Thursday, August 26, 2010

A Personal Viewpoint on Buying Used Games

Today's hullabaloo is all about the ethics of buying used games. Cory Ledesma from THQ started it by declaring  in a CVG Interview that "when the game's bought used we get cheated". Tycho from Penny Arcade rowed in in support here and here. Hundred of commenters have come out on either side of this debate and in the blogosphere Syncaine has declared his agreement while Syp and others have come out strongly against.

I firmly believe that I should obtain a legitimate license for every piece of software I use but I don't feel particularly philanthropic towards game developers and I will try and get that license legally the lowest cost to myself. If a developer allows their game to be legally traded second hand, or if they allow it to be deeply discounted on Steam or if they choose to offer it in a "pay what you like" sale then I will happily take that license for the lowest cost possible and feel good about it. I will admit that my conscience genuinely prompts me to pay about €5 for "pay what you like" but I remain deeply suspicious of this type of give away and the way it obfuscates the purchasing decision.

One of the main arguments used against second hand sales is that none of the money goes to the developers of  games.   I think if you take a bigger view of the market you will see this is not true. Much of the money spent on second hand games goes back into the hands of gamers who will in turn use that money to buy more games. Where does Gamestop get those second hand games from? They get them from gamers who TRADE THEM IN TO BUY NEW RELEASES.  If you completely prevented second hand sales then there would be less money overall flowing into the games market and there would also be lower sales of new games.

Ultimately it boils down to economics 101 and the downwards sloping demand curve. You cannot beat the curve and force people at the lower price end of the curve to pay more.  If games were only every available at full price then sales would be a lot smaller than they are now.  The differentiation in the market with brand new shrink wrap game available on day of release at a high price, second hand slightly grubby games available a few weeks later at a  discount and budget versions available after while after that is actually very good for the market as a whole and helps to maximise the total revenue from the sale of games.

A game company arguing against second hand sales is being very short-sighted because killing second hand sales would reduce the overall amount of money being spend on games and would ultimately hurt their business. The only valid gripe with second hand sales is that perhaps the retailers are getting too big a slice of the overall revenue pie.

Ultimately this is a non argument though because it is entirely within the control of the game companies. They can intervene at the business level by renegotiating a higher cut from the retailers. They can intervene at the price level by bringing out discounted versions of a game to compete head on with second hand sales. They can intervene at game level by having phone home activation and limited installs. They can intervene at a legal level with restrictive licensing clauses. Would these move increase or decrease the game companies revenue. I don't know but if they are really concerned about second hand sales then they are plenty of things they can do about it rather than trying to pin a guilt trip on their customers.


Tesh said...

"Ultimately it boils down to economics 101 and the downwards sloping demand curve. You cannot beat the curve and force people at the lower price end of the curve to pay more."

Exactly this. I've argued this more than once, and will again. I'm an artist* for crying out loud, and I understand the demand curve. It's elementary school math. It's baffling to me that supposed professionals don't understand it.

*OK, I also love math and do very well with it, but this stuff really isn't rocket science. It's barely riding a bicycle.

mbp said...

Agreed Tesh. There are two things about this whole "debate" that don't make sense. The first is that those arguing to stamp out second hand sales clearly haven't thought of the implications of the demand curve and the second is that there are many many ways distributors can stop second hand sales dead (activation limits, license restrictions, phone home registrations etc.). The fact that they are very reluctant to do this makes me think they know well that second hand sales are a "good thing" over all but the real debate is about the game companies getting a larger slice of the pie from the retailer with the second hand sales thing just a smokescreen.