Xbox killed the used game

[Starscream]

Companies with no ethics try to screw the public all of the time. If the majority will fall for it, the company will keep screwing, then screw even harder. Eventually gamers will have to pay by the hour.

 

The question wasn't about ethics. It's was about business models.

[+Random Terrain]

The question wasn't about ethics. It's was about business models.

 

"Business model" is usually synonymous with the questions "How hard can we screw the public and get away with it? How can we trick the public into thinking our crap is worth paying for? How hard and deep can we fleece these rubes without leaving bruises and scars?"

 

en.wikipedia.org/wiki/Business_model

Whenever a business is established, it either explicitly or implicitly employs a particular business model that describes the architecture of the value creation, delivery, and capture mechanisms employed by the business enterprise. The essence of a business model is that it defines the manner by which the business enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit: it thus reflects management’s hypothesis about what customers want, how they want it, and how an enterprise can organize to best meet those needs, get paid for doing so, and make a profit.

[fiddlepaddle]

It seems to me that what is happening with the game industry is following the same path as what happened with VHS movies when they first came out. If you wanted a copy of Star Wars, you paid $79.95. Then blockbuster started buying tapes and renting them for $3 per night and they cleaned up. This forced the movie distributors to lower the retail prices on VHS tapes, eventually to about $10, when millions of consumers started buying tapes (at this more reasonable price) instead of renting and, VOILA, the movie companies started making lots of money again. Of course, people rented the tapes and copied them, but this is more work than buying a new tape, so it didn't impact sales much.

 

Much the same thing happened with PC software and copy-protection schemes/dongles/keys/etc. Consumers rebelled and most of that crap is gone now. There are still some companies and products that are set up this way, but very few, and usually very high end stuff where even one or two pirated copies would damage the companies who are selling these products. The big hold-out, if you can call it that, is cloud services, where you don't ever get the software in the first place, you just pay to use it as you need it...just another business model.

 

I think forcing people to "check in" periodically to run a game is over-reach, and will ultimately reduce the market for those games, but it's legal and they're free to try. If game consumers realize what's happening, the ones affected will probably look for a better way. As long as we have a competitive market (potentially a BIG if), someone will give us what we want.

 

What if my vacuum cleaner required "periodic updates" to keep working...I'd find another one. I don't think this model will be feasable in the long term. Even though internet access is common, not everyone still has it, and it's not 100% reliable, and won't be for a long, long time. Eventually though, probably almost every device we buy and use will wirelessly self-diagnose, update, and probably check authorization for ownership or licensing. I see it coming, and don't like what I see.

[Mord]

just about everybody before the late 90's, on occasion you would find a small bin outside of EB with copys of last years sport games, or something in the traders post newspaper, but yea used games? there wasnt a funco and 2 gamestop and a game trader all within a 3 mile radius like there is today

 

Actually, before there was a gamestop/ebgames/gametrader/etc near every populated area, people just traded their games among friends and rented games besides that. I had probably 15-20 NES games for instance, but would regularly trade games around. So sure you bought new back then, but many of us still had the ability to play a lot more than just what we bought new.

 

So really, nothing changed from then to this gen as far as the effect of a used/secondhand/etc market on new game sales. Publishers just couldn't stand seeing a third party making millions selling used products that the original buyer no longer wanted and started craving a (very large) cut of the pie they had no rights to in the first place.

[Starscream]

Publishers just couldn't stand seeing a third party making millions selling used products that the original buyer no longer wanted and started craving a (very large) cut of the pie they had no rights to in the first place.

 

This particular part intrigues me. Exactly what or who has been given the authority to determine how much a company can make on their IP and at what point?

[+Random Terrain]

Exactly what or who has been given the authority to determine how much a company can make on their IP and at what point?

 

I can answer that. The law has authority. If you buy a new chair from a craftsman and decide to sell the chair at a later date, then the chair maker kicks in your door and demands a piece of the sale, the police will drag him off to jail.

 

If these game company suits want to act like gangsters and demand a piece of every pie, they should be treated like gangsters and tossed into prison.

[Mord]

This particular part intrigues me. Exactly what or who has been given the authority to determine how much a company can make on their IP and at what point?

 

The first sale doctrine for starters. Once the first sale is complete, then so long as no additional copies are created, you're suppose to be able to do what you want with it. Including selling that copy to another. The original creator has no legal rights to demand a cut of any of those sales.

[Andromeda Stardust]

The people using the "straw man" argument that buying used games equals piracy, are forgetting something called "supply and demand".

