Used Videogam es Jacob Klaffke Professor Weller W131 6/20/12 Keep them or kill them? [1]
Transcript
Slide 1
Slide 2
Used Videogames Keep them or kill them? http://upload.wikime
dia.org/wikipedia/co mmons/5/5a/SNES- controller.png [1]
Slide 3
Table of Contents Note to Audience The Situation: Terms of the
Industry The Players within the Debate The Plaintiff The Defendant
Example Advertisements The Real Numbers Hothardware Graph GameStop
(GME) Stock Graph The Results: The Changing State Mobile and PC
Markets Buy New Incentives Death of AA Titles & Spiraling
Development Costs The Solutions: Oust All Used? Make Better Games
The Retail Scene Respective Pricing Digital Distribution Supreme
Court Ruling in the Works Conclusion Works Cited [1]
Note to Audience Two out of three households in the US play
videogames (Video Game Industry). I am talking to those who play
games. And as the number encroaches upon newer audiences, I suggest
the non-gamers listen up, as well. The industry took a revenue dive
in recent years, and every corner of it wants to know why. Partly
to blame was the great recession, also to blame was a dying
interest from the casual gaming Wii crowd. While many factors
played into the decline in sales, one topic the industry players
continue to banter about is the used game market. Would doing away
with it give the industry the boost it needs to change for the
better? Or is it a natural outcome of a free market? Either way, I
look at the issue with facts and solutions set up in a multi-genre
manner intended to inform the reader. Videogames are the latest
extension in the line of artistic media, replacing film. Albeit, as
an infant, its hard to appreciate the potential of the medium, but
as a human on this earth it is imperative to understand the arts
our common form of expression. And the outcome from the used games
issue affects the direction of our newest art form. [1]
Slide 6
The Situation: Terms of the Industry The industry is based on
intellectual property (IP) A copy of that IP is what is being sold.
Buying a videogame grants you ownership to a copy, not to the IP
Owners of an IP are called publishers. Owners hire workers, called
developers, to make a playable videogame based on the IP Publishers
and, consequently, the developers get none of the used game revenue
in its current state On the other hand, individuals and businesses
have found a market for lower- priced videogames by selling
second-hand http://metue.com/wp- content/uploads/2009/03/recycle-
games-lg-metue.jpg http://www.willamette.edu
/~gorr/classes/cs449/figs/o ldbrain.gif [2]
Slide 7
The Situation: The Players within the Debate Publishers In
charge of the funding a typical videogame receives; paid by
distributors Distributors (Gamestop, Best Buy, Disc Replay,
Wal-Mart, etc.) Sell used and/or new videogames to the public Paid
by consumers Consumers The ones buying used and/or new videogames
Caught between the feuding publishers and distributors (Narc_Cop33)
Think with their wallet and look for incentives (Mihulec)
Developers The people who work to create a videogame Paid by
publishers Opinions on used videogame sales vary within each
category, but generally publishers and developers dislike them,
while consumers and distributors like them.
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The Situation: The Plaintiff Here is what the opponents of used
game sales say: Publishers are the risk-taker in the equation,
while distributors reap the benefits without the risk (Boesky)
Gamestop can sell a used game, buy it back, sell it to the next guy
at a profit, buy it back, sell it for a profit to the next guy, and
on and on making multiple sales off a single game (Boesky) The more
profit publishers make on new games, the more games they can fund
and release to the public (Moriarty); listen to the snippet from
the podcast on the left The window of new sales is so short
nowadays, only about three months There are no long-tail revenue
streams (Brightman) Designer Richard Browne: If used sales fuel new
sales, new would have spiked a few years ago when used was in its
heyday, but sales have actually declined (Hruska) Publishers want
the money the used market is generating, or at least some of it
(Usher) http://images.wikia.com/l ogopedia/images/3/3b/25
-08-08-ebay-logo.jpg http://nibletz.com/wp- content/uploads/2012/
05/95-logo- gamestoplogo1.jpeg http://didyousayma
rketing.files.wordpr ess.com/2012/05/a mazon-com-logo-
online-store-sales- deals.jpg [4]
Slide 9
The Situation: The Defendant Here is what the proponents of
used game sales say: Gamestop, which controls 90% of the used
market (Lloyd), says that they bring $1.2 billion in store credit
to the industry; bleeding edge core gamers sell their used items to
fund new purchases (Brightman) Used sales are not all lost sales
for publishers; many people who buy used would not buy new at all
if used was no longer an option anymore Used sales are legal and
capitalistic; publishers are monopolistic; capitalism has gotten
publishers to where they are - they have earned huge sales numbers,
but they have also drawn competition in the form of used markets
(Sterling) [watch the video by clicking the image]
http://www.youtube.com/watc h?v=r4efpGb0DqE [5]
Slide 10
Example Ads by Gamestop They push new sales......but also
really want your used games. http://www.gamestop.c
om/gs/newnews/fsi/ima ges/ebc3010438.jpg http://desmond.imageshack.
