Used games killing game industry, game developer claims; what about used books?

Here’s another story of a developer railing against used video games. Although it may not seem to have relevance to e-books at first, I think this story demonstrates the way the gaming industry and the publishing industry are struggling with some similar issues in the digital age.

In an interview with GamesIndustry International, Silicon Knights head Denis Dyack states that used games are clobbering the game industry, cutting off the “tail” of sales that used to support game studios well after games’ original release. Without that “tail”, Dyack says, game companies can expect to receive almost all their sales in the first few months of the game’s release, and then they have to come up with other measures to try to bring money in. (Found via CNet.)

"I would argue, and I’ve said this before, that used games are cannibalizing the industry. If developers and publishers don’t see revenue from that, it’s not a matter of hey ‘we’re trying to increase the price of games to consumers, and we want more,’ we’re just trying to survive as an industry. If used games continue the way that they are, it’s going to cannibalize, there’s not going to be an industry," he said. "People won’t make those kinds of games. So I think that’s inflated the price of games, and I think that prices would have come down if there was a longer tail, but there isn’t."

On the other hand, GameStop’s CEO holds that a vibrant used game market drives a new market, generating $1.2 billion of trade credits around the world.

Now, I’m pretty sure that used video game sales have been around in one form or another for at least 30 years. People got tired of Nintendo games or even early PC games just as easily as they get tired of Playstation games today. And by the same token, second-hand bookstores have been around for at least as long as first-hand bookstores have. Why is it that over the last few years both of these used markets have suddenly become the Great Satan, threatening to drive game and book publishers to the brink of extinction?

Whatever the reason, it seems clear that game companies do feel threatened enough to take extreme measures. An anonymous tipster tells CNet that Sony is going to lock out PS3 games and used games from its next console, scheduled to ship in 2013.

17 Comments on Used games killing game industry, game developer claims; what about used books?

  1. Malignant Carp // March 29, 2012 at 1:50 am //

    I think how long it takes to get to a used video game store says a lot about a video game’s quality and replay value.

  2. Comparing used books to used games is like comparing a Ferrari to a Tractor, other than a basic premise there are almost no similarities.

    Anyone capable of writing a book can do so with a little time with miniscule overheads. Video games on the other hand have massive development budgets running into tens of millions.

    The reason it’s become so much of a problem in recent years is because of two factors, the increased cost of making games and the huge increase in the second hand market.

    10 years ago you may have had a local video store that sold second hand games and the price you got for your old games was pretty poor. Nowadays all the High Street game shops have a second hand game market and even supermarkets are doing it so the person selling the games can now shop around for the best price and those buying the games now have a much greater selection.

    You only have to look at GAME who admitted last year that second hand sales actually made up the majority of their profit and had much better better margins than new game sales.

    It’s a temporary problem though with DRM digital downloads becoming more and more common and I suspect the next generation of Playstation and X-Box will see the second hand market stamped out.

  3. Binko Barnes // March 29, 2012 at 5:44 am //

    Oh hooray! Let’s use DRM to exert even more control! Let’s stamp out another market.

    Poor, poor gaming conglomerates aren’t making enough profit on their massively expensively buckets of derivative dreck? Time to tighten the screws on the consumer. No more used games! No more game rentals!

    This is what happens when mass media is produced and owned by huge monopolistic corporations. And it won’t stop there. Once they have eradicated the used and rental game markets they will just move on to the next target.

  4. Felix Torres // March 29, 2012 at 8:24 am //

    No need to get riled up just yet. Nor to expect the gaming inndustry to pave the way for further BPH idiocy.
    First, because the video game business is very different from the book business; it is closer to the movie industry in that the bulk of the product is generally a corporate assembly-line, work-for hire effort.

    Second, there are different types of games and different markets and marketplaces for them. Dyack’s rant refers to the big budget, disk-delivered, so-called hardcore AAA games (the equivalent of BPH NYT bestsellers), not the rest of the industry. And a lot of his angst derives from the fact that as the overall gaming industry is growing, it is (not surprisingly) differentiating into very different segments (arcade, casual, hardcore, indie, online-only, etc) and evolving business models that go beyond the traditional retail boxed disk sales (ad-supported, subscription-based, rental services, etc).

    Third, Dyack is a… temperamental… figure and hardly representative of the industry as a whole. (Think of him as a Harlan Ellison-type. Creative, opinionated, and very quick to sue.) It has also been a while since his Development Team produced anything resembling a big seller so he’s not exactly happy with the existing gaming climate.

