The Cost of Doing Business: Video Games Cost Too Much

The Cost of Doing Business: Video Games Cost Too Much

  • By: CM Boots-Faubert
  • Posted 20th Oct 2012

Kingdoms of Amalur: Reckoning



To put this in perspective for you, look at the different numbers below:

Video Game Retail Price: $59.99
Cash* Buy-Back Price: $$9.99
Regular Trade-In Value: $19.99
PUR** Member Trade-In Value: $39.99

So a member of the PowerUp Rewards program clearly received a much better deal, and it was always a better deal to trade rather than sell the game, since trading it yielded a value that was closer to the actual retail price. The fact that the PUR monthly deals often included discounts on pre-owned games tended to encourage members to take their trade-in credit and buy pre-owned games with it, games that basically cost GameStop next to nothing, and their purchase using traded funding further increased the profit obtained by GameStop for each transaction.

== Pre-Owned: a Dirty Word to the Games Industry ==

When you purchase a video game what do you own? For most games in the modern market you don't actually own the game, you own a license to use the game, and a lot of those licenses include clauses that make selling your copy of the game a violation of that license. What is more, by 2008 there was a growing conviction on the part of game studios that the pre-owned game market and its sales had a greater impact on their industry than video game piracy!

A spokesman for game studio Lionhead actually said as much to games journalists, claiming that second hand sales have actually cost them more than piracy. In the four years since that position was widely and publicly made known the games industry has looked to digital sales as the ultimate solution to combat pre-owned game sales, because the license that is issued for a digitally distributed title simply cannot be transferred or sold. Major game publishers like EA Games have not simply a vested interest in encouraging the industry to change to digital distribution as its sole sales system, they are spending a lot of money in lobbying government to protect that sort of sales and the various hardware and console makers to build into their gaming systems the sort of resources (large hard drives, WiFi broadband connectivity) that is crucial if that move is to be a success. They have even suggested that it may be necessary to offer very large (think Terabytes) hard drive storage even if doing so requires that the sale price for the console is made at a loss, pointing out that it would be easily more than made up for by game sales, considering that all of the major console makers also make and sell games for their platforms.

But the move towards digital distribution is not the only efforts that game publishers have made to combat used game sales -- in fact there is a war being fought between game makers and used game retailers, and the victims in that war have traditionally been gamers themselves, who end up being hurt by the attacks in ways that are not completely obvious!



It was not until the behemoth retail giant Walmart tossed its hat into the ring for pre-owned game buying and selling that the mainstream media took notice of the practice, widely covering the fact that gamers can now bring their old games in to select Walmart stores and trade them in on the purchase of a new game or game system.



The first major battle in the war against used games sales took the form of a mandatory pass-based registration system, as for the first time each new game came with a paper insert inside the retail case that contained a registration number. The game could be slotted in your console and the single-player offline content could be played with no change from what gamers were used to, but the moment that they attempted to access the online side of the game -- to play against other human opponents in other words -- which is now a more popular style of play than offline, they were prompted to input their registration code. That code locked in the game for the GamerTag / ID of the person playing it, and in most cases for the console on which it was registered.

What it did, in essence, was unlock the online side of the game for any person playing on that console. Any gamer who was visiting a friend and who wanted to play the game could, as long as they were logged into the game server with the GamerTag / ID under which they had redeemed the code that is. This seemed to be a perfect stop-gap solution to prevent the resale of the game from costing the studio a sale, because when the gamer bought the used game and wanted to play the online side, they had no choice but to pay for a license via the game's DLC content system, so even though a retail store made a profit from reselling the used game, the game publisher still got a piece of that in the form of the online license or pass which the gamer still had to buy. That solution was aimed at the retail sale of pre-owned games, but it ended up severely hurting a different industry, the video game rental industry that is lead by the company GameFly.

After some hard words were exchanged, game publishers and the companies that rent video games (like GameFly) came to an arrangement -- the publisher would implement a 72-hour grace period under which gamers could access and play the online content without having to pay for a pass or license -- that 72-hour grace period being arrived at because according to the companies who rent games, that was the average amount of time that gamers kept and played the games before returning them. The logic in that decision was sound -- gamers who prefer to rent their games still had full access to the game, but the gamers who preferred to buy pre-owned games had to pony up the pass/license fee, or they simply did not have access to what amounted to the bulk of the game contents for modern titles!



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