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100 Million Used Games Traded Each Year In the US
We occasionally discuss the complaints from video game publishers and developers about how used game sales are hurting them, and how they've been testing out countermeasures disguised as features to compensate. Now, industry analyst Michael Patcher has released a report which attempts to quantify that damage. Patcher estimates that used game sales and trades number around 100 million each year in the US. However, despite the immense number of transactions, he doesn't think the used game market is as detrimental to sales of new games as the publishers think. "The vast majority of used games are not traded in until the original new game purchaser has finished playing, typically well beyond the window for a full retail priced new game sale. Thus, while there may be some limited substitution of used game purchases when GameStop employees 'push' used merchandise upon consumers lined up to buy new games, the vast majority of used game purchases occur more than two months after a new game is released. ... To the extent that there is a substitution effect, we estimate that fewer than 5% of new game sales are impacted."
as price drops demand picks up; and purchasers at $20 will not buy at the $50 retail price. Thank you for restating how supply and demand curves work.
The real question is:
Is there a price point between the price of used games and new games that would generate greater profits for game manufacturers than the current pricing model?If there is, then used sales do cut into new ones in the sense that purchaser will wait until the game price drops to a price they are willing to pay if the used game reaches that price prior to publishers lowering the price of new ones. If the used market captures those sales then it is cutting into new game sales since used games are replacing new game sales.
Publishers would probably like to price so as to capture as much of the "I must have it on release day" sales as at high a price as possible; then drop prices enough so the incremental demand from the price drop generates higher profits than fewer sales at higher prices. While falling prices would drive down the value of used games and their attractiveness to stores; publishers run the risk of training buyers to wait a few weeks for the first price drop and losing release day sales and profits. Given how rapidly used games start to appear after release shows their is a large demand at lower prices (duh); how to tap into that without hurting earlier sales is a difficult question to answer. It's a tough call; especially given the money it takes to develop a game.
In the end, however, I think their is more to the story than just $20 used game sales don't hurt the $60 new game sales./P.
I'm a consultant - I convert gibberish into cash-flow.
When you justify buying a new game at $60, knowing that you can resell it and maybe get half your money back makes it a little bit easier. Without that ability, the value of the game goes way down. Imagine if you were buying a new car, and knew there was no way to resell it ... Would that impact the price you were willing to pay?
How are the sales of used games "hurting them", when this is the market model that has always been around, and nothing has changed????????
The only people saying that the sale of used games is "hurting them", are people who do not understand the law, or greedy people. Or both. But there is no middle ground.
Quite the opposite would work: Make games with great replay value so I do not want to sell them.
The "story" of a contemporary game takes you about 10 hours, tops. After a few skirmish turns you're fed up with that too. And then? Off to the used market.
Can you imagine parting with your copy of CivII? Or Alpha Centauri? I can't. Yeah, I don't really play them THAT often anymore (hey, they're like 15 year old now), but still... I just might pick them up again, I couldn't sell them.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
I have some insight on this.
I ran a Computer store from '92 to '95. I started doing a "buy, sell or trade" thing on computer games in 94, I immediately noticed a big jump in new game sales, and the reason was told to me by hundreds of customers, being able to sell or trade the game in when they were done was a gigantic incentive to buy the games in the first place.
I also tried renting them out, BTW; that helped sales a little, but only because every 3rd or 4th customer ended up buying the game through late fees.
Up until Microsoft's attempt to kill or seriously injure the PC gaming industry came out, the "games for windows" program, I would have said that PC game reselling was a 100% good thing for the gaming industry; I imagine it would be impossible with the state of EULA's to do it legally, these days.
Blatant Plug: www.gotthefire.net/dnn. Go. Be Round.
Why, yes, I AM a Pagan Libertarian.
I held my private rebellion to this.
You were right until the book publishers also caved to the "Don'Wanna'Read" crowd at the same time. I improved my grade by some 3 points because the older edition I picked out of a department ex-libris bin had more thorough explanations everywhere. Then on mean days I'd ask "brilliant" questions based on material that wasn't in the new edition.
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
Especially school books.
Mod up! I used to eat for a week off one semester's worth of book-buy-back.