    Fourth, the big corporate game *publishing* studios like Sony, EA, and Activision have, like Hollywood, gotten hooked on the “blockbuster” business model and are no longer content to produce good quality games that sell well, but are constantly looking for “Franchises” they can exploit with annual releases, long DLC tails, merchandising, and (more recently) spinoff movies. Much like the big movie studios, where “merely” producing a good, enjoyable movie isn’t enough for success and if a movie isn’t an instant blckbuster it is deemed an instant failure (no more letting movies find their audience or letting word of mouth spread–it’s all about racking up big launch weekend numbers), the big gaming studios with which Dyack works want high volume upfront sales numbers; they want product they can hype to the heavens and drive blind pre-order sales. It’s all about upfront money.

    The current rumor for the next generation Sony Playstation (not totally unfounded, since they do have a patent for doing it) is that the PS4 “Orbis” will lock retail games to a sinngle user account so that added gamers using the disk will have to pay extra. Thus, no lending or resale.
    But for now it is just rumor and probably based on incomplete information.

    So, yes, there are some parallels between the corporate think of the Big Gaming Studios and the Big Publishing Houses, but just as there is more to book publishing than the BPHs there is also more to gaming than the BGSs.

    The BGSs think preventing game rentals and resales will save them from an evolving market just like the BPHs thought Price Fixing would save them. Expect them to be equally disappointed because, just as there are plenty of other publishers willing to buck the price fix conspiracy to gain market share at the expense of the BPHs, there are and will be plenty of game developers eager to make hay at the expense of the Games that choose to go along with Sony’s scheme.

    Worse for the BGSs’ dreams, most of their biggest distribution channels have thriving used game businesses; there is already speculation that GAMESTOP will refuse to stock PS4 games that implement the account lockdown “feature”.

    Given that we’re looking at the rants of a disgruntled insider and rumor-mongering there is no reason to get overly excited just yet. It’s worth keeping an eye out to see how it plays out but it is too early to start hyper-ventilating.

  5. “Poor, poor gaming conglomerates aren’t making enough profit on their massively expensively buckets of derivative dreck?”

    They really aren’t though.

    Some big Publishers like EA or Activision are making a killing but the developers themselves are going out of business all the time at a worrying rate.

    That’s why truely original games are becoming less and less common and why every game nowadays is a Call of Duty clone.

  6. @AndyBSG: Or GEARS OF WAR.
    Its not all First Person Shooters—there’s also the Third Person Shooters. 😉

  7. Enough whining already. Quit trying to get the government to supplement your revenue stream. Next will be the automotive industry trying to outlaw used cars. Force the consumer to buy new cars. As a carpenter I build high end cabinets, etc. My customers have the right to sell their property when they are tired of it. I do not expect, nor do I want the government to regulate that. Piracy is a separate issue that is more complicated. Here we are discussing the consumer having the right to sell a product they purchased when it is no longer relevant to them. It may be a MP3 player, pair of shoes or a printed book. Just because it is electronic in nature does not change the common sense rules.

  8. Wade – Very well said. It really is a pitiful piece of political opportunism by a gaming industry that has been extraordinarily lucrative for years.

    Chris:
    “think this story demonstrates the way the gaming industry and the publishing industry are struggling with some similar issues in the digital age.”
    I disagree fundamentally. I do not believe they are in any way ‘struggling’ with these issues. They are EXPLOITING these issues because they see a window of opportunity brought about by the whinging of the Publishing industry. We cannot allow these industries to distort the world to suit their own lazy asses. They have been making enormous profits for years, in common with the publishing industry, and they need to get a grip on reality and learn to live with it.
    If anyone thinks that this is all going to change soon they need to wake up to piracy and other methods users will use if the developers start to take the p1$$ out of gamers or users to inflate their earnings.

  9. Kind of surprising to see that so many people support microtransactions, DLC, and in-game advertising.

    “What? That’s not what I’m saying at all!”

    Ah-heh. If you want games to be worth doing, then those games are going to have to make money for their creators. If they can’t depend on new-game sales anymore–which is what you’re all saying you want–then charge-as-you-play schemes like DLC or in-game advertising are the way to go.

  10. I would like to see someone produce some ‘evidence’ that the games industry is actually suffering. I don’t see any in any of these articles. Only whining and threats.
    If the gaming industry finds that it’s tail is being cut then it needs to adapt. Maybe it is spending WAY too much money on game development ? Maybe it is spending way too much on unnecessarily graphics intensive projects when game-play is what gamers really want ? Maybe it is simply a problem that they have that THEY need to adapt to and fix, and stop looking around for someone and something to blame.

  11. Binko Barnes // March 29, 2012 at 4:13 pm //

    Howard, the games industry is not suffering at all. Take a quick jump over to Steam’s website and you will see that there are over 4,000,000 gamers logged into Steam right now.

