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Old 09-20-2005, 12:33 PM   #1
bapenguin
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Mark Rein: "Preowned is Bad"

Computer and Video Games has an interview up with Mark Rein of Epic Games. One of the topics is a recent speech Mark gave at Edinburgh. He discusses why he thinks Pre-Owned titles from companies like EB Games and Gamestop are hurting the industry.
Quote:
If you walk into EB in the US, they try and sell you a second hand version of a game before a new one. I think that's bad. It would be fine if they share that revenue with us. They can also be marketing partners with us as well. We can have an official refurbished games policy. That's the problem. Those resold games use server resources, tech support. The majority of guys calling up saying "I don't have my serial number", I'm sure a lot of those are resold. It costs us money. Those customers think they paid for it, and they're entitled to support. The reality is, we didn't get paid. They didn't pay us.
So very true, especially since the profit margins are so high for EB on those titles. You'll get a 20 dollar credit for something they will sell for 40 bucks. That's quite the markup. And what does EB offer that say, Walmart or Circuit City doesn't offer to justify such a cost increase of that game? What service do they provide with that preowned title? They don't refurbish it, repackage it, or anything like that. The developer should definitley see some of that profit. I wonder if the game companies start referring tech calls back to EB on preowned titles if EB would change it's mind on the preowned policy.
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Old 09-20-2005, 12:39 PM   #2
Klade
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The developer shouldn't see anything from a resell. They made money when the game was sold the first time. If they don't want to deal with people calling up asking for tech support then they should make sure their tech support is only offered to those that bought the game the first time. Yes its hard to tell the difference but thats the way it is. No reason at all they should make money twice over on the same product. Thats like me selling my used car to a used car dealer and then Ford getting a share of the profits when its sold again.

Sorry shit doesn't work that way.

The solution to this is what Valve has done with steam. Pretty damn hard to resell when your computer game exists only as a license you have a password and user name to access.
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Old 09-20-2005, 12:40 PM   #3
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Although I believe he is right, what can be done about it? I highly doubt EB or gamestop is interested in a partnership, especially for console games where there is almost no tech support needed.
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Old 09-20-2005, 12:43 PM   #4
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No, the developer should NOT see any of that money, any more than music companies should get money from the sale of used music CDs.

This is black-letter capitalist law. Once I buy a video game, I own it. I can then choose to sell that video game to anyone I want for any price that myself and the buyer agree on. If I decide to sell that game to EB, Gamestop, etc. the retailer then get that same freedom to sell the used video game for whatever price they can get from their consumers.

If game developers and publishers want to include some sort of online activation that will restrict the ability of used game buyers to play their game, they're welcome to try it [and fail], but as things stand now they get to live by the same rules as anyone else who sells something, and it should bloody well stay that way.
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Old 09-20-2005, 12:44 PM   #5
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Fuck Mark Rein in the ass with a white-hot brand.

I understand that it hurts the companies, but to get rid of reselling your used games, it would spell the end of used bookstores, record stores and other businesses. I thought it was the right of the End User to do what he wanted with his game/product as long as it stayed within legal guidelines (i.e. pirating/duplicating). I hope this wouldnt also spell disaster for selling your used stuff on Ebay or elsewhere.

I also don't agree with Valve's way of handling HL2 for reselling. You have to pay 10bucks after you buy it off another just to reactivate it? That sounds about as nice as getting a painful reacharound squeeze on a hot summer night.
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Old 09-20-2005, 12:46 PM   #6
frederec
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I don't understand why this argument about used games comes up. Klade made a good point when he mentioned cars. I think the similarity goes further. Many people are more willing to pay full price for a new game knowing that they can sell that game back at a later time. Other people aren't willing to pay full price for games. These two kinds of consumers wouldn't exist if selling used games (or about anything for that matter) was more difficult. Some may buy new games, but I'm willing to bet they'll buy less games altogether than they bought before. Once again running into the problem of only the big games getting sold and the smaller ones getting screwed.

Please don't take this as defending EB or Gamestop's crazy profit margins on their used games. It's one of the reasons I usually would rather get my used games on ebay rather than from a retail store. Though I hear the profit margin on new products is so thin, these stores need to sell used games to stay afloat. That fact I question, but it seems somewhat plausible.
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Old 09-20-2005, 12:49 PM   #7
RMan
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Freaking nonsense. Although he has a point that the developer should not shoulder the tech support for these types of things, boo freaking hoo, itís a drop in the bucket. As far as lost revenue, sell the games at a reasonable price, or shut the hell up about the completely obvious result of selling your product at a very high price.
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Old 09-20-2005, 12:49 PM   #8
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Bad for developers, good for stores because they get all or most of that money instead of a few measly dollars. You can't exactly stop them.
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Old 09-20-2005, 12:51 PM   #9
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I have to agree with babbster and klade, saying that reselling products is wrong is just plain ludicrous. If I own the game then I can bloody well resell it. If you want to stop me from reselling it then you have to find a situation where I dont really own the game and I rent or lease it from the developer or producer. Of course, if you try that then I will never even consider paying 50 bucks for the privilage of playing a game that someone else owns. Even if they cut prices I think I would still be inclined to just go play something else.
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Old 09-20-2005, 12:51 PM   #10
mkelehan
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Quote:
Originally Posted by bapenguin
And what does EB offer that say, Walmart or Circuit City doesn't offer to justify such a cost increase of that game?
10% cheaper price on the preowned version, for one. And with coupon codes online (CAG15 and SAVER for EB), you can make it a good deal more. That's what they offer.
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Old 09-20-2005, 12:54 PM   #11
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A used car or a re-sold book doesnít take up the companies server bandwidth or cost them for tech support calls. EB is also making money twice on reselling the games so why shouldnít the developers? I donít see a problem with EB and Gamestop sharing the profit, which on used games is pretty high.
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Old 09-20-2005, 12:58 PM   #12
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I tend to agree with some of the other posters, once I have purchased a game it is MINE and the developer has ZERO rights to making any profit from a resale of that title.

