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Gamestop: ‘Pre-owned good for the industry, doesn’t harm developers’

Monday, 6th August 2012 17:15 GMT By Dave Cook

Gamestop has revealed new figures regarding its American pre-owned sales, stating that they are worth $1.8 billion a year, but remains adamant that used sales don’t impact new, and that developers simply don’t understand how pre-owned works. Set phasers to angry.

In a Gamasutra interview, Gamestop president Paul Raines said, “We are not ashamed of the pre-owned business and in fact we believe that it’s good for the industry.”

Raines’ statement comes despite many game developers slamming the used sale methods of retailers, and the way they eat into new sales. With used sales, none of the profit made goes back to developers, and only the initial new sales makes them money.

Regardless, Raines stands his ground on the subject, “We have not been successful in communicating to developers how this business really helps. Now, if I’m a developer, I know that [used games] give me heartburn, to see a game…”

It’s here Gamasutra reports that Raines tailed off before he continued:

“We’re really not cannibalizing new game sales,” Raines proceeded, “That’s a common misconception. So my answer to developers is that we are driving growth in a category that needs to grow.”

Raines concluded, “We think there’s a real lack of awareness as far as how it’s good for the industry. The transparency you’re seeing from us is because we want people to know about it, helping people understand what we’re trying to do for the industry.”

What do you think of pre-owned’s impact on game developers? Speak you brains below.

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23 Comments

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  1. WFMMK

    I’ll take your word for it company that profits the most from used sales.
    That doesn’t seem weird at all.

    #1 2 years ago
  2. viralshag

    People are willing to spend money on games. You see it in many of the titles that sell really well. I think most gamers will always buy new if they’re sold on a product as the difference is often quite low between a new game and pre-owned new game, something like £5 maybe?

    I don’t believe the pre-owned industry really does damage sales all that much. Especially as there is never any figures or facts to prove it. I mean, we never hear anything about pubs/devs $10 project figures and results, this just leads me to think it’s nothing worth writing home about.

    #2 2 years ago
  3. Ireland Michael

    Just a quick note Dave, you repeated a phrase in there twice.

    RE: the story, I think the funniest part is how he constantly keeps stating how used games don’t harm developers but never actually bothers to explain why…

    #3 2 years ago
  4. Gheritt White

    @ 3: “I think the funniest part is how he keeps stating how used games doesn’t harm developers but never actually bothers to explain why…”

    I agree.

    Also: DEV RAAAAAAAGE!

    #4 2 years ago
  5. OlderGamer

    The sad part is someone will believe them.

    #5 2 years ago
  6. viralshag

    But guys, seriously what facts are there to prove him wrong? If someone can show me some I will happily hold up my hands and say I was wrong…

    #6 2 years ago
  7. Fin

    @6

    It’s not facts, its common sense.

    Which would developers prefer.
    A) People buy games pre-owned from Gamestop, developer gets nothing.
    B) People buy game new from Gamestop, developer gets something.

    The existance of online passes and shoe-horned multiplayer are the outcome of the pre-owned market.

    #7 2 years ago
  8. Dave Cook

    @3 thanks mate, double paste there :)

    #8 2 years ago
  9. viralshag

    @7, it’s not as simple as that though. You can’t simply ignore factors such as when they’re buying the product, how much for, whether or not they would ever buy it new or if they buy any new games at full price.

    I don’t think there are enough facts or figures available for people to make an accurate assessment of the situation.

    #9 2 years ago
  10. OlderGamer

    Viral there is so much evidence to prove this tool wrong. Perhaps I will come back and drop some links. I don’t have time right now.

    Fin is right tho, just common sense. Two points, if it was no big deal, why do so many people complain, and why do Gamestop feel the need to defend it? And, the point he made: pubd make money when you buy a new game, they make nothing when the game is used.

    #10 2 years ago
  11. OlderGamer

    Sigh, Viral I gott go lol.

    Look there is another angle your not seeing. When GS have preorders for USED copies. They clearly have no intention of selling new copies, yet anticipate the game will sell. That is lost revenue for the people that actual make and publish the game.

    It is one of the reasons the prelaunch hype and preoder are such a big deal. because of GS used game sales, the tail for selling your game long term is greatly diminished. You have a very small window to make your money on the game. Hence DLC, online play passes, etc.

    Again just common sense. Used games sales = bad.

    #11 2 years ago
  12. ManuOtaku

    I dont know, but i think theres a need for a well trought out study about this subject, and intwertined this data with sales for the reduced first hand games at retail, steam, amazon,etc, just to see an overall picture, i got the feeling that the percentage of people that wait for a big discount like those found on steam or amazon are a little bit bigger than second hand sales, or at the very least they they are really close, but a study in this front is needed.

