Used and Abused

It’s somewhat appropriate that in a week when the Detroit automakers are flying cap in hand to Washington for bailout money, an increasing number of voices in the industry are calling for legislation, government intervention or a change in industry practices for the used games market.

Appropriate, because just as the Big Three sought for decades to place the blame for their own problems elsewhere, so too is the games industry using the used games market as nothing more than a scapegoat, an alternative to confronting deep-seated problems that threaten the financial viability of this business.

When times are tough, every industry is quick to point the finger anywhere but at themselves – at foreign competitors, at immigrants, at any easy target. Entrenched industries with deep-running problems will look anywhere for the scapegoat rather than focus on the problems blighting their own industry. Rather than face up to the problems of inefficient manufacturing processes, crippling unions and the perception of inferiority with the end product, Detroit sought to blame outside influences, asked for intervention to limit Japanese imports and did practically everything but fix the problems that blighted their industry.

And while gaming is certainly not that badly off, the economic climate, the cost of development budgets and the feeling of uncertainty about what will be a hit anymore is contributing to silly comments such as those of David Braben, the creator of Elite, who suggests that stores who sell secondhand games are “defrauding the industry”.

Are the secondhand practices of stores like GameStop unpalatable, both to the consumer and to publisher? Certainly. But unpalatable and illegal are far from the same thing. The used games policy of stores is merely taking advantage of the fact that many customers fail to see the value for money an individual $60 product offers – and this is a problem that we have built and continue to build for ourselves.

By staking the future of the industry around big-budget tentpole games, most of which are offered for sale in the same 3-month period of the year, have single-player experiences that last little more than a full day of gameplay, and are entirely linear from start to finish, we are feeding the creation of this problem.

As any industry will forget to its peril, the customer is not stupid, and when you can see last year’s massive epoch-defining hits sitting in bargain bins mere months after their launch, it’s hard to fault the customer for suspecting that the next big-budget game you publish may not offer much value for money. While the process of design, creation, testing and manufacturing is one that takes years to see through, it is of absolutely zero impact to the end user. All they care about, and all they should care about, is how much game they’re getting for how much money.

Japanese publishers already fought and lost this battle almost a decade ago, a fight whose aftereffects can still be seen on Dreamcast-era titles that carry the warning “NO RESALE” when you pick them up, erm, secondhand. At the time, companies such as Enix sought to sign retailers up to agreements that they would not sell secondhand software – cutting off their access to shipments of big new titles like Star Ocean if they didn’t agree – and sought a legal backing for this practice by bringing the issue to court.

But the “NO RESALE” warning itself carried no legal influence, and Enix’s practices were blatantly unlawful, as Japanese courts ruled that there was nothing to prevent stores selling games secondhand. Those speaking out against the issue now would do well to review this case, because as the Japanese Association of Retailers of TV Video Game Software (ARTS) argued at the time, the used and new markets are much more tightly bound than many are prepared to admit.

To look at the number of games bought used and imagine that they are lost sales on new software, is as disingenuous as the music industry’s claims that every illegal download is a lost sale of that CD. The sale of used games in fact supports the new game market, as customers trade in their unused titles and use that money to support the purchase of a new title. Although the source of the 80% statistic quoted by Dan DeMatteo, the CEO of GameStop, is unclear, the idea that funds used from selling games are used immediately on new ones is anything but.

Furthermore, the savvy consumer takes the resale value of games into account when purchasing – they are not buying a disposable commodity like frozen food, but something more akin to a car, which has a return value already added in upon purchase. That added value provides a safety net to customers for them to splash the cash on impulse purchases – which is vital, because of the amount of sheer crap that we as an industry have foisted, and continue to foist, on the customer. Safe in the knowledge that they can sell a dud back almost instantly and regain maybe half their loss, it is much easier for the average consumer to pick up an unknown title – which, in an era where publishers are starting to realize the value of pushing new IPs, is absolutely something we should be encouraging the consumer to do.

Part of the problem – and the one most difficult to fix – is that so many games have so little intrinsic artistic value. Whereas, say, a Led Zeppelin album is still as good today purchased on iTunes as the day it was pressed onto vinyl, the ludicrously fast pace of technological advancement means that some games can be old news six months after their release date. To put it bluntly, no one is going to want Gears of War 2 in 40 years time, and certainly not for the same price as it costs today.

Publishers and developers, most of whom are individually prepared to spend as much as it takes to enjoy their hobby, all too often fail to remember the time when they had to scrounge together pennies to buy a game a year – and it shows in the words of people like Epic’s president Michael Capps, who says that they “have a rule at Epic that we don’t buy any used games… because this is how we make our money and how all our friends in the industry make money.” Nothing wrong with a little principle, indeed, but not everyone is in such a position. In these belt-tightening times, attempts to squash the used games industry could actually have a negative affect on the sales of new games.

If we cannot find a way to make what the consumer wants at a price they are willing to pay, then we deserve to fail. That’s capitalism for you. And the market clearly shows – if you are not smart enough to do it, someone else is. Just as there is nothing that we can or should do to stop GameStop exploiting a hole in the industry with its resale practices, there is nothing that can or should be done to stop publishers attempting to add value to games purchased new, as Epic and EA have sought to do recently.

This problem with the content we offer is something we are going to have to face up to as digital content – with no resale value and thus no safety net – becomes more common. Because this reaction to retail is really just a symptom of a larger problem – the way games are not only sold, but also conceived and created, is becoming increasingly financially unviable. When publishers are still expending millions of dollars on projects that are financially and creatively unsound, it’s difficult to have much sympathy – and compared to those problems, eliminating the used games market is like putting a band-aid on a bullet wound.

Christian Ward works for a major publisher, and admittedly does not understand why people are willing to buy secondhand for only a $5 discount.