us/Himg18/scaled.php?serv er=18&filename=couponsfl
2.jpg&res=landing [Advertisement 2] [Advertisement 1]
Slide 11
The Situation: The Real Numbers While used distributors, like
Gamestop, make a 50% profit margin on used games, publishers only
get 20% of the new game sales (Lloyd) 23% of the U.S. console
gaming dollars go toward pre-owned purchases (Orland) 60% of core
gamers buy used; see graph above (Used Video Game) Core gamers will
grow the industry from $52 billion in 2011 to $70 billion in 2017
(Caoili) Many gamers indeed sell used items to fund new purchases
(Mihulec) The graph below is from a 2008 study, and it shows that
less than 10% of sales comprised of used with 90% still going
toward new; see graph below (Used Video Game) Retail sales dropped
from $10 billion to $8.8 billion from 2009 to 2011 (Snider)
Nonetheless, $25 billion was spent on gaming in 2011 (Snider) Fun
fact: the value of one Atari game in its time is equal to the value
of one copy of a multi- million dollar production sixty dollars
(Moriarty)
Slide 12
Contrary to Brownes earlier statement, new sales increased with
used sales -- used helped new [Hruska]
Slide 13
Additionally, Gamestop (GME) stock has tanked since the
highpoint of used games in January 2008, not reflected in overall
industry trends -- used does not dictate the industrys success or
failure [Google Finance]
Slide 14
The Results: The Changing State So Gamestops used game sales
plummeted over the recent years, but the industry did not (although
it may have dipped to a degree) This shows that the stake Gamestop
and other used game retailers had in the entire market was not as
influential as thought What shifts occurred to uphold the videogame
market in the Gamestop crisis? Some clues have been given thus far
in the presentation, but further answers are ahead...
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AAAAJY/j2ETxjMvw Lc/s1600/change- architect-sign1.jpg [6]
Slide 15
The Results: Mobile and PC Markets PC Gaming generated a 2011
revenue of $18.6 billion (DeCarlo) $4 billion was spent on
microtransactions within free mobile games (Snider) Digital sales
from 2009 to 2011 jumped from $5.4 billion to $7.3 billion, while
retail is expected to decline 5% in 2012 (Snider) Analysts expect
that by 2017, 66% of the $70 billion game industry will be from
digital distribution, the primary manner of acquiring content on PC
and mobile platforms (Caoili) http://fc05.deviantart.n
et/fs50/f/2009/283/0/6 /MY_Computer_icon_ by_balagehun1991.pn g
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The Results: Buy New Incentives EA and Sony drive up new sales
with pre-order bonuses, such as exclusive downloadable content
(Mihulec) Other times, publishers put limits on those who buy used,
namely in the form of 1-per-game online access codes If you buy
used and the code has been used, it costs between $10 and $20 to
get a new code to be allowed access of online multiplayer
(Moriarty) Here is a link to EAs website on how to obtain said pass
for one of the most popular online shooters, Battlefield 3 on the
Xbox 360link Some buyers of used are infuriated by these blocking
measures put out in recent years; other buyers find that the
incentives still dont outweigh the savings of buying used
(Skerritt) http://cache.gawke rassets.com/assets/ images/9/2011/12/
4f105041bfb747fd 3646823de4564e3 7.jpg http://blog.dealroc
ker.com/wp- content/uploads/20 11/05/pre-order- l.a.noire.jpg
[8]
Slide 17
The Results: Death of AA Titles & Spiraling Development
Costs Few franchises can support the $100 million budgets of
mainstream game production, so the mid-tier development studios
cant afford to take a hit on a poor-selling product Consequently,
mid-tier studios disappear (Brightman) The lost sales that go
toward used games is not felt equally by all game studios, and all
videogames are not equally bought used; some studios hurt more than
others: the mid-level studios Developers wont make games that wont
sell. Publishers dont want to take that risk. Only the broadly
appealing games will get made (Brightman) All studios below
(indicated by their logos) have been shut down in recent years due
