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Is the pre-owned videogames market set to become a thing of the past?

RetailThe future of games

Walk into any high-street videogame retailer and the chances are they’ll have a large section dedicated to second-hand games. In many cases, pre-owned games comprise a large percentage of a videogame retailer’s revenue (GAME and GameStation announced revenues of £387 million from pre-owned games alone in 2010) and it’s not unusual to see some shops emphasise their “trade-in and buy used” policy.

Retailers like CEX and GameStation thrive on their competitive buying and selling prices of new and old games, providing a welcome service for us gamers who wish to recapture our long-past childhood with the swift purchase of an old FIFA game or a much sought-after all-night multiplayer session on TimeSplitters 2 (always as Captain Ash, always).

But where do pre-owned games figure in a rapidly-expanding internet dominated videogames industry? In an age where the downloadable content is king, can the second-hand gaming market realistically remain as lucrative as it does at present?

The Online Pass system has taken off majorly in the last year or so and it’s now commonplace to find a 12 or 16-character activation code inside your newly-purchased game. In order to access the online features of the game you’ve just purchased, you’re required to enter this code when prompted on-screen. These codes are provided on a “one use and one use only” deal and should you purchase the game in question second-hand and want to take it online, you’re charged around $10 for a brand new code.

EA pioneered this system and announced that since their own Online Pass system was introduced and implemented in all their games from 2010 onwards, they have generated extra revenue in the region of $10-$15 million. So far, so money.

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Online Pass encourages people to buy a brand new copy of a game whilst ensuring that, should a used copy actually be purchased, the publishers and developers don’t lose out. Sounds fair enough to me, initially.

But second-hand gaming has never been purely about trying to avoid paying full price for a brand new game. No-one walks into a retailer and approaches the second-hand section in the hope that they have Grand Theft Auto V for £10. Without delving too deep into an argument for another day, if gamers interested in pre-owned software were all about saving money, they would just visit a torrent site.

No-one wants to see the creators of a truly outstanding game go out of pocket. That’s why the best games and series often make the best money at launch (the highly-grossing Call of Duty: Black Ops can be considered a notable exception to the rule) and why you very rarely see the newest and highest-rated games on the pre-owned shelves in a retailer.

But what happens in five or six years’ time when a gamer wants to re-purchase a game he sold long ago? Or wants to try a game he never got round to playing the first time? My flatmate has just purchased a pre-owned copy of Shadow of the Colossus; a game I’m sure many of you would agree was one of the best available on the PlayStation 2. I myself recently bought a copy of Odyssey: Abe’s Oddworld (pre-owned, obviously) from a high street retailer, a game I could not for the life of me defeat as a child but that I now felt confident in defeating having watched nothing more than a couple of nostalgic clips of the game on YouTube.

So what is a gamer to do in five or six years’ time when they decide they want to go back to playing Batman: Arkham City? Will they be content with paying £20 to buy a used copy of the game…only to then find out that they’ll have to fork out extra for the DLC required for 100% completion and an elusive Platinum trophy? Will a fan of Resistance 3 be tempted to buy a pre-owned copy of the game in three years’ time if he knows that he will have to part with another £10 to access the online multiplayer?

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Publishers are to be applauded for their ingenuity and I certainly don’t begrudge them some extra cash if it means more games like Arkham City, Skyrim and Hello Kitty: Island Adventure will be made in the future. I know publishers have always had a “beef” with the pre-owned videogame industry (Lionhead’s Mike West once described the pre-owned marketplace as being “worse than piracy”) but the move towards Online Passes and the overemphasis on DLC in the videogame marketplace just appears to be a quick way for publishers to generate instant revenue for little-to-no investment, regardless of the cost to the pre-owned industry.

Because there will be a cost, a heavy one. If Online Passes and DLC continue to appear and grow at their current rate then there will be little incentive for someone to purchase a pre-owned game when the game disc has essentially become a glorified demo. EA and Sony may well consider this a fantastic step forward but the pre-owned games market will suffer and that will be a terrible shame, not only for those gamers who enjoy purchasing second-hand games but for those high-street retailers who rely on the income generated by pre-owned games to continue operating (and if the likes of CEX, GameStation and GAME were to close, there wouldn’t be very many high-street retailers left to sell those shiny, new, Online Pass-ready games either).

