‘Pre-owned a bigger problem 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.

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“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.

EA you say?

posted by Simon May 11, 2010 at 1:47 pm
1
Simon

Isn't this the same EA sports that turned off games servers for a product not even a year old?

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Per user account or system?

posted by Matt May 11, 2010 at 2:49 pm
2
Matt

If it's a one use per system, then I can see people with a dead console feeling done over. But it means that the family can play it without penalty

If it's a single user code then I'd be inclined to not purchase at all. As you'd need to spend $10 extra per user.

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Not his biggest problem

posted by LeeC22 May 11, 2010 at 5:28 pm
3

"publisher and developer royalties are effectively quartered"
Perhaps he would like to quote some examples of his developer royalty figures, and then maybe project some sales figures to show a potential 4x increase in sales.

While he is at it, if he really does pay developer royalties, maybe he could quote some figures for those too.

But regardless of whatever argument he (or any of the other studios) comes up with. They are not entitled to profits from a used product, any more than ANY OTHER manufacturer... FACT!! It's about time they got over it, and started to release games worth the full price.

I mean, what next, Sony demands profits from used console sales? No, it won't happen, because they're not entitled to it.

I'm so glad I have some spare time at the moment, I'm going to get so many people on this case, they won't believe. I'm sick to death of hearing the whining publishers and devs, go on and on with this arrogant, elitist attitude.

As for them trying it on the 360. I will be certainly informing Microsoft that if other companies are intending to inflict a premium, on top of the already paid for service, then I will cancel my Gold account. I don't mind paying once for Live, but I'll be damned if I'm paying twice for the privelige.

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backlash

posted by jason May 11, 2010 at 6:39 pm
4
jason

I understand having to pay again for additional online gaming features (I wish Phantasy Star Online for DC had this feature). But if EA wants to eliminate resale of their games, they are in for a surprise.
No doubt their sales will increase, but not proportional to their reported loss due to used sales.
I believe that people that can't afford either new games or the built in anti-rebate that EA has planned, will ultimately not use EA.

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He's right - good luck to EA

posted by Steve May 11, 2010 at 8:50 pm
5
Steve

The sooner the rest of the publishers follow suit, the better for everyone.

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@Matt

posted by Ash May 11, 2010 at 10:09 pm
6
Ash

@Matt It is both, to match the Xbox DRM. The account that uses the code can access the online modes from any console. The console they consumed the code on will let anyone use the online modes from it.

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@ Lee

posted by Adam Green May 12, 2010 at 1:04 am
7
Adam Green

"They are not entitled to profits from a used product, any more than ANY OTHER manufacturer..."

Arguably software has to be treated differentally than traditional hardware... Hardware does have a limited lifespan and will depreciate in value and likley eventually break... With software what you are really selling itn's a disk, it's a liscence to use some software and how they get ahold of it is really just a formality...

Just as Microsoft will prevent someone installing windows on a PC then selling the disk on, game developers should have a right to prevent users simply selling a game on once the experience has been completed... Similar to how people at cinemas can't pass their used ticket to someone on the way out to continue using it...

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@Adam Green

posted by FromMonday May 12, 2010 at 4:23 am
8
FromMonday

That's a logical fallacy: You're not purchasing a one-time experience with a game. As a consumer, you have the right to go back and play a game a second time, a third time, and keep on doing so so long as you have access to the hardware.

Likewise, without illegally modifying your console to circumvent copyright law, you cannot install a game onto a system and them sell your copy back to a store while still enjoying it.

Plain and simple, this is the publishers and developers attempting to gouge consumers a bit more, and is really in exceedingly poor taste given the fact many portions of the world are only beginning to recover from a rather crushing recession.

Honestly, I'm not surprised that Blitz Games is saying this. They're not exactly an award-winning studio, and most of the games they produce are forgettable, shovelware games which only sell half-decently because of the Nickelodeon licenses which they haphazardly slap on whatever piece of drek they've produced lately.

