I know you’ve all seen and heard this before, the old as dirt debate on whether or not used games are hurting the industry. In all honestly, this is probably the best time to bring up the topic. The gaming landscape is changing and we are at a cross roads. We are gaming in a time when digital distribution is becoming more important every year. The physical disc is being questioned and with it, the concept and existence of the used game.
The undeniable fact is that used games do have a negative impact on the industry in regards to developer and publisher profits. The real debate should not be; do used games hurt the industry? But, how detrimental are used games to the industry? I personally don’t believe that used games are going to cripple the industry, but I do believe developers and publishers are missing out on a chunk of cash that results in smaller profits. Over time, gamers could witness many small to mid size developers and publishers close their doors forever (R.I.P. THQ).
The reality is gaming companies get nothing from physical used game transactions from the likes of Gamestop. Even massive retailers such as Best Buy, Target, and Wal-Mart offer pre-owned games. Gamestop’s “Power to the Players” slogan sounds as if it’s trying to portray gaming companies as evil money hungry entities vying for the consumer’s almighty dollar. When in reality ALL companies, including Gamestop, are vying for the almighty consumer dollar. The only difference between them is that Gamestop doesn’t put in any of the work.
The coming digital age has the chance to eliminate lost profits to third party companies. However, it needs to be done in a way that doesn’t screw over the consumers. Keeping the consumers in mind, two truths are evident; not everyone has or can afford internet and not everyone can afford paying for only new games. In short, Sony, Microsoft and Nintendo (will be referring to them as SMN) need to prevent the lost profits due to used games without hurting the consumer.
One of the major concerns I have for download only games is the pricing. Right now retail games can be bought online for $60 new like their physical counterparts. Lowering the online price would hurt retailers, and I don’t think the gaming industry is ready to stab brick and mortar stores in the back yet. This is an important considering most console sales will be coming from these retailers. A lot of consumers still buy and will buy physical discs. Even for the foreseeable future a lot of sales will come from physical copies. For individuals without internet, a digital only industry is a major problem.
We have already been witness to internet-less consumers who don’t want to just “deal with it”. Everyone isn’t magically going to get internet during the first year of Generation 8, but sales might shift so strong in that direction of digital sales that keeping physical discs in stores is just not financially feasible, especially when the lure of easy digital downloading becomes the norm.
Along the lines of everyone cannot afford internet, not everyone can afford to buy only new games at $60 a pop. Believe me I’ve been there, I know the value of the used game. I’ve been that broke college kid with $40 in your wallet that needs to last you the next two weeks… but you have nothing to play and you just ran out of beer. I transitioned from a broke kid, to a broke college student, and now I am an in debt graduate. There are plenty of people out there who landed on actual tough times (and not just a broke college kid) who won’t be able to enjoy their favorite hobby if it becomes too expensive.
Thankfully, I have two concepts for the used games dilemma. Both are tricky in terms of implementation. In both physical copies still exist (for those without internet), but the main concept behind both is that online digital distribution becomes so alluring that it replaces brick and mortar stores as the consumer’s choice. I have also decided to forgo talking about online game sharing, as there really is no other way I can think of implementing sharing without extreme restrictions. Sharing games online could run rampant among friends resulting in developers and publishers would get royally screwed.
The first concept involves reduced online game prices. This is something not new and is a concept tossed around for quite some time within the gaming community. In reducing online prices, it may be off putting from consumers who are only able to buy physical media at full price (cost of shipping and distribution make dropping prices not feasible). However, it will drive consumers who do have access to internet toward spending their money with SMN and not on cheaper used games.
The first, most obvious, and most plausible is just the reduction of price of all games released digitally from $60 to something more along the lines of $45/40. The price is then kept at a constant indefinitely until either SMN or the developers/publishers want to offer the game at a discount or free as a part of PS+ or Gold. Many consumers will have the opinion that physical copies have greater value than digital ones (since digital isn’t tangible). For SMN to sway these consumers, they have to provide services to increase the value of the digital download. In my article Opinion: Making the Switch to Digital I mentioned some of these services: playing while downloading, larger hard drives, and well thought out and explained policies regarding 1) game ownership and 2) what happens to the consumers downloaded content when the console breaks or is stolen.
In this way companies can entice the consumer dollar away from used games of third party companies, while still allowing those without internet or who can’t afford only new games to continue to play. Why go to Gamestop the week after a major release to get the game for $55/50 used when you could get the game from your sofa for the same price (or less)? Hypothetically, if new games are $45 online and $60 physical retail, companies like Gamestop would have to re-price used games at $45 to stay competitive. However, as I’ve said before, why even drive to the store or wait all day for it to arrive in the mail, when you can get the game at anytime without ever leaving your sofa?
The second solution is my personal favorite and a little radical (can we still use that word outside the 80’s?). It involves a harder push for getting rid of used games completely whereas the method detailed above is more like a nudge.
