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New US Online Retailer Will Give Game Makers 10% Of Used Sales

Ben-Dutka 63 Comments

GameStop may not have any intention of sharing its pre-owned profits with publishers and developers, but they're not the only show in town.

Well, okay, they basically are, but there's a new fish in the sea, and this fish isn't afraid to give the game makers a little taste of the used game market.

According to GamesIndustry.biz , new US online retailer EKGaming plans to share 10% of their pre-owned game sales with the publishers and designers.

The company wishes to promote a "circle of life" in the retail environment, which includes this new revenue stream for the game producers. Said EKGaming CEO Mike Kennedy:

"Publishers are spending record amounts of cash on new game development. This increase in dev costs is steering them in directions that don't necessarily jive with gamers, causing them to take less risks on new and potentially exciting IP's or game mechanics and sticking with tried and true properties that are more of a guarantee.

We want to share our used game revenue with them so they can continue investing in new gaming experiences without worrying about the negative effects used games could be having on their operations."

Furthermore, the retailer says they will "guarantee" better trade-in credit for games; perhaps as much as 30% better. They can do this due to the low overhead of the online marketplace and could be in stark contrast to GameStop, a company that has enjoyed billions of dollars in pre-owned sales over the years. As an example of the higher trade-in values, EKGaming currently offers $40 credit for Call of Duty: Modern Warfare 3 , Assassin's Creed: Revelations , and The Witcher 2 .

Well, it's a start. No matter how you slice it, game makers deserve something of those used game sales.

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California GameStops Must Post Warnings For Used Games

Ben-Dutka 49 Comments

Don't worry; the boxes won't lie to you anymore. Well, at least not in California.

The latest news involves a settlement Baron and Budd reached with GameStop in the United States District Court for the Northern District of California.

According to the report , the settlement concerns used video games sold by the retailer to consumers who are unable to access downloadable content and online features unless they pay an additional $15. The problem with this is that the packaging of the games always say the DLC is available for free with purchase of the game. Now, GameStop must (for the next two years), post signs on used game shelves and online, "warning consumers that certain downloadable content may require an additional purchase." Seems like a reasonable solution.

Furthermore, consumers will get the chance to recover the $15 they would've had to pay for access to that DLC: Those who purchased "qualifying used games" and are part of the PowerUp Rewards program can receive a $10 check and a $5 coupon. If you purchased a qualifying title but aren't a PowerUp member, you'll receive a $5 check and a $10 coupon. Said Mark Pifko, Baron and Budd attorney and counsel in the lawsuit:

"We are pleased that as a result of this lawsuit, we were able to obtain complete restitution for consumers, with actual money paid out to people who were harmed by GameStop’s conduct. The in-store and online warnings are an important benefit under the settlement as well, because if GameStop discloses the truth to consumers, it is unlikely that they will be able to continue selling used copies of certain games for only $5 less than the price of a new copy. In fact, we already know that not long after the lawsuit was filed, GameStop lowered prices for used copies of many of the game titles identified in the lawsuit."

The lawsuit mentions that GameStop purchases used games from consumers "for only a fraction of the original price, and then sells them to other consumers at a marked-up price, usually around $5 less than the price of a new game, to maximize their profits." This results in over $2 billion/year in used game sales, and they still don't have to pay royalties to game publishers or developers. Yeah, that's still a problem.

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Dyack: Used Game Market Will Kill The Video Game Industry

Ben-Dutka 153 Comments

Industry veteran David Braben just recently said the used game market is to blame for keeping retail game costs high and now, another gaming vet echoes that sentiment.

This time it's Silicon Knights founder Denis Dyack, who told GI International that pre-owned games are a severe threat to the industry. In fact, he says if things continue the way they are, "there's not going to be an industry."

"If used games continue the way that they are, it's going to cannibalize, there's not going to be an industry. People won't make those kinds of games. So I think that's inflated the price of games, and I think that prices would have come down if there was a longer tail, but there isn't."

Dyack added that there's "no tail" to a game, in that a publisher and developer ca't keep making money, as the used copies of that title take the place of new ones and subsequently, the game makers lose out.

"Now there is no tail. Literally, you will get most of your sales within three months of launch, which has created this really unhealthy extreme where you have to sell it really fast and then you have to do anything else to get money."

