Who cares about the used-games market?

From Gamasutra:GameStop to Game Devs: Please Love us

We have all been into a GameStop store and been offered a new release, used, sold at $5 lower than the new price. The company insists this is a tiny percentage of its business and, in reality, happens rarely. People generally hang on to new games for at least six weeks, the execs say.

The problem with the used-games model is that consumers will try to save the $5 and publishers are trying to stop this by including single use DLC codes and, in some extreme cases, including a single use license key which requires online activation and tying to your email address.

The problem is that the used games market is killing revenues for more obscure games. People might buy COD Black Ops and never trade it in because they value the game. They bought it full price and they keep it. But maybe a game like “Resistance” which has an extensive single-player campaign gets traded in (because the multiplayer, compared to COD Black Ops, is quite weak). More people buy this then as a used-game and play it. Who gets this revenue from the second purchase? Not the game developer. It’s a massive percentage of the cover price but all of that money goes into the used-game retailers pockets.

Is it therefore any wonder that game developers and publishers are increasingly moving to a digital download model and bypassing the used-game market with online accounts, online distribution and licenses that are tied to your identity.

Paul Gregg notes:

Which is a very fair point indeed. And I can see Valve allowing you to trade in your games for pennies on the dollar so you can buy more games. Valve’s store, STEAM, it must be noted, has extremely draconian DRM – orders of magnitude worse than Apple’s App Store. This would get them out of the way of EU legislation on property but it’s unlikely to make anyone happy about the result. And I doubt that Apple or Valve or Blizzard (or even Google) will hand over their decryption keys to GameStop to make it easy for them to be a broker of digital content.

Even the idea of “re-use” of digital content is somewhat ludicrous, especially when you consider the heinous amounts of DRM that would have to be implemented in order to protect the rights of IP holders. What’s to stop the average punter taking their DRM-free copy of a game and giving it to another retailer or even just posting it on the internet for download? The enforced scarcity of plastic disks (and tapes) and their primitive copy protection from the 1980s (anyone remember the colour reference sheets used to unlock games?) has had to be replaced by restrictive DRM in order to just make sure that creators get paid.

On the other hand, games on the App Store and Steam are already really cheap and it makes me wonder whether people are really concerned about the pennies.

I don’t see why anyone should do GameStop (or any second-hand games retailer) any favours. They’re part of the machine that is killing the industry, driving prices up and restricting innovation and creativity in game development. A single copy of a great (but niche) game might be sold once brand new and then sold 2-3 times more in the used-game market. The vast majority of that money goes to the retailer and only a tiny fraction to the developer/publisher. Now, if you were the developer/publisher, what would you want to do to get fair access to your dues? Is it any wonder the big publishers are taking the market away from the used market? Is it any wonder that everything is trending towards online activation (or online distribution)?

Now, if you will excuse me, I must go and play Call of Duty 4:Modern Warfare III or Call of Duty 4: Black Ops II or FIFA 13 or any number of a series of safe sequels.

 

Matt Johnston

"The" Mac geek in Northern Ireland. Also iPhonista, iPadista, Gamer, Writer, Technologist, Futurist, Humanist

 

4 thoughts on “Who cares about the used-games market?

  1. DRM is a red herring and not at the heart of the issue. DRM may be the games companies answer to the problem it perceives – but at the end of the day, CRM only hurts those people who actually pay for the game.
    I could go onto many underground sites and find the latest games “for free”. I don’t as I do believe the game should be paid for. I have a large collection of both Wii originals, and a large Steam archive.

    Having said that, morally, I have a real objection to the games companies thinking they can ride roughshod over consumer rights and long established principles and doctrine of first sale.

    The second hand market is both legal in the physical works *and* in the digital world. And thankfully we now have case law to back this up.

    Last month, in the EU, Oracle lost a case trying to prevent resale of licenses to its software.

    The court wrote:
    “A rightholder who has marketed a copy in the territory of a Member State of the EU thus loses the right to rely on his monopoly of exploitation in order to oppose the resale of that copy.”

    Further, Oracle, and Matt here, opposes further distribution based on licensing terms. The court also rejected this view, thus:
    ‘The principle of exhaustion of the distribution right applies not only where the copyright holder markets copies of his software on a material medium (CD-ROM or DVD) but also where he distributes them by means of downloads from his website. Where the copyright holder makes available to his customer a copy – tangible or intangible – and at the same time concludes, in return form payment of a fee, a licence agreement granting the customer the right to use that copy for an unlimited period, that rightholder sells the copy to the customer and thus exhausts his exclusive distribution right. Such a transaction involves a transfer of the right of ownership of the copy.
    ‘Therefore, even if the licence agreement prohibits a further transfer, the rightholder can no longer oppose the resale of that copy.’

    http://www.gamerlaw.co.uk/2012/07/legality-of-second-hand-sales-in-eu.html
    http://www.bit-tech.net/news/gaming/2012/07/04/curia-digital-distribution/1

    In summary, as a gaming company, you would love to make income on the second hand sales of your games, who wouldn’t. However, morally it is wrong. Would you like the government to charge VAT on second hand goods? No? – they already got their cut, as have you in your first sale.

    Thankfully, the law agrees with me.

    Paul Gregg

  2. First Sale is a great consumer protection. If I buy something, I should absolutely have the right to sell it. I shouldn’t, however, have the automatic right to copy it and sell it on.

    I’ve yet to have it explained how to sell on a digital instance of anything without making a copy and therefore breaking copyright. While I could send you an instance of a digital asset I own, to do so I have to copy it. And while no court in the land would convict me for sending you the copy and then deleting my own copy, there’s precious little chance that everyone will do this and this leaves the system open for copyright infringement everywhere. The EU is likely going to tie itself in knots by insisting on protecting copyright and insisting on First Sale. And all that will happen is that Digital Restrictions Management will become the default.

    If it cannot be made worthwhile that this content is paid for, then content will not be created. Ultimately people need paid to make this stuff and if there is no market for it, then there will be no content made. This isn’t necessarily about the rights and wrongs – but absolutely about the reality of the market.

    I’m not against this law (as you seem to think). But I am definitely thinking about the practicalities. Bottom line, why would anyone permit GameStop to handle any of this (which was the whole start of this conversation).

  3. Worth also noting this clause in the Oracle case:

    granting the customer the right to use that copy for an unlimited period

    Just opens the doors for SaaS and Subscriptions. This is, IMO, going backwards. Watch how licenses change (I believe Valve has already updated their EULA).

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