I am always slightly baffled by the arguments against pre-owned games, and the damage this does to developers and publishers. The model (second hand retail) has long been established for books and music. Outside of entertainment I can buy a second hand car, bicycle, or anything that I like. The manufacturers of items that are re-sold do not feel they are losing revenue because of the existence of a second hand market, so why should games developers?

For the msot part I'd have to agree. Did they *really* in all honesty "lose" $13m? How many of those sales would never have happened without pre-owned prices etc. It's a similar argument to piracy this, and whilst I agree there are more potential sales they would have made, there's a massive number they wouldn't.

I'd love to see some actual research done on this. It would be interesting no matter what the results were!

Considering the majority of these games would have never sold (as new full price) in the first place, I don't see how he "lost" any money at all. If anything, it opened up the doors to a whole new group of people who would have never bought Heavy Rain anyway, and now if they liked it buying it preowned, they're more likely to buy the sequel at full price if it ever comes out.

But to say you "lost" money, especially in that number, is just pure wishful thinking.. the people who bought second hand wouldn't have bought the game new anyway. All you did was increase your fan base, allow people to trade in an old game and put it towards a new release and to the developer rather than keep it in the closet collecting dust, and bring in new players.

So yes, you "lost" money and fans indeed!

Lol, Heavy Rain didn't lose 13m, that's 13m it never was entitled to. Somebody buys the game the same, trades it in a week later, then somebod else buys it that's the way right of first sale works!

They wanted to make an adventure game and tell a story, so if people beat it and return it quickly oh well! That's just the way it works.

Well I MIGHT in the future be part of the million people who purchase Heavy Rain. I played the demo and I didn't like it enough to pay 60 dollars on. So I might buy it used next year some time. Maybe never. I just bought Resistance 1 for 12 dollars! And I cand tell you for certain, I would have NEVER have bought that game. So it is my opinion that this arrogant man claiming he is losing millions is not telling the full story. He is not losing millions, he is gaining millions of people who may have never bought his stupid game in the first place.

If this wasn't a PS3 exclusive... i bet they would have not had these losses.

Dan Higgott, you cannot compare this to physical medium items being resold. Physical items come at their own toll for being used. Software medium, such as games, is as good to the 5th buyer as it was to the 1st (assuming no disk damage, and there usually isn't much). There is no maintenance, visual differences within game, etc.

I'm sure music and movie businesses suffer same issues, but they have been established longer, have more traditional approaches, they are stubborn, and it is their problem for not keeping current with times.

de Fondaumiere makes an incredibly stupid assertion, that, metaphorically speaking sounds like this: "I can't ride my bicycle under water - let me throw it away, it is useless"

No, you can't ride it on water? Ride it on land, fool. If retail channels are not profitable - dump them, go for digital distribution just like everyone else who knows whats good for them.

How silly of you, de Fondaumiere.

http://www.gamestop.ca/browse?nav=16k-heavy+rain

look at the used and brand new price...

Price that customer is willing to pay for brand new item =
(a) value he hopes to get out of said item
+ (b) price he thinks he'll get out of said item when done.

If b goes down, full price has to go down too (or less items will be sold).

Gentlemen,
Thank you for the animated debate. I won't answer each of you but here is my take on things with some more granularity...without insulting anyone :-).
There was a time when publishers and retailers together decided when it was the right time to drop a game's price. We had full price, mid-price and budget games and the whole value chain benefitted from this. That was also the only way to have different life-cycles for games, compared to films for instance.
Decisions to drop the price were based on consumer demand and levels of stock. Most importantly, price drops happened in a timely fashion. Gamers who couldn’t wait bought full price, those who weren’t sure waited some time, usually 3 to 6 months for the first price drop, and then again some time for the next. But each time a game was sold, companies which had financed and developed it made money, along with the retailer. Different marketing waves usually accompanied these different releases….
Today, second hand gaming (SHG) happens almost same day and date with the full price release. From far away, this may seem to be to the benefit of all in the chain, but actually it isn't. There is probably indeed no research to back my (and all of your) claims on SHG, but the fact that one party only in the mix benefits enormously from this "market pattern" should at least make us chew our arguments twice.
Also, I do not think that comparing VG to durable goods such as cars is relevant. However if one does, you will see that in the case of the second-hand market happening through the same distribution channels (there are only very few examples, cars being one indeed) then there is a mechanism in place to balance this distortion: distribution margins for new cars are very low, because it takes into account maintenance and used sales. Which isn't the case for games, one of the reasons their SRP isn't droping....
Back to games, this new market condition is the main reason in my view why only the "big guns"- the Top 15 games on each console nowadays - sell.. Now I hear those of you who say "well then just create these or sell your crap online only". I think however the industry can be cleverer than that and not necessarily to the detriment of the consumer. I also believe our industry needs diversity, as much as it needs physical retail, at least for certain games. Especially at a time when one development studio closes after the other.
But of course, you don’t have to agree with me….

