Do you think the used game market is lost sales?

Post » Sun May 13, 2012 12:54 pm

Opposition to used game sales betrays a serious lack of understanding of economic principles. There are two key things to understand: people have a limited amount of money they're able/willing to spend on games, and used game sales finance new game sales. Consider the following situation: person A has $100 they can spend on games in a month, and person B has $50 they can spend. When used game sales are possible, person A buys two new games, plays them, then sells them to person B for $25 each, then uses the $50 they made to buy a third game. Total new games sold: 3. When used sales are not permitted person A buys two new games and person B buys one new game, with no further transactions occurring. Total new games sold: still 3. For the sake of simplicity I've ignored further downstream sales, but even if these are taken into account the only thing that changes is the number of people playing games, not the amount of money being spent. The key point to recognize is this: disallowing used sales does not magically create more money that people then spend on games. At best going from used sales to no used sales is a complete wash. At worst eliminating used sales actually hurts the industry, for reasons I'll cover later.

Something I want to touch on first, though, is that my example assumed direct seller to buyer transactions, while most used game sales in the real world involve a middle-man who siphons off some of the money involved. In such cases it could be argued that the money siphoned off by the middle-men is money that would end up going the devs/publishers if there were no used sales. However, it's important to recognize that this is not due so much to used sales occurring, but rather due to market inefficiencies that allow the middle-men to command higher margins than they would be able to in a more efficient market. The proper solution to seek in such a case is actually to make used sales easier- make it easier for buyers and sellers to connect directly, and make it easier for middle-men to enter the market, thus increasing competition between them and decreasing the margins they can command.

As for why eliminating used sales can actually hurt the industry, one has to look at the effects eliminating used sales would have on consumer behavior. One of the clearest and easiest changes to note is that while the amount of money being spent on games both with and without used sales is roughly the same, the amount of people able to play a given game decreases when there are no used sales. This means less of an opportunity for word-of-mouth advertising, and for multiplayer games it means a smaller player base, thus potentially reducing the percieved value of the game if it's known there aren't as many people to play with (this can be a big issue for multiplayer-centric games, particularly MMOs). Another very important thing to keep in mind is that while the total amount of money being spent will be about the same, the shape of sales over time will look very different. This is because used sales allow a fairly organic form of price discrimination to occur, and without them price discrimination instead must be carried out by whoever is selling the game over a much longer period of time. Basically not everyone will value a game at the $50-60 it's initially sold at. With used sales the price can either be reduced by used copies, or effectively reduced by the ability to sell a purchased copy, thus recouping some of the cost. Without used sales to do this people who don't value the game at the initial price will wait and only pick it up once it drops in price (assuming they don't just forget about it). Thus many of the sales that may have occurred within the first few months when used sales are allowed instead have to be picked up via long-tail sales as the price of the game gradually drops. This can have a couple of negative effects. First, many studios that don't have large cash reserves may be counting on those large initial sales to pay off various bills they accumulated during development, and having those sales stretched over a much longer time frame can put them in a tough financial situation. Additionally, many publishers will just look at the sales numbers for the first few months when deciding whether or not to bankroll expansions, sequels, or additional projects by a developer. While this issue can be overcome by changes in the way the industry does business, quite a few people will get burned while the industry wakes up to the fact these changes would need to occur. Another negative effect of sales spread out over a longer time is that, again, lower initial sales can hurt the overall sales of multiplayer games (due to the smaller player base), and can be the kiss of death for MMOs.

Ultimately, once you start looking closely at the economics of the whole thing opposing used sales is really a very foolish thing to do.
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Lucky Girl
 
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Post » Sun May 13, 2012 11:24 pm

I hear a lot about "lost sales" but for some reason none of the companies involved ever bring up the issue of games that are out of print. Would they claim that the second hand sale of a game that isn't even sold any more should be considered a "lost sale"?
I doubt they really believe it's a significant impact, any more than DRM is expected to prevent piracy. Just as the latter is more to appease shareholders and prevent resale, I imagine killing used games isn't so much an effort to recoup "lost" profits so much as to make more money by forcing consumers to buy new or not at all. If they can't wait for prices to drop, they may be more willing to buy at first price rather than risk the game disappearing from stores entirely.
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adam holden
 
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Post » Sun May 13, 2012 4:43 pm

Lets see now...

