, they charge me 120eu to fix it. get f**ked apple!
i know what you mean about smaller developers. i dunno tho, survival of the fittest

Gamesnash.ie: Pat

Mousey- wrote: »

sure shops make 100 percent profit anyway.... they buy games for 20 - 30 and sell them for 60...


look at the us its 60 dollars a game...
thats 40 euro..



and big games like cod 4.... that are still 60 70 euro is making them a fortune

It's a 100% markup in that case not profit sorry for being an ass about it.

The prices being set in the US and Europe are different due to the prices that the publishers set themselves to retailers. It's not a case that shops here are paying the same cost prices and making more profit.

As Noodler said recently the majority of titles have been given a RRP of less than €60 - main Sony published titles and the upcoming MW2 are the only ones I can think of off the top of my head that were left at €69.99 and they were available well below this.

noodler

ScumLord wrote: »

That' just buying power. In the UK they'll always have the biggest new release for £10 in tescos (one time I was over there they were even giving away a free giant yorkie bar with the new release priced at £10, it was ridiculously cheap) but you won't get that price across the entire range of new releases just the one they know for a fact will sell. With the likes of Tescos it's just a matter of getting you in the door, the cheap price on that one item is just bait. Do the world a favour and don't ever buy anything in tescos.

I did mention a shedload of retailers other than Tesco didn't I? or are you only addressing the FIFA 10 situation? Either way your point is not really as valid for the other retailers listed.

Resident Evil 5 was 40e upon release in XV, Uncharted 2 is 45 in HMV on release. I think it is clear from the controversy the MW2 price is causing that prices are no longer generally at 60e+.

Ross_Mahon

Game developers have also become very greedy themselves, Charging people for DC and special edition, I think ill continue buying second hand games.

gizmo

Ross_Mahon wrote: »

Game developers have also become very greedy themselves, Charging people for DC and special edition, I think ill continue buying second hand games.

Again there is a certain level of confusion in this post. First off, game developers don't charge for DLC, the platform holders (Microsoft, Sony & Nintendo) and publishers charge for this content. Several developers have come out and said that they wanted to offer some of their content for free but were both forced to charge for it and then forced to charge more than they wanted to.

Secondly, you seem to be missing the point of collectors editions, or at least the original one before the likes of the crazy Modern Warfare 2 Prestige edition. The original idea was to offer retail-only bonuses to customers who bought copies of the game so as to discourage them from downloading it. There were also some games who just had them for the sake of it, Ultima Ascension from back in 1999 is one of the best I can think of with it's lovely cloth map, prints of in-game artwork, a cool little pendant and tarot cards. Either way they're a nice option for some people and the fact that they exist alongside standard editions means they're hurting no one.

D4RK ONION

I for one usually get special editions, just because I'm a bit of a magpie like that. Prestige edition is coming my way.

There was a bit a while back about how the castle crasher devs wanted very much to give their DLC out for free, but Microsoft essentially told them to piss off. They took a novel and frankly, very admirable stand against this

http://www.destructoid.com/the-behemoth-giving-away-free-castle-crashers-king-pack-dlc-codes-122891.phtml

Sierra Oscar

grizzly wrote: »

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.

Totally agreed, at the moment most big publishers are just treating the digital download service as another way to cash in on sales, when it is fairy evident to consumers that by principle games sold online should be at least some bit cheaper due to the lower manufacturing costs of no CD's & cases.

Anyway as people have already hinted at, the main problem stems from games being just too darn expensive. Having to fork out €60+ for a console game is pretty steep . . . hence more people just buy second hand copies.

If the games were cheaper, they would certainly get more sales in my mind.

Rhyme

I'd love to see some figures on EA making their previous sporting titles obsolete with 'Roster Update 09', how the second-hand market is pumped full of last years titles every time they increment the number on the box.

Granted the newest Fifa game is a pretty big advancement on the last title, or so I've heard.

D4RK ONION

Sierra Oscar wrote: »

Totally agreed, at the moment most big publishers are just treating the digital download service as another way to cash in on sales, when it is fairy evident to consumers that by principle games sold online should be at least some bit cheaper due to the lower manufacturing costs of no CD's & cases.

Anyway as people have already hinted at, the main problem stems from games being just too darn expensive. Having to fork out €60+ for a console game is pretty steep . . . hence more people just buy second hand copies.

If the games were cheaper, they would certainly get more sales in my mind.

What I find worse is MS points. Y'know that moon money Microsoft uses for the arcade games and more importantly for me, RB DLC? Purchasing it in a shop works out cheaper than adding it to the account by credit card. It just makes no sense, and it makes me angry... Getting off my topic though!

ShooterSF

I think every industry on the face of this planet deals with a second hand market. Yes gamestop has made the gaming one into a huge market. That's life tough and while I'm too much of a collector to trade in I do see the use of it.
Eventually I'd love to see an open source console ( a hybrid of PC and console) with ultimate freedom for developers and cheap games available to download.

Sierra Oscar

D4RK ONION wrote: »

What I find worse is MS points. Y'know that moon money Microsoft uses for the arcade games and more importantly for me, RB DLC? Purchasing it in a shop works out cheaper than adding it to the account by credit card. It just makes no sense, and it makes me angry... Getting off my topic though!

Egh, dont get me started on MS points. The fact that one can only buy certain bulk quantities of the points resulting in usually over-paying for content really annoys me . . .