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@FromMonday

posted by Matty May 12, 2010 at 7:21 am
9
Matty

I agree fully. What the publishers are also missing here with their "4x" lost income is that many people can't and wont fork out for a full price game. I've worked in retail and many people would not buy games in the first place if they were full price - there are a lot of gamers on a tight budget that developers account for. If people didnt have the cheaper pre-owned option, they wouldnt buy the game ever - its not about just 'saving money', its about the low prices giving people access to the games.

The trade process allows millions to enjoy video games they simply couldnt afford to otherwise.

On top of that, with big chains and supermarkets being able to drive down console and game costs, retail stores (chain or independant) cannot compete. Currently pre-owned is the ONLY reason UK stores like Game Group are still operating (and even then only just) is because they can make lost revenue back with pre-owned. They see barely anyhting from hardware and new software sales, without pre-owned there wouldnt be any high street retailers in the UK.

And Blitz can't talk either. Shovelware title after shovelware. You'll find the majority of their games in a pre-owned Wii bin in stores for a reason...

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yeah right

posted by thedude May 12, 2010 at 7:02 pm
10
thedude

Pre-owned and Piracy are just solutions to the bigger problem of new games costing $60 a pop.

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He forgets...

posted by theworm May 13, 2010 at 4:17 pm
11
theworm

...that to have a second-hand sale, you need a first-hand sale to have occurred. And second-hand sales only grow in relation to how many people bought the full price title.

It won't be a linear relationship of course, eventually there will be enough second-hand versions floating in and out of the 'pool' to satisfy all those wanting to buy it cheaply.

The problem isn't about second-hand killing the industry, it's about the industry seeing a perfectly legitimate and legal trade in second hand games and at a time when money is tight thinking "how can I get some of that?"

Personally I rarely if ever buy full price titles on release now, unless it's a big WANT (Mario Galaxy 2 will be my first in over a year) because they are too expensive. And there's the hint.

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pre owned

posted by DoctorFouad May 17, 2010 at 10:40 am
12
DoctorFouad

this is a big fallacy...where is frederic bastiat ? lol
what the hell those publishers are thinking ?

when they will decrease the second hand market, we have 2 effects :

1/ what we see : sales of the new copies of FIFA or other online paying games increase

2/ But what we dont see ! is that people bying new games wont be able to sell their games, so they wont be able to buy another new games, so overall there would be less consumers buying new games and this is bad foir the industry of video games taken as a whole.

so EA and those publishers, arent taking into account that second owned games are vital for the new games business....because they are just evaluating what they see and not what they do not see (beause they will prevent it from happening)...I hope they will realise by experience soon enoughn, that killing the second owned games market = less sales for the new games.

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Legal since Betamax

posted by Carlo May 18, 2010 at 10:27 am
13
Carlo

The second-hand market has been around since Betamax. People have always had the right to sell their used movie tapes. How is this much different from video games? You get to use it as long as you have the media. If you want to look at this as a licensing issue, even licenses are transferrable. This is just a company looking for more ways to put one over on gamers. Watch as they disguise key game features as DLC just so they can tie it in to one account. It's disgraceful how some companies are taking advantage of the lack of policies that this young market has yet to create.

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Cant Blaim Them

posted by Grant Jun 04, 2010 at 2:03 pm
14
Grant

Eh, i can see their point but if they are going to be eventually seeing a %300 increase in revenue, then i don't think the consumer should be paying $60 per title.

If EA lowers the price of madden to $39.99 for instance and blocks any way of reselling the game, then i would agree with this. They need to take in mind that people who usually purchase new games with plans they can sell them back to game stop (or whoever) will no longer be able to do so. They may be less inclined to drop $60 of hard earned money on a game now.

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EAs $10 plan

posted by Joolz Jun 07, 2010 at 11:02 pm
15
Joolz

Hmm...

I'm as yet undecided about the whole thing.

Got to say that only the software industry could even think about this silly attempt to stop 2nd hand sales.

