Next Gen Bombshell: Pre-Owned Games

A feature I wrote for the website www.square-go.com

The transition between video game console generation is always full of rampant speculation, guesswork and rumour-mongering of the highest order. Much of it should only be served with a bucket of salt but occasionally something bubbles to the surface that does warrant some attention.

Specifications and what-not were leaked last week purporting to reveal what the “Xbox 720″, the assumed successor to the 360, would be capable of. So far, so humdrum but then the reports suggested that this console would tie any disc-based game purchases to one Xbox live account so only you could play them. No lending old games to friends and, more importantly, no selling them on to game shops.

This promptly put a very angry cat into a large group of already panicky pigeons. The response was negative, especially when a patent filed by Sony was uncovered that looked to do the same thing only without being reliant upon an always-on internet connection.

Who Gets Paid Wins

So lets boil this down to the important question; who gets the best end of this deal? It would have to be the publishers.

For years now they have been pushing that the second hand retail game market is damaging the industry. This is why a fair few online multiplayer games now come with a one-time only activation code, which means that if you pick it up from the Pre-Owned section then you’ll have to pay another fee to access the multiplayer modes. If this was the first shot across the bows, then what is suggested by the Xbox rumours will likely be a full frontal assault.

The ones suffering from that assault will be the retailers, the ones who own the brick and mortar shops we buy games from, they would be greatly hurt by the dismantling of the pre-owned market. Make no mistake, the markup they can apply to second hand games is a major revenue stream for them. Just ask GameStop in America; of their total profit 46% percent is said to come from pre-owned sales. Ever wonder why a pre-owned price on a recently released title is only a couple of pounds less than the ‘as-new’ price? That’s why.

So it does make sense when the publisher and developers say that these sales hurt the industry; when a pre-owned game is sold none of that sale goes back to the people who made the game, just into the pocket of the retailer. Money that could be use to fund new games and ideas and franchises and all that jazz.

However, when you consider that the industry has existed for a good thirty years and, during the entire period, people have been buying and selling second hand games, the publisher argument falters. Book sales seem to have been working out for a fair old while with no problems, the same with music. But this time it isn’t a publisher making this move to push out the pre-owned market, it’s the console makers. themselves. This is partly in response to the real reason why physical book and music sales have been dropping like a stone; the move to a digital marketplace.

Online and in Credit

Facilities such as Steam have proven that a digital marketplace can work and be a success, so naurally now the console makers want to make that model work for them. But when retailers are undercutting digital prices and, in the case of pre-owned sales, taking the full share of the money for themselves then you can understand why the hardware makers would want put a stop to that market.  How likely is this to happen? Those same retailers that enjoy the pre-owned sales are also the ones that sell those consoles in the first place.

Let’s break it down in a potential scenario: Microsoft release their next console, which ends up locking game purchases down to the owner’s online account and cutting out the pre-owned market. The retailers obviously don’t like this and decide to not stock the console hardware. If Microsoft can’t sell it’s machine then they can’t get you buying games on it.

It’s a classic Mexican standoff. Whilst the console makers want to cut the retailers out of the market to steal a potential slice of the pie, the retailers can easily cause them all kinds of pain to teach them a lesson. In between them are the publishers trying to keep both sides happy.

All three have been in an uneasy truce for decades but the times they are a changing; the world economic situation and changing buying habits have pushed the brick and mortar retailers to the wall. They’ve seen how Apple dominated the music market and Amazon did the same with eBooks and they obviously don’t want it to happen to them. Battlelines would appear to be being drawn.

You Win or you Lose Out

So who are they losers in all this? The game buying public, the customers have to put their faith into a digital system that hopefully won’t screw them over at some point; remember, in the digital world you don’t necessarily buy a game, you buy a licence to play a game. A licence that could, buried deep in the terms and conditions that no one reads, be revoked at any time. A quick peek at a google search for ‘kindle wiped by amazon’ points to the darker side of the digital marketplace.

But, alas, all of this is still rampant speculation based on guesswork and rumour. No one will know anything until someone steps on a stage at some press conference and unleashes some Powerpoint slides all up in our grills. At which point those in the room will either be very happy or very annoyed.

Originally published February 12th 2013

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