On Monday we posted a news story about how Quantic Dream had ‘lost’ an estimated €5 to €10 million, thanks to the sale of pre-owned games.
A lot of you commented on the news and a similar amount of comments were posted by industry professionals on GamesIndustry.Biz. These have caught the attention of Guillaume de Fondaumiere and on Tuesday he has posted a response, explaining how the almost instant discounting of titles hurts the industry.
There was a time when publishers and retailers together decided when it was the right time to drop a game’s price. We had full price, mid-price and budget games and the whole value chain benefitted from this.
Decisions to drop the price were based on consumer demand and levels of stock. Most importantly, price drops happened in a timely fashion.
Gamers who couldn’t wait bought full price, those who weren’t sure waited some time, usually 3 to 6 months for the first price drop, and then again some time for the next.
Today, second hand gaming (SHG) happens almost same day and date with the full price release. From far away, this may seem to be to the benefit of all in the chain, but actually it isn’t.
Guillaume has dismissed any comparisons between games other second hand markets such as cars as ‘irrelevant’. This is backed up by Dave Herod, Senior programmer at Codemasters who posted this message
It’s annoying how people always compare used software to the sale of used cars. It’s NOT the same, if you buy a second hand car you’re buying an inferior item, it’s more worn out, the warranty has either gone or there’s less time remaining on it, and it degrades over time.
Software doesn’t degrade, and when you buy it you’re not paying for the disc or the box, you’re paying for the rights to play that game.
The IP is owned by the publisher and developers and retailers are effectively selling something that’s not theirs. It’s not far from theft in my view.
Guillaume has posted another response in which he clearly states he “never said we should ban second hand gaming” but points to the huge profits generated by second hand games which have been reported by retailers.
You only need to look at the annual reports of certain retail giants to find out that between 30 and 40 % of total games software turnover comes from second hand sales today (incomparable to books for instance).
Gamestop recently reported used-game sales jumping over 12% on last year and the most recent financial report from GAME show pre-owned revenues of £387 million with a profit margin of nearly 40%.
The last word must go to Diogo Neves, Programmer for Sony Europe, who has posted:
It’s a legal market and as such, we just have to move on and find better ways to make this practice more profitable for game studios. Maybe it’s the business model that has to change.
Source: GamesIndustry.Biz
Kev
This hasn’t changed my mind in the slightest. And I don’t agree with Dave Hero’s assumption that the used car analogy is redundant.
However, there have been some interesting suggestions here, particularly KeRaSh – and I don’t think you’re talking out the wrong end at all. Consumers shouldn’t be punished for wanting to buy the product, but perhaps game sellers should have more responsibility to support the industry that they profit from.
Perhaps if the game’s original pricing were more affordable more people would buy new rather than pre-owned – I know I certainly would.
DirtyHabit
Why can’t these companies take a cut from the retailers? Surely all sales go through the retailers computer systems. Wouldn’t be too difficult to impliment some sort of system that gave the publishers a percentage cut of that sale …?
They could get say 10%(£2 ish) guaranteed on each sale rather than £7-8 per online pass which has no certainty that the end user will purchase.
Thing is though, either way it would still be us that ends up paying in the end. :(
Tuffcub
TBH akll i needs is Activions, EA and THQ to release a statement saying they wont provide games to anyone who sells preowned and the market would be dead in a day.
However it would kill off GAME, Gamestation and probably HMV with it and then there would be no one to sell games.
anthro
Of course there would be – independent retailers have already been killed off by the likes of GAME etc, and I’d imagine that the removal of the pre-owned market would actually result in these shops coming back into the market if GAME etc went under. We’d probably go back to the halcyon era of smaller shops selling brand new games alongside all sorts of trinkets to make ends meet. Pink Planet in Bristol have already adopted this business model, and while they do have pre-owned games, they mainly sell new products.
bunimomike
Massive respect to Diogo Neves. The business model needs to change so it looks after both parties. Don’t ever, ever think you can take the piss to whatever level you fancy. Things snap. Hell, we’re already starting to see it creaking under the weight of current changes.
My gaming purchase habits are changing because of their actions. Friends are too. Not many right now but if they continue to pursue this misguided attempt on increasing profits they are going to do the industry a lot of damage.
Oh, and games DO devalue. For different reasons but they do. Other, better games come along and supersede. Simple as that. FIFA {old version} isn’t worth as much as the new version. The Market dictates this with demand (or lack thereof). Not because some pompous developer thinks everything he pinches off is gold.