I have an idea. Sell major games for $10 or so then make several stage of the game unlockable at $10 until unlocking the full game nets $60. Quite often I am interested in a game but not sure I will really like it. These are the games I wait 6 months to get for the price drop or used . I would be willing to take a chance on a game for $10. If I liked it I would be willing to pay in stages knowing the full game would end up costing $60. If half way thorough I thought the game was a dud I would just not unlock the rest.

I bet almost everyone with any sort of interest in a game would be willing to pay $10 for it on the first day. This way publishers would get a cut from everyone who played it and if their game was good enough people would keep unlocking it until the full price was paid.

I know you guys would love it to work that way, but it does not. A house builder does not get cash when a house is re-sold, a car manufacturer does not get cash when a car is re-sold, a book publisher does not get cash when a book is re-sold, a movie studio does not get cash when a DVD is re-sold, painters do not get cash when their paintings are re-sold... etc. ad nauseum.

There is absolutely no precedent for video game publishers or developers getting a piece of used video game sales! None! The only plausible reason for video game publishers wanting this is pure greed, plain and simple.

My answer to this is that hes just blaming pre owned what about rentals or people lending their games all this crap over preowned games is just a piss take you must take into account all forms other than just buying and selling.
Also one point hes missing to is people may of been unsure about the game but Quantic Dream may and will probly gain future sales on products they produce as now people have seen the quality of work they did who probly wouldnt of bothered with it if they could get it by preowned or borrowed or rented.

Research and facts only go so far in an argument with this. Some things are hard to quantify. Such as the same day / next day trade in. How many people didn't enjoy the game, returned it, got $35 in return and called that good enough? Would they have then purhcased the game for $60 if they didn't have this safety net? If you get rid of second hand games, you better accept returns, ESPECIALLY if you won't release a demo before the game comes out.

I would recommend that game publishers look at their own actions to disuade second hand sales. While this may not pertain to the little guys, it is part of the bigger problem: Games have become worthless after you have played through it and they have also become worthless when the next sequel comes out. Since EA makes yearly games and Call of Duty has become a yearly game and you have everyone else is wishing / trying to do the same thing. While it is nice for EA and Activision to have a chunk of their market shell out $60 a year on a particular franchise, it in effect creates the need for second hand / trade in's for the majority to "afford". Afford isn't really the issue, but people don't like spending more money then they have to and will trade in games in order to get more games or to make their gaming habit cheaper. Especially if you are done with a game and have no interest in playing it anymore. Change this culture and you might change the need for second hand sales.

If you think it is about a lower price point, maybe the industry should also self regulate and charge $39.99 for these yearly titles and $49.99 for non-top tier games. $59.99 should be reserved for the big blockbuster's and AAA titles. Let's face it, not every game is worth $60 new. Especially a single player only experience that offers less than 15 hours of gameplay and offers little to no replay value for the majority of users. (Some games have tremendous replay value, a lot are "one and done's"). Some games you know are going to sell well (as they have a big audience) and be widely available second hand. It didn't take long for Mass Effect 2 and Dragon Age 2 to be sold for $29.99 and even $19.99 second hand.... While worth every bit of $60 new, based on the amount of content provided, they suffer in resale due to the number of people that don't find any replay value once they have beaten one of these games.

Another thing that might help: Don't release every good game during the time frame of Oct. 15h - Nov. 15th. Maybe you would have less people looking at it the way I look at it: I'm buying Gears of War 3 next week, Rage 2 weeks later, then I am hitting the crunch season of decision time; What games am I going to buy on release vs. how much time do I actually have to play them vs. what am I most interested in. By the time I get Skyrim and MW3 I will have dropped $240 between now and then. I just picked up Madden for $60 (no I don't buy it every year and yes I am from Cleveland, and yes I was snookered out of $60 for crappy load times and no identify-able improvement.) and I am honestly looking at picking up Dead Island, but don't think I will have time to play it through between GoW3 and Rage coming out. This is also considering tough decisions on releases that I want, but don't think I will have the time for: Forza 4, Battfield 3, Arkham, AC Revelations, + a slew of second tier games that all pique my interest.

