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"Why does the gaming industry not like the second hand market?"

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Thu 20/11/08 at 16:24
Regular
Posts: 19,415
This probably belongs in the gaming forum but I had burgers for lunch.

Whats with all these codes? Why cants we buy games or controllers or bits for our console and then sell them off when we don't need them anymore. It saves us from chucking them in the bin plus poor people get to have a bargin.

Do they really want everyone to buy everything new? I know they avoid talking about this but they know that we know that they don't like it at all. Now I'm hearing about things on the Wii that will only work once and I wont be able to sell or give away. Or extra downloadable content that can only be downloaded once so making it worthless should you pass a game on.

I've been saying this for almost two decades now. I game would have to be bloody spectacular for me to want to spend £40 pounds. Its just not worth it especially if you only play it for a few days. I want to see games no higher than £5 and just download them on my HDD and play them on my machines.

So in conclusion, when you buy a game you should own that game and whether you want to sell it or give it away that's your prerogative.
Tue 25/11/08 at 13:40
Regular
Posts: 14,117
Thing is, some places take the mick. Game in Braintree had Fable 2 at 39.99 new, or 37.99 pre-owned. With such a small difference I'd rather pay more and then at least the developer who put all the work it gets some of the money, rather than Game lining their own pockets.

By the time the second hand prices come down, then places like Play and Shopto have brought theirs down too.

I like to buy the original as then the people who put the work in get some of the money. If I don't want to spend £40 on a game, I'll wait 'til it comes down price. For example, Mirrors Edge is down to £27.99 on shopto. I'd rather buy that, than a pre-owned version at a similar price.
Fri 21/11/08 at 13:15
Regular
Posts: 19,415
Interesting, but why did SR fail? Was it because of companies like Amazon or Play that cant buy back games or give part exchange. It's like Jason said, the game retailers arent making enough from selling new games, so the second hand market brings in a lot of money for them. If they got rid of them then the retails would suffer and soon you'll just be able to get your games from Tesco and the online stores.

I'd like to compare the video game industry with the movie industry and why game prices should be in line with DVD prices. But then movies earn money from product placement, cinema release, product sponsors and merchandise. You're never going to get free CoD toys with your big mac.

@Nin, I can't remember the article but I think it was this one game and this microphone gadget for the Wii. You can only enter these codes once so if you try and sell it to someone they will end up with a useless microphone that won't work.

Nows a good time to pick up a Wii before they run out.
Fri 21/11/08 at 12:40
Regular
"eat toast!"
Posts: 1,466
Most publishers see selling it second hand just as bad as copying.

Its got something to do with the multiplier effect (For business study bods you'll know what this is).

Person A buys game for rrp 40 quid and sells it on for half the price.
Person B Buys game for 20 quid and sells it again halving the price once more.
Person C buys game for 10 quid and keeps it.

Notice from just one copy of the game, it has changed hands 3 times and that one game alone has had 70 quid invested in it whereas the rrp was at 40 quid. But the 30 quid has gone into the pockets of the users NOT the publisher.

Naturally they're going to be a bit annoyed. They want to maximise return and when someone is taking the product and selling it to line their own pockets with gold. They feel slightly cheated. A bit like say a pirate taking all their hardwork and taking it for free.

Nautrally this has led them to come up with downloading the game and leaving it on their computer or DRM which not only combats illegal copying but locks them onto specific hardware and as one nasty bioshock publisher argued that just because you bought the game, doesn't mean your family can get away with playing the game you bought.

This of course alienates consumers as they're esstentially renting and not buying and with possible develops of making consumers pay a subscription price for top games like bioshock 2 and gta5.


As for the price of the game being so high. Most of it is mark up price as it travels down lines of distribution. Most of this money goes to the shop owner like game or the publisher. Very little is seen by the developer and therefore makes the gaming industry very cut throat. Of course, some small time developers can get away with distributing on their own and thus they get most of it. Valve probably has done very well through steam. Good on them i say. IIRC, steam came about after their game was stolen and they planned safety measures to counter it.
Thu 20/11/08 at 22:20
Moderator
"possibly impossible"
Posts: 24,985
Garin wrote:
> Comparisons with other markets are pointless. The business
> models and revenue streams are totally different so its
> impossible to make realistic comparisons.
>
> The point with the second hand market is that you've got
> retailers making as much off second hand titles as brand new
> ones. Game buys a title at wholesale and then through trade-ins,
> they get to sell that title 2 or 3 times. Each time making
> nearly as much as they did on the original sale or in some cases
> even more. And when you've got this happening, retailers start
> devoting more space to their lucrative second hand market instead
> of new titles.
> If I were a publisher I'd have to be insane to think this wasnt
> a problem.

