GameStop exec says a market without second-hand sales is 'unproven'
Microsoft’s next generation games console will not feature technology that blocks out pre-owned games, according to the chief executive at retail giant GameStop.
Paul Raines told investors it is “unlikely” that the so-called Xbox 720 will restrict customers to solely playing games bought brand new.
“The model simply hasn't been proven that works," he said.
Suggesting he had spoken to Microsoft about the matter, Raines said GameStop’s console partners “have great relationships with us".
"Remember that used video games have a residual value,” he added.
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“Remember that GameStop generates $1.2 billion of trade credits around the world with our used game model. So, consider taking used games out of that, you'd have to find new ways to sell the games.”
Earlier this year it was claimed that Microsoft’s next home console would bar access to second-hand games, as part of a wider aim to take the pressure off publishers and developers who are squeezed by pressured profit margins.
Sales of pre-owned games returns no direct money to content creators; retail takes all the profit.
With game budgets at an all-time high, in turn making it harder to achieve profit from blockbuster games, some in the industry believe the second-hand market has become a bigger problem than piracy.
Gamestop *hopes* that Microsoft won't have the gonads to cut retailers and the second-hand market off in one fell-swoop by locking discs to a specific console. I truly believe that if Microsoft thinks that enough consumers will be OK with that type of system, they'll forge right on ahead with it.
I still dont get why the games industry, particularly publishers, are upset over used games. No other indudtry, automobile, housing etc complains about it. Used car sales and flipping houses are big industries and yet we dont here car manufactures and housing construction companies whining about get their cut once its been resold.
...when you compare the automobile and games industries, you have to take into account that the automobile industry has planned obsolescence, so it always has a way of bringing customers to buy new products. The games industry however is having to adapt to a us gamers trading second hand, and undercutting what for the automobile industry has as an assurance to income. The property market is different again, because people are not constantly looking for house 2, or the ever delayed house 3.
I think the only way I could see Microsoft going ahead with a model like this is if they are going to direct to customer transactions for less then what the players are currently paying for games. I can't see many people taking risk on games for $60, where current used games give the players chances to try out those same games for a fraction of the cost.
In addition to that, I think it would be hard to convince retailers to actually sell a product that they aren't going to make a lot of money on. Companies like Gamestop can currently take a game, sell it to one person, have them return it, then resell it multiple times. With a "new game only" policy, they would have to cover all the revenue loss that they couldn't have had from trade games.
It's very unlikely they'd keep doing business with Microsoft, which would then in turn hurt developers. I don't see this happening any time soon.
The solution to 2nd hand market is Free To Play games... Not only the retail business is decreasing as the market is going online, but next gen platform will probably see more Free To Play games allowing publisher to directly connect with clients.
I can't see Microsoft having Xbox 360 games work on their next console. Mainly because it'd mean they'll have to support DirectX 9 (released in 2002!!!) while we have now DirectX 11 and they are breaking a lot of stuff with their Windows 8 vision.
I can see Microsoft, and I don't necessarly approve that strategic decision, trying to converge all their platforms (Windows, Xbox & Windows Phone) into a single shared technology.
Such business desicion doesn't leave room for older games and is a radical change to even consider emulating an Xbox 360 within their next console...
I may be wrong but that wouldn't sound like what they'd do if the above hypothesis are valid.
The 2nd hand market is not a real question: publishers and the industry would like to get a bit of the cash generated from it but that's just impossible.
Their best chance is to move from the sale mechanism to some sort of renting or subscription mode: with such approach they'd have full control on the games we play, when we do and therefore how much we would pay... But it'd require them all to agree on the terms which I doubt it can be achieved short term...
