Sections

Pachter: Without used games, industry will “disintegrate”

Monday, 21st May 2012 04:41 GMT By Brenna Hillier

Industry analyst Michael Pachter has clarified what he meant by saying that blocking used games isn’t in platform holders’ best interests, suggesting it would be tantamount to suicide for any hardware manufacturer.

In the latest episode of Pach Attack, Pachter said it would be a huge mistake to block used games on next-generation hardware.

“I think the industry will disintegrate; I think there will be no more video games if next-gen consoles don’t support used games. You hear that, Sony and Microsoft? You have to support used games,” he said.

Pachter noted that Sony has no reason to block used games, because it makes its money from royalties.

“Why would the next-gen consoles not support used games? Sony doesn’t sell that much software; maybe 10% of sales are Sony products. Everything else, the other 90%, is third-party. Sony isn’t going to help its overall sales that much – let’s go with 1%, 2%,” he said.

This tiny increase would be demolished if users flocked to Microsoft’s new hardware, Pachter said which they would almost certainly do if it supported used games and Sony’s didn’t. The two companies are not only too smart to give the other side the advantage, he reiterated, but also not “evil” enough to “collude” against the gamer.

The Wedbush Morgan analyst went on to say that publishers over-estimate the number of lost sales caused by the used game market, and under-estimate its importance in fostering future new sales, saying that in the long run the market balances out.

“What does it actually cost [publishers] if people trade in used games and some people buy used games instead of new games? My guess is 5% of software sales, probably,” he said.

“Because most people don’t finish new games in a week. Most people take thrtee weeks to a month to finish games. Not everybody buys a game the first day. You probably don’t get that many games traded in; in reality about 40% of games get traded back in.”

Pachter said that of that 40%, very few come back in soon enough to have a significant impact on a new release’s sales, the majority of which occur in the first three months.

“So what’s the cannibalisation? I’d say probably 5%. I’d say about 5% of the time somebody buys a used game instead of a new game, that costs the publisher a new sale.”

See the full episode below.

Latest

24 Comments

  1. unacomn

    Hello, my name is PC gaming, I have no used game sales or rentals, they are illegal. I am still alive. And while you’re dying I will be still alive. And when you’re dead I will be still alive, still alive, still alive.

    #1 3 years ago
  2. Phoenixblight

    @1

    Onlive and Galkai are rents you buy the game for 3 years after which you have to rebuy the game to play it again which most of the industry will be heading towards in the next decade.

    #2 3 years ago
  3. The_Deleted

    Pachter talking sense, if not mighty obvious to anyone on a modest income.
    The used game market is a necessary evil. You take away the customers choice to sell a £40/$60 game and you’ll pay for that with the next release failing because gamers just won’t risk another shit game or are stuck with a game from the same dev. that they didn’t enjoy. Not going to take a chance on another dud if you can’t get shot of it.
    If you’re going to console lock a title, you better be damned sure you price games fairly. £30/ $40 is still a lot but if I’m not given the option to fuck it off, I’m not going to give you my money. At all.

    #3 3 years ago
  4. JB

    @1

    Ignorance is bliss – isnt it ^^

    #4 3 years ago
  5. Froseidon

    “Most people take thrtee weeks to a month to finish games.” – Thrtee, eh?

    Also, more on topic, I wouldn’t call the used games industry bad at all. If more game devs offered dlc to every new copy of a game instead of an online pass (similar to Dragon Age 1 with the Golem DLC) then I believe that they may see the increase of game sales of the new kind. The used sales will still be there for someone who is a bit skeptical of buying the game. If they like it, they might buy this “new-puchase” dlc from the XBLM or PSN Store or w/e. There seems to be better, less against the customer ways around this “problem”… I’m with what Pachter says here.

    #5 3 years ago
  6. G1GAHURTZ

    Don’t be so naive! Just because you think it’ll hurt *your* pockets, it doesn’t mean that the entire games industry will die!

    The point of the console manufacturers is that they don’t have the control that they want. People take their products and create their own little sub-market that generates hundreds of millions, year after year.