to a lack of performance; shown are some of the most well-known
companies, which brought beloved titles to the market
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b.com/blogweb/uploads /Top10/topten_closed_f reeradical.png
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content/uploads/2011/ 02/hudson-soft-logo- 421x304.jpg
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er_Interactive_Log o.png/295px- Zipper_Interactive_ Logo.png
[9]
Slide 18
The Solutions: Oust All Used? So, should the industry oust the
sale of used games as we know it? NO! Having no used option
available would drastically lower the number of gamers (Reisinger)
because selling used items to put toward new purchases would become
non-existent (Moriarty) As shown through the statistics above, the
used games market is not a leech on the industry and in many
respects, helps it Certain avenues have opened up recently where
used game purchasing is out of the picture (think digital) But is
that necessarily good for the industry? There are always going to
be trade-offs http://mt-blogs- redesign.syfy.com /scifiwire/assets_
c/2010/01/StarWa rs_vader_noooo- thumb-550x378- 32922.jpg [10]
Slide 19
The Solutions: Make Better Games The sad fact is that the
big-name games that get the funding are the ones that appeal to the
highest amount of people. Gamers will have less choice
Consequently, creativity is limited on the developers part They
will be put on projects that are bland and overdone, forced by the
publisher But there is hope; small independent companies have
sprung up with oodles of creative works to show off Just look at
Minecraft, Bastion, Braid, Limbo, Dear Esther Also, alternate
methods of funding have been born in the midst of the chasm The
biggest of which is Kickstarter, which has funded multiple games
into production, the biggest of which being Double Fines latest
game.Double Fines latest game These games are better because
big-name games only satisfy so deeply, whereas grassroots games,
although satisfying to a smaller audience, bring a much deeper
happiness to the gamer. A study in The Journal of Marketing found
that the more IPs a console has exclusive to it, the more the
system sells (Blinken) http://www.talka ndroid.com/wp-
content/uploads/ 2012/02/Double FineAdventure.jp g?3995d3 [11]
Slide 20
The Solutions: The Retail Scene Buy todays games for $60.00
instead of the $55.00 used deal Gamestop puts up within days of a
games release (Moriarty) The publishers get no cut of the Gamestop
sale. Also, buy the games mid-tier developers have worked hard on
Generations past where their videogames are no longer manufactured
by the publisher are OK to buy and sell used (on eBay, Amazon, mom
and pop stores) (Moriarty) Another solution poses the rule of
new-only sales during a certain window of time following a new
release (Pearson) Another solution mirrors the film industry where
a law could make the sale of new and used games in the same store
illegal (Pearson) http://nintendoageme dia.com/users/3864/a
vatars/eb_ness.png http://oyster.ignimg s.com/wordpress/w
rite.ign.com/50304/ 2011/05/All- Suits.jpg http://i487.photobuck
et.com/albums/rr231/ zacesilverblade/8- bit/83686-70788-red-
mage_large.png http://i22.photobu cket.com/albums/
b338/justletmesig nup/smwbowser.g if [12]
Slide 21
The Solutions: Respective Pricing All videogames are not
created equal Some are worth $30.00 new, others are worth well over
sixty or seventy dollars One solution is to price videogames on day
one according to their actual worth, instead of a industry-wide
pricing of $60 or $50 new A two-version solution says that
publishers could sell one version that would be non-resalable at a
low price, and a resalable version at a bit higher of a price
(Pereira) www.freeiconsweb.com/Icons- show/shopping- bags-
graphicsfuel/brown -shopping-bag- 256x256.png [13]
Slide 22
The Solutions: Digital Distribution No pressing discs, no
retailer cuts of profit, and no shipping costs are three areas of
money-saving benefitted from digital sales (LeClair) Digitally
re-release past generations of games (Miller) and price them on a
