Frontier Developments’ David Braben lists six steps to take
There have been all sorts of statements about so-called pre-owned games, and quite a lot of people spouting hyperbole. To be honest I have been one of those people, but that doesn’t mean there isn’t a truth to it.
We see more and more developers and publishers speaking out against pre-owned, while more and more retailers – even supermarkets now – are getting their wide-bore snouts deep into this trough. But, apart from speaking out, we are really doing very little about it.
Since I last wrote about it nearly a year ago, little has changed, other than my fear (a plethora of type-in codes and ‘memberships’) having largely come to pass.
The deck is sloping, the band is playing, and we are shouting and gesturing angrily to each other about the iceberg. One or two people are building rafts, but no-one is plugging the hole. We’re all waiting for someone else to move first.
If you don’t believe pre-owned is causing a huge dent in our sales, then look at the figures: In the US in 2008/2009 42 per cent of GameStop’s profits (as the biggest specialist retailer in the US) came from pre-owned game sales, and gross profit on pre-owned alone climbed to just under $1 billion. It is no wonder supermarkets and corner shops are joining in the plunder.
We need to look at it sensibly – we need to think not just of developers and publishers, but players and retailers too.
PLAYERS
There is a strong argument that players want the prices of games to come down, which sounds obvious enough – and that is effectively what pre-owned does, if you return the game after playing it.
Our fragmentary response to the problem, one-time codes and so on, is in danger of reducing the incentive to keep them anyway, devaluing a collection if it is bound to numerous different accounts and codes, with no certainty that in the future these codes will continue to work.
RETAILERS
High Street retailers were having a hard time of it before they started with pre-owned – new games are rarely sold for anything close to the RRP these days, going for not a great deal more than the trade price in some cases (especially online). So retailers’ margins are now very slim on new games. This process of margin erosion is starting to happen to pre-owned too, and will increase as the supermarkets get up to speed.
Such a decrease in the profit from pre-owned to retailers makes it less valuable to them, so may make them rather less resistant to change.
It is not completely bleak; pre-owned does – effectively – put some money back on the table, as the cost of goods is saved each time a game goes around the loop. But fundamentally there is now less money to go around as retailers have educated gamers to think that a lower price is what they should expect.
It would be possible for retailers to pay a slice of the pre-owned revenue to publishers and developers, but I can hear the calls already: ‘Why should we?’ Perhaps they are right. The inaction of our industry so far has essentially given them the go-ahead. There needs to be a real likelihood of things changing imminently right across the industry for any action to be taken.
ACTION
There are six ways we can go:
1. Carry on with the array of ad-hoc one-time codes, online ‘passes’, DLC, to tilt players toward new purchases.
2. Introduction of cross-industry serial numbering of discs. This shouldn’t mean the complete freezing out of pre-owned – it would be up to developers and publishers what to do – but it does give the option of a whole range of possibilities, including ones currently covered by the one-time codes.
3. Industry participation in pre-owned sales. This has to be with the retailers’ agreement, but this may come, as long as there is an upside to them, and that upside could be as part of holding off on the worse excesses of (2).
4. Bring in ‘Not for Resale’ SKUs. Why is there no parallel with DVD sales? It is because they do not allow resale or rental – and in fact have special ‘for rental’ SKUs at a significantly greater price.
5. Make the discs just data discs costing say, £5, perhaps containing an extended demo, but requiring online validation to become a full game (eg by withholding the executable file), even for the first user.
6. Move to online-only. This is where the retailers seem to want us to go after all, so perhaps it’s time to make the jump.
Whatever the tactic, let’s do something soon, and stop all the shouting about the unjust iceberg.
Isn't Option 5 just Option 1, but on a larger scale?
One of the main points here is retail has to sell at full price since they have lower margins than a online store. So they use used games to generate better income.
The publishers will criticise it but don't offer anything else. We should all face up to the fact that if games stores want to remain relevant in a digitally distributed industry they need to offer more, and the publishers need to help them with this.
Why not get the devs touring the country signing disks? Midnight openings are great, but where are the tournaments, games nights?
I discussed this with tabletop veteran James Wallis last week and he agreed that games retailers and publishers need to start looking at the likes of G.W. and its totally vertical integration to see what they need to be doing. They need to do it quick before the supermarkets come in and destroy the value of their products.
I spotted PC world selling a game for 7p this weekend. Its pretty depressing when supermarkets are using a piece of art that took a hundred thousand man hours as a loss leader.