    Stopping it doesn’t mean that the industry will stay with the same business model. How can it? The current business model is a confused mess right now, anyway, with one foot in he past, and one trying to get a toe-hold in the future.

    There are a huge amount of ways that they could go, next-gen. A subscription based model (pay a monthly fee and get unlimited content [like satellite TV]), an ‘iTunes’ based model with ‘lite’ versions of every game and lower prices, etc. there are many different things that they could do, which could actually give gamers better options than hey currently have, and much more value.

    You bunch of dinosaurs.

    #6 3 years ago
  7. FrankieDF

    @6
    Honestly, both of those models you described sound downright painful.
    One of them flat out promotes restriction of content, which we already have problems with.

    #7 3 years ago
  8. G1GAHURTZ

    Painful?

    I don’t see the many hundreds of millions of satellite TV customers complaining.

    I don’t see the hundreds of millions of App Store users complaining.

    Gamers are too greedy. They think they deserve things and have some sort of special right to be given everything that a developer ever thought of.

    It’s actually this sort of thinking which is keeping the games industry from moving forward.

    #8 3 years ago
  9. DrDamn

    @6 and @8 +1
    The model will just need to adapt.

    #9 3 years ago
  10. absolutezero

    The problem is that gaming has reached such a level of popularity that there is a very very large part of the market that just will not pay full price for a new game. It does not matter how good you make that game, how well its marketed or what incentive measures you add onto it. They only buy games at a huge discount either months after release or pre-owned from a store.

    The industry in its never ending need to sell as much of everything as possible at the highest possible price will do everything to either win over those people OR exclude them completely.

    Thing is by taking all these measures they might instead begin to irritate the people that do buy full price releases at launch. I dispise online passes and I fucking hate day 1 DLC.

    Also 40% of the 10% of statistics that Patchter spouts are pulled from within his very own anus.

    #10 3 years ago
  11. DrDamn

    @10
    That’s quite a low percentage – who’s ass does he get the rest from?

    #11 3 years ago
  12. absolutezero

    82% comes from the fourth percentile of Geoff Keighley’s buttocks.

    #12 3 years ago
  13. ManuOtaku

    #6, #8, i dont know if what iam about to say holds some true, or has anything to do with this, but in order services i dont see things like Physical DLC, always connected, DRM, etc, things that demostrates the kind of dictatorship mind some of this industy posses, therefore thinking of something that might put more power in this peoples hands, doesnt bode to well with some people and in my opinion rightly so.

    #13 3 years ago
  14. Cobra951

    @3, there’s nothing evil about selling used products. The idea that games are not the same as cars or books when it comes to the market is fairly new. It is a bit of brainwashing that the industry has been pushing with all its might for a decade or maybe longer, with quite a bit of success. Once you make money from an initial sale, you are supposed to be out of the loop. What you sold no longer belongs to you, so why should you profit from it further? The fact that the IP of a game doesn’t belong to you doesn’t mean you don’t have ownership of what you bought.

    If you buy a new Toyota, you think it’s yours, right? Can you copy its design and manufacture copies of it for sale? No, you can’t (unless you’re in China, but that’s another story). That’s what’s illegal. That’s what’s wrong. Selling your Toyota to someone else is perfectly moral and ethical, as is selling your games.

    #14 3 years ago
  15. JB

    Lol at @6

    “The point of the console manufacturers is that they don’t have the control that they want. People take their products and create their own little sub-market that generates hundreds of millions, year after year.”

    You mean… like used cars, used clothes, used whatever ^^ You`re not a huge fan of free choice and The Free Market are you ? Or is it just “gaming” that`s so special it needs it`s own rules?

    You`re not a fan of supply and demand either?

    @8 I dont get your comparison at all??? You`re comparing two different markets, with very different attributes to eachother???

    Doesnt make any sense, actually most of what you said in @8 doesnt make any sense.

    “Gamers are too greedy. They think they deserve things and have some sort of special right to be given everything that a developer ever thought of.”