To put it simply, SMN needs to set up a digital used game market. Yep, you read that correctly. There is no such thing as a “used” piece of intangible data, I get that. However, when you buy a game online, you should be able to “sell it back” online as well. Crazy? Yeah I know, but here’s how it works:
The main concept: selling your game back on the PSN, Xbox Marketplace, or Nintendo Network results in a set amount of “used” downloads becoming available. However, selling or buying “used” games can only occur a set time after the consoles release.
The main draw to this system is its flexibility; SMN can either sell these games at $60 full retail or lower, such as $50 or $40. The set time for when digital “used” games can be purchased vary game to game. Massive triple AAA titles might be 6 months, while others might be around 3 months. How much money received for the game, how much the used copies are, and how much money can be received for re-selling used copies can all be regulated by SMN.
The crucial aspect of this system: the amount of “used” games available for download never exceeds the amount of games actually sold back. For example, after 6 months, 5,000 people sell back Uncharted 4: Sully’s Love Life on the PSN. This results in a maximum amount of 5,000 “used” downloads becoming available for consumers. Hypothetically, if 0 people sell back the game, then no one can buy it used since there are 0 available downloads. Thus a supply and demand is created with a finite “virtual stock” of games.
By implementing a window in which these transactions cannot occur pushes people to buy their games “new” but if they are less than $60… SMN probably won’t hear a lot of complaints. If it’s still too pricy for some consumers, all they have to do is wait around for the “used” game to become available. This wait actually mirrors the wait in the real world when dealing with physical copies new or used. I’ve waited several months for either 1) the new game to drop to $40 or less or 2) the used game to be at $40 or less. Either way, the consumer still has to wait a set amount of time. The advantage is that the consumer doesn’t have to guess when the price drop will happen, as the game has a set date of when “used” copies become available.
Instead of selling a physical copy to Gamestop for $5 or less, you can sell the game you downloaded back for PSN/Gold credit of larger monetary value, regardless of how old the game download is. Why sell a physical copy for nothing, when you can get $15 back online. The consumer doesn’t even have to spend it on a new game. There’s all the various game DLC, or even movies, music, television available for download on the PSN and Xbox Marketplace. Gamestop gives away in store credit for selling used games there. Now, SMN can offer consumers “in store” credit as well. In this way more money is circulated throughout the parties responsible for creation and distribution of the game, than a third party retailer. Sony, Microsoft, or Nintendo can effectively take Gamestop off the market by providing an avenue where money isn’t lost to third party retailers. They can providing more bang for your buck, without the consumer ever leaving their chair.
Also it is important to understand that not everyone is going to sell back their games. I tend to replay a lot of games and selling them back online isn’t something I would do consistently. I can’t even remember the last time I sold a game back. Many gamers probably are the same way; they keep their games. In contrast, there are plenty of gamers who are going to sell them back when they are done. As a result a balance is found between the two types of gamers, so SMN isn’t going to be dishing out online credit for everyone who purchases a new game. Really the limitation for a lot of people is how big their console hard drive is.
Here is a breakdown of the chain of events (note “new” and “used” are just description as there cannot be actual used copies of data):
Uncharted 4: Sully’s Love Life is released on May 11th. A consumer buys the “new” game for $50 online and plays it for two months. He/she decides to sell it back to the PSN and gets $15 in return to spend wherever on the PSN. Sony keeps track of the sell back and adds +1 to the available “used” downloads set to occur six months later on November 11th. Once the consumer sells the game, it is either deleted from his console by Sony or rendered unplayable and must be deleted by the consumer (in short, consumer can’t play the game). However, the save file and trophies are still intact if the consumer ever wants to repurchase the game. November 11th rolls around and the “used” game is downloaded by another consumer at a reduced price. He/she now can play the game forever if he/she chooses to do so. The consumer can also sell back the “used” copy of the game, but for a reduced compensation. Whereas, someone selling back the “new” copy bought it for $50 and got $15 in PSN money, the “used” copy was bought for $25 and will only receive $5 in PSN money.
Used games might not be the apocalypse in regards to the gaming industry, but it certainly doesn’t help that they are taking money away from studios and publishers who put these games out here for us. I understand that not everyone has access to internet and can afford only new games, that’s why finding a balance is key. Sony, Microsoft, and Nintendo need to push consumers away from spending their money on third party companies such as Gamestop, but at the same time not tell consumers to just “deal with it”. The price for developing and marketing these games will only continue to increase even though games will still be sold for $60 in generation 8. With higher development costs and used games chipping away at profits it’s only a matter of time before another well respected publisher or developer goes under. Eventually SMN will be looking to eliminate physical discs, and with it, used games. They are seeing more and more of their profits come from digital sales. However, they cannot afford to alienate the consumer who cannot afford $60 for every game. Finding away to make this possible at the same time maximizing profits should be the goal of SMN. By providing a closed digital economy for games, prices could be dropped and at the same time preventing money from going to third party companies who do nothing with the games creation, marketing, and publishing.
If anything is confusing or problematic, let me know in the comments. It sounds so clear in my head I may have not explained something in detail or left an aspect out.
Oh, by the way, if Sony, Microsoft, or Nintendo utilizes an online “used” game market, they better give Resident Entertainment some E3 passes.