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`Pre-owned games a bigger problem than piracy’


Shaddix Leto Croft

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http://www.develop-o...lem-than-piracy

Blitz Games Studios’ co-founder Andrew Oliver says second-hand games can effectively quarter owed royalty pay

As EA is set to implement a divisive $10 pay-wall in a bid to curb pre-owned sales of its games, one experienced UK developer believes the threat of second-hand sales must be addressed.

In fact, Blitz Games Studios co-founder Andrew Oliver believes that piracy is not the biggest problem facing the game industry, but instead one part of a bigger, underlying issue; lost revenues.

“Arguably the bigger problem on consoles now is the trading in of games,” he tells Develop.

“I understand why players do this, games are expensive and after a few weeks of playing you’ve either beaten it, or got bored of it so trading it back in to help pay for the next seems sensible when people are short of cash.”

However, citing figures suggesting that games are traded in as many as four times, he says that – if true – this means that publisher and developer royalties are effectively quartered.

“So while retail may be announcing a reasonable season, the money going back up the chain is a fraction of what it was only a few years ago. This is a much bigger problem than piracy on the main consoles,” he added.

Oliver adds that the damage done by the pre-owned business will push publishers towards “digital downloads, either the full game, or downloadable content releases.”

Today EA revealed it is introducing a $10 pay-wall scheme that will see its line of sports games come bundled with a free pass card for online services – permitting access to online games, downloadable content and other online bonuses.

The pass card will work much like a Microsoft Points card, with users having to input a code to get online access. Once the code is used, the player’s online account is activated and the pass card becomes useless.

It means that, in theory, all pre-owned EA Sports games found at the retailers won’t be offering free online access. Those who buy EA Sports games pre-owned can still get online access, but will have to pay $10 for one.

Ermm wow so pre owned games are even worse than piracy then haha this is just plain silly to be honest I always thought pre owned games are pretty good when you want to find a good cheap game to play like the other week I got Spidey 3 on 360 for £2 at game station I never thought of pre owned games being a big problem ever this is just really silly.

Edited by ςгครђ
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Pre-owned games are great for consumers, hell for publishers.

Remember they make no money whatsoever off a 2nd hand sale. A large amount of publishers would love to see the 2nd hand market die perminantly to garuntee that any sale of their game gets them their money. I think the 2nd hand market has helpped prevent as much piracy, but sadly in the eyes of a publisher there is little difference.

However SEGA West's CEO actually pointed something rather important out about it:

It's those games that people trade in that give gamers enough cash/credit to buy new games so often.

I'll try and find the actual quote later.

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Guest Jordan-4K6

This is just plain dumb, digital distribution will make them loose more money considering a lot of gamers don't have internet access.

Edited by Jordan-4K6
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This is just plain dumb, digital distribution will make them loose more money considering a lot of gamers don't have internet access.

No it won't, digital distribution like text messaging is said to have a bigger profit margain than finding and selling gold. The cost to put out a physical product is vastly greater than that of a digital product.

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Source: http://www.gamesindustry.biz/articles/mike-hayes-part-two

Q: Retailers seem to be doing well out of the second-hand game sales business at the moment, and now there's a movement towards rental as well - certain sections of the industry haven't reacted well to that move, what are your thoughts?

Mike Hayes: It's a very interesting one, because of the recent announcement from GAME. We've always embraced it, notably via Blockbuster, but the debate's been raging since even back when I was at Nintendo.

It's something we keep an eye on - particularly now our business is so mature, and we're in so many markets, I think ownership of hard copy is still something that the consumer wants. So the rental try and buy, I wouldn't say we fully embrace it, be we certainly understand there's a market for it, and we don't think it's overly damaging our sell-through business.

But we keep an eye on it - it's not like a big green light. The whole second-hand games market is one of those very, very sensitive areas that I've got to say Sega keeps a pretty low profile on - and I'll tell you why.

I know that there are publishers that are vehemently, aggressively against it. My reluctant view is that while I can understand that, if publishers were to try and enforce a non-second-hand market to the consumer, I think there would be relationship damage with the consumer.

Of course, commercially, do I support it? Of course not, and I have to think here of the 650 people we employ at Sega Europe. However, do we have a successful business working with the retailers that offer that service? Yes, we do.