    So like every other consumer they want the best for the lowest amount of money possible, and wont put up with lazy or average content – fuck them, how dare they use their brains and shop around, wait for the “game Of The Year Edition” or buy another game…

    Lack of innovation, bad games, endless recycled content, DRM, and greedy developer entitlement is preventing the games industry from moving forward, not the consumers.

    #15 3 years ago
  16. ManuOtaku

    “#6, #8, i dont know if what iam about to say holds some true, or has anything to do with this, but in order services i dont see things like Physical DLC, always connected, DRM, etc, things that demostrates the kind of dictatorship mind some of this industy posses, therefore thinking of something that might put more power in this peoples hands, doesnt bode to well with some people and in my opinion rightly so”.

    I did try to say **in other services** instead of “in order services”, sorry

    #16 3 years ago
  17. G1GAHURTZ

    @JB:

    I’m not sure about used clothes(!?), but your comparison doesn’t work in this case. Car manufacturers actually make a whole lot of money out of the used car business.

    In fact, the longer their cars are on the road, the better for them, because they make millions out of the spare parts and repairs that the cars begin to need, the older that they get.

    How does a game dev get a single penny back from a used game?

    There’s only one way, and that’s DLC, *IF* the gamer decides to buy some.

    As for my comparison, it’s a simple one. Other industries have business models which, on the face of it, could very easily be adapted, if necessary, and taken on by the games industry to solve a lot of problems that currently exist.

    I gave two examples of models that I think will work just fine. We already see people paying for XBL Gold. So instead of paying £40-£80 every one or two months for a new game or two, why couldn’t they pay £29.99 per month for complete access to a vast library of games, DLC, video content, apps, etc?

    Or why couldn’t MS/Sony have a gaming app store, where every game has a time limited ‘lite’ version?

    Ideas like these do away with all of the ‘What if I don’t like it?’ arguments, and they would, in fact, offer much greater freedom of choice for the consumer.

    Don’t like a full subscription? Pay as you play. Buy one game at a time. Problem solved.

    Don’t like the ‘lite’ version? Uninstall. Try something else. Problem solved.

    So like every other consumer they want the best for the lowest amount of money possible, and wont put up with lazy or average content

    Actually, most other consumers simply vote with their feet and buy another product. Gamers go into an internet rage, en masse, and act like the end is nigh.

    HOW DARE THEY PUT THE DLC ON THE DISC!!!???? THIS IS AN OUTRAGE!!!!! I BOUGHT IT!!!!IT’S MINE!!!!! ALL MIIIIINE!!!!!!!!!! GIVE IT TO MEEEEEEEEEEEEEEEEEE!!!!!!!!!!!!

    Most other groups actually understand that you get what what you pay for. If you don’t like it, don’t buy it.

    #17 3 years ago
  18. OlderGamer

    I think G1GA ia right. I have been saying the same type of things for awhile.

    I can really see the big pubs having their own “Channel”. Works a lot like the old Sega channel did on the Gen. One fee per month, 50 games, unlimited play. It hocked right into your Sega Gen(MD) system.

    I think it works.

    The trouble is, what if your a smaller publisher? Do you have enough brand name to pull in enough subscribers? Could always etch out a deal with a bigger pub, but doesn’t that create more of a problem? Why would say EA want your FPS game, it might steal users away from their next BF offering.

    Could also lead to pubs weeding out original and new IPs. Instead favoring brand names like CoD, NFS, Halo, etc.

    I know something needs to be done, and I think it will be done.

    What i don’t know is what form it will take or if we as gamers will like it. Whatever it is, i bet it feels restrictive to most of that have been around awhile.

    #18 3 years ago
  19. G1GAHURTZ

    @16:

    IMO, if the majority of gamers had the ‘power’ in their hands, they’d pirate their way to a games library so big that they wouldn’t be able to play everything, even if they tried.

    Not everyone, but the majority.

    That’s why devs are resorting to the sorts of measures that you mentioned.

    I know it’s not working, but ‘just trusting’ gamers isn’t really an option.

