Publishers Want a Slice of Used Game Market

grigory writes "GameStop's business model depends on a healthy flow of used games: incredibly '[GameStop] enjoys a 48 percent profit margin on used games.' Game publishers do not see a cut of the secondary sale because it falls under the first sale doctrine. Now, some publishers and manufacturers want a piece of the pie. 'One marketing executive, who did not want to be identified for fear of angering GameStop and other retailers, said the used game sale market is still depriving publishers of money because it gives consumers an all-too-easy alternative to buying a new game.' Interesting picture of companies fighting for your business, and (surprise!) complaining about being left out of the money stream."

Comments

Re:If a used bookstore can sell used books...

[e9th]

Over the years, paperback publishers have attempted to cut into the used market simply by narrowing the inside margins of their books. This forces you to spread the book open farther, leading to increased deterioration of the spine. Combine that with crappy glue, and you have a book that will fall apart after just a few readings.

I have paperbacks from the 60s that are holding up better than ones from the 90s.

They got their cut at time of first sale

[Jerf]

The game companies get their cut at the time of first sale. The selling cost of the game already includes in the price the value to the customer of the ability to resell the product. The assumption the game companies are making is that if they lock this out, they can sell more product at the current prices, but instead what will happen is that they will be have to drop their prices some amount to account for the fact that it is less valuable to the purchasers.

This is a fairly standard element of elementary economics; for instance, see this chapter of Price Theory, where virtually this exact problem is problem number 12 in chapter two of the book.

Which just goes to show that for all the supposed value of an MBA, people in business still routinely fail to apply even the simplest economics to their own worlds.

Re:anonymous coward wants slice of first post mark

[pugugly]

The height of American corporate practice - we won't do anything to keep our customers but will spend millions creating artificial mechanisms to distort the market and end any competition for them.

The good news is they're succeeding wildly - for instance I've neither pirated nor bought big corporate music in years because I can't stand either option. Instead I just buy direct from bands for half the price in a market *not* distorted by Sony and BMG, and by odd coincidence the artist gets to keep all of it.

It turns out market arbitrage is not a constitutionally protected right.

Pug

Re:Gamestop -- pushing used games over new

[pwizard2]

What Gamestop is doing is hardly innovative; It's the college textbook business model. Buy it used, pay about 60-70% new price. (or worse) Sell it back at the end of the semester and you're lucky to recoup 40%. Back in my college days, I often did what I could to avoid buying textbooks because of rackets like that, but sometimes there was no other way.