The Future of Used Game Sales is in Your Hands

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The debate over the sale and purchase of used games has once again come to the fore, now that Best Buy and Target are extending their pilot used-game-sale programs and rolling out the purchase and sale of used games throughout the country. To be clear, this isn't a moral debate about anyone's right to used games, nor are used purchasers perpetrating some kind of evil. This is a straightforward economic issue. Let's quickly review a few of the facts:
Game owners have the well-established right to sell the copies of retail game software that they purchase, to the extent that this software is transferable. When games were discs or cartridges without online connectivity, there were few practical ways for game publishers to limit the transfer of games from a new purchaser to a used purchaser.

Thus arose intermediaries such as GameStop, whose businesses depend upon purchasing used games very cheaply and reselling those games at a substantial mark-up. GameStop makes far more profit on used game sales than on new sales.

Game publishers aren't particularly fond of used game sales, because used game retailers are harvesting all the profit from those sales, rather than passing on a significant chunk of the profits to the publisher in the case of new game sales.

The technology now exists (through methods such as downloadable content and the premium unlockable codes now being issued with many new game sales) to entirely eliminate used game sales. For example, you cannot resell an Xbox Live Arcade game. Game publishers are not obligated to sell you a product in a form that can be resold. They continue to sell games that can be resold to maintain a good relationship with retailers such as GameStop.

Bricks-and-mortar stores have been an important component of game sales and promotion, and publishers don't think they can survive without that distribution channel... yet. That's why publishers are flirting with codes to restrict a portion of content to new game purchasers.

The real question here is, how much do game publishers need physical retailers? These downloadable codes being packed into new games are an effort to reclaim some of the used game revenue, but only as much as publishers can retake without pissing off their distribution partners so much that those partners stop selling their games.

Some gamers may think they have a right to sell or purchase used games. Morality aside, they don't. And it will only be possible to resell games for as long as game publishers feel that the promotional benefits of supporting retailers outweigh the financial benefits of claiming all game sales for themselves. Put another way, the more attention you pay to clever game marketing (such as Microsoft's Halo: Reach campaign), the shorter-lived used game sales will be. The more that you rely on used-game retailers for your purchasing decisions, the longer they will last.

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This page contains a single entry by Editor published on August 27, 2010 5:15 PM.

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