    #19 3 years ago
  20. G1GAHURTZ

    The trouble is, what if your a smaller publisher? Do you have enough brand name to pull in enough subscribers?

    It’d probably be the same as now, OG. But instead of fighting for shelf space, they fight for dashboard pixel space.

    Maybe it will drive competition a bit more…

    #20 3 years ago
  21. JB

    There are many cars where you dont need specialized equipment or where the special parts are just cannibalized from older cars, bypassing the manufacturer entirely… Just view wheeler dealers as an example.

    I dont subscribe to your developers should get money from used games at all, its just greedy bullshit, if consumers are buying a lot of used games, they`re telling developers and publishers your games are too expensive, lower you RRP, but they`re not listening, as you yourself is not listening.

    Ofc they complain DLC content is on the disc, you`re telling the consumer he`s an idiot, and when he or she complain your downloadable content is allready on the disc – thats contempt for the consumer again.

    “Most other groups actually understand that you get what what you pay for. If you don’t like it, don’t buy it.” Again how can you know what you`re getting when there`s no demo or you cant return the software once the wrap has been broken.

    Restricting peoples rights, bypassing The Free Market and tying them to different payment schemes is not more freedom for the consumer, it`s just industry BS to get more money.

    “Don’t like a full subscription? Pay as you play. Buy one game at a time. Problem solved.” But there is no problem for the consumer in the first place, they can buy one game at a time, they can pay for free, etc. It`s the industry only that see`s this as a problem, or some of the industry at least.

    “Actually, most other consumers simply vote with their feet and buy another product. Gamers go into an internet rage, en masse, and act like the end is nigh.”

    There you go again – treating the ones who (probably) pay your wages with utter contempt. I cant believe you actually think only gamers behave like that ><. It`s just pure ignorance.

    I could go on, but I`ll stop here…

    #21 3 years ago
  22. Cobra951

    @17, if car manufacturers profit from the replacement-parts business, more power to them. But they are not entitled to make those profits. You could maintain your car with used parts from junkyards, installed by independent mechanics, or even yourself. You don’t have to pay the owner of your car’s IP a nickel to do any of it.

    #22 3 years ago
  23. burrsalem

    Without getting into the used games debate, I’d just like to say how mind boggling it is how that man continues to get paid. Anything. By anyone. His estimates in this case are so incredibly far off as to make you wonder if he’s just f’ing around. His predictions in general are lazy and correct only at a puncher’s rate. He just takes old data and reapplies it over and over and then, when he so often misses entirely, he doesn’t understand why and makes the same mistakes all over again. Pachter is worse than useless to the games industry; he’s an outright detriment.

    #23 3 years ago
  24. IL DUCE

    Where this moron misses the point is that it affects publishers and developers that make the other 90% of games for the Sony/MS consoles are the ones hit the hardest and lose the most money…therefore, as a hardware maker, why wouldn’t you help the companies that supply you with the software to be used on the consoles? Not to mention, I’m pretty sure up until a few years ago when this used game BS became such a huge thing the industry was doing just fine so why would it all of the sudden “disintegrate the industry” after never being a big part of it for so long…hell I never even traded in or bought a used game up until a couple of years ago and its useless anyway, publishers already put online passes in so you might as well buy it new, plus the majority of people pre-order games especially when extra content is offered…so used games are obsolete half the time and only 5 bucks cheaper than a new copy most of the time…its just a way for companies like GameStop to make an insane amount of profit for minimal work…with a 30% bonus they bought my RAGE copy for 9 bucks, which they will turn around and sell for $18…so keep in mind even with a 30% bonus given to me for my trade they still make 100% profit if that used game gets sold, not to mention a new copy of RAGE is only $20 so you’re gonna tell me that 2 bucks really makes a difference? I’m noy buying it…so I don’t give a crap about the used games industry, PC gaming is doing pretty good for never having any used game market don’t ya think? As usual, WRONG AGAIN PACHTER!

    #24 3 years ago

Comments are now closed on this article.