It's a free market, or so we like to think, where anyone can capitalize and run a successful business, regardless of what (legal) trade they deal in. That's capitalism, partly. And when the first party (publishers and developers) tell the second party (retail chains as GameStop and Game) that the trade they deal is not entirely acceptable unless the first party can profit from the success of the second party, it kinda ruins the point of a free market. The same free market the first party had success on.

Besides, every legally used game that is available was purchased once for full price, with profits going back to the developer and/or publisher. No other trade I can think of, have portions of its community demanding a second minor profit due to resale. At least I haven't heard of it.
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Brιonα Renae
 
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Post » Sun May 13, 2012 7:28 pm

It's not a lost sale, because the company behind the game isn't entitled to money just because somebody has used their product. Should I be required to buy separate viewing licenses for each member of my family, friends, dates, etc who I might want to watch a movie with? What if I lend a movie or game to another person? Why should this be any different if money changes hands?
Would you say that after buying a movie theater ticket and watching the movie, the ticket should remain valid and you should be able to sell it to someone else?
A movie ticket only givens you access to a specific movie at a specific time. You don't buy a ticket and then redeem it whenever you want. You buy a ticket for Real Steel and 7:30 PM. Movie tickets are more like putting tokens in an arcade machine.
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Taylor Tifany
 
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Post » Sun May 13, 2012 2:20 pm

*sigh* You're dragging your thread off course but if you won't let it go, you implied with this post that all the millions of people who use it daily are happy with it. And you implied this as a way to discredit someone who said something against Steam.. I was merely pointing out that millions upon millions could use Steam every single second of everyday but not all of them were happy. Now being you can't respond without being rude, I won't comment further on this point.
Thats a good way to cop out of a losing arguement.

You completely ignored my reply to you and quoted an old one.

If you don't want ppl to be rude to you, don't lie about what they said.

Last time: Saying millions of ppl like something doesn't mean everyone likes it.

THAT. IS. NOT. HARD. TO. UNDERSTAND.
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Tammie Flint
 
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Post » Sun May 13, 2012 12:54 pm

I can see it both ways. It would svck if the next generation of consoles makes it impossible to play used games, but if that's the way they choose to go I won't object. I can't buy used baseball tickets to see a game after someone else already has, you know, so why should people do it with games? Just because you get to hold onto something physical? Some day all gaming will be done via digital download if not cloud based so we ought to get used to it now.
You don't own the baseball game. You own the discs and license, the costs have been paid for. OR else they would ask for more. It is YOURS. A ticket isn't a product, but a service. Your getting to vastly different things confused.
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RAww DInsaww
 
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Post » Sun May 13, 2012 8:12 pm

People are getting confused. You don't own the game itself and it's content.
no one is talking about ripping content from the games to use how they see fit so i'd have to disagree with that
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Damian Parsons
 
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Post » Sun May 13, 2012 10:48 pm

no one is talking about ripping content from the games to use how they see fit so i'd have to disagree with that
That's because it's not relevant. We're simply looking at legal aspects of owning a disc. It's a completely different debate about piracy. It kinda sorta ties into used game ownership, but not really. You can't deny that people deserve to own what they buy and sell it once. Making copies of it and giving or selling them of course would be illegal, and is as I said a completely different thing. Technically speaking they aren't losing any sales at all. Pirates don't give a [censored] about you. As the meme goes, [censored] the police. It's their idealism/greed thinking they could ever domineer the will of human beings not to steal. You can't do it, there will ALWAYS be the cheap person out there who will pirate something. Hell cracking games and putting them online is a pass time for some people. It's just not changing. I don't think pirated copies are lost sales, you'll never get them.
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Scott
 
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Post » Sun May 13, 2012 5:41 pm

A clever clause they included as a sort of loophole for things like this. In reality it means nothing.