So would I ever join a campaign to get it stopped? The answer is no. Do I like it? The answer is no. I may be sitting on the fence here, but there needs to be a bit of reality on the market.

SEGA West has a rather wise person at it's helm.

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Used games certainly are a problem for publishers, but any attempt to really force the issue isn't going to turn out well for the publishers. The news post in the OP, however, shows the typical fudged numbers nonsense shown whenever PC publishers bitch about piracy, which actually makes the validity of the claim itself quite questionable. I have little problem with what EA is doing (Sony announced similar measures for the Socom games last year), and I actually think that would be the best way to handle the situation for all involved (other than new game prices coming down).

Edited by Tornado
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To be blunt, publishers and developers that bitch about used games sales can kiss my ass, they make more than enough money, and EA can kiss my ass, because they screw gamers over enough as it is.

To elaborate, nine tenths of games released are either utter crap or nowhere near worth their price as a new game. Frankly, if a company can't be bothered to put out something worth buying at full price they shouldn't expect me to pay full price to give them money to keep making sub-par games. Not to mention the economy sucks, some of us don't have a job, and I don't have craploads of money to throw around on 60 dollar games in hopes they won't turn out to be a waste of a rather large amount of money. And EA sucks just because they're coming up with ridiculous schemes to force more money out of gamers which is pretty much business as usual for EA. Maybe if they put half the money they put into these schemes into making better games less people would buy their games used.

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I think I should clarify something, just in case anyone gets the wrong idea: I don't have that much of a problem with EA's plan on the PS3 and PC (especially for those assholes who jump at the chance to buy the $5-off games at Gamestop). But I find it utterly reprehensible for them to do it to 360 users.

Also, there is a pretty good article on Bitmob about this. While I don't agree with everything stated within, it does give a pretty good once-over of everything as it stands now.

Edited by Tornado
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In a world where second hand games are banned?

Sure sucks not being able to get out of print games, ever.

Holy crap that would be hell. There would be absolutely no point in continuing to produce consoles late in the console's life either.

And I'm talking about disc based consoles here, not the hypothetical (perhaps equally hellish) future of digital distribution in which the servers may well be taken down at some point after the console's death anyway.

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In a world where second hand games are banned?

Sure sucks not being able to get out of print games, ever.

Holy crap that would be hell. There would be absolutely no point in continuing to produce consoles late in the console's life either.

And I'm talking about disc based consoles here, not the hypothetical (perhaps equally hellish) future of digital distribution in which the servers may well be taken down at some point after the console's death anyway.

Don't quote me on this but I seem to recall reading in a games magazine a few years back that advised on prices you should expect for selling used games actually stated that the practice of selling used games in Japan is actually restricted and that you need a license to do it.

But yeah, I think that games companies concerns over the purchase of second hand games draining away their income is mostly greed. Selling and buying used games is a practice that's been going on for years and their only really really complaining about it now? I am inclined to think that the so-called economic crisis is what's hitting them hard i.e Skint gamers scrimping for cheaper used games than the insane £30-£50 prices of a mint copy.

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But yeah, I think that games companies concerns over the purchase of second hand games draining away their income is mostly greed. Selling and buying used games is a practice that's been going on for years and their only really really complaining about it now?

Its easy to simply say it is a result of greed, but I don't think it is accurate.

I think the real reason is online play. The economic crisis probably didn't help, and is probably why publishers are doing emergency steps at the moment, but online play is likely why they are having problems with it now and not in the past.

Edited by Tornado
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The concept of charging for online play only came about with things like online-only games and Xbox Live. Used game sales existed when online play was free and it never sank a company then and there are more people than ever buying games now, so logically, just like there are more people buying used games, there are also more people buying most of their games new than before. No reason it should start hurting companies now. Especially ridiculously massive companies like EA that can afford to buy up a new developer or IP they never plan on utilizing every other week.

The gaming industry just coasted out of a massive boom thanks in no small part to the economic crisis and a large shift towards at-home entertainment that it brought. Publishing companies are freaking out because, despite the fact they are making much more than they did a few years ago, their profits are finally going back to an average growth trend and they want to artificially force up their bottom line to keep things more in line with what they've been experiencing for the late 18-24 months.

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Honestly? This doesn't bother me at all. As long as they never ban second hand games outright I'm okay with it. Paying a small fee for otherwise free online services seems perfectly reasonable to me. It'd prolly still work out cheaper to buy it second-hand anyway so what's the big deal?

