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Paying To Be Used

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Right now, you’re reading the words of a hypocrite.

Though I’ve participated in it more than once, I still hate the used game market. Need a quick list of reasons? Of course you do. Well, I’ve got three big ones:

1. Unfair Trade-in to Mark-Up Ratios:

Companies like Gamestop buy back current best sellers for about 50% of retail, and that’s if you’re lucky. A few weeks after MAG’s January release for PS3, the game’s trade value had already dipped to around twenty dollars. However, the shelf price for the used copy was still clocking in at 55 dollars. It takes very little math to figure out the profit margin on that transaction.

If you don’t have a (paid) Gamestop membership you’re paying 92 percent of the retail cost for most used copies of new release titles. Even with the extra 10% off you don’t fare much better (the cost plummets to 82.5% of retail).

Meanwhile, Gamestop paid about 20 bucks to the guy trading in his copy – and they probably paid him with in-store credit that was then reinvested into Gamestop. By the end of the day, the worst Gamestop does on that used title is 145% pure profit. If you don’t have a membership they’ve taken you for around 175% profit – and that’s if you walk out the door without spending it right away.

You’ll notice that none of that math takes into account state and local taxes – but that brings up my second point:

2. Amazon Does New Better than Gamestop Does Used:

I know it’s a bit of a loophole, but Amazon.com has the benefit of being able to slink around tax laws as a sort of amorphous entity. Outside of certain places, Amazon doesn’t charge you tax on your purchases. Sure, there are shipping costs, but they offer free shipping above twenty five bucks and most new games are clocking in at twice that or better – so I think we can call that a wash.

In terms of the tax implications, I’ll illustrate using my local sales tax as an example of how quickly a used title loses value:

My local tax rate (in Denton, Texas in case you’re curious) is 8.25%. So, for every 55 dollar purchase, I’d wind up paying $59.54 – if we’re being fair let’s assume I have my membership card and my cost goes from 49.50 to around 53.50. Suddenly, I’m picking up a hand-me-down title with at least a little wear and tear and I’m only saving somewhere between .50 cents and 6 dollars.

Sure, that gets me a designer coffee – or some gum – but as a consumer I give up quite a bit of power for very little savings. This would suck all by itself – even if we didn’t know that Gamestop is taking home 150% profit while we, the consumer, hover around a misguided status quo.

When you pile on by considering that a lot of online chains (even Gamestop on occasion) have started offering 10 dollar gift cards with the purchase of a new game – the used game market seems even more indefensible – unless you’re looking for something older of course, but that’s not the focus of this piece.

3. Game Developers Get Hosed:

I saved my third reason for last, but it’s by far the most compelling. I want you to think very hard about your favorite underrated game of all time – and I want you to quietly fume about how they never made a sequel for it.

Now, I want you to consider how many people paid Gamestop 150% profit on that title while seeing none of that revenue sent back to the original artists. In terms of pure profit, that game may have outdone a dozen titles that year – but in terms of the raw sales dollars that get reported to publishers – they’re stuck counting only the first time through.

If you bought a title like Call of Duty: World at War or Dragon Age and then sold it back after a week, even if the game is re-sold before it hits the shelf, that doesn’t contribute to the “official” success of the title.

With games that demand a sustained online presence such as Madden, Halo or Modern Warfare – it actually costs developers and publishers more every time someone picks up a used copy instead of a new one. Sure, you could make an argument that the raw number of users remains stable if there’s a one-to-one transfer of a used game – but that doesn’t take into consideration community dynamics and data management issues – never mind that the only party not receiving a good in the trade-in triangle is the game company itself.

Player X sells back a game to Gamestop – they get 33% of their original investment back, but likely enjoyed all of the end user features. Gamestop then repackages that game for 150% profit, sending none of it back to the developer, and player-y gets to resume the previous use of the end user content. Everyone in this scenario has either saved, or obtained money from one party or another—except the developer. What’s the developer doing? They’re offering 100% of the support they’d been offering before.

If that seems fair to you, I hope you burst into flames.

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Really? Flames?

Ok, yes, despite that very strong condemnation and despite my previous three points – I still get sucked into buying used games several times a year – so, maybe I don’t want you to combust just yet.

I get it. Retail stores offer incentives – “buy two get one free,” “ten percent off the already discounted price,” and let’s not forget the magazines.

I buy used games for the same reason I once weighed 230lbs – the temptation to consume outpaces my desire to be responsible. I’m too impatient to wait for a few days to have a game shipped at a lower cost. Instant gratification makes me into a cruddy person. I admit it. But, I also hate it, and I have no problem with some of the steps companies like EA have been taking over the last couple of years to undermine my baser instincts.

Prevention By Incentive:
I know we’re an entitled bunch. We being humans, gamers, and in my case you can add American to the list. We want things done our way, we really think that the customer is always right, and we’re happy to shout it over the phone or refuse to tip if someone refuses to honor it.

The problem is, we often spout that crap at people we aren’t paying. If you can’t get game support, DLC, or your warranty honored for your used game – it’s not because the game company is ripping you off. It’s because you didn’t actually make a transaction with them.