tiered scale (Moriarty) Some of this is done by publishers, but the
selection is anything from comprehensive The process is slow-going
and only the most popular vintage games get re-releases Also, to
allow play of these older titles, publishers could manufacture
their own mod chips to legally sell to consumers (Miller) Pricing
must be extremely competitive since todays private emulators are
free and the roms (games) are free via illegal downloading Also,
the convenience of digital shopping could positively affect sales
numbers (LeClair) Common digital retailers: Gamefly Amazon Steam
GOG http://pcmedia.ga mespy.com/pc/ima ge/article/112/112
8069/steam_1287 071486.jpeg http://www.picture scream.com/image
s/46442906zyz.pn g [14]
Slide 23
The Solutions: Supreme Court Ruling in the Works The Supreme
Court of the United States is going to rule on a case that decides
whether foreign goods have the First-Sale Doctrine applied to them
or not The First-Sale Doctrine says once an item is purchased, the
copyright holder has relinquished control of the product you can
sell, destroy, or give away the item Three lower courts have or
have had cases concerning the First-Sale Doctrine and its amendment
(Supreme Court) The amendment would remove the right to resell
foreign copyrighted items (CDs, iPods, clothing, cars, trucks,
etc.) To sell anything copyrighted and imported would require
contacting the copyright owner and receive permission to resell the
product in the States (Supreme Court) Consequently, the used games
market would be greatly affected, most likely destroyed Most, if
not all, videogames are manufactured in Asia The ruling is not
currently dated (after all, the case has only been accepted), but
there is a DemandProgress.com campaign for consumerist interests; I
must say I dont think the Supreme Court will rule absurdly against
the doctrine, but the case shines light on the necessity of
regulation during the Internet age of intellectual property
DemandProgress.com http://www.copyrig htauthority.com/cop yright-
symbol/Copyright- Symbol- images/Copyright_s ymbol_9.gif [15]
Slide 24
Conclusion It seems the used game debate is becoming somewhat
of a dead issue now that digital avenues have become a mainstream
means of purchasing videogames Although, traditional console gaming
has another decade or so before it shifts heavily over to digital
No publishers have stepped forward trying to work with distributors
This must mean the battle isnt worth it to them (Hruska) Its a
capitalistic feature of the industry Also, the argument of the used
market taking from the new market is hardly applicable You can see
in the graph on The Real Numbers slide to see what the height of
Gamestop was doing to the industry The issue is not as devastating
as some make it out to be It does impact the middle of the
industrys developers, so I implore you, if you want more of those
games, buy new from mid-level developers If you dont know which
ones those are, do a little research Im not talking Mario and Call
of Duty, Im talking Harvest Moon and Metro 2033.Mario Call of
DutyHarvest Moon Metro 2033 I know its hard to buy $60.00 games
whenever you want. Enough people agree with that sentiment and have
discovered and even created ways around it pirating, used, digital
download, indie support... Thanks to the free market, we arent
stuck with what has become the norm of generations past. Whats the
point of an art if its bound by a market too focused on squeezing a
profit from it? Thankfully we have a voice, and because of it we
can take this medium to new heights, making it more accessible and
humane than before [1]
Slide 25
Works Cited 1.Boesky, Keith. "Gamestop: Used Games, We Just
Can't Quit You Edition." A Tree Falling in the Forest. Blogspot, 23
Aug. 2011. Web. 16 June 2012. 2.Binken, Jeroen L.G, and Stefan
Stremersch. "The Effect Of Superstar Software On Hardware Sales In
System Markets." Journal Of Marketing 73.2 (2009): 88-104. Business
Source Premier. Web. 14 June 2012. 3.Brightman, James. Pre-owned
increases cost of games, cannibalizes industry, says Dyack.
Gamesindustry International. Eurogamer Network Ltd. 27 March 2012.