As for "not everyone has internet access", that isn't a proper arguement against download-only games. More people are getting access every day. Sure, I can relate, my DS doesn't like my wireless at all, if I wanted to download a game for that I'd be stuck, but nothing is stopping me popping down to the local coffee place to download something.

Once upon a time not everyone had phone lines, but we got over that.

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The problem with used games is that unlike other things, say cars, people beat and return games in the same window of the initial release. AKA: Where publishers make most of their money. However, I hardly see it as a massive problem. It's a legitimate business.

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The concept of charging for online play only came about with things like online-only games and Xbox Live. Used game sales existed when online play was free and it never sank a company then and there are more people than ever buying games now, so logically, just like there are more people buying used games, there are also more people buying most of their games new than before. No reason it should start hurting companies now.

That is untrue. With the exception of the handful of multiplayer PS2 games, online play was never free until this console generation. XBox Live is a pay service, Sega-Net was a pay service, and XBand on the Saturn was also a pay service. The costs for running the free online play for the PS3, PSP and Wii come directly from the income the publisher makes on new game sales, so used game sales likely have a very dramatic effect on operating costs for multiplayer games.

As for "not everyone has internet access", that isn't a proper arguement against download-only games. More people are getting access every day. Sure, I can relate, my DS doesn't like my wireless at all, if I wanted to download a game for that I'd be stuck, but nothing is stopping me popping down to the local coffee place to download something.

Perhaps not, but there are many far more tangible arguments against them.

Edited by Tornado
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That is untrue. With the exception of the handful of multiplayer PS2 games, online play was never free until this console generation. XBox Live is a pay service, Sega-Net was a pay service, and XBand on the Saturn was also a pay service. The costs for running the free online play for the PS3, PSP and Wii come directly from the income the publisher makes on new game sales, so used game sales likely have a very dramatic effect on operating costs for multiplayer games.

You're forgetting the PC which has had a massive market of online games that didn't cost to play that stretches back into the early history of gaming. Never owned a Sega console so I'll admit to ignorance on that part, but were there really that many online console games at all until last gen's Xbox? Edited by Cipher
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You're forgetting the PC which has had a massive market of online games that didn't cost to play that stretches back into the early history of gaming.

PC Gaming doesn't apply for two reasons:

  1. Online play for PC games is, and always has been, done in a completely different way. PC games usually use dedicated servers, which means that one of the people playing the game runs the game for everyone else. Those that don't use dedicated servers (and even some that do) use third party servers completely separate from the publishers like Gamespy Arcade. With the exception of MMOs (which have subscription fees) and some very recent console ports, publishers practically never run the online component. This is part of the reason that PC games cost less, because PC publishers don't need to charge more to support the multiplayer parts of the game.
  2. The used game market for PC games was never particularly strong (partially because the legality was always somewhat questionable), and it has been all but dead for the past decade or so.

Essentially, not only was the used market small potatoes compared to that of consoles, but the publishers also aren't the ones that pay to keep the servers running for PC games, so used games wouldn't be a problem for them regardless.

Never owned a Sega console so I'll admit to ignorance on that part, but were there really that many online console games at all until last gen's Xbox?

The Saturn had a few. The Dreamcast had dozens.

Edited by Tornado
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As for "not everyone has internet access", that isn't a proper arguement against download-only games. More people are getting access every day. Sure, I can relate, my DS doesn't like my wireless at all, if I wanted to download a game for that I'd be stuck, but nothing is stopping me popping down to the local coffee place to download something.

Don't forget that gaming is largely aimed at children, they make up a gigantic portion of the market. And where to parents shop for their children's games?

Retail.

How does the child know if a game is available online only? He might have absolutely no idea, and even if he did, is he going to be able to persuade his parents who are very possibly still a bit technophobic to give their bank details away over the internet to download this game for him? Does this kid have enough technical knowhow to explain that it's safe? He's just a kid.

OK, let's say they say no. What now? Even though they have internet access, this kid can't get the game he wants because it's online only.

You have to admit it's not very accessible. In an age where gaming is supposed to be becoming more accessible to every kind of gamer, including parents, pensioners and even younger children, how can going to DD only route not be a largely alienating one?

