Yesterday I came across a fairly interesting thread asking: Do used games hurt developers? I wrote a nice, long answer in it but I figured I would share it with those who might not have seen it.I feel that saying that developers are hurt by used games is like saying the agricultural market is being hurt by you growing your own tomatoes in your backyard.
Is it true that developer lose money if you buy a used game? Yes, they do lose a bit because instead of gaining a profit percentage from someone buying a new copy but yet they still gained money from the original copy bought.
Is it enough to harm them? No and here's why:
Used games only exist if people buy new copies. The developers gain money from those new copies and a vast majority of the time, the developer gains enough money from the first round of new copies to cover the costs of the game's development, printing, shipping, etc...and still walk away with enough of a profit to expand their company.
While it is true that some people do buy newly released games, from experience I've mainly see people buy used games that are older titles with a lot of them being games that are no longer in print new. You mean to tell me that a developer is going to constantly printing new copies of a five year old game so I can buy it new? The answer is simply no because the developer would lose more money from reprinting than they do from me buying their five year old game (which by that time is probably worth 75% less than when it was first released).
Occasionally they will release reprints of games via 'Greatest Hits' releases. While the value of the game has dropped, the developer still earns some money from these sales and in a way, we can interrupt 'Greatest Hits' titles as the developer saying, "Here's your last chance to buy it now, other wise we don't care." After all, by this time the developer has often moved onto other, larger projects that will probably bring in a bigger profit than their 'Greatest Hits' titles- even if consumers buy them all.
Used games have been around for over a decade and we have yet to see any company go bankrupt because of used game sales. So far, the main reason why we've seen a company fold was due to law suits, mergers, or their games just losing quality or not holding gamers' interests to even make them by them in the first place. (I miss you so much, Clover...)
Hell, used game sales can even help increase new sales for a developer. Say you buy a used copy of 'This Game'. You played it, loved it, and then shortly after beating it you found out that the developer is going to be releasing a sequel or a game with similar gameplay. Chances are your interest in the game is going to be so great that you're going to rush out and buy a new copy of the new game.
If you don't believe me, let me give you an example: The Grand Theft Auto games are a popular series for people to buy used, yet, the Grand Theft Auto IV walked away with selling 3.6 million copies on their first day gaining (roughly $216 million on its first day); they had sold 10 million copies a few months after the game's release. All those copies were new. Since then, people have bought used copies of Grand Theft Auto IV and will continue to buy them, yet there is no news anywhere about RockStar going bankrupt due to low game sales.
But of course sales don't end with used copies. There is no law preventing you from buying a thousand new games and then reselling them even though you never opened them. Just look at eBay auctions will people will sell 'brand new, in mint condition, never been played!' copies of rare games and makes more of a profit than the developer does from its sale since the consumer who is reselling it doesn't have to pay a development team or printing costs or even the shipping costs since they charge whatever they want for 'shipping and handling'. You mean to tell me that reselling new games is different than selling used games? The only difference is one copy is still in the original packaging while the other as been played. It's still the same thing: a game being sold by someone other than the developer who gains a profit from it while the developer doesn't.
The fact of the matter is: people will always buy new games. The desire to have a brand copy the day of its release is too great for most people to pass up. Why it isn't uncommon for people to just buy new copies over used copies because they feel that saving $5 isn't worth having a copy that might not have a manual with it. People will always buy used games because not everyone can afford a new game or because the game might not even exist in new copies. And people will always sell games they buy regardless if they played it or not just to earn a couple bucks.
Yet, developers will continue to make money and will be able to continue to support themselves. Especially with the growing market of microtransactions. So what if someone buys a used copy of Halo 3? Bungie still makes money off of the buyer buying the maps. And the income doesn't stop with game content. Every t-shirt, hat, wallet or item you buy that is tied to a game, the company still gets a small profit from it due to them owning the rights.
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1 comment:
I think you are looking at the situation through slightly rose tinted glasses and I think a few statements in your post need to be thought about further.
The first is the assumption that "a vast majority of the time, the developer gains enough money from the first round of new copies to cover the costs of the game's development". Unfortunately this isn't right. The majority of games do not recover enough profit to cover their development cost (the figure for profitable games has been put at between 10-30%). This is usually on the publisher’s side as the developer (unless it's an in-house studio of course) is paid up-front for their work, but this obviously feeds into the next project and the one after that (decreased sales also effect the royalty rate which can effect a studios future).
What I think most people worry about is the speed at which pre-owned games come onto the market. A title may come out one week, and then a specialist retailer will have a second hand copy (maybe $10 cheaper? I’m working in £’s here) a week later, and in some case, even a few days later. It is these pre-owned sales that really affect the profit figures of new titles.
If people know they have a good chance of getting a cheaper title only a week or so after release, then unless it's a massive release, a lot of people would rather wait.
Using GTA as an example really doesn't give a clear picture. Titles like this are rare and 99% of the games sold will sell no-where near as many copies, especially on the day of release. You need to look at more core titles, the titles that the majority of studios put out and the average sales ratio, especially of next gen titles.
I would agree with you that second-hand games are one of the best ways to find older titles, but again this could be side-stepped if retailers weren't so quick to drop a title from their shelves after only a few solid months of release. Micro-transactions are also a solid point and the rise and rise of digital distribution will only help the developers and publishers in the future.
Of course this debate has many sides, the initial cost, price vs. value ratio and many other factors play into what is a tricky situation, but as it stands even the biggest publishers worry about the effect of pre-owned sales as they stand.
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