You have some good points, but there has to be a happy medium when it comes to new and second hand games, perhaps some form of regulation.

The Second Hand Games market has to exist. Granted, it may be having an affect on new games sales, but it's a necessity bourne out of the general format; play, finish, trade/sell. Ok, so some games can be played multiple times, but then you need to consider that new consoles will come out and people will trade in their old games that way too.

Several ideas:

1) Rules could be set up for games retailers to only accept second hand games when the title is over 3-4 months old

2) Retailers have to provide a small amount of revenue on every second hand game sale (similar to how the music business gets a cut of songs played on the radio).
Thu 20/11/08 at 21:44
Regular
"Too Orangy For Crow"
Posts: 15,844
Machie wrote:
> That must mean you're their dream consumer GP, you cant bear to
> get rid of any of your old games ^^

Yep, I buy games new or new at a reduced price, never trade them in and very rarely buy 2nd hand. Usually, I buy 2nd hand if it is an old game that I wanted to buy but for some reason never bought and is no longer available new.
Thu 20/11/08 at 19:51
Regular
"Monochromatic"
Posts: 18,487
Machie wrote:
> Whats with all these codes? Why cants we buy games or
> controllers or bits for our console and then sell them off when
> we don't need them anymore.

What are you referring to? I'm a bit out of the loop when it comes to consoles but i'm looking to buy a Wii for my sister's christmas present. It'll probably be 2nd hand so if there's issues that i need to know about...
I'll be the only one without a new games machine this christmas. My mum wants a DS because of the cooking titles out on it.
Thu 20/11/08 at 19:12
Regular
"@optometrytweet"
Posts: 4,686
Garin wrote:
Game buys a title at wholesale and then through trade-ins,
> they get to sell that title 2 or 3 times. Each time making
> nearly as much as they did on the original sale or in some cases

Preowned is the company's major profit generator. Think at the number of PS2 games being traded in at £1 and then sold at £9.99. Huge profit.

However, if they do get rid of the second hamd side of things, then they'd have to dramatically reduce the price of the new games. As the points pb and Machie have used, many people can't afford to buy new titles immediately and then on top of that use some of their older ones to help fund the price of the new ones.

And Machie, if you download something to your HDD, only you (or the person/people) that uses that console can use it. You should find that Nintendo allow you to download a lot of their games through the virtual console (bought with Microsoft points) and Xbox Live Arcade allow some original XB games and Arcade titles to be bought for the equivalent of £4-£8.

Although Garin is playing Devil's Advocate here, you can compare the markets about what is going on. Just because it is a different product doesn't mean it won't follow similar trends. I's also like saying the credit crunch and the way the lending/savings etc isn't affecting the technology markets. What happens in one can usually be a pretty good indicator of what could/should happen in another market.

And finally...yes Machie...I am the blame taker! Although I havent worked for game for a fortnight :p
Thu 20/11/08 at 18:24
Regular
Posts: 19,415
I suppose that makes sense, so this is all Jasons fault. I always wondered why they were so keen to buy old games and sell them.

That must mean you're their dream consumer GP, you cant bear to get rid of any of your old games ^^

So I suppose when we all switch to digital downloads this will all end? Well I hope the prices come down a lot, it'll be bad to buy a game for £45 and not be able to pass it on to someone else or sell it.
Thu 20/11/08 at 17:48
Regular
"Devil in disguise"
Posts: 3,151
Comparisons with other markets are pointless. The business models and revenue streams are totally different so its impossible to make realistic comparisons.

The point with the second hand market is that you've got retailers making as much off second hand titles as brand new ones. Game buys a title at wholesale and then through trade-ins, they get to sell that title 2 or 3 times. Each time making nearly as much as they did on the original sale or in some cases even more. And when you've got this happening, retailers start devoting more space to their lucrative second hand market instead of new titles.
If I were a publisher I'd have to be insane to think this wasnt a problem.
Thu 20/11/08 at 16:57
Moderator
"possibly impossible"
Posts: 24,985
It's not the gaming industry, it's Epic and one man in particular.

That man's name? Evil Dr Michael Capps (ok, I added the Evil for dramatic effect).

Basically, they're trying to suggest the whole gaming industry (now worth more than the film or music industry) is suffering from people buying second hand games.

The things they don't mention are:
1) How does the second had car, DVD and Music market, not to mention other areas, manage.
2) To get a second hand game, you need someone to buy it new first
3) If you banished second hand games then you would soon have a heap of unwanted games lying around with no one able to play them
4) most people use their old completed games to trade in towards new games, so this may even stop new games from selling as well.

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