I understand that devs making no money from used game sales might be a problem for the makers, but are the developers themselves Really the people loosing out on the profit, or is it their publishers? Not to mention that in almost every instance where a publisher has its own digital distribution service, the price of the product doesn't actually change; take a look at Origin, or the PSN's game prices for the PsPGo's games on launch, and as you mentioned the 10% between digital and physical copies for the PsVita is laughable at best.
Without a vibrant and competitive games market, the consumer looses out.
Not to mention that once you sell a game, what right do you have to tell the consumer How he may use it?

And this is exactly why you are going to lose consumers. You forgot many arguments in your development and those are useful to know.
First of, you mentioned the fact that to develop is very expensive and we should be happy to only pay $60 for experimenting your games. Well, what about the cinema then? It's way cheaper than video games no? Do you pay the writer if I lend you a book? NO. Do you pay the director if you lend a DVD? NO. And what about the fact that selling your games can allow you to buy new ones? You seem also forget that the one who sold his game can't play with it online anymore. So why would you ask to pay for a service that we, as consumers, are not able to know if you will not close after few months? Besides, the money and you should stop lying about that doesn't go to the developers pocket, but to publishers'. The publisher pays an amount of money for the development and THAT'S IT unless you have a special agreement. Don't forget that video games are the biggest cultural market now and you all find you way to break it. Just don't try lying that you are too poor to survive in this industry. And also mention the fact that first buyers are always the ones the industry screwed because your products are not even finished.

> "I think what most consumers don’t realize is that every time they buy a used game, there is ZERO money making it back to the Game Developers"

Incorrect. Without the option of preowned, 'John' might not have purchased FIFA 2010, FIFA 2011 and FIFA 2012 year after year. These statements are so ignorant of a basic understanding in economics. There's actually no telling how differently consumers would behave, but conventional wisdom suggests they would spend LESS. Why? because it's a higher involvement purchase.

You're operating from the wrong economic model, like others mention. The purpose of used sales is free marketing, the same as loaned books, and the goal is to get someone new to buy your next game and not scrape the bottom of the barrel for profit on this one.

The article is completely right but pointless because it will only get moronic responses like those above - the reason why I quit the industry and never looked back.

I'm tired of seeing the poor consumer vs the poor developer argument... I see the problem as greedy retailers…
The problem I see is that there is no where near enough transparency in the industry, as a consumer of games I don't really know where my money is going, if I pay AU$100 for a game new or AU$50 for that same game used, I'm still getting that game, but my contribution to the development of that game is different based on the avenue of purchase.
Looking at the entire process, using arbitrary numbers:
Say a developer manages to sell their game to a publisher for some upfront dollar value + royalty agreement. Say, $100,000 + 50% of all publishers’ sales. And say, the publisher's costs for advertising and printing discs works out to be $200,000... based on their assessment of the market they set their per unit, wholesale, sale price of $50 per unit, regardless of medium.
For the publisher to break even, they need to sell 12,000 units, this is because they need to cover their initial production costs of $300,000, plus the royalty costs of half of any income from sales ($25 of the $50 price point), meaning they need an income of $600,000. This is not including any adjustment for profit.
If you then consider that it might cost the retailer $100,000 to sell an individual product line, with this amount consisting of shelf space, staff and advertising per product line. Meaning for the seller its going to cost $700,000 to stock and sell a product. Based on only buying the amount from the publisher to allow the publisher to break even, the store will need to sell its product at a price point of $58, this is only to break even remember, the retail store is going to want to make a profit, so increase the price by anywhere up to, say, 20%, meaning the retail store sells for $70 (maxed).
So the retailer, by selling the 12000 units its purchased from the publisher receives, $840k, $140k of which is its own profit, the publisher having gotten 600k from those sales only cover their initial costs, which wouldn’t be desirable. The developer has made 300k for their efforts…
If you put in the second hand market into the equation, the price that retailers or resellers buy the product for is significantly decreased from what they pay retail while their cost to sell is not increased. Say they give a person selling it to them second hand $20 per copy, going by my experience here, they sell the second hand product for about 15% less than new, so based on this scenario they price it at $58. They’ve paid $30 (60%) less than what they would buy from the publisher, but are selling it to the second hand buyer for only 15% less than retail. Everything in between is their profit, they’ve not paid any additional royalties to the developer, nor anything to the producer, they are effectively a parasite to the previous process.
Sure this profit allows them to purchase additional product lines, and expand their buying/selling power, but the initial product supplier doesn’t directly gain from this unless this profit goes towards investing in selling their product. If it goes towards selling their competitor’s product they’ve made a loss, and the retail point has gained everything.
I don’t see a problem with second hand markets, if its consumer to consumer, but by using a middle man such as gamestop, there is a leakage from the economy that we’re talking about. If the second hand consumer bought the game from a second hand seller directly at the price that is being set by the second hand ‘retailer’ then there is no real diminished return. The second hand seller would have more buying power, having only lost 15% of the initial cost at which they purchased the original game, they would be able to more readily purchase more retail games, which would more directly benefit developers, meaning there would be less reason for developers to try and prevent the leakage from occurring in the first place. These retailers diminish the value of the game for resale by a consumer by placing their buying point at such a low value, the argument of ‘right of first sale’ makes no sense at this point, as you’re not profiting by reselling it to the reseller, but rather, empowering the reseller to take more money off you.