    Also i think this is a rather subjective issue, and for that blaming a sector like this is blind sided, what some people find value and for that are willing to pay full price for a game, lets say max payne 3 fans, doenst apply to others that maybe will wait for a big price drop before buying it first hand or go instead with used sales for a price tag that in their eyes is worht it, therefore as subjective as value is, i think is wrong labeling this things, at least the industry should ponder is the price of games too much or not, because of the success of second hand games, and the big sale numbers when the games are reduced in price, like steam or amazon, if they dont do that they can´t find the proper answer to counter this, instead the go with the route of more money making like DLC and the likes, which is again in itself another problem IMHO.

    p.s and i agree with Michael he didnt stated the reasons why he believes this type of business are good for developers and publishers.

    #12 2 years ago
  13. Gadzooks!

    If there wasn’t a used games market I, and many many other gamers I know would spend considerably less on games.

    Trade-ins have been an integral part of the game scene for at least a decade.

    It’s not a black and white issue.

    #13 2 years ago
  14. Sasha_Je

    The only thing GameStop and every other similar company does is exploiting the industry. Games lack content, end-game content and replay-ability. I will never go and try to sell a game that manages to bring me something “new” if I can put it this way. They don’t unpack new games and sell them as used, it’s the games sold by us, gamers that they are selling. If developers want to combat this market they have to come up with games that bring more content ( and DLC does not count ) or someway to “force” us not to sell them.

    Best regards,

    Sasha_

    #14 2 years ago
  15. OrbitMonkey

    Used games are bad for a dev, but good for the consumer. Do they damage the actual industry… Er no more than piracy I’d imagine… And look how that’s killed the pc market.

    Oh wait it hasn’t.

    #15 2 years ago
  16. viralshag

    @Manu, I totally agree with your idea that more people wait for the huge discount sales on Steam than people wait to purchase pre-owned.

    @OG, There really is more to this than just “using common sense”. This is a topic that essentially comes down to financials and the bottom line. And as people have said, the used game market and piracy have been a part of the industry for easily over a decade. If it truly was such a strain then they would do far more to counter it but my guess is the loss through used sales would be a lot less than what they are willing to spend to counter it. And is therefore considered an acceptable “loss”.

    All I’m saying is I want to see hard figures of how and why it affects the industry negatively. I don’t think we can really say it is harmful because of what we think, it has to be what we know. And as used games is (and I am guessing here) an unknown quantity to both devs and pubs, I don’t know how they can gauge what profit/sales they are realistically losing.

    #16 2 years ago
  17. majicship

    In order for a game to be considered used it must first be purchased by a consumer at the retail price. This gives the developer/distributor etc. their cut of the money. Nobody is going to complain about that.

    However, if the rightful owner of the copy of the game (who has already bought it new) decides to sell his lawfuly purchased copy on to somebody else, what on earth does this have to do with anybody other than the seller and the subsequent buyer?

    #17 2 years ago
  18. OlderGamer

    “Used games market

    Gamestop has frequently been criticized by game developers and publishers for the retailing of used game titles.[25] By reselling used copies at a small discount on the same shelf space as new copies of the game, it is argued that Gamestop is taking profits directly from organizations such as developers and publishers which are solely dependent on their intellectual property for revenue. The motion picture industry prohibits selling second-hand copies of films in the same retail space as new, full-priced copies of films,[citation needed] but for the game industry there are no such established protections. In effect, this means that companies such as GameStop can resell used copies of a game within days of the title’s release and keep all of the profit, thereby cutting directly into the critical initial sales which would otherwise go to publishers and developers. It has been suggested by industry insiders that this directly results in increases to the retail cost of new games.[26]”
    –http://en.wikipedia.org/wiki/GameStop#Used_games_market

    Right now a lot of milage is being had by an interview(PR stunt?) with GameStop CEO Paul Raines. In the interview Paul attempts to tackle critics head on. Headlines are reading that 70% of used game profits are spent on new games.

    Geez that sounds nice. Look OG, all they are doing is building new games sales. Well, no.

    First off I don’t trust that guys numbers at all. Go talk to your local Gamestop managers. I do, often. Secondly think about what he actualy said. 70% of people trading in games, buy new games. That mean that GS takes your old games and throughs them away, happy to sell you a new copy of a different game?

    http://www.ign.com/articles/2012/08/02/what-happens-to-your-used-games

    Of course not. It means that new games sell. But it also means that GS has a multi million dollor biz built around reselling your used games. What you do with your $17.38(for three games) is less important to GS then what they will do with the three games they took from you. Those games will go on the shelf and sell in place of new copies.