Considering such statements, it's probably no surprise that current rumors say the next PlayStation and Xbox won't support used games . If it's really this dangerous – and it appears to be, given the slumping state of the industry – maybe it's long past time to ditch the pre-owned idea before the "cannibalization" goes too far.

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Inversion Dev Defends Used Games, Supports Digital

Ben-Dutka 35 Comments

A few days ago, a Volition designer said the used game market was in danger of crippling the industry .

But Sabre Interactive CEO Matthew Karch is saying that in reality, pre-owned games aren't a bad thing. In speaking to CVG , Karch addressed the rumor that the next Xbox might block used games. Said Karch:

"As long as games are distributed on physical medium as physical goods, players should have the right to buy and sell them."

He added that if a player doesn't like a game, it's "just not fair" that they'd have to keep it. He even used his studio's new game, Inversion , as an example- "If people buy Inversion and it's not for them, then why should they be forced to turn it into a drink coaster?" he said. Karch also supports digital distribution, saying the new $60 price tag for games could be cut in half if we switched from physical to digital. He said agetting a game to retail consists of $30 of "waste" expenses.

His solution? Have a game be broken down into two sections – single-player and multiplayer – and charge $15 for each or $30 for the pair. That could make things a whole lot cheaper but once again, we'd have to wave goodbye to physical media…and our libraries.

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Volition Designer: Used Games Market Needs To Be Fixed

John-Shepard 58 Comments

Volition game designer Jameson Durall is working on a "secret project." But that project didn't get him in the news.

No, he sounded off on the controversial used video game market at the AltDevBlog in a post entitled, "I Feel Used." As most know, while GameStop makes millions off the sale and resale of games, game studios don't see a penny of used transactions. And Durall says if something doesn't change soon, the whole system could crumble.

"In the end, I fully believe that we have to do something about these issues or our industry is going to fall apart. People often don't understand the cost that goes into creating these huge experiences that we put on the shelves for only $60. They also don't seem to realize how much they are hurting us when they buy a used game and how pirating a copy is just plain stealing."

Durrall suggested that downloadable content could help combat the problem, as timely and valuable DLC would cause gamers to hold on to their copies longer. But he adds that such content has to be "compelling and a good enough value." He also supports the online pass program manufacturers like EA, THQ, and Sony utilize; the programs began in at attempt to get consumers to buy new copies. Said Durrall:

"Some consumers complain about this method because the precedent has always been that it's included in the price and should come with it. It did for the person who actually bought it first…so was saving that $5 at GameStop worth it for you?"

We've often said that gamers tend to be awfully dismissive of the amount of money required to produce certain titles these days. The idea that all developers are sitting in mansions sipping champagne is sadly false; the terrible truth of the matter is that it's a forbidding environment, and non-million sellers often barely make enough for the creators to break even. Used games aren't really helping, although we don't propose a solution.

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Is The Used Game Market Doomed?

Ben-Dutka 197 Comments

It seems incredibly unlikely, as the removal of the used game market could absolutely cripple the retail industry.

But publishers have clearly expressed their disapproval of the way the pre-owned market works; retailers like GameStop can sell a title countless times over and keep raking in the profit, while the game makers never see another dime beyond the initial sale. Hence, the emergence of online passes from major manufacturers like EA, THQ, and Sony.

But that's mere child's play to what may happen in the next generation. The hot rumor involves Microsoft's next-generation console and according to Kotaku , the machine may actually block the playing of used games. How exactly, we're not sure. But if Microsoft and Sony incorporate such a feature in their next-gen hardware, used games may be forced to go the way of the dodo. There's not much game makers can do about it, either, if they're cut off at the source (i.e., the systems themselves).

Let's not forget that a huge portion of GameStop's profits come from pre-owned sales and with the increasing popularity of digital gaming, consoles that won't play used games could put GameStop in a critical position. After all, they're mastered the art of taking in a game for a certain price and selling it for three times the trade-in value. The profit margin is about 300% and of course, they don't enjoy any such margin with new products. Not even close, really. But what about consumers? They've become familiar with used games being available and fans seem to love the option, even if the pre-owned copy is only $5 cheaper than a new copy.

We're not sure how the next generation will pan out, but we should probably expect some significant changes. The death of used games is probably unlikely, but at this rate…who knows?

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