There was a lively discussion last week on EBC about the Jason Rubin-inspired topic of new distribution models for video games. When this week’s episode of EpicBattleCry seemed to be returning to the same subject, I was a tad concerned. But it turns out that the topic at...]]>
By Lorin Baumgarten

There was a lively discussion last week on EBC about the Jason Rubin-inspired topic of new distribution models for video games. When this week’s episode of EpicBattleCry seemed to be returning to the same subject, I was a tad concerned. But it turns out that the topic at hand was a different one: used game sales and what publishers are doing to combat them. I must say that my opinion on this has wavered in light of the recent discussion on EBC. I am no longer convinced that publishers deserve money from used game sales. I have, however, maintained strong ideas about what is being done about it. Read on and let us know your thoughts on the matter – you never know who might be listening!

When I began conceptualizing how my column would read this week, I had very definitive ideas about the subject matter to be contained within. But there were some very interesting points brought up during the show (Brent) that have caused me to re-think my entire view point as it relates to used game sales.

To really look at this issue I find it easiest to break it down into two basic categories. The first is the pricing of used games and the second is whether or not publishers should see any of that money. With regard to the former, there is no lack of clarity for me. I have always felt that it is ridiculous for a retailer to buy my two-day old used game for $25 (you know, the one I just paid $60 for) and turn around and sell it for $55. That is roughly a 100% profit (I knocked off the extra five bucks to pay for the time it takes for the cashier to interact during the purchase process and, possibly, to clean the disc). One hundred percent – that is a ridiculous profit margin. And that same profit margin exists at all price points. Thirty-five dollar games are usually bought back for twelve to fifteen dollars and twenty dollar games are usually bought for around eight dollars. According to the fellas on EBC, that profit margin earned GameStop 1.4 billion dollars last year. Wow.

The second aspect of the used games discussion, and the obviously more controversial, is whether or not game developers/publishers deserve some of the money being made by retailers in used game sales. This is where my opinions were shifted by the EBC analysis. Prior to listening to the show, I wholeheartedly felt the answer to this question was YES! Why should retailers make such a ludicrous amount of money off of the 2-5 year efforts of the game developers, while the developers themselves see none of it? Seems reasonable, right? Well Brent pointed out a very interesting point on the show. His point was that once the product is sold it becomes the property of the consumer and the producer no longer has any legal rights to financial interests in it. This is true throughout all of industry. Consumers are free to sell their CDs, DVDs, cars, Mp3 players, clothes, shoes, stereos, tools, dishes, appliances, computers, or furniture and in no case does the manufacturer get any part of the resale of the item (unless, of course, you owe money on the original item – and even then, not always). So on this matter, I have changed my mind. The game companies are not entitled to a piece of the used game money.

But game companies realize this. That is why the minds behind the gaming industry have gotten creative. Publishers, such as Electronic Arts, have begun to work around the problem by coming up with ways to either entice consumers to buy a new copy of a game or to recoup some money should they choose to buy a used version. Not only have they come up with a way to combat this issue, but a way that actually seems fair to the gamer, yet still serves their purposes as well. I know – I am shocked too.

I am, of course, referring to the model used in the recent game Mass Effect 2. I wrote about this last week, but to reiterate, if you purchased the game new you received a code giving you access to the Cerberus Network. The Cerberus Network, named after an entity within the game, is a portal to downloadable content released after the launch of the game that ranges from additional armor to entire additional levels. If you did not purchase the game new, you would have to pony up $15 for access to the Cerberus Network.

This model works well for publishers because it circumvents the need to reach an agreement with retailers regarding used game sales as well as accounting for used game sales that take place outside of the retail space (think eBay, Craigslist, etc.) Now, whether or not this translates to significant revenue for the publishers remains to be seen, as this is a fairly new model.

This model also works well for the gamer as it will, hopefully, pressure retailers to lower used game prices to stay competitive. After all, who would pay $55 for a used game knowing that they will have to pay an additional $15 for the extra content when they can get it all for $60 by purchasing a new copy of the game? Additionally, for the fan of the franchise that purchases a new copy of the game, much (if not all) of the DLC is included in the price, or so it seems. And at least in the case of Mass Effect 2, the DLC included in the “new game” purchase price appears to be pretty robust. And for the gamer who wants to save some money, they can buy the game used and play a full and complete game with no requirement to purchase the additional content.

All of these things combine to make this a very fair and amenable model to combat used game sale issues (assuming revenues are increased for the developers). Electronic Arts is also using this model for its newly released military FPS title, Battlefield: Bad Company 2.

While I like the model discussed above, the jury is still out on its viability. In the interim, however, it has passed through my mind during the writing of this column that if GameStop made 1.4 billion dollars last year on used game sales, perhaps you and I should open a store that sells games at a reasonable price and gives publishers a piece of the pie. We could make gamers happy and publishers happy. Sure we might only make two or three-hundred million dollars a year, instead of 1.4 billion, but I think that I could live with that, don’t you?

So what are your thoughts, my warriors of wisdom? Do publishers deserve a piece of used game sales? Do retailers charge too much for them? Is the model being put forth by EA reasonable to you? Sling it, my friends, and let the gaming world know what YOU think!!

Editor’s Note: Lorin Baumgarten is the founder/owner of Furious Gamer Radio and has, unfortunately, experienced being Used and Abused on a quite personal level dating back to his exploits as head male cheerleader/mascot for the University of Colorado where he learned first hand that no matter how much you train, people still think of you as “the dude in the Buffalo suite”.