Posted on August 28, 2008,

Selling of Used Games a 'Critical Situation,' Claims EA

Gaming TodayGameStop and company absolutely love it when you buy and sell used games. They hand you $20 for a game you just paid $60 for, then turn around and sell it for $55 which — for the price-conscientious consumer — makes much more fiscal sense than paying a few dollars more for a new copy. That money adds up, so who can blame them? It’s a win-win situation as far as retailers and consumers go, but the sales of used games are of no benefit to the developers and publishers who see nothing come their way each time a used game is sold. But just how much of a detriment are these second-hand sales to game companies?

If we’re to believe Electronic Arts senior VP and general manager for European publishing Jens Uwe Intat, it’s a “critical situation.” Speaking with GamesIndustry.biz on the matter, Intat claimed that comparisons to other second-hand sales in other industries (such as cars and books) aren’t valid, and that EA is trying to counteract used game sales by giving gamers a reason to hang onto their games for months after release.

“What we’re trying to do is build business models that are more and more online-supported with additional services and additional content that you get online. So people will see the value in not just getting that physical disc to play at home alone, but actually playing those games online and paying for them.” …

“In our understanding of the business model we are actually giving away the rights to play, and if you just pass it on, pass it on, pass it on, that is not comparable to second-hand sales in the normal physical goods area where you have physical wear-out – second-hand cars, second-hand clothes, second-hand books… they’re all physically wearing out, so you have an inferior quality product.” …

“But digital goods is not actually becoming inferior in quality, so people passing that on is actually very challenging for us.”

With that in mind, suddenly the tremendous amount of support for Burnout: Paradise makes sense. All of the game’s downloadable content is being handed out for free — certainly that’s not the sort of thing you’d expect from an EA-published game. Perhaps EA has been backing the decision to release it all for free as a method of convincing gamers to not sell their copies of Paradise. And don’t forget the recent announcement that the game would be sold on the PlayStation Store, which would completely remove the option of selling the game.

Outside of MMOs and subscription-based games, the Paradise model definitely seems like the most effective method for ensuring games aren’t sold more than once. One has to wonder, though, if the return they’re seeing really justifies whatever resources they’re pouring into post-release content. Hopefully it does, as any owner of Paradise will tell you that it’s been phenomenal to get so much bang for your buck.

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14 Comments on Selling of Used Games a 'Critical Situation,' Claims EA

SpiralGray

On August 28, 2008 at 12:00 pm

The music industry made the same whiny complaints. If they want more people to buy their product new, then lower the freakin’ price. I have no idea if the numbers make sense, but if lowering the price 20% resulted in 25% more sales, they’re ahead of the game. They want their cake and eat it too, and I think some consumers are finally wising up.

Nathan E Burke

On August 28, 2008 at 12:33 pm

You know what if you buy a game and don’t like it? You can’t return it at a store except for the same thing and they unwrap it for you. So what else are you supposed to do? The only option you have is trade it in for another game at a store like GameStop.

I like the fact they are trying get people to keep their games by adding more content. It still sounds like EA is just a greedy corp. looking to turn games into a rent to own deal where you lose out. EA has had a bad rep for a long time and they are trying to change that but doing things like this and adding DRM is not helping them at all. They claim to do it in the name of helping the customer but you know I think as a customer we should be left to decide what we do with things we buy.

PCgamer

On August 28, 2008 at 2:31 pm

Yeah the bigger problem is game pricing… Why will normal version of a game like fallout3 or anything other game that takes years and years to make cost the same as a madden like game that comes out every year and barely changes most years?

But I do see the EA guy point it’s like Piracy in PC games but not hidden and probably bigger.(Though as a PC game I like it because it make PC games almost as profitable as console :) )

Marine_Bryan

On August 28, 2008 at 2:41 pm

But EA’s model on Paradise is counter to what they normally do, which is sell online content, downloads, new weapons, vehicles, and the like. What this tells me is that they failing to sell online downloads, which could help people keep games, and now there giving it away to help convince people to keep games.

I’d be curious to know which makes more money though, free content=keep games, or sale content=used game purchases.

Vengeance09

On August 28, 2008 at 2:51 pm

I understand EA’s point here, and I actually agree with them. They are selling the rights to play the game, and if you sell it to someone else, they don’t get money back on their investment. Since, as the fellow said, the games don’t actually depreciate in quality as they’re handed off (Aside from actual damage to the disc, which is entirely avoidable) this cycle can continue indefinitely, given enough interest in the game. I mean, this is probably an extreme example, but imagine a million people playing a game; one hundred thousand of the people bought it from the actual game company and the rest, nine hundred thousand consumers, bought it resale from GameStop or some other outlet like that. The company who made the game is only getting 10% of the sales, which is patently absurd. That particular example is far-fetched, but it is within the realm of possibility.

As for the pricing of games: that’s not the issue. If all games were $20, and you could buy a used copy for $17, you’d buy the used copy. More people would probably buy the initial release, but I seriously doubt it’d solve the problem.

ChaosBahamut

On August 28, 2008 at 4:13 pm

You ask me, I have to agree with EA on this. The used game market is a poison to the game industry, and in my opinion should be removed. (except for the old games that you CAN’T buy new anymore, and I mean literally can’t buy new)

hmmm

On August 28, 2008 at 7:31 pm

It’d be nice to know some of the actually numbers on EA’s losses, it’s hard to feel sorry for a million-dollar company when they complain about lost revenue but don’t really say how significant it is (though I would hope it is serious since they are making the statement.)