Actually it does, you can blame Nortons for this, they took an individual to court for reselling a peice of their software on e-bay because it wasnt what they wanted, so they tried to resell it, Nortons argued that they own the software, in the original case they lost, they appealled to another court and this time they won and set a precident . So the individual had to pay for the fact that they illegally sold their software, thus setting forward a legal precident that the company owns the software.

Of course this can lead to a ton of scenarios were your at a disadvantage for purchasing software, where they constantly list that they have the right to make changes to their terms of use whenever they want. Also rather than whining about lost sales maybe like many technological devices nowadays, they should have to designed it originally so it couldnt be resold, see pc game, once my codes used i cant resell it, generally companies are their own worst enemies they make bad decisions then look for a scapegoat when trying to make larger profits.

Theres a certain miniatures company that is going from metal to plastic miniatures, because its so called cheaper, or basically the resale market is killing their new sales because their products are overpriced, and with the metals you can strip the paint the plastics you cant, plus the prices didnt change, for a much inferior product.

Technically its in no way, shape or form piracy, its the original software in its original format neither duplicated, nor tampered with other than used by the former purchaser, you can just as easily argue that the person is actually selling the hardware on since they dont want it anymore that disc or cassette may contain software but it does not say you cannot sell the medium of transfer of the data, that woud have to be up to the producers of the storage medium. Also businesses that sell, computer games, purchase games in bulk from the main companies distributor, once theyve sold theyve gone, if games sales stores are purchasing games, then the main companies making money from these stores, if the moneys flowing both ways then everyones getting a peice of the pie, what these companies are doing is just pure greed, trying to squeeze blood from a stone. I can see Nortons wanting to stop people trading their goods online but then that comes under the trading acts of whatever country they are based in, but to sell one peice of software is like nuking a major city to get a bag snatcher.

If the companies really wanted solid data they would look into what games are being most traded and in what age brackets are trading and buying, rather than the typical knee jerk its everyones elses fault.
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Alexx Peace
 
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Post » Sun May 13, 2012 12:14 pm

Actually it does, you can blame Nortons for this, they took an individual to court for reselling a peice of their software on e-bay because it wasnt what they wanted, so they tried to resell it, Nortons argued that they own the software, in the original case they lost, they appealled to another court and this time they won and set a precident . So the individual had to pay for the fact that they illegally sold their software, thus setting forward a legal precident that the company owns the software.

Of course this can lead to a ton of scenarios were your at a disadvantage for purchasing software, where they constantly list that they have the right to make changes to their terms of use whenever they want. Also rather than whining about lost sales maybe like many technological devices nowadays, they should have to designed it originally so it couldnt be resold, see pc game, once my codes used i cant resell it, generally companies are their own worst enemies they make bad decisions then look for a scapegoat when trying to make larger profits.

Theres a certain miniatures company that is going from metal to plastic miniatures, because its so called cheaper, or basically the resale market is killing their new sales because their products are overpriced, and with the metals you can strip the paint the plastics you cant, plus the prices didnt change, for a much inferior product.

Technically its in no way, shape or form piracy, its the original software in its original format neither duplicated, nor tampered with other than used by the former purchaser, you can just as easily argue that the person is actually selling the hardware on since they dont want it anymore that disc or cassette may contain software but it does not say you cannot sell the medium of transfer of the data, that woud have to be up to the producers of the storage medium. Also businesses that sell, computer games, purchase games in bulk from the main companies distributor, once theyve sold theyve gone, if games sales stores are purchasing games, then the main companies making money from these stores, if the moneys flowing both ways then everyones getting a peice of the pie, what these companies are doing is just pure greed, trying to squeeze blood from a stone. I can see Nortons wanting to stop people trading their goods online but then that comes under the trading acts of whatever country they are based in, but to sell one peice of software is like nuking a major city to get a bag snatcher.

If the companies really wanted solid data they would look into what games are being most traded and in what age brackets are trading and buying, rather than the typical knee jerk its everyones elses fault.
There have been an equal amount of cases going either way depending on circumstances as to the enforceability of the EULA, if this is indeed to what your referring.
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lexy
 
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