The used video game market is on the verge of becoming downright crazy! This 2 billion dollar a year business (which is dominated by Game Stop and eBay) has Amazon and Best Buy foaming at the mouth to grab a piece of the action. More competition between retailers breeds better deals for consumers. You’re probably thinking, “Hey, that sounds good for gamers,” and you’d be right in a way. Depends on if you are a buyer or a seller. I’ll get more into depth on this subject in a minute, but before I do, I have to throw in the recent news that the game manufacturers such as EA want to get into the used game market as well. They’re saying, “We spend countless hours and millions of dollars building these games and everyone else is profiting from selling these used games but us!” They are correct in stating that they are being cut out, but should they be in the picture at all?
The answer is: they will be if they want to, and they want to. The only question is if they will actually do it in an obvious fashion, by adding a form of DRM where the second owner would have to put in a code in order to take advantage of the full functionality of the used game, or try to offset their “losses” by limiting what goes into the game when sold new and creating more downloadable content which they will charge you for (See COD and their Map Packs). Either way, the consumer would be paying. The number that has been thrown around is $15.
So let’s get back to the buyer or seller part of this and I will use myself as an example. I am both a buyer and a seller. I typically buy a new game for $60, play it for a few weeks (longer if there is a compelling online component) and then sell it on eBay for $35. So when all is said and done I am paying $25 for a game that provides me 20-30 hours of entertainment. Now let’s say that the same game has the manufacturer’s DRM on it that requires the second user to put up another $15 to play. How will that affect the price of the used game I am selling? Will I still get the same money? Will I get $15 less? Will the price fall somewhere in the middle? If I get $15 less, my investment is now $40. How does that affect how many games I buy over the course of a year? Will I buy fewer games?
What about the type of person that buys used games. If they buy a game from me for $35, and have to throw $15 to the manufacturer, that’s only $10 off the price of the game’s MSRP. Will they go through with the sale? Will they buy the game new? Will they wait significantly longer for the price of the game to drop to $20?
These are all very interesting questions and I don’t know the answer to any of them. The only question I know the answer to is that if the manufacturers go through with charging $15 to reactivate a game, Game Stop is the big loser. We all know that used games are Game Stop’s cash cow and they would have to discount all of them by $15, significantly eating into their margins. You might say “Why would they have to do this? They can just pass on the fee to the consumer.” Here’s a good example: a hot new game comes out and someone buys it and really doesn’t like it. They sell it back to Game Stop for a fraction of the cost and Game Stop jacks up the price to $55, just $5 less than retail. If you add in the $15 anyone who purchases that game is going to pay, then that person has now paid $70 for a game they could have gotten new for $60. At the very minimum, Game Stop would have to drop the price of the game to $40.
With that being said, will the game manufacturers institute this policy? I doubt it as they don’t want to piss off the big retailers, but you are going to see more and more downloadable content in the near future. I’ve got a better idea for how the manufacturers can capitalize off of the used market. Check out Part 2 soon!