 

Basically the way supply and demand works, for products that are still in production, is as demand goes up, the production is increased. Games start out at high prices, until sales become slow. Then prices are reduced in order to stimulate higher demand for the game later in it's life. The PS3 "Game of the Year" editions of popular games are an example of this, for instance a game that was once $60 is sold for $30, and is packed with another $30 of free DLC content, basically resulting in a $90 value compared to the original game + DLC.

 

For discontinued or collectable products, supply ceases, and the only products available are used. Prices are no longer dictated by the company, but instead are dictated by collectors. Common games in low demand might sell for between 50 cents and $2, whereas rare games in high demand might sell for $200 or more. Besides those two extremes, prices for uncommon but low demand game, and common but high demand games, generally are fairly reasonable.

 

For games on the current market, being sold used, the situation gets a little more complicated. Basically, in a healthy market, supply will always equal demand. As gamers get done with their games and sell them used, it does nothing to increase the pool of games that exist. As publishers continue to sell new games, the pool of existing games increases. What sometimes happens though, is that the market gets flooded with too many copies of a particular game. This is what led to the video game crash of '83. In a healthy economy, the pool of available games, equals the demand. So if a publisher sells 10,000,000 copies of a game in the first year it's available, many of those games begin to appear on the used market. In fact, the used games market is healthy for the future collectability of games by ensuring that the market does not get flooded with too many new copies. To look at it another way, suppose there 15,000,000 people who desire a copy of game X, and 10,000,000 copies of the game currently exist. Of the 15,000,000 people who currently desire the game, 5,000,000 people already own it. That leaves 10,000,000 people who desire a copy but currently do not possess one. Of the 10,000,000 people who originally bought a copy, 5,000,000 people no longer desire to own it, so they sell the game on the used market. And there are 10,000,000 who desire this game but do not possess it. Therefore, 5,000,000 used copies are sold alongside 5,000,000 new copies, and everyone who wants a copy of the game can get one, as well as everyone who does not want their game can sell theirs. The market is balanced, and used game sales prevent overproduction, which could lead to a crash.

 

Piracy on the other hand, is entirely different. Buying or selling a used game does not increase the pool of games in existence. Pirating, or illegal copying, essentially creates a +1 out of nothing. Suppose 1,000,000 of the 10,000,000 people who desires the game decides not to pay for it by pirating instead. The remaining 9,000,000 gamers who desire this game will buy the remaining 5,000,000 used copies, then only 4,000,000 new copies are sold instead of 5,000,000. So one can deduce that every pirated copy prevents the sale of one new copy by artificially inflating the pool of existing games. Normally only the publisher is allowed to increase the pool of existing games by selling new copies. Buying used does not increase the pool size, but piracy does.

 

Of course, there exists the strawman argument that those who would pirate would not buy the game anyway, or the reverse equally strawman-like argument that some pirates only pirate to test the game out or "try before they buy". Not only is that logic faulty, but it is up to the publisher to weigh the pros and cons to decide if potential customers should be allowed to try the game out, for example by offering free demos. In the good old days, one could rent the game before buying it, and I'm sure lots of disappointed customers and sales of crappy games were averted by this procedure. On the same token, I'm sure lots of customers who rented a game they were unsure of eventually fell in love with it and decided to buy it at retail. So, in a way, rentals and free demos promote sales of good games and discourage sales of bad games.

 

I think that pretty much sums it up. Used game sales do not add to the pool of existing copies, and help prevent market saturation. Piracy adds to the existing install base, immediately cutting into profits for companies.

 

The first sale doctrine for starters. Once the first sale is complete, then so long as no additional copies are created, you're suppose to be able to do what you want with it. Including selling that copy to another. The original creator has no legal rights to demand a cut of any of those sales.

My point exactly (you posted this while I was composing my original message). "First sale" doctrine all goes back to the fact that only the rights holder can increase the number of copies in circulation, or the total install base. Used game sales are a transfer of the rights to an item which previously existed, from one party to another. Piracy in effect is creating something out of nothing, essentially creating a one out of a zero. Edited June 9, 2013 by stardust4ever

[Emehr]

This particular part intrigues me. Exactly what or who has been given the authority to determine how much a company can make on their IP and at what point?

 

So you think that a company should be able to make money on a product that they already made money on?

[Necron99]

So you think that a company should be able to make money on a product that they already made money on?

I see a future double entendre here as well. Since developers can make more money if their games are traded in, I predict that there will be a lot of 3rd rate companies making 3rd rate games just to cash in on this bonus. essentially bad developers will make more than good ones :/

 

I can't think of an other form of.... well anything that lets a company cash in twice or multiple times off of a single item. I think it's disgusting and gaming will suffer for it i'm sure.

