Posts Tagged‘retailers’

Retailers vs Publishers: The Battle For The Second Hand Market.

I’ll admit that I haven’t bought many games used since I’m usually in the store on release day hungering to be one of the first to get my hands on them. Still I realize there’s quite a market for second hand games since not everyone has the disposable income that I do to splurge on the latest and greatest titles. They’re also a significant source of revenue for brick and mortar games retailers as the margins on used titles are significantly higher than their brand new counter-parts and provide an additional sales hook for them to attract customers (I.E. trade-ins for newer games). There are one group of people who aren’t so pleased with the second hand games market however, the publishers.

Second hand titles, whilst generating significant revenue for the retailers, generate almost nothing for the publishers that first distributed the games. The advent of downloadable content mitigated this somewhat as it was usually tied to the console it was downloaded on and not the game itself but it is a pittance compared to what they generate from a new sale. More recently however games publishers have taken a more sinister approach to the second hand market, seeking to make a resold product less attractive than the new unless the consumer ponies up the extra cash to make up the difference.

Sadly this kind of chicanery affected one of my most favorite games, Mass Effect 2. New buyers of the game received a special code that gave them access to the Cerberus Network, a daily news service for the Mass Effect universe plus the gateway to all the DLC available for the game. The code was a one time use deal so anyone buying the game second hand would have to do without or pony up the US$15 for access to it.  Whilst you could argue that you still got the vast majority of the game despite the lack of the additional DLC there was quite a bit of free stuff on there, some of it even on day 1. This meant that anyone buying it without the code was essentially getting an incomplete game, even if it was playable.

Whilst it’s still not the norm to cripple the second hand market like this it is becoming alarmingly common, with several recent titles making used purchases far less desirable through new-only-or-pay-up DLC. It’s still a step ahead of something like Steam which doesn’t allow the sale of second hand titles at all, not even for a trade in on other steam titles. But it’s still a dick move by the publishers who are just trying to squeeze money out of the consumers in any way they can. Realistically though its detrimental to both the publisher and consumer since many trade ins drive new games sales, to the tune of 20%. Cutting that market out completely would harm the new games market significantly, but none of the publishers will admit to that.

It’s also arguably a violation of the First Sale Doctrine although no one has yet tried to test out this particular violation of it in court.

All this does is reduce the perceived value of the product that the publishers are putting forward and will only help to encourage people to seek out alternative methods in lieu of forking out the extra dollars. Whilst I am happy to give up my freedom to sell my games for the convenience that Steam provides (I am a hoarder, though) I know many people who aren’t so willing to make that trade and have avoided purchasing games that remove their right to first sale doctrine. Instead of punishing people for buying second hand they should be encouraging people to buy in early with things like betas and in game items. Of course I find it hard to fault a company that tries to maximize its profits but when it comes at a cost of significant good will I have to wonder if the costs outweigh the potential benefits and the only ones that know the answer to that are the publishers.

And they’re not talking about it, unfortunately.

Pre-Order Fever.

I often reminisce about how the games industry has changed over the past couple decades and its mostly because I’ve grown up along side it. We both took our first timid steps into the real world many years ago and we’ve since been trying to define ourselves in the world. Granted one of us has grown up to become a multi-billion dollar industry and the other a slightly disgruntled consumer of said industry, but that’s growing up right?

One of the big things I always remember was lining up on release day for the game that everyone wanted. You see back then unless you were actually working in the retail industry (which I was, for a significant amount of time) you had to be there on the day to pick up the game you wanted. Queue all sorts of mayhem when the game you want is exceptionally popular to, as you’ll be lining up with many a fellow nerd and geek in order to get your latest fix of gaming pleasure. Then some bright spark coming up with the idea that a certain time before the game was released you could pre-order your copy. You could then swagger up anytime to pick up said copy, and hopefully avoid the shameful looks people would give you for being camped outside Electronic’s Boutique all night. So began the gamer’s love hate relationship with this new fangled way of acquiring the latest games.

Initially the only advantage to pre-ordering a game was a guaranteed copy which in itself was a pretty good deal. I can remember swaggering up early one morning to pick up a copy of World of Warcraft, thinking they’d be brimming with copies, only to be told there were 7 left. My fellow comrades and I managed to get ourselves a copy each but from then on we knew that anything remotely popular would require us to have our orders in, and in early.

I’m not sure what changed in the games industry since my first forays into pre-ordering but the idea has stuck in all the publisher’s heads that customers expect something for guaranteeing to buy a copy before the game is released. It started off with a few small things, like early access to a demo or maybe a DVD of extras like soundtracks and pictures. More recently however we’ve seen publishers lavish pre-ordering people with things like beta access to the game, pre-order only items (which are very prevalent in MMORPGs), secret levels, downloadable content and so much more. Realistically if you think a game will be any good you’re probably better off pre-ordering it, as there is usually some kind of benefit to be had.

I can see the benefit for the MMORPG genre. Launch days are the most critical time for any game that is going to base the rest of its life off on-going subscriptions and a bad experience on the first day might be enough to turn many customers away. This is the thinking behind the pre-order head start that I’ve seen in almost every new MMORPG that has come out in the past 2 years. The pre-orders get to go in a couple days head of everyone else which allows them to progress a little faster than the normal sales. Not only does this give them an idea of just how many people will be playing (for server balancing) it also makes sure that the starting areas aren’t overflowing with new people, making the game unplayable for the new comers.

For other genres it would seem to be a good indicator of how popular the game will be before launch. Sure you can watch the gaming media and see how your hype is being received but in the end the cold hard numbers of pre-sales will tell you how much of that buzz is actually translating into real sales. It might trigger the marketing department to step up their campaign a couple weeks before release day to try and sure up some more numbers if the pre-sales aren’t good. This is where things like downloadable content come into play as you can easily keep a few things secret from the press and use them as incentives to entice people into the game. Although I’ve yet to see that kind of tactic used unless it was 2~3 months out from release.

There’s a darker side to the world of pre-orders however. Depending on the publisher-retailer relationship they may start taking pre-orders for a game that doesn’t have a definite release date. The best example of this is Duke-Nukem Forever who went on pre-order in 2001 and will more than likely never ever ever be released. While this is rare there have been many times when pre-orders have been taken for games that have been significantly delayed (Half Life 2 was a good example of this). There’s also the chance that the game will only go pre-order only which is again rare, but for things like collector’s editions it happens quite often. I remember getting burned on Bioshock for that one, but I really have no one but myself to blame for that one (yeah who would’ve thought that game would be so popular! ;)).

As someone who has the disposable income to purchase games in advance the pre-ordering scheme has worked extremely well for me. There’s nothing more satisfying than buying the game 2 months before it’s released and then getting called in to pick it up, as I don’t have to check if it has arrived at the store yet. The incentives to pre-order are really just the icing on the cake for me but it’s something that I hope the publishers continue to do as little things like this are the kind of initiative that will actually drive people away from piracy, especially if it’s something physical that can’t be duplicated.

Now excuse me while I fork over a wad of cash for Left 4 Dead 2…. :D