    “In dollar terms, that’s $250.2 million in profit, which is a lot more than the company made from the sale of new games, which “only” brought in $182.4 million.” And consider that the bulk of the games they are selling as used, facter into the sales numbers for the new games sold.

    http://kotaku.com/5694038/why-gamestop-wants-your-used-games-so-bad

    Used games make GS far more profit then new ones. Easy to understand why they would want to sell them so much.

    “We don’t make any money when someone rents it, and we don’t make any money when someone buys it used – way more than twice as many people played Gears than bought it.”
    —Epics Capps, on used games.

    I thought about not responding at all to this thread. I really REALLY can not believe that anyone could look at used game sales and think they could be a good thing for anyone other then the people making money off of them. Used game sales are bad. Period.

    It might be nice to take a few games your done with and get 1/3rd off of a new game(or new to you game). But everytime you trade a copy of a game in at GS, a vender just lost a sale on a copy of a game. And that means the publisher lost a sale. As did the dev. Studios close and people lose jobs.

    As the dev costs rise, it will be more important for companies to be able to gaurentee profit on each sold copy of a game. That is why we read talk of anti used game consoles next gen. It is why we have a digital push.

    And I understand that not all used copies sold directly equals lost new sales. After all, w/o used trade in said customer may not be able to purchase a game. But I would rather have that, then have smaller studios/pubs not be able to survive because there due payments are undermined by GS leeching sales away from them.

    I think the solution is pretty simple. Your not selling games. Your selling DVDs with a liscence to use a game contained within. So, everytime a retail establishment sells a game, they should pay a liscencing fee to whomever owns the rights to the game. In other words, if I buy Darksiders one used for 18usd at GS instead of 20usd, I think THQ should recieve 15% of the price I paid GS for the copy.

    I think that solves most of the trouble. What about person to person sales? Ebay? Valid questions, but I don’t think they are bulk of the problem.

    Like I said I almost skipped a response. And I know I could have done better here. But if people aren’t interested, why bother? Not like I am going to change your minds. Really it boils down to simple common sense. You either see it, or you don’t.

    But, if used games are so harmless … why do they cause so many industry folks to lose sleep at nite? Surly they wouldn’t care if what GS CEO Paul Raines was true…would they?

    #18 2 years ago
  19. viralshag

    @OG, I appreciate the response but it still doesn’t answer the question of how much money devs and publishers are really losing. You say you can’t trust what a GS CEO will say but then what evidence is there to make me believe the other side is telling the truth about how much they are losing. Should I believe them just because they are the guys making the game over the guys that are selling it to me?

    A lot about your post reinforces why GS have such a golden business with used games. It simply makes them more money. But just because one company can capitalise on re-selling games doesn’t automatically mean that the creator of said game is losing money. There are so many unknown factors to take into consideration such as whether or not that *new game* would have actually ever been purchased new.

    I’m not denying that retailers do shady business, I just don’t think that is what’s being questioned.

    And we see studios that make popular well sold games close, have staff cuts and the like. My only point that I’m trying to make is this seems to be an argument of one word against another, without any real proof or evidence to substantiate one or the others claims. If a full report with facts and figures can be produced I will happily accept whatever the outcome is.

    #19 2 years ago
  20. OlderGamer

    I don’t think we can have a solid debate on hard sales figures. Only GS has those kinds of numbers. And basicly they are going say “Trust us”.

    On the basic surface level, you can see that in one year GS sold 250ish Million in used games, same year 181ish million on new games. many in the idustry will see that as lost revenue. And really, it is. Not every single penny of course, but enough for companies that are strugling to ask a few questions and raise a few eyebrows.

    “But just because one company can capitalise on re-selling games doesn’t automatically mean that the creator of said game is losing money”

    And that is fundamnetaly where we would disagree. If a gamer walks into a store, and has a choice between new or used, there is a problem. If the gamer spends money on used GS gets paid. If the gamer spends money on new GS still gets paid, but so do the people that actualy made the game to begin with(the devs/the pubs). On some basic level, if you stop paying the people making the games, it stands to reason that less people will be around to make the games.

    It is what has led to countless sequels and me toos. I mean there is all kins of bad resulting from a massive used games bizz. the only winners are GS(or resellers) and to a lesser extent the customer(but w/o realizing it, he/she is creating a losing scenerio in the long run).