    This is a case of the big industry behemoths like EA, Bethesda and Activision attempting to what big corporations always do, maximize profits. The games and the gamers mean nothing to them beyond a means to the end, which is always to maximize profits.

    Of course, just like with ebooks, the screaming and complaining is loudest from those who are still trying to wring maximum profits from an old business model, namely selling highly publicized and expensive games in the traditional manner.

    Steam on the other hand has embraced a new business model and it doing very well.

  12. “Howard, the games industry is not suffering at all.”

    Sorry but i’m afraid you’re very misinformed if you think that and using Steam which is a miniscule percentage of the gaming market doesn’t do anything to illustrate your point.

    As I mentioned before there there are one or two big publishers, not developers, who are making a killing but the rest of the market is in huge decline.

    Some huge studios have closed in recent years or been gobbled up. Examples are Bizzarre, Team Bondi, Blackrock, Bedlam, Codemasters, Visceral, Propoganda, Krome, Kaos, Codemasters, a huge chunk of THQ.

    Team Bondi is a great case study because they tried something very different with LA Noire and it got very good reviews yet the studio went under because people weren’t going to pay £40 for something on release day that they knew they could pick up a few weeks later for £20

    You only have to look at Mass Effect 3, probably the biggest reelease so far this year, and barely 3 weeks after it’s release stores are already selling it for half it’s RRP because they know that within two weeks of it releasing their sales are basically dead. Because of the pre-owned market you won’t get innovative games like Alan Wake which sold poorly on release but built up enough word of mouth sales over the months after release to make it a success.

    This means that niche games like that are becoming more and more of a rarity. The other thing is that more companies are spending time on online multiplayer than on the single player because they can at least try to recoup monoey with online passes that way. This is why we see games that are know for brilliant single player and really not suited to multi player having dev budget wasted on online MP for sequels.

    you look at the only two publishers doing well at the moment, EA and Activision, and you can see the way gaming is going with them basically selling half the game on release day then making you pay for the rest of it through DLC like they did with Mass Effect 3.

  13. Felix Torres // March 30, 2012 at 6:47 am //

    Uh, the Mass effect 3 price decline is *not* due to used games. At *all*.
    It is due to the uprising over the ending and the day one DLC.
    In fact, some people have been demanding and *getting* refunds for the misleading marketting.
    Further, the game runs 40-50 hours for a proper playthrough, without counting the online component so, for a game out for just weeks, there should be few if any used copies to be found.
    Factor in that the online component requires used game buyers to pay for an online pass and that (contrary to pre-release promises) getting the “best” of the “controversial” endings can’t be achieved is impossible without online play and it is clear that EA has already devalued the used value of the game.
    Almost as much as they devalued the *new* release by stripping out a core character for release as extra cost day-one DLC.
    So pick another underperformer to float up as “proof” of the evils of used games.
    Mass Effect 3 is no victim.
    It is, however, the last BioWare game I am likely to buy.

  14. Binko: “Howard, the games industry is not suffering at all.”

    Indeed they are not. Like all industries there are companies closing down, as there are new ones forming. Companies fail for a multitude of reasons. Gameplay is an elusive thing to achieve and way too many gaming ventures invested millions in rubbish game play and tried to hide it with fancy graphics etc.
    Platforms are changing rapidly. Gaming on the iPad and iPhone is exploding. Gamers are changing. Gamer profiles are changing. Like your story of Mass Effect, Blizzard and WoW are suffering slightly too. But this has nothing to do with 2nd hand markets. WoW has become tired and they have milked users over and over with new extensions that have gone their course for many.
    It really is a joke talking about Mass effect and 2nd hand sales after 3 weeks. The only people selling this or most other games after 3 weeks are people who discovered the game to be total crap. And the blame for that is not the public, but the developers. Of course they want to end 2nd hand sales ! they want to bleed suckers dry and stop them recovering some of their cash when they are disappointed. And now they look to blame 2nd hand sales for ALL of their woes. What a scam !

  15. Clytie Siddall // April 1, 2012 at 1:22 am //

    According to local (Australian) tech media, Team Bondi went down because of the high Australian dollar, not because of the success (or imaginary lack of success) of LA Noire.

    Pull the other one.

  16. I will make you a deal. I will stop buying the more popular games used if you stop using lawsuits and advertising to eliminate your competition in america!

  17. Used games are not hurting the gaming industry, games that are crappy are. lf the companies making games would put more effort into their games instead of rushing them out the door to stores, then gamers might actually want to buy their games instead of hesitating and just buying a used game. Would you want to pay $60 for a new game that sucks, or $15 for a used game that might be good?

The TeleRead community values your civil and thoughtful comments. We use a cache, so expect a delay. Problems? E-mail newteleread@gmail.com.

wordpress analytics