Imagine giving your car manufacturer cash every time you buy a second hand motor?

Having said that - the 'ten buck plan' as it relates to the console versions of Battlefield: Bad Company 2 (my current PC game of choice) ain't so bad.

Meh about the whole issue really.

Want to discourage 2nd hand sales? Make your titles last significantly longer for the original purchaser. Whether that means an improved single player experience or more emphasis on multiplayer is your choice chaps.

Most gamers will generally keep a quality title for quite some time. Shit gets traded in...

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Will Never Work

posted by Pre Play Zone Jul 05, 2010 at 8:46 pm
16
Pre Play Zone

I can see both sides of this battle, but can never see the second hand market being squashed, it just to big, but no one else is moanig in the business world, you could say the same about Car, Motorbikes, LCD Tv's, Games, Consoles, Laptops, everything gets sold off or traded in at some point, otherwise alot of people wouldn't be able to afford the upgrades, new cars, NEW VIDEO GAMES !!! etc, plus we are a Retro website and sell Super Nintendo, Nintendo 64, Mega Drive stoping at Xbox and the Playstation 2, nearly all the stock we have you can't buy brand new / sealed, so where do they stand on this ???

Another exmaple, Microsoft have brought out the new Xbox 360 Slim, no how many people do you think are going to be trading in there old bulky elite for the new slim version, 1000's.

Take EA games Tigers series every year you bring out a new version, 05, 06, 07, 08 and now 2011, now EA whats to stop people trading in and stop the pre owned market, there is very little change in Tiger Woods games every year, maybe a new course here and there, so say EA get there way who is going to want to be stuck with Tigers 2011 and over 10 years you have 2021 who is going to want 10 bloody Tiger Woods games in there collection, people will just stop buying and play the last one they brought, its the same with NBA, MADDEN and every other sport game which lets face it is EA's biggest market, to be honest i think it will back fire and they will be left behide in the gaming marking.

But everyone has there own thoughts and this is ours at Pre Play Zone !!!

Keep gaming all :) !!

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Hypocrites

posted by Mr Mark 1977 Oct 30, 2010 at 11:28 am
17
Mr Mark 1977

Sorry, but if they're going to compare software to physical objects, and call piracy 'stealing', then they should continue to compare software to physical objects, and realise that once people have bought and used something, it's up to THEM to decide if they want to sell it on second hand, not up to the manufacturer of the item they purchased.

They can't have it both ways - what they are effectively saying here, is you can buy this car from us - but you can NEVER sell it on to someone else.

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beautiful

posted by Jairo Jan 21, 2011 at 7:30 pm
18
Jairo

beautiful,
a fairly common thing is people buy used cars when they can not buy one again, this works just as a used game, the game is something real, not virtual. it is sold in the form of DVD that is something real, just as the car is in vedido, or concepts are similar. we sell the games for fun and sell the cars to get somewhere faster, because we can sell and buy used car and can not sell and buy used game?
what's the difference?
only one difference ...

Greed.

signed by,
a Brazilian who buy things in Brazil by values and 3x to 4x more than they bought in the United States.

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rip off EA

posted by tricky Feb 27, 2011 at 2:39 pm
19
tricky

i cant believe that microsoft are letting EA get away with it. we already pay for our online experience i could understand if it was on the PS network. I buy some game new and pre owned as it depends on the offers, i bought NFS hot pursuit brand new and this will be the last EA title i will buy. this rip off will have a knock on effect through out the gaming industry and needs to be stamped out ASAP!!!

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please

posted by codie Apr 20, 2011 at 6:02 am
20
codie

Its funny they say they're losing money, when really places like gamestop, best buy, walmart etc... are the ones losing money if anyone is. These companies are buying these games from EA and getting their money and then some back when we buy them from them....seems like a greedy scheme to me. As much as I love the Mass Effect trilogy I think I will skip the EA games...their servers suck anyway. Maybe they'll take this money they're jacking from everyone and make a server that can handle their games.

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