The publisher makes $25 per sale, therefore will need to make 12,000 sales to break even on their investment per above.

I can understand some points but one i really don't like is how he says "I think what most consumers don’t realize is that every time they buy a used game, there is ZERO money making it back to the Game Developers. All of those profits are going directly to the re-seller and making it more and more difficult for us to continue making higher quality products"

Now correct me if i'm wrong, but aren't you getting your money from the first new purchase?? Statements like this don't make sense other than it makes you sound very greedy or stupid.

If this sort of thing carries on i'll be either moving over to pc gaming or jacking gaming in altogether. And i've been playing games for 25 years!!

@Katan13:
I don’t think you have quite grasped the point... sure it might appear that developers are being greedy but consider who is making the money on the second sale, or any subsequent resales, could it not be argued that by not giving a share of recurrent sales(however small or large) that the retailers are the greedy ones?
I would argue that developers would be feeling far less ‘used’ if second hand sales contributed something towards the development costs or profits, as opposed to the zero that it currently does. The reseller (I’m talking store here) has profited directly from the work of the developers upon the second sale, but has contributed nothing back to them… it feels like a free ride, and it feels wrong.
Sure as a consumer you have the ‘right of first sale’ in the US, but in Europe you are meant to pay royalties. In Australia you don’t have the right to resell, but it happens anyway. But as the second hand sale doesn’t constitute as a purchase for consumption, does it qualify within the ‘right of first sale’? and if not, does this not breach the US copyright laws?

@Beau W:
I thought every second hand market didnt give money back to the original creator, why the need for a special case here?

How does this differ from used car sales/trade ins? How is this different from selling your old dvds or cds?

When you traded in your car, did Toyota say, "consumers don’t realize is that every time they buy a [car], there is ZERO money making it back to the [car manufacturer]. All of those profits are going directly to the [car dealership] and making it more and more difficult for us to continue making higher quality products."

Why are you guys different then anyone else in the entire consumer market?

Second hand markets do return to the developer but in a very indirect way with second hand retailers often making the most out of it. I'm not against reselling to another consumer at the price point set by the store, removing the middle man. I fundamentally disagree with game stores devaluing an item simply because its not in their store room, eg, i have a brand new, New release still in its shrink wrap purchased for full value only 'worth' 1/8th that value because it walked out a shop door.

The problem with the car analogy is that the developer doesn't often consist of the producer, supplier, advertiser, and sale point all in one, further the developer doesn't get an income from spare parts as game maintenance eg patching is expected to be free. You also don't get a second hand car in the same condition as the new car, wear and tear degrades the parts, certain consumables are removed or consumed, and warranties expire, while for a digital item, the bits haven't changed... Yet with second hand games there is an expectation held by many that the game will come with everything it had retail including the support from the developer. Games also are produced in such a high volume and at a strict pricing point that there are no real differentiation of quality, or returned enjoyment.

I feel that all developers of consumable goods, copyrighted goods, be it books, music or computer games, should be entitled to some form of protection against parasitic resale, that is, resale by an individual or company without the intent to consume.

I still don't really see your point. I'm afraid to say but it's how the big boy world works.

You buy an item, it's yours to do with as you please, keep it, sell it or destroy it. Entirely up to you.

If publishers and games companies in general want a bigger cut, squeeze everyone else but not your target buyers. In the long run you will have less people buying games because they will have no experience of that IP, yes you will destroy the 2nd hand market, but in turn it will mean less people getting into gaming through 2nd hand sales and over time they will see profits fall sharply.