1) This is the best way to devalue the gamers purchase completely. The only person who suffers with single-use codes, is the original buyer, as it is them that make the biggest loss on trade-in. Way to go hitting the loyal buyer in the pocket, nothing new there then.
2) And this will do what exactly? If I bought a game with a serial number, what would it do? Tie it to my personal details? Not likely! It might tie it to my tradeable fake details, that will go with the game... nothing more.
3) I see no reason why retail should agree to that, and if they did EBay would be the traders choice of market.
4) Ah yes, because that really stops DVDs from being resold. You could go into Blockbuster and buy ex-rental DVDs all the time. There isn't the enforcement agency to deal with this, and even if there currently was, it would probably be in the "waste of time/money" column.
5) That's right, tell gamers "if you ain't got the internet, then you ain't playing our games". Deliberate discrimination based on economic and regional status, that's a great way to sell a product.
6) See 5. Since when did gaming become the passtime of the rich and connected?
Braben should remember his roots, the people that earned him the right to post this kind of blog. We weren't all rich, we didn't all have online connections and we didn't need them to play games. Games are for the people... ALL of the people.
Maybe if the games industry had the chip knocked off its shoulder, it might get a bit more support from people. While ever its stance is based on greed and arrogance, it's getting just desserts IMO.
and this is a help to the end user of entertainment software HOW?
Maybe we can give some advice to GM and Ford to close down those used car companies costing them millions, or maybe that pesky stocks and bonds markets that cost public companies money.
This whole debate is absurd and juvenile. Once a game is sold these companies loose any right to worry about what the original owner does with their game.
Blackmailing retailers by demanding a portion of their revenue under the threat of locking out new games will result in a number of extremely costly legal actions that I'm sure would ultimately result in the games industry having to back down, if not prison sentences for blackmail.
Even the jackals in the film and music industries haven't tried a move like this – I agree with Jack, the auto manufacturers aren’t doing this, nor are book publishers, nor even the jackals at the film and music industries.
Only halfway sensible is your proposal to go the pure digital route but consumers will need to see cost benefits attached to this. Personally I like having my games on disc (even though I install them to the hard drive on my 360) because I don't trust publishers and hardware vendors to remain in business for the 20+ years I might keep them (yes, I still have my Mastersystem and still play certain games occasionally) so that I may redownload them should the hard drive fail whereas working hardware is generally available used, though I’m not clear if you’re proposing that hardware should be crippled to a single user only too. Sales of PSP GO are hardly demonstrating that digital only is viable though are they?
PC games are already significantly cheaper than their console counterparts despite the fact that they cost more develop due to the need to support multiple hardware configurations so there's clearly potential to reduce the cost. Reducing the cost of console games to around the £25 mark would lead to a marked increase in sales that improve.
If your objective was to propose ridiculous, unworkable solutions to draw the industry to more sensible pricing in both digital and retail channels I salute you, job done!
Another sensible suggestion can be found here:
http://www.develop-online.net/blog/161/Replayability-is-at-the-heart-of-the-pre-owned-issue
Given that Elite I & II have huge re-playability levels I'm surprised you didn't spot this!
There should be some reasonable compromise between distributors and retaliers - for example two months moratorioum to not buy back newly released games. Newly released titles need to make many to their creators, and then others should participate.
After further deliberation on this subject, I thought perhaps it would be worthwhile making an alternate suggestion.
Retailers will not want to give up a portion of their pre-owned revenues and consumers require value in their used games to offset against the sticker price of new games (otherwise they'll wait for games to hit the bargain bin, especially predominantly single player games).
So, how do publishers gain a slice of the used market and foster customer loyalty without infuriating (too much!) their distributors and retailers?
I think that the solution is simple. Offer customers the option to send back their old games to the publisher for discounts against new ones or cold hard cash.
Obviously the value returned to the customer would need to be competitive with that offered by retailers.
The used games could then either be destroyed (helping to push the price of used games so as to be less competitive with budget titles) or resold back through existing retail channels, whichever being the more commercially sensible option.
You're not actually addressing the issue --> Give your games value and a reason for consumers to KEEP them. Not ways to LOCK us out and squeeze all the money from our pockets.
Substantial DLC and game updates -- Compelling multiplayer -- Engaging AI that adapts and is fun to play against -- Gameplay with branching stories or that tailors to your choices --
These are the type of suggestions I wish the industry could be exploring. Not prohibitive tactics meant to lock out players at every turn if they don't have an unsealed retail copy.
God forbid I want to BORROW a game from a friend!! Or lend someone a game they never would have purchased/played otherwise...