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I wonder if publishers are looking in the right direction and at the right people in their never-ending search for profits. It isn’t like the pre-owned market is the only profit-stealing gremlin to the videogame industry. Does borrowing a game from a friend represent you stealing profits from a publisher? Quite possibly, but hasn’t that always been acceptable? How about those FIFA nights you have at a mate’s house with an eight-player tournament and a bowl of Doritos; should each of those players have their own copy of the game with them? What about the time you let your friend borrow that copy of Heavy Rain so they could play through the truly interactive, cinematic experience for themselves? Remember?

No? According to Guillaume De Fondaumaire you did.

Mr. De Fondaumaire, CEO of Quantic Dream and the man with the hardest-to-spell name in videogame history, took some time to study the Trophy stats and concluded that one million people played Heavy Rain without paying so much as a penny to the game’s publisher Quantic Dream.

“We basically sold to date approximately two million units,” explains Mr. De Fondaumaire.

“We know from the trophy system that probably more than three million people bought [Heavy Rain] and played it. On my small level it’s a million people playing my game without giving me one cent. And my calculation is, as Quantic Dream, I lost between €5 and €10 million worth of royalties because of second-hand gaming.”

Mr. De Fondaumaire may very well be CEO of Quantic Dream but I think his claim that Heavy Rain is “his” game may be contested by his co-CEO and director David Cage. The same David Cage who once argued the key to experiencing Heavy Rain is playing it once and once only (presumably then to let it gather dust on your shelf and avoid letting anybody else enjoy the experience). The other claim I would like to contest is his rather bold assertion that he lost between €5 and €10 million in royalties through “second-hand gaming”.

Such a bold claim is assuming that each one of those one million gaming leeches who played the game second-hand would have been a guaranteed sale had the second-hand market not existed. I purchased Heavy Rain on the day of release and I let one or two of my friends borrow it so they could enjoy a new way of enjoying gaming. One of these friends subsequently bought the game new and one other consequently recommended it to another friend who went out and bought a new copy.

Whilst this is not necessarily a common theme throughout the gaming world, there is certainly evidence to suggest that trading games second-hand has resulted in more revenue for developers than would have been possible initially. The pre-owned market keeps interest in the older videogames on the market alive and that can surely only be a good thing for the industry?

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The issue of the Online Pass phenomenon is one which is set to continue. I am all for the videogame industry making money and am not here to endorse a form of counter-capitalism in any way. Developers and publishers require our investment to continue creating their consistently impressive work. Games like Uncharted 3, Arkham City, Heavy Rain, Metal Gear Solid 4, LittleBigPlanet and Red Dead Redemption are genuine masterpieces and the developers of each of the aforementioned works of art deserve every pound thrown at them.

But should slightly greater profits come at the expense of the second-hand market? I would have to say the answer should be a resounding “no”. Every time I make the trip into my local town I find myself wandering into at least two different retailers just to browse the pre-owned section in the hope that I might find a bargain and I know I’m just one of many hundreds of thousands of gamers who do exactly the same. In their financial report for the first half of 2011, GAME revealed that pre-owned games accounted for 30.1% of total sales compared to 27.5% in the first half of 2010.

I am sure there will be many of you who would vehemently disagree with what I have had to say here and I would hope as much. This is a huge issue facing the videogame industry and one that requires debate.

So how to truly conclude this opinion piece? Well, I think I will leave you with these words from Take-Two chairman Strauss Zelnick:

“It’s irrelevant to be critical of the used-game marketplace. You don’t want to use a stick punishing users for buying used; you want to create something that’s of benefit to consumers. You want to give them a reason to buy new.”

The author of this fine article

is a Staff Writer at Thunderbolt, having joined in December 2011. Get in touch on Twitter @WilkinsonAshley.

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