Edited June 9, 2013 by Necron99

[Lentzquest]

The first sale doctrine for starters. Once the first sale is complete, then so long as no additional copies are created, you're suppose to be able to do what you want with it. Including selling that copy to another. The original creator has no legal rights to demand a cut of any of those sales.

 

I love this doctrine. I also like RT's suggestion that these sales practices are illegal and should be dealt with by the law. It's just unfortunate that tech companies have the ever popular user agreements nowadays. Nothing like having millions of customers scroll down a mile of fine print and then just click to agree to whatever in order to make it go off the screen. They basically say that you agree to every last one of their crooked terms and practices, making all things legal and tolerable that should not be so. I no longer support quite a few companies because of that crap.

 

One of the things I appreciate most about my old cartridge-based systems is that there are no user agreements to have to accept. Just plug it in, power on, and hit start. As someone else said in this thread, I'm not mad because I have no dog in this fight. The newest systems I own are the PS2 and a Wii, and it will stay that way until after the next video game crash and the industry rebuilds itself a little less stupid and greedy. If no such turnaround happens then I could still spend more than a lifetime playing things that are available to me right now. I'm looking forward to just sitting back and seeing how the game industry plays out in the next several years.

Edited June 9, 2013 by Lentzquest

[Starscream]

The first sale doctrine for starters. Once the first sale is complete, then so long as no additional copies are created, you're suppose to be able to do what you want with it. Including selling that copy to another. The original creator has no legal rights to demand a cut of any of those sales.

 

Up until now, yes. Software though, has exclusions, primarily license permissions. If your purchase is for the License to use the software, no ownership is granted of the software. I would assume that's why EA had the Online Pass system in place because it technically didn't count as profit twice. So I would expect that Xbone games will now have fine print stating you don't own the product, just limited rights to the license, much like every piece of computer software. Just taking I quick look at the wording on the Halo 4 package in front of me, I own it. That fine print will change.

 

Clearly, the video game industry has been running along for decades with no attention paid to rentals or used games. I would think, since the introduction of online services for home consoles, the ability to "see" the difference between copies sold as new and the different amount of unique users to that piece of software has been an eye opening experience. For example, 57000 copies of a game are sold but 84000 unique users have played that game, I would think publishers see that as lost profits from new game sales, and I don't think that's unfair to assume. As for rentals, I have never been able to find anything regarding fees to the owner of the game, just permissions to rent so again, this may have been lack of foresight.

 

Other options to keep things in check would be higher new game prices that the additional percentage would go directly to publishers/developers or the now extinct Online Pass system. The problem is, everyone is still going to cry rivers of tears over the additional costs.

[Starscream]

So you think that a company should be able to make money on a product that they already made money on?

 

In this very unique situation, yes. Let's just say, for the limited amount of people to make money on before retail, the expense of the products production and development, and only one point of sale ever, and the ever changing environment of technology, and finally a non disposable product, I do 100% think profits should occur at every point of sale, new or used and rental fees.

 

Please, please, please, do not try to counterpoint with cars, or books, or movies etc. I really don't feel like trying to explain because that would be a long post and probably boring. And nobody would really take into consideration what I point out.

[Necron99]

Please, please, please, do not try to counterpoint with cars, or books, or movies etc. I really don't feel like trying to explain because that would be a long post and probably boring. And nobody would really take into consideration what I point out.

you can't explain it because comparing it to cars, books, and movies ARE the same thing. what other products earn a profit multiple times from the same item? ZERO. only goverments do that soft of thing.

 

if developers feel their product is worth more money or they aren't making enough money, then initial sale price should be higher. double dipping should not be an option.

[Lentzquest]

It's a shame arcades are pretty much dead. It would be nice if video games had a venue for release prior to the home console/PC market. In the world of movies, they get to make millions in theater ticket sales, then again on the home market a few months later. I'd love it if modern games first got released live in arcades, then the excitement would build before being able to get them at home down the line. That alone would single-handedly usher in a new arcade boom.

[+Random Terrain]

Game company license permissions = perpetual wallet rape.

 

It might be worth it if game companies continued to update every game for eternity, but they'll do it a handful of times for a few years (if you're lucky), then they'll stop. It's not something like an anti-virus program that is constantly updated and improved.

[xDragonWarrior]

 

 

Unless GameStop is selling stolen games, the difference is that every game was purchased at full price. The game company got their money. It's different from one kid buying a game and letting 100 of his friends make a copy.