EA should maybe just consider taking a more active approach and open a second-hand retail store that offers incentives for gamers to trade in there EA games at those locations (or through an online store maybe?) this way the company keeps all the revenue (or nearly all of it) and can even get multiple purchases (at increasingly depreciating values of course) from a single copy of the game. This should help alleviate the lost revenue of their games being sold multiple times at other retail outlets.

To be honest this is a problem in all retail. True most ‘second-hand’ items to depreciate in quality from wear and tear and thus are less likely to be resold, but I have to say I’m skeptical about just how much a gap there is between second-hand books and games. (remember the ‘book’ can be ratty and dog-eared but as long as the pages are legible the story in it is the real value just like a scratched disc that still works (the game data on the disc is why you buy the game disc)) Thus maybe EA should look to book publishers to see how they are addressing these issues?

mr don

On August 28, 2008 at 10:01 pm

What we have in this case is greed VS morality.

Morally, the RIGHT thing to do, is to let consumers do as they wish with what they buy, since buying something is pointless if you STILL do not own it enough to do what you want to with it…

But companies like EA shiver with greed each time you THINK about using their game without paying for it.

In fact, perhaps they will call it “piracy” & “lost profits” if you don’t pay them every time you USE the thing!

Wait, they already DO do that! It’s called oxidated DVD’s. Saw some on a stand in South Carolina. Movies for sale, $5. Just buy it, watch it 2 whole days for free, then the disk is so oxidated that it can no longer play (self destructing & oxidating disk as soon as it is exposed to air).

My thoughts on this, is what is to keep someone from just keeping the plastic wrap on, & cutting it to fit the disk, or getting a blank dvd & cloning a more permanent copy, or ripping the movie straight to hard-disk?

They might even “mentally” clone it and pirate it. I guess telling a friend about it will be illegal later because it is robbing them of potential sales?

Oh brother, why even advertise?

Greed VS Morality. I say that morality should win over greed, & that all kinds of evil are performed for love of money…

Destroy planet earth? Hey, for the right money….

I say, sue these mugs senseless. More power to the poor!

Bounce

On August 29, 2008 at 1:30 am

Nobody cares, I’ll sell whatever the hell I want.

ikiddo

On August 29, 2008 at 1:32 am

If you want me to buy new, dont charge me £40 GOD DAM IT … Thats like an extra £10 on an american version.
Im not spending £40 when I can get it for £30.

SpiralGray

On September 1, 2008 at 7:12 am

@Nathan E Burke: Sure you have a choice. Never heard of eBay? Yes, that isn’t the point of the article, but I probably buy and sell at least 70% of my used games on eBay. When selling I get more money than the game stores offer, and when buying I get it cheaper.

Vengeance09: I disagree with your argument. I buy used because I can get them for half the price (I got GTA:IV for $30 off eBay three months after release). I currently would buy a new game over a used if the difference was only $5, I highly doubt I’d buy used over new if the difference was only $3.

Mikouen

On September 1, 2008 at 9:57 am

Selling and buying of pre-owned games only hurts the consumer, to be honest. The developer still gets paid for each single copy of the game in circulation. It’s not like three copies are sold and EA only receive the money for one.

The economics add up just the same for them either way.

If Person A has a copy of the game and hands it over at Gamestation, then Person B buys it pre-owned, only one copy of the game has been sold and thus EA only received money for one copy. One person with the game, one copy of the game in circulation, one payout to EA.

EA still receive money for each and every copy of the game that goes into circulation. That’s not hurting their profits at all. If anything, it’s hurting the consumer.

The consumers are the ones who are making minimal returns on their investments, and getting the short end of the stick.

EA’s description of how pre-owned games hurts their profits, only works out remotely how they’re trying to make it sound, if multiple copies of the game go into circulation but only one was paid for.

Doesn’t take a genius that EA are merely trying to devise ways to get multiple payouts per each individual unit, instead of one payout per one unit – which is exactly what they’re getting now, and is exactly what they should be getting. No more, no less.

If they want people to *keep* the games, they should stop forcing their studios to pump out crap just because it’s fiscally beneficial to release it sooner rather than later. You don’t need to hit peak spending times in order to turn a profit, if you have such a good reputation that the games can sell themselves regardless of target audience or release date.

There’s only one entity screwing EA, and that’s EA, tbh. :neutral:

DeadlyFred

On September 1, 2008 at 11:56 pm

No physical wear? Apparently EA has never bought a used game at Gamestop, heh heh.

john

On September 11, 2008 at 12:38 pm

I hate EA. I just bough Spore. This game is a watered down version of a real game, very shallow gameplay, and allows you to only install the game 3 times. I want to return this game that I paid 50 dollars for and will never play, but I can’t. I WANT MY MONEY BACK! EA has totally ripped me off THANKS A LOT! On the topic of re-selling used games I would just like to say that once I buy anything, nomatter what it is, I can do whatever I want with it. This includes giving it away. If EA wants to try to change that, they are going to loose a lot of customers, especially since they seem unable to create any good games anyway. The only good games they have put out, like bioshock and the recent release of halflife were not even made by EA. I just have one thing to say to EA. People will not buy your products if they do not trust you. Right now there are a lot of people that don’t trust you.