Web. 13 June 2012. 4.Caoili, Eric. "Core Gamers to Grow Game
Industry Revenues to $70B by 2017 - Analyst." Gamasutra. UBM
TechWeb, 8 June 2012. Web. 16 June 2012. 5.DeCarlo, Matthew. "Dead
or Alive? PC Gaming Generates a Record $18.6 Billion in 2011."
TechSpot. N.p., 7 Mar. 2012. Web. 16 June 2012. 6.GameStop.
Advertisement 1. Web. 09/18/09. 7.GameStop. Advertisement 2. Web.
2009. 8. GameStop Corp. (GME). Digital image. Google Finance.
Google, 16 June 2012. Web. 16 June 2012. 9.Hruska, Joel. "If You
Resell Your Used Games, The Terrorists Win." Hot Hardware.
HotHardware.com, LLC, 18 Apr. 2012. Web. 16 June 2012. 10.LeClair,
Dave. "4 Reasons The Digital Distribution Of Video Games Will Make
Your Life Better [MUO Gaming]." MakeUseOf. N.p., 3 Apr. 2012. Web.
16 June 2012. 11.Lloyd, Mary Ellen. "Best Buy Tests Waters for Used
Videogames." Wall Street Journal - Eastern Edition 24 June 2009:
B3A. Newspaper Source. Web. 14 June 2012. 12.Mihulec, Frances. Used
Video Games: Good or Bad for Video Game Industry? The Other Gamer.
WordPress. 18 Feb. 2012. Web. 13 June 2012. 13.Miller, Corinne L.
"The Video Game Industry and Video Game Culture Dichotomy:
Reconciling Gaming Culture Norms With the Anti-Circumvention
Measures of the DMCA." Texas Intellectual Property Law Journal
2008th ser. 16.3 (2008): 453-81. Academic Search Premier.
EBSCOhost, Spring 2008. Web. 16 June 2012.
Slide 26
Works Cited (Continued) 14.Moriarty, Colin. The Used Games
Debate. Podcast: Beyond. 02 Feb. 2012. IGN Entertainment. 13 June
2012. 15.Narc_Cop33. I am a game developer, and Im going to explain
to the mass of /gaming/ why the state of gaming is as such. Reddit.
Reddit Inc. Web. 13 June 2012. 16.Orland, Kyle. "Report: Used,
Digital Sales Make Up 35% Of U.S. Console Spending." Gamasutra. UBM
TechWeb, 7 Nov. 2011. Web. 16 June 2012. 17.Pearson, Dan.
"GameStop: Used Sales Benefit the Whole Industry." GamesIndustry
International. Eurogamer Network, Ltd., 23 Aug. 2011. Web. 16 June
2012. 18.Pereira, Chris. "Used Games Market Is Defrauding the
Industry, Claims Developer." 1Up.com. 1UP Network, 30 Oct. 2008.
Web. 16 June 2012. 19.Reisinger, Don. "Should We Stop the Sale of
Used Video Games?" CNET News. CBS Interactive, 04 Dec. 2008. Web.
16 June 2012. 20.Skerritt, Peter. "Consoleation: War on Used Games-
A New Slippery Slope." GameCritics.com. N.p., 20 Aug. 2011. Web. 16
June 2012. 21.Snider, Mike. The Changing State of Gaming. USA Today
04 Jun 2012. Print. 22.Sterling, Jim. Jimquisition: Used Games Have
A Right To Exist. 26 March 2012. Online video clip. YouTube. 13
June 2012. 23."Supreme Court Poised To Rule On Important First Sale
Case." GamePolitics News. Entertainment Consumers Association, 15
June 2012. Web. 16 June 2012. 24. Used Video Game Market
Inforgraphic. Digital image. JJGAMES.com. N.p., 9 Feb. 2011. Web.
16 June 2012. 25.Usher, William. Top Misconceptions About The
Gaming Industry. Cinema Blend LLC. 18 March 2012. Web. 13 June
2012. 26.Video Game Industry Statistics. Digital image.
Entertainment Software Ratings Board. Entertainment Software
Association, 2010. Web. 16 June 2012.