 

People who buy used games that are only 5 dollars less than the full price are idiots. I usually only buy a used game if it is half of the full price or lower. When I go home and spend points card money on the extras, the game company is getting money from me that they never would otherwise. If I really, really, really love the game and would like to by the next one in the series, I might save up my money and buy it for full price instead of waiting 3 to 5 years for the used price to drop. The used game sale actually helped the game company.

 

If GameStop is wrong, used book stores are wrong. Stores that sell anything used are wrong. Flea markets are also wrong.

 

Who are you to call people idiots for buying the used version because it's $5 less.If i had a choice between a used copy of a game for $45 and a new copy for $50,I'm gonna get the used copy.It's not like a used copy is a watered down version or has a high risk of not working,the only difference is that someone has played it before me.For every used game someone buys,that same game was brought new for more than the person who brought it used( whether It was $5,$10,$20,or even $30 and $40 more),that's still a profit.And I would like to have cash left over for other expenses than spend it all on Videogames.

Edited June 9, 2013 by xDragonWarrior

[Starscream]

you can't explain it because comparing it to cars, books, and movies ARE the same thing. what other products earn a profit multiple times from the same item? ZERO. only goverments do that soft of thing.

 

Actually, I can. With fact based information.

 

Auto Business model for profits: Extremely HIGH initial costs

 

Percentage made off of each contracted supplier

Percentage made on Logistics

Percentage made form franchise fees

Percentage made from point of sale new

Percentage made from license fees

Percentage made from aftermarket parts

Percentage made from.....wait for it...............USED car sales through certified programs

 

Movie Business Model: HIGH initial costs

 

Percentage made from distribution

Percentage made from sales at theaters

Percentage made from home sales

Percentage made from Premium channels

Percentage made from Network channels

Percentage made from rentals

Percentage made from licensing

Percentage made from merchandise

 

Book Business model: LOW initial costs.

 

Percentage made from each sale, digital or hard copy

(over simplified this one)

 

Video Game Business Model: Moderate to high initial cost

 

Percentage made from developers

Percentage made from original point of sale

Percentage made on merchandise

Percentage made on license fee (very uncommon)

 

I'm skipping music as it's much like the movie industry.

 

As you can see, not only are there some products that make money at every level from start to finish, some even make money off of used products!!!

 

While you chose to take a small snapshot of a much larger picture to hold your stance, these comparison always fail and always will. Because it's a product you can touch does not mean it's comparable beyond that.

 

If you noticed, each of those industries has unique business models. Each of these unique ones provide a profit for the company. Companies, unless expressed, are NOT Non profit and should not be expected to be. Movie costs are astronomical compared to books and this is where your over simplified comparison FAILS. Not one of these different industries can use the others business model. It's not even realistic to think they can. Not one company on this planet is all about you or what is best for you. They simply provide goods and services that you may want or need. They do NOT owe you anything beyond a condition of quality or reliability.

 

Now, please explain to me why video games, whose cost are considerably high to produce and relatively inexpensive to purchase, should work on the book model? Would you prefer the Movie model? Simply put, the expenses involved and the relatively low profits DO NOT work anymore. There needs to be a change and it is being pursued.

 

BTW, is now a bad time to mention Gamestop make money off the same product multiple times.............

[Osgeld]

A car is a complex mechanical device that exhibits physical wear, and if you do not buy from a certified dealership the car companies are not raising a fit over every corner lot

 

The car is sold, its none of the makers concern anymore what you do after that (aside from warranty) if you take it back to the dealership for a new one then great, that dealership gets to sell it again and the maker gets a small slice if they are a part of the certfication process. BUT! GM for instance is not installing lock out codes if you buy a used car from some guy in the paper and holding the goods in ransom for a special code rendering the product inoperable.

Edited June 9, 2013 by Osgeld

[Necron99]

A car is a complex mechanical device that exhibits physical wear, and if you do not buy from a certified dealership the car companies are not raising a fit over every corner lot

 

The car is sold, its none of the makers concern anymore what you do after that (aside from warranty) if you take it back to the dealership for a new one then great, that dealership gets to sell it again and the maker gets a small slice if they are a part of the certfication process. BUT! GM for instance is not installing lock out codes if you buy a used car from some guy in the paper and holding the goods in ransom for a special code rendering the product inoperable.

 

aside from the car thing..

 

everything else you mentioned doesn't have used sales revenue either. expenses to make and repair a product don't count as used sales as they are a service.

 

as many have said in the past, Gamestop/EBGames are terrible, if they went bankrupt tomorrow, I wouldn't care.

