Used games can be good for industry, says EA CFO

Used games can be good for industry, says EA CFO
Seth Tipps

By Seth Tipps

February 13th 2013 at 8:44AM

What's good for retail helps publishers argues Blake Jorgensen

EA's chief financial officer Blake Jorgensen has spoken of the pros and cons of used games for the development industry.

There is a perennial rumor that next-generation consoles will block pre-owned games, but Jorgensen's comments suggest he is looking for a bright side to a market that some say is choking the life out of retail publishing models.

Speaking in a Q&A session at the Goldman Sachs Technology and Internet Conference in San Francisco recorded by Gamasutra, Jorgensen admitted he'd rather be able to sell every game at full price, but says there are some positives to used game sales.

"It's one of these classic double-edged swords," he said.

"In one way the used game business has been critical for the health of the retail channel, and having a healthy retail channel is an important thing for us."

There are also technical hurdles to overcome in going entirely digital.

"The business will probably never be 100 percent digital," said Jorgensen.

"Bandwidths are a constraint, and will continue to be a constraint for many years to come, which hold back the ability to do full digital downloads of some games."

As long as publishers rely on physical distribution methods, customers will look for a way to offload games that are simply taking up scarce shelf space.

"So at the end of the day, it's storage capacity," Jorgensen explained.

"Unless you've got a giant storage server in your house, keeping hundreds of games can tax your storage capacity. And so having a healthy retail channel out there like GameStop or Best Buy or others is important, and to the extent that used games is important to them, I think that's a positive."

Even if both customers and retailers benefit from the trade of used games there are still hangups for publishers like EA.

"Would we like to sell everything at full price and not have a used game market? Sure," says Jorgensen.

But without a place to get rid of old games, customers are more likely to buy fewer new titles, and this exchange helps keep demand up.

"I think the used game market's a little like any other kind of market where it creates liquidity," said Jorgensen.

"The fact is that liquidity benefits us in some fashion. So if someone goes in and trades in a game, there's a good chance they're going to buy another one of our games. And so if there's a liquid market, I think that that's not a bad thing at all."

So will 'fourth generation' consoles block used games?

Jorgensen refused to answer directly, but his comments suggest such a move is unlikely even if an always-on internet connection is the new norm.

"I will say that the trend in the business is to have that always-on connectivity and connect with a customer, and to the extent that the software identifies a certain customer is going to create some issues going down the road in the used game market," he said.

"But I do believe that the consumer likes it, and it's been good for the retail channel."