    What GS is basicly doing is biting the hand that feeds it(the game industry). It is no suprise to me that PC has grown, consoles have decreased, and industry insider after industry insider have spoken out against used game sales.

    I think if used game were removed from the market, a slight dip might be seen in new games sales. But I doubt it. What sales would be lost because of used trade ins would be gained by the shift in purchases from used to new games.

    Or like I said a certian % of used games sales(that closly mirrors the porfits from new game sales for Pubs). I think that would be workable. Maybe not.

    I guess it will be a mute point when everything is a digital service that we subscribe to.

    #20 2 years ago
  21. viralshag

    But that’s the point. If GS are the only people with the figures, then how can publishers and developers know what money they are losing out on? Just because they made 250 million doesn’t mean that’s on new-used games. That could be on games six months old or more. Let me put it this way:

    In order for a publisher to keep selling only new games they will have to either create over stock of the game – disc, packaging and then either shipping costs or storage costs for said stock.

    Or have your disc and packaging manufacturer available to create top up stock orders every time there may be a demand for your game. Which would most likely be small orders and cost ineffective after the main launch of the game.

    Both of these options run the publisher the risk of creating stock that potentially could never get sold. And unsold stock is lost money. And why would a consumer be willing to pay for a full price game months after release? So the option to counter that is to lower the RRP of that game, which makes the overheads look even more daunting as you have the same costs as a new game with a lot lower return for both publisher and retailer.

    It’s really like applying the digital strategy to the retail industry and it just wouldn’t work. But really, with the business models in place today, this is really the only way you an keep a market free of used games. When gaming goes fully digital, will no doubt be the end of retailers like GS.

    #21 2 years ago
  22. OlderGamer

    “But that’s the point. If GS are the only people with the figures, then how can publishers and developers know what money they are losing out on?”

    Well here we would have to use Epics Gears example, where they said that they saw over twice as many people playing the game then they sold copies. I have read several other companies say the same type of thing. A game will have 5 million users(non concerent) and yet the game only sells 1.75million copies new. We would have to pressume that most of the players were playing copies that they didn’t purchase.

    Now in all honestly, they could have rented the game. Or borrowed it from a friend. Almost all numbers can be manipulated. So alot of it should be, I think seen while looking for presenters slant.

    But the one time use codes, are a direct result of teh example I used with Epics situation. Because other companies have experienced the same type of thing. If you drink GS Kool-aid, there would be no need for one time use codes, play passes or other such incentives for buying new or not trading in. But sadly alot of companies feel very threatend of second hand sales.

    “In order for a publisher to keep selling only new games they will have to either create over stock of the game – disc, packaging and then either shipping costs or storage costs for said stock.”

    I think because of used game sales, you have been mislead. Into thinking that games only sell during this magical launch window:

    “Or have your disc and packaging manufacturer available to create top up stock orders every time there may be a demand for your game. Which would most likely be small orders and cost ineffective after the main launch of the game.”

    What I mean is that your assuming that games are only capable of selling during that short window. And the reason that this is true now days is because once your game gets into circulation, your sales will drop. This is due to new copies being replaced and sold instead of new ones. I know from talking to a friend of mine that GS stocks/orders far less copies of new games because they anticipate used game sales. Instead of buying a large suply of a game from a vender they buy a smaller number and resell it several times. One of the links I found said that 80% of trade ins are resold in the same store they were traded in at.

    I have seen GS taking preorders on used games that weren’t even launched yet. Used games, good for GS(or other such retailers), bad for everyone else. And at some basic level I feel GS and its used games policy is one of the things leading the push for digital distribution.

    #22 2 years ago
  23. viralshag

    There is still nothing to prove that publishers are essentially losing money which is they key to all this. Like I said before, it’s the retailers word against publishers and devs.

    At the end of the day I want to see facts. Not what we think is the situation. Pre-owned games have been a part of the industry for well over a decade. If it was truly as big a problem as you say it is, so much more would have been done to counter it. What have they come up with in all that time? The $10 project…

    If you think publishers have run the numbers through and said “hey guys, we’re really losing a ton of money here. We really need to sort that out!” and then just sat on it for all these years, I think that’s being a little naive. They run a business, they have analysts and accountants, they will not be sitting around just moping about “lost sales” to used games.

    If there was truly a way for these companies to increase their profit from countering used game sales, you really think EA and Activision wouldn’t have been more active about it other than their $10 project which I’m assuming has resulted in no great win as we don’t hear about it.

    #23 2 years ago