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Herp gon derp.
A new study shows that without used games video game publishers would need to drop their prices by 33%.
In my last post I argued that brick-and-mortar retail was bad for the video game industry in the long run, and that used games were a necessary casualty on the path to digital distribution, all of which will eventually lower costs and empower developers.
To bolster my case, a new study shows that an end to the used game industry would actually harm game makers’ profitability unless game prices came down.
“The study found that if the used game market were to be eliminated and nothing else changed, game publishers’ profits per game would drop by about 10 percent,” Wired reports. “However, it found that if game publishers were to adjust the prices of new games to optimal levels, they could expect profits per game to rise by about 19 percent.”
“We find that the optimal price would be on average about 33% lower than the current price level, if the used game market were eliminated,” the study’s author, Masakazu Ishihara, told Wired in an email. “So roughly speaking, in the US, game prices should go down to about $40.”
In other words, exactly the opposite of what people are worried will happen if used games go extinct. If video game publishers are greedy—and they most certainly are in it for the profit—they’ll need to lower the cost of their products in order to sell more units. Doing so would make them even more money (and especially via digital.)
As with any study out there, we can’t be sure that this one has taken everything into account and we can’t use it to predict the future. So there’s caveats. It, and I, could easily be dead wrong. I can live with that.
More to the point, and to play my own Devil’s advocate for a moment, what about the pesky near-term? Long-term is one thing, but near-term is now.
What about the Xbox One and the discussion over used games that could affect today’s consumers? What about the weird policies being floated about lending games to friends? There are some near-term problems that are troublesome regardless of the long-term gains I predict.
These sorts of reports are what’s fueling the anti-Microsoft backlash at the moment. Should Microsoft take note?
Penny Arcade’s Ben Kuchera confusingly argues that “Microsoft is taking a massive PR hit right now” and maintains that “ the reaction to the possible used game restrictions amounts to a fart in the wind.”
So is it a massive PR hit or no big deal? I can’t tell. And are gamers wrong to react the way they are, and is their reaction pointless or…maybe even “entitled?”
I think Kuchera may be right that the majority of gamers will probably buy the next-gen systems regardless of used game restrictions—other factors, such as price, might be a different matter—but I don’t think the reaction meaningless or anything less than a backlash.It’s just not really a backlash over used games—even though many people may think so.
No, the underlying source of this backlash has less to do with used games and more to do with the cost-to-value ratio of buying games new and then purchasing all the add-on content above and beyond the $60 entry point.
This is heightened due to the openly hostile relationship between the industry and its consumers and the mounting two-way mistrust.
When prices in the music industry were too high, Napster came into being and piracy led to massive changes in the music industry. It took a digital revolution to bring down music prices (including a great deal of piracy) and it will take the same thing with video games. Used music sales have decreased a great deal as have physical copies of music, while digital consumption has increased.
Used games will be a casualty of the digital revolution, too—an unavoidable casualty, just like brick-and-mortar game stores. But this doesn’t mean consumers should be happy about reports that we will no longer be able to lend games to friends. If anything, the PC equivalent—Steam—is too restrictive when it comes to this sort of thing. It’s worse, of course, when there’s physical media involved, when giving a friend the disc you bought and played no longer works.
You see, my issue isn’t with used games. I don’t think used games actually harm the industry. I think the dead weight of retail is what holds the industry back, not used games. Used games are just a piece of the broader puzzle.
Of course, without retail we’re left in yet another precarious situation with digital. Because there are troubling aspects to digital “ownership” and what that means for people who “buy” digital goods like eBooks and games. What happens when a company goes out of business and their servers go down? What happens to my collection of eBooks on the off chance Amazon goes out of business? What happens when an oppressive government can use technology to censor games, books, etc. simply by flipping a switch?
I think the laws surrounding this new concept of sort-of-ownership are too vague and in need of serious reform. I like the convenience, but I hate the uncertainty.
At the very least we need some sort of clause that allows us to download back up copies of our digital products as a way of future-proofing our investment. We may only own a license, but that shouldn’t equate to having no consumer rights whatsoever.
In some respects it really is a double-edged sword. Digital distribution can lower costs and give content creators more freedom over their creations, but until we have better consumer protections in place there is always going to be a risk. How to affect that sort of change is trickier—we’re talking about a change to global consumer protection laws, after all.
I don’t think publishers are going away, but I do anticipate a change in the balance, with more mid-tier games like Torchlight 2 finding their way to gamers, self-published and digitally distributed far cheaper than their AAA, retail counterparts.
In the meantime, a little backlash isn’t the end of the world.Comment
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You look even more retarded when you look at Steam, where used games don't exist, and get this, game prices are lower.Comment
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For the people that are now on the fence with this change, don't forget the Xbox is still 100 dollars more. With really no extra perks.
Unless you're the person that goes for Bing, IE, live fantasy basketball updates etc...Comment
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So this awesome feature goes to strictly Madden sharing for 10 people? Everyone else will be leaving their library alone pretty much every night since you'll have 8-10 45 minute Madden games happening in the evening.
So assume you pull it off. I'm sure EA would be thrilled at selling 10 copies for this and ease their current financial issues. Oh right, everyone will magically buy DLC!
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