I’ve heard a lot of complaints from fans about downloadable content in general these days – about the audacity of a company who’ll ship a game and then ship the DLC later – as if fans are being ripped off by developers looking to milk them for all they’re worth.

My favorite example of this has been Bioware’s Effect 2 and Dragon Age: Origins titles. Both games come with free DLC right out of the box – but that DLC also comes with a catch.

It’s the catch that has plenty of people upset with Bioware, which is a quick stepping-stone to proving my point. You see, if you buy either of these titles new, you get the extra DLC at zero cost. If you buy the games used, you wind up paying an extra fifteen dollars for the same DLC.

A lot of fans have lobbied under the radar of logic by claiming that the DLC should have been on the disc to begin with and that Bioware is just trying to leech money from fans. True fans don’t make that argument because they bought their copies new. The only way you wouldn’t get the extra content is if you didn’t buy a new copy – and as I showed before, if you bought a used copy, you didn’t actually pay Bioware anything for the game you’re playing – let alone the extra content you claim you have a right to.

In case it isn’t clear – I’m all for this type of positive reinforcement of new sales. “Buy our titles new and you get free content,” is the rallying cry – however it can easily become negative reinforcement to those who want to get something they haven’t paid for.

Still, it’s hard to back any gamer who says, “I have a right to all the content and you had better give it to me or I’m never buying another Bioware game again!” Guess what buddy, you didn’t buy this Bioware game – so why should they focus test your opinions when moving forward with their business?

The other bonus of this particular strategy (which has also been used successfully in titles such as Rock Band) is that it makes buying a used game cost MORE than a new game during the crucial early stages of retail. Sure, there are built in degradations that help spur used sales later – such as that inevitable time when it will become cheaper to buy the DLC separately. But in the first few months of retail, EA has basically found a way to turn 55 dollar used games into 70 dollar used games. Not a great investment when the same game would cost you less than 60 bucks new at retail (extras included).

GamestopWithTextureAndTagTrue Leeches:
I don’t know how else to say it. Stores like Gamestop give gamers less for most games than Bioware (and others) charge for premium DLC. They then sell those games for three to four times what they pay for them. They make all of this money, while basically playing the pimps of game retail world. Hard working game developers and creators take all of the actual risk, put in all the meaningful man hours to create these experiences for us – and they wind up relegated to turning tricks for a group of nobodies – and get little to nothing in return.

Then we, the sycophantic bastards that we are, we look them in the eyes and say, “pretend that you’re having a good time – I’m paying for this.” We’re lucky that developers still keep making games in this dangerous and competitive business. We’re lucky that publishers keep funding games knowing that they’re forced into bed with this type of retailer: one that passes on risk, but ends up leeching dollars like a succubus. Gamers are probably lucky that we don’t get sprayed with Mace every time we swipe our Edge cards.

As with most used dealers of anything (from flee market gypsies to auto dealers), the only people not getting screwed are the people pawning off the goods. Yeah, gamers are getting unfairly punished at times for the sour business practices of companies like Gamestop – but it’s because we had plenty of time to do the right thing and didn’t. Instead we decided to watch the market blister and peel thanks to unfair pricing coupled with zero loyalty to the originators of the craft.

In all, Gamestop and companies like them aren’t even in the used game market as much as they’re in the used gamer market. They’re taking advantage everyone in the chain by exploiting their middle-man position to the fullest. Worst yet? They’ve got thousands of gamers voices backing them up, instead doing what they should be doing and lobbying for the developers – the artists of our medium. Why? Over five bucks? Over a designer cup of coffee? Well, bank on this: the final cost will be far greater.

Steven Kilpatrick

Comments: 2 Comments

2 Responses to “Soapbox: Paying To Be Used”

  1. Dre Says:

    Um… but isn’t EVERYTHING on earth sold used? Like houses, cars, boats, and those are all really expensive yet they are still being made. 😛

  2. Steven Kilpatrick Says:

    That’s a clever but completely ridiculous parallel.

    When someone builds a house they create an estimate for the cost of materials, the man hours, the amount of time and energy they’d have to put in to make a profit etc.

    So, when they sell a house, or even a tract of houses, the contract labor is paid for immediately, the goods change hands, and they aren’t left with thousands of other houses they just built going to waste and depreciating in value by the minute.

    People tend to build homes either in areas with huge growth, or in a place where a specific buyer agrees up front to pay full value.

    As for cars and boats etc–once again, you’re not talking about the same stuff. A used car doesn’t sell for 15,000 dollars, get bought back a week later and then resold for 14,500 dollars. Cars are used and depreciate over time–usually a full generation. Houses too.

    It’s not at all the same to talk about a long term item bought for utility and a short term luxury/entertainment item.

    For that matter, if you bought a house or a car that was used you would never settle for a mere 5-10% discount of the original price. You’d just buy new. If you did decide on that discount, you would be laughed out of the room if you wondered why you didn’t get the free complementary year of AAA or Onstar that came with the car ten years before.

    Yet, people get angry about DLC only going to new buyers.

    You can put a little tongue at the end of your posts, but that doesn’t make them poignant–it just simplifies the point and ignores true discourse. Not that I mind, makes my life easier.

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