C_S15
” It’s not far from theft in my view.”
Okay, I’ll remember to pirate next time I want to get a game pre-owned. That’ll show those pesky retailers, selling your games, taking your monies. Seriously, what a twat. Stop attempting to put the blame on us and start either: A)Concentrating on making a game good enough to not trade in. I haven’t traded in Heavy Rain yet but I might just do it now, seeing as I want to get a couple of games and I have no use for a game with zero reply value. B)Punishing retailers for pushing used game sales more! But of course, they’d get upset and wouldn’t want to promote your game so much if you potentially taxed them for it. Greedy twat. Argh! :@
Grabacr
LOL, and what they’re doning is not far from money grabbing in my view ;)
jimmy-google
” It’s not far from theft in my view.”
I can see where he’s coming from. From a developers perspective whether you pirate a game or buy it second hand there is no difference for them. They see no more money from one method or the other and they’re ability to see you DLC doesn’t change. From a balance sheet point of view there is no difference.
Grabacr
‘It’s annoying how people always compare used software to the sale of used cars. It’s NOT the same, if you buy a second hand car you’re buying an inferior item, it’s more worn out, the warranty has either gone or there’s less time remaining on it, and it degrades over time’
Sounds to me like this guy is seriously grasping at straws. The physical condition dosen’t even come into it. The comparison gamers were making was how when you buy a second hand car, the manufacturer gets 0% of the money, exactly like when GAME etc sell games 2nd hand, and how car companies don’t moan at people for buying and selling their products used.
Grabacr
Just gonna say that I’m in no way biast towards brick and mortar shops like GAME etc as I think they’re crap and useless and I’d much rather buy my games from the internet.
jimmy-google
But with cars there is constant up keep, a yearly MOT, repairs (labour and parts) etc.. Manufacters of cars often create their own bespoke tools so you have to take it to one of their garages for repairs.
Developers could charge everyone a yearly fee but I can’t see that going down too well.
Faulker
DLC. There’s your upkeep.
Grabacr
‘The last word must go to Diogo Neves, Programmer for Sony Europe, who has posted:
It’s a legal market and as such, we just have to move on and find better ways to make this practice more profitable for game studios. Maybe it’s the business model that has to change.’
This guy seems to be the only one with something intellegent
to say. If you want to entice people into buying new, you have to make them want to, like with online passes, pre-order bonuses etc. Not moaning at shops and customers which wont achieve anything.
Grabacr
*intelligent
A bit of an embarrassing word to misspell.
The Lone Steven
If preowned is such a massive problem for the gaming industry, then all publishers should contact all major gaming retailers and work out a deal to get a cut of their preowned profits or support their games with DLC in an attempt to make some cash.
Once we have payed for the game, we can do whatever we want with it. If i want to lend it to a mate i will.
I have brought some excellent games preowned and have spent £40+ on DLC on said games. But most publishers seem to forget about that. I am glad that for once someone in the industry has suggested that the model needs change. Although i agree that retailers are being very greedy with preowned as my local gamestation has mostly preowned games and a very small section for new games.
jimmy-google
If developers don’t start making more money from games then all we’ll be left with is Fifa and COD every year.
Retailers are the problem but it’s very hard to combat it without cutting them out all together. In doing that it kills the second hand market completely unless the developers/publishers can create a digital second hand market they control.
Lyts1985
There’s an easy solution to this: sell all your brand new games for a tenner!
People will be more willing to spend a tenner on that game they weren’t sure about than £40+ or wait for a cheap preowned copy
Game et al will only be willing to offer £3 max for a preowned copy which no one is likely to accept, and then the retailer will sell it for around £7 – who’s going to bother with 2nd hand when you can buy new for a tenner?!
Win-win I think :-) yes they’d have to sell 4-5x more copies but we’d be much more likely to snap it up at that price!
jimmy-google
If every game was a tenner there would never be enough time to play everything you buy. Finshing more than two games in a month is a challenge and that doesn’t take to account multiplayer and games like Fifa that doen’t really end.
stonyk
This guy is irritating me. Simple solution he needs to have an online code. Solves his issue completely. People who want to play it will pay and those who don’t (or would only buy it second hand) don’t. He will earn pretty much the same amount of money but have less game coverage. Simples.