[Starscream]

A car is a complex mechanical device that exhibits physical wear, and if you do not buy from a certified dealership the car companies are not raising a fit over every corner lot

 

The car is sold, its none of the makers concern anymore what you do after that (aside from warranty) if you take it back to the dealership for a new one then great, that dealership gets to sell it again and the maker gets a small slice if they are a part of the certfication process. BUT! GM for instance is not installing lock out codes if you buy a used car from some guy in the paper and holding the goods in ransom for a special code rendering the product inoperable.

 

Right because you are buying the car, not the right to use the car. Very simple.

[CGQuarterly]

People need to go read a EULA, because too many if you don't understand what it is that you're paying for. If you buy a chair, then you own that chair. It's yours to do with as you wish. When you go buy a game (or any piece of software), you are buying the right to use it. The disc is simply the vehicle with which they transmit the software to you. You own the disc, but (AND READ THIS PART THREE TIMES SO THAT IT SOAKS IN) you do not own the information on the disc.

 

Edit: When you buy a game used, the developer or whoever is not being paid to grant you a license to use their software. When you illegally download a game, the developer is not being paid to grant you a license to use the software. The difference is that when you buy a game used, someone else (a third party) is accepting payment to allow you to use software that they don't own and therefore cannot grant you a license to use. I am not saying that this is right or wrong. I am saying that this is the position of devs and pubs.

Edited June 9, 2013 by Jibbajaba

[Andromeda Stardust]

People need to go read a EULA, because too many if you don't understand what it is that you're paying for. If you buy a chair, then you own that chair. It's yours to do with as you wish. When you go buy a game (or any piece of software), you are buying the right to use it. The disc is simply the vehicle with which they transmit the software to you. You own the disc, but (AND READ THIS PART THREE TIMES SO THAT IT SOAKS IN) you do not own the information on the disc.

 

Edit: When you buy a game used, the developer or whoever is not being paid to grant you a license to use their software. When you illegally download a game, the developer is not being paid to grant you a license to use the software. The difference is that when you buy a game used, someone else (a third party) is accepting payment to allow you to use software that they don't own and therefore cannot grant you a license to use. I am not saying that this is right or wrong. I am saying that this is the position of devs and pubs.

Jibbajaba, please reread my very long earlier post (#83), that explains in great detail why used game sales / rentals does not equal piracy.

 

To sum it up, while publishers do not get royalties off used games, buying a used game does nothing to increase or decrease the existing install base (or the total number of "licenses" available) and in a healthy market actually helps prevent market saturation, which allows games to hold their value over time and thwarts the likelyhood of a second video game crash. If the demand for a particular game title is higher than the used supply, additional new copies will be sold to meet demand for it. Piracy is essentially creating extra installed copies of said game out of nothing, without the publisher's consent. There is a huge difference. I don't think anybody wants a repeat of 1983, but if Microsoft and Sony follow through with these anti-consumer DRM schemes, a second crash may be imminent sometime during or after the 8th Generation.

Edited June 9, 2013 by stardust4ever

[RevEng]

People need to go read a EULA, because too many if you don't understand what it is that you're paying for. If you buy a chair, then you own that chair. It's yours to do with as you wish. When you go buy a game (or any piece of software), you are buying the right to use it. The disc is simply the vehicle with which they transmit the software to you. You own the disc, but (AND READ THIS PART THREE TIMES SO THAT IT SOAKS IN) you do not own the information on the disc.

 

They may be upheld legally in some jurisdictions, but current EULA practises represent another erosion of our consumer rights. Very shady stuff.

 

Usually you get to see a contract before you enter into it. Most software EULAs are either click-through or in-packaging, so you've already bought the damn thing before you get a chance to see what heinous terms you have to abide by. Good luck getting a refund on your software if you don't agree with the EULA terms.

 

Also, there's nothing special about software that allows it to have a binding EULA. A chair could have an EULA too, and it would apply just as much as software EULAs do. Similarly a piece of software doesn't have to have an EULA, and it would be covered by the same implied warranty of fitness that other retail goods would be covered under.

[+Random Terrain]

Who are you to call people idiots for buying the used version because it's $5 less?

 

Who are you to ask "who are you?" Who does anyone have to be? A bum covered in joy juice and feces can call someone an idiot.

 

 

 

 

If I had a choice between a used copy of a game for $45 and a new copy for $50, I'm gonna get the used copy. It's not like a used copy is a watered down version or has a high risk of not working, the only difference is that someone has played it before me.

 

That's not the only difference. The used game for 5 dollars less than full price often has at least one small scratch, greasy fingerprints all over it, and it could be missing the manual or box or both. It could also be missing any special download codes. It's smarter to spend the extra 5 bucks and get a pristine copy.