It's All Fan And Games: The Future Of Used Games

The Xbox One and Playstation 4 will release this year.  E3 is coming up on June 11-13 and we will find out more about these consoles.   What kind of policy on used games will exist in the next generation?  That question may or may not get answered.  As I said last week, nothing is set in stone until the Xbox One and Playstation 4 are in the hands of gamers.

Everything is speculation with Microsoft since they're contradicting their own employees.  Sony, on the other hand, will not implement any used game restriction themselves, Sony told Kotaku in a roundtable, nor will the PS4 require an internet connection to "check in."  It will be left up to the publisher to restrict used game sales on Playstation, but publishers may not do that unanimously.  Electronic Arts recently did away with their online pass both retroactively and moving forward due to negative feedback.

Despite the rise in digital distribution, used games are not going away anytime soon.  As a matter of fact, they could become law.  Digital secondhand sales already are in Europe.  Last year, The Court of Justice of the European Union ruled that digital software, in addition to physical software,  is protected under Europe's First Sale Doctrine.  This means any company that does business in Europe at the moment cannot take action against a European consumer for selling their digital copy, so long as the original is no longer functional.

Microsoft and Sony do business in Europe.  In some form or fashion, they have to comply by this law.  Why not do it across the board even though no such ruling exists in the United States (yet)?  Why not set up a marketplace that allows for digital trading?  Apple recently received a patent for such a marketplace.   Amazon did as well.  This is not just for games; but also music, e-books, and movies.  Of course, publishers will have to be on board.  That may take time.

A lot of entertainment is moving to the cloud and subscriptions.  That is a whole other issue of goods vs. services.  However, there is still strong demand for offline content.  After all, did cable kill VHS or DVD?

Last Saturday I stated:

Game retailers taking a full cut on the sale of a used game, with no proceeds going to the developer, is something that needs to change.  It is evident that Microsoft and Sony want to do that, but how remains uncertain.  The idea floating out there of charging a gamer fees equal to the full retail price to trade a game just sounds silly.  Constricting the ability to borrow one copy of a game from a friend is equally silly.  Expect a middle ground that makes everyone happy.

Why make such a fuss over used games?  The movie industry does not receive a cut from used DVD sales.  Commenter Joe pointed that out.  True, but the movie industry has the benefit of multiple revenue streams; theatrical release (where they make the most), Pay-Per-View, DVD, cable syndication, and now streaming services.  If a movie bombs at the box office, budgets can still be recouped through the other services.  The gaming industry does not have that.  They release a game at full retail, and if it fails, it's nigh impossible to make up the losses in time.  Many studios have closed because of this.

Now studio closures are not just because of used games, but bad business decisions as well.  Square Enix sold 3.6 million copies of the new Tomb Raider in March, a great number.  The company, however, expected it to sell five to six million in the first month.  Those are Call of Duty numbers.  The company is currently restructuring.  THQ and 38 Studios (That game company owned by Curt Schilling) have closed outright through bad decisions.  Other studios were shuttered because games simply did not sell.

When I say the current climate on used games needs to change, the $60 pricing model also has to change.  The reason people buy used is because used is cheaper.  Trading in older games also goes towards new purchases.  However, receiving just $20 for trading in a game you just purchased new, is that really a good deal?  Many digital distribution platforms have awesome sales on new releases.  I have seen games released, and within one month, go for $15.

Game retailers also have strict refund policies.  You buy a game, you're basically stuck with it unless you trade it in.  A few months ago, a broken game known as The WarZ was released on Steam, a digital distributor.  It was such a defective product, Steam pulled it and offered full refunds.  Sure digital distribution refund models need a little work, but they offer more ways to communicate a complaint with a product.

I like the idea of trading online.  If it means more money going into the pockets of developers to make better games, I'm all for it since they have limited ways to make a profit.  More obscure games can be made that I can feature in "The Obscure Game of the Month."

Having said that, restricting the ability to loan a product that a consumer paid for to a friend or family member is out of bounds.  That is something that all industries who sell goods must deal with.  You cannot attach a couch to an online account.  Period.  When a licensed dealer sells a used car, the car maker gets a cut, but not through a private sale between two people.  The gaming industry should have a similar model, or gamers will not buy in.  (At least not the casual market.  They'll continue playing Candy Crush Saga on their smartphones.)

Remember kids, it's all fun and games until it hits the fan.

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