But either way I am debating on trading in a bunch of games that I have sitting around as the a "out with the old, in with the new" mindset. I am trading in Bioshock 1 & 2, Assasin's Creed, Assasin's Creed Brotherhood, Red Dead Redemption, Dragon Age 2, Mass Effect 2, Tiger Woods 10, CoD WAW, COD MW2, NFS Hot Pursuit, and maybe 1 or 2 more I can't think of. All of which I hope nets me enough to pay for GoW3! I don't trade them in right away, but it helps me stomach the roughly $400 on games I will spend between today and 12/31/11. Cuz I have a feeling I will buy Dead Island, even though I shouldn't, and a few others, even though I shouldn't, all for the sake of chasing the next release.

My words of advice, Don't be like EA and try to jew the second hand market with the Online Pass BS. Don't make a single player only game that you can beat in 8 hours. Heck, don't make a single player only game if you hate the resale market.

Make your games worth owning by supporting it with extra content on a much quicker schedule. 1 month after a game's release should be the first DLC. Otherwise your "hardcore" market will have moved on. 3 months is too long as someone will have traded in the game by then. But if you can hook them early and often, they will keep coming back for more. Plus a resold game still allows you to expand your audience and expand your sales through DLC. DLC, as far as I know, has been very profitable for those that produce quality content. EA thinks you should pay for cheat codes and to unlock items already on the disc you bought. Bethesda and Bioware give you content that adds to the game and is of high quality and worth the price vs. play time you receive. Last I checked, you couldn't trade in DLC.

I won't go as far as saying "Just make the games and don't worry about the money." But give us gamers VALUE. $60 is asking a lot for the many games that are out there. Know your market and know your fans. Release stuff that pleases them. If your market is 500k gamers or 15M gamers, give them what they want. Trust me, Call of Duty *could* release on June 15th and sell just as much as it would for the holiday "rush". Some gamers want to buy it new, day it comes out and beat every facet of the game spending months playing it. Others take the most they can from it, sometimes falling in deep, other times just grabbing a taste and moving on. Either way, second hand gaming doesn't have much of an effect on your audience if you produce a quality title and release it at a time when your audience can play it, without the distraction of other games, especially if you are a little guy.

I'm not sure that music and movies are quite comparable to games.

There is a different channel for movies for those who want to watch them for a lower price, without committing £15 for a DVD: it's called a 'cinema'. One generally buys DVDs only if one is intending to keep them, keeping the flow into the used channel small.

Music, on the other hand... Physical CD sales have collapsed as people switch wholesale to digital distribution. Even if I did want to sell a CD I'd bought, I only paid £10 for it anyway; it's hardly worth the effort. No, I don't think that CDs are a good comparison either.

Comparison with cars is just silly. Cars degrade over time, and for newly-traded cars the manufacturers have indeed established a second revenue stream: the 'approved used' scheme.

Since discovering Steam, I've bought many games from it that I would have normally bought used, including my first full-price purchase for a long time. The difference? Price. de Fondaumiere has the right of it: make new games cheaper, and cut the heart out of the used market. The man wants to make new games cheaper for you; why argue with that? After all, the alternatives are Ubisoft-style DRM - or the death of retail.

What he's really saying is that 1/3 of the people who played his game generated a revenue stream from which the developer never saw any profits.

Yeah it is skewed to say that is a loss of $13 million ... that's like the record label publishers saying they 'lost' money from pirating. Some of those people might have bought full-retail-chain copies if that was the only option, many might never have bought the game at all if the full-retail-chain and high price were the only option.

I'd love to make money from every pair of eyes on my product. From a developers point of view that would obviously be ideal, not only that but it would be fair and just. However, as pointed out once something is used and passed on it does just simply enter a different stream of revenue based on used goods - no different then buying used skis, a car or clothing second hand. We should get over the ideal and get with the reality.

Their huge problem isn't second hand games, it's the lack of decent royalties from their work from publishers who suck up the lion's share of profits while doing a lamb's share of work.

His point is akin to saying I shouldn't hand the controller over to my buddy sitting next to me, because if he can play my copy, he won't go buy his own! This is absurd, and is nothing more than BS accounting trickery.