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Besides, the market really isn't ready for games being download-only yet. I mean, look at the epic retail failure of the PSP Go. It was practically bound to flop. I mean, come on, it's way to early for a download-only console let alone a handheld, it was a retarded idea, I seriously wonder why Sony even considered it. Download-only is perfectly fine with smaller games with smaller budgets, but I don't see all types of games moving to download-only anytime soon... Maybe not even within the next 5-10 years.

Still, I think this whole "pre-owned games are a problem" thing is seriously being blown out of proportion by publishers who want more money. Second-hand products have been around for ages, not just games, I don't see why the second hand market for games is a special case.

Edited by Masaru Daimon
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Second-hand products have been around for ages, not just games, I don't see why the second hand market for games is a special case.

Because the games market as a whole is a special case. Compared to other types of media, until the last few years with the increased popularity of DLC, games were very limited in the number of ways they can make money. The second hand market makes up a larger portion of potential sales for games than say films or music.

Like it or not, direct download will begin to take up a larger portion of the market share.

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and even if he did, is he going to be able to persuade his parents who are very possibly still a bit technophobic to give their bank details away over the internet to download this game for him?
xbox-live-1600-ms-points.jpg

oh hey who left this thing here

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Don't forget that gaming is largely aimed at children, they make up a gigantic portion of the market. And where to parents shop for their children's games?

Retail.

How does the child know if a game is available online only? He might have absolutely no idea, and even if he did, is he going to be able to persuade his parents who are very possibly still a bit technophobic to give their bank details away over the internet to download this game for him? Does this kid have enough technical knowhow to explain that it's safe? He's just a kid.

OK, let's say they say no. What now? Even though they have internet access, this kid can't get the game he wants because it's online only.

You have to admit it's not very accessible. In an age where gaming is supposed to be becoming more accessible to every kind of gamer, including parents, pensioners and even younger children, how can going to DD only route not be a largely alienating one?

That's a good point. A lot of parents would be lost without a shop to go down to and ask for advice on "that new mario the hedgehog game for the nintendo 360 my son wants".

Digital distribution is probably the future, but it'll take a while to ease everyone into it.

EDIT: Scratch that, what Blacklightning said. Lol.

Edited by JezMM
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oh hey who left this thing here

- Not all systems support points

- Points don't work for everything

- It's not not exactly an accessible or casual-friendly process in a world where gaming is supposed to be becoming more and more accessible to all demographics.

- If there are no more game shops left, where do you expect will sell things like this?

And Jez you brought up a good point yourself. Who are the parents supposed to ask for advice if all they have are call centers on premium rates?

I'm telling you Digital Distribution only is just more excuses for the game industry to have a complete monopoly on everything it does. It's not exactly "casual-friendly".

EDIT: And for those who missed my first post I'll bring up again...

When the servers for old systems are shut down? Say goodbye to back catalogues, say goodbye to all those games you missed, because you won't be able to buy second hand copies. They're gone forever until the company makes you pay for them again at a ridiculous price on a new system.

Edited by SuperLink
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- Not all systems support points

All three main consoles do as far as I'm aware (as well as some of the handhelds), so I don't see what the issue is.

- Points don't work for everything
How so? They work for games and content for games anyway, and frankly I don't yet see the need for anything beyond that.

- It's not not exactly an accessible or casual-friendly process in a world where gaming is supposed to be becoming more and more accessible to all demographics.
Entering a 20 digit code when prompted isn't exactly rocket science, even if it's a bit tedious.

- If there are no more game shops left, where do you expect will sell things like this?
I don't recall claiming that game shops should be removed.
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Entering a 20 digit code when prompted isn't exactly rocket science, even if it's a bit tedious.

It's not accessible. The industry finally has a grasp on girls/pensioners/parents/younger children after trying so hard for so long, do you really think they'll mess all that up by forcing people to go buy a bunch of cards and enter a bunch of codes and scrolling through a bunch of online menus when they have noone to ask for advice other than premium phone lines? Keep in mind a large portion of these demographics are not exactly internet savvy.

Hardly, a move like DD only would surely kill a large portion of the casual market.

I don't recall claiming that game shops should be removed.

Because they'll obviously stay open if they have nothing to sell right? Why else do 9/10 game stores refuse to stock the PSPGo?

Edited by SuperLink
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