I also think that most publishers should stop selling titles to EB and Gamestop for exactly the reasons that Mark Rein states above - when you walk in they try to shove a used title down your throat for only $5.00 off the retail price (a rip-off I can't believe consumers fall for) and they gave some poor sap only $20.00 in STORE CREDIT for that title.

That is a massive markup. These companies aren't passing any savings on to the consumer and they are leeching off the publishers at the same time. (You get lured into the store by the TV advertising that the publishers paid for and then EB & Gamestop try to shove their used crap on you or try to fuck you into pre-ordering so that they don't have to do THEIR JOB and stock the store shelves properly.) It is a horrible business model and when those specialty stores go the way of the dinosaur I'll be more than happy to dance on their graves.

Give me a big chain like Best Buy or Fry's Electronics. They have regular sales, they mark down the older titles and they ONLY sell new & sealed products.
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Old 09-20-2005, 12:58 PM   #13
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I don't think he cares about the physical game itself. The problem is the support - multiplayer servers, phone calls, etc. The question is whether or not those services are associated directly with the physical copy of the game, or whether they are purchased solely by the original owner of the game and are non-transferrable with the sale of the actual disc. That's not a black-and-white capitalist law. I haven't looked that closely at current licenses, but it seems that if the companies want to limit this problem, they need to include non-transferrability clause for thse services (which I don't believe exists right now.) Difficult to enforce, but if they don't disclose it now, they probably should.

With the rise of easy online trading, if game companies have to look at supporting their sold games longer and longer (as the existing copies are circulated among the gamers of the world) with no corresponding increase in revenue from new games sold, it's a downward spiral for the industry. World of Wacraft or the like can be supported indefinitely, but tons of people still play Diablo II and other older games. Blizzard still has to support those guys. I sympathize with the problem here.
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Old 09-20-2005, 01:00 PM   #14
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The tech support argument is total bullshit. For one, used PC games constitute a tiny percentage of EB and Gamestop sales; for two, PC developers/publishers already have mechanisms in place to limit resale potential of their games; for three, even if they don't want to limit that resale potential, a simple online activation with a person's name and a password could limit the tech support to a person who buys a used game.

I wonder how much tech support Epic and other companies end up unknowingly offering to software pirates. Should EB and Gamestop foot the bill for that, as well?

edit: PS- To Evil: $5 off a videogame which I can't get for less than full price anywhere else IS a good deal, especially when I might buy 8-10 games at a shot. Of course, I've only sold games to EB once and I don't care if they're making giant profit margins on them.
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Old 09-20-2005, 01:01 PM   #15
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Quote:
Originally Posted by Achilles
A used car or a re-sold book doesnít take up the companies server bandwidth or cost them for tech support calls.
Last time I checked, most Xbox titles don't use up any bandwidth from the company - they use your own bandwidth and you PAY Microsoft $50.00 a year for the right for the Xbox to use your own bandwidth to connect to other players.

And most PC titles offer up dedicated server files to the consumer - again it is the consumer footing the bill for the bandwidth and not the publisher or developer.

About the only people actually taking up bandwidth costs are the MMORPG's and they charge you a monthly fee.

This is a non-issue.

As for customer support calls - if you want to be in the business of selling games then you have to budget in tech support for the life of the product. That is just the way it goes. You can't go complaining about it just because consumers have the right to resell the product.
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Old 09-20-2005, 01:02 PM   #16
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Yea, but the primary reason the profit margin is there is BECAUSE the developer isn't getting a cut. If the developer's getting the "fair" cut, it wouldn't be any cheaper since the physical product is really not what's being sold.
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Old 09-20-2005, 01:04 PM   #17
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Reselling games is legal, it would be nice if they could have the same deal with Blockbuster that the movie studios do however.

Reselling games does hurt devlopers, at least in the style EBGames/Gamestop does it, with massive markup over what they pay and keep the prices barely cheaper than buying a new copy.

Mark mentioned that if games could sell more copies, they could be cheaper, as in... the market penetration of a movie which would allow for lot's of money and a lower price.
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Old 09-20-2005, 01:09 PM   #18
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ANYONE who thinks that games would actually go down in price if sales were higher needs to take a look at some nice beachfront property I have in Arizona. It's a REAL sweet deal!
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Old 09-20-2005, 01:10 PM   #19
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I'll stop buying the used game two months after release for half price when they stop charging $60-50usd for new games.

Raising the price point of new games only drives the preowned market even higher.

If developers/publishers don't want the preowned versions to be on equal footing with a new copy then they need to include more incentives for the original owner. (eg. online registration yeilds exclusive levels/weapons/etc. this way they get extra market data out of the deal)

Honestly I think that this is just more of the game industry whining in the same way that they did 10 years ago about game rentals. Which are still a steal. $7 for 2 weeks of a game? For most titles that's more than I need.
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Old 09-20-2005, 01:11 PM   #20
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Quote:
Originally Posted by Deadend
Mark mentioned that if games could sell more copies, they could be cheaper, as in... the market penetration of a movie which would allow for lot's of money and a lower price.
They could be cheaper, but they clearly could be cheaper right now. Sales have gone up dramatically in the last 20 years, and reproduction costs have also dropped dramatically, and none of that has translated into a drop in price, only a rise in development and marketing costs.
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