As pointed out in many ways so far, NONE of these claims hold water when examined scientifically. And I don't mean his calcs were wrong, his assumptions used to start the calcs were. How about this scenario? Gamer A buys, plays your game, then sells it to a store. Gamer B buys it from them, which the pub/dev see nothing from admittedly, but now, Gamer B loves the title enough to take a chance on the next title from said dev/publisher, which btw, I had never heard of until this article....so the whole "Blockbuster" claim is erroneous.

But the whole lost income claim is frankly bogus, as there is no way to prove you would have retail income from those participating in second hand sales. Absolutely NONE. You can assume....but we all know what happens when you do that.

Just a quick 'different' thought on pre-owned.

Currently, everything we have that is pre-owned has been used, the value of the item is lessened. A car gets older, books get used and bent, etc.

The game, whether used today or three years from now is still exactly in the same condition, because it's digital.

So technically you are purchasing a 'brand-new' game at a used price. Hum? Maybe something to think about. :)

m0deth is right, the actual developer share is a fraction of the total cost of getting a game on the shelf. In fact if we are looking for the greedy people in game sales then it is once again the retailer they make about 40% on each sale and then have the cheek to turn over most of their stores to reselling preowned which again they make a big chunk back from trade ins by hapless customers.

I have no problem with private second hand sales, I do take offence to how stores are turning it into there own little empire. When was the last time you bought a second hand music album or DVD from HMV or Tescos? Chances are that you can't say the same about second hand games and now even the online stores are getting in on the act like Amazon.

The soon that its digital the better for the developers, sadly it is going to hurt for people who legitimately want to sell older titles they no longer have a use for.

It's a sad day when 2 million sales of your new IP is considered relatively poor.

So according to this number 1million people resold the game back? A 50% turnover. I feel that is high or shaddy business of used game companies opening and selling the games for used for a larger margin.

Can you blame consumers for not wanting to pay full price for this game? It's short, slightly boring and has little or no replay value what so ever.

With a little more investment they could have produced some online content to keep people coming back and/or forcing them to buy the game new (in order to get the DLC codes).

2nd hand gaming has been around since the beginning of software. We all used to buy our friends used ZX Spectrum tapes (unless you were copying them - naughty, naughty).

Simple...sell and ship your own games. Instead of having stores selling them.

Beat the competition, rebuy your own game at a better price than a retailer, and resell the physical game again at a cheaper price than the brand new game..

Then make games people want to keep more than 2 days, pretty simple solution.

People should stop saying lost as its context swings more towards missing possesions. 'Lost out' or 'missed out' should have been the key words to prevent the vocal outbreak on such an article.

I also want to point out that the argument that cars degrade over time but game don't is simply not true. Just have a chat with any gamer that did not grow up in the 80s and you will find that they simply can't stand older games.
Try it out yourselves. Show to someone who loved fallout 3, fallout 1&2 and then write down the percentage that was not repulsed on sight.
Degradation is not only physical.
Ps: Before we get to the subject of the retro scene, bear in mind that most of it is driven by nostalgia and the target audience is mostly older gamers that remember these times.

Lost Out is not a positive way of thinking! Certainly DRM 4 Life pans out from time, to time making Steam and others worth calling. Ad minimus I'd like to be able to share games 8, 14, 20 months out in a way that can reward the original effort; handing my copy out and ordering replacement aftermarket is a bit hard use for something I wish to praise and keep!

Speaking to the Develop and Quantic Dream parties: Somehow WSJ.com (and most times, FT.com) manage to cite in condensation the model used when citing any kind of number; why not here? Clearly distribution agreements are too elastic when they get to reverse distribution, or rather, shorting is so sweet that hedge clauses against dispossessed rents (e.g. a naked $13M 90-day 'used' volume) including clauses about media favoring rental over purchase are included standard (making it a gravely considered $13M. Maybe. Do they truly play legal T&C button-mashers in channel sales?) Contrawise, did the studio chief forget her option to offer a Quantic Store Pulp Pack where people can order a brick lettered in gold with their completion time/s for the mystery (valued at $20M,) because peach schnapps and/or promotional pub crawls do that? What happens now, (now there's a Kindle) to marking the hardcover mystery market for pals when price curves cross in 18 months; there should be recognition of value in that 2 people can be lent a book? Is this flash memory distribution channel a whole new rocket science?

Reviews of videogames (unlike those of card games, which need to be burnt with fire more each year) retain value in a way games (in the most forward-carrying, 'fractal geometry' emulation pack) do not. A twilight case for tanked print and multimedia could be a bit sweeter, if merely in recognizing fungible projects...Next Gen and Namco having tanked what, four times each?