Hey i'm just a customer, But there is def a limit to how much of this nonsense i'll put up with. This kind of thing turns people to piracy.

Hmm, Beau I agree, but forget analogies, let's be direct.

We must be careful not to miss the benefit of resale. Used sales reduces the involvement of purchase (have a read of the marketing section of 10 Day MBA for more info). It opens up the market to the many consumers who wouldn't be satisfied spending $60 per game (or whatever they are), and it suits a different grade of buying behavior.

The freedom to pass on a game again reduces the perceived cost. And the middleman is necessary becauase it allows much more flexibility in the trading ecosystem.

I could go into many details, but really we must be careful not to make resale our enemy without a real understanding of the economics, marketing aspects and reality of everything that goes on and how badly its absence would impact the industry. Of course if the same economics of trade could exist and all the money goes to developers, then that would be great - besides retail is faltering so we can do this with digital distribution (just look at green man gaming).

But lets be prudent, take away these options and we will without a doubt change the economics. Such a different economy I believe would have disastrous effects, and because of the high involvement you will see people sticking to the same IP and much less innovation (well, having said that the indies will probably be selling at a lower price point) ... in fact, now I think of it, go ahead, remove it, then we indies can be more competitive at a lower price point and with resale economics :) **note, I am being a little tongue in cheek here, please don't take offence**

"I think what most consumers don’t realize is that every time they buy a used game, there is ZERO money making it back to the Game Developers."

Correct me if I'm wrong, but I was under the impression that the developer/publisher *always* benefits from the sale of DLC, regardless of whether the original title was purchased as new or used. A single copy of a game that's resold multiple times can potentially generate additional sales of the same DLC to multiple consumers; retailers are not part of this equation unless the publisher allows them to sell code cards in-store.

To be perfectly honest, this ever-increasing "monetization" of consumers through online passes, day-one DLC, "Gold" subscriptions, and re-skinned map packs has soured me on console games for the foreseeable future. I've stopped buying most titles at retail, preferring to wait for the inevitable "GoTY Edition" to be released, and I buy many through GameFly's used game storefront. The recent spate of single-player content locked behing "online passes" is yet another nail in the coffin which the industry has essentially created *for itself*.

I now have more games on OS X (you know, the platform with basically "no games") than I'll have time to play through any time soon.

...if Microsoft's next console does, in fact, lock specific discs to a specific console, I will buy absolutely *nothing* for that platform, including the platform itself. I've had enough issues being locked out of downloaded content due to Microsoft's DRM on the 360, due to having gone through *6* original-model Xbox 360's since launch. All were repaired or replaced from the "refurb dead-pool" under warranty by Microsoft. I finally gave up on the never-ending cycle of replace & die, and bought a then current-gen 360 which does not exhibit from the initial heat-related failures and has been running for ~4 years without a hitch.

And lest not forget that we're in a recession. I'm sure games companies and publishers are feeling the financial pinch. But rather than taking it like a man like the public are, they're trying to come up with new ways of getting more money out of poorer people.

I think it's a complete joke, but carry on with your plans by all means, i won't be a part of it.

You do realize that one used game sale won't automagically convert in one new game sale if there was no other way to get the game, right ?

You do realize that over here in Europe, games on consoles are sold for about 100$ (70€ at least) ? You do realize that there's a huge economic crisis going on here, right (over 20% unemployement rate in Spain & Greece for example) ?

And you do realize that every time I resell one of my bought-new games to pay part of my new games purchases you're (indirectly that's true) getting money from the one buying the used game because otherwise I'd be buying a lot less games ? Which do you think I'd choose : buy a new game full price (remember : 70€ in retail shops here) or secure what's equivalent to a week worth of food for my wife and me and wait until the game's price drop ?

So yeah, keep wishing for the used videogames market to disappear, I'm ready to bet that when this happens you, the videogames industry, will be the ones crying.

http://gammasquad.uproxx.com/2012/02/dear-jameson-durall-you-feel-used

Read that, and you'll get it (hopefully).

Ditch the second hand games by all means but expect sales at the £50-60 price point to plummet. When people realise they can't resell their games, what should they do with them? Give them away? Someone else can still play it. A sale is lost anyway. (Unless it is locked to one console - what if that console breaks?) Why would they want to blow £50 without any hope of getting any of it back? In fact, you should assume that these current offensive price points are only possible BECAUSE of the 2nd hand market.

Physical boxed games do have a used quality - they've been opened, touched, folded, ripped, scratched. A damaged/incomplete package has a lower resale value.