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Digital Distribution and Used Games, The Good, The Bad and the Unrelated

Editorial | June 12, 2013 7:14 pm

Clint Eastwood ALWAYS makes a good opening picture

So many of us have been discussing all the news around the new Xbox One. While many are concerned about things such as its specs or how much it will cost ($499 if you missed it), many people such as myself are clamoring about the used game policy.

Microsoft has stated that used games will be available at the publisher's discretion (read: oh it's not us, even though we are a publisher), they have noted there will be some ways to share the games with your friends, although some of these features may not be available at launch (read: oh crap we realized we pissed some people off and are adding new features to fix it). Many of us who follow the video gaming industry and write (on occasion) about video games have made a lot of speculation on how used games currently affect the video gaming market. Some people have even predicted that an end to used games and going digital will be the glorious second coming for us video gamers. Although I'm one for being optimistic, I'm going to go into a few other things that some of these people may not have thought about. Albeit what I am going to say is speculation, what anyone else has predicted is nothing more than speculation in the first place.

I do want to take the time to point out this article (thanks TK!) as it is a good read about all the potential good things about doing away with used games and digital distribution. Yep, that is the extent of the good that I am bringing up at this point as it pretty well covers it. Now for my own 72 cents (sorry it's a long article).

You might be asking what in the world is "unrelated" doing in the title of the article? Ahh good question reader! Well guess what, all the good that may come with digital distribution is actually not related with used games, it's related with ALL games. I loved how the aforementioned article gives Gamestop all this power over the video gaming industry. I had to laugh a little bit. ALL retailers help control the video gaming industry! What happens if Gamestop goes away? A lot of people are out of a job, and Walmart, and Best Buy and EVERY OTHER PLACE THAT SELLS VIDEO GAMES gets a bump in revenue. Yes Gamestop sells used games, but that is not the entirety of their profit! Plus used games are available in other stores, Best Buy does it now, Amazon does it, and Gamefly couldn't exist without used games.



So what is the tl;dr of the last paragraph you say? Used games do NOT control the cost of games on the shelf. They don't...how does that even make any sense? They may influence them slightly but the idea that how much someone sells a used game for months (or years) after the game has been out means minimal in the life of the game. Yes it does eat a portion of the money going to the developers, however this is money they may have NEVER seen in the first place. So anything in regards on how much the used industry eats up money from the developers is speculation pure and simple.

Let's look at some basics of the video game industry. Gamestop doesn't pay $60 for a copy of a game that gets sold for $60. They are purchased at a cheaper price, and then sell it and make a profit. We as the consumers paid $60 for a game, but probably half of that is money that made it to the developer and/or publisher. Even then it's not direct. Let's say that Gamestop as a company buys a million copies of My Horse and Me 3. We'll just go with the assumption that they paid $30 a piece. Gamestop turns around and sells all these games to consumers (because it's such a HOT game), and brings in $60 each for this. Do they now owe Microsoft or any other developer more money because they sold out of them? Nope.

Well what happens if Gamestop doesn't sell those games? AH HA! Gamestop is possibly reducing them to make less money, or sell at cost to break even or worse losing money on each item. What does this mean? What is the point? It's business plain and simple. Gamestop only wants to order as many copies of a game as it thinks will sell. Equally MS and the other publishers try to make enough physical copies to meet this demand (with a little extra just in case) and should this game be a smash hit, they will only make more if they sell out and the demand is high enough. On the flip side, if any retailer purchased too many of a game and can't sell it, they definitely won't order any more, and these games become our bargain bin new games down the road.

Damnit Minioger what the hell does all this have to do with Digital Distribution or Used Games? It's the background of the gaming industry. It's not like these games magically appear at Walmart or Gamestop, they get there because a publisher guesses at how many games will sell, sells them to retailers at a price where the retailer can (hopefully) make a profit and we end up paying $60 a game for them until they drop in price....or until we buy a used version of the game.



Okay, with me still? Here is the point of this lesson in the video game industry. Microsoft and other publishers depend on all the retailers to sell games for them. Yes some of them do have their own store, yes they do have digital copies (we'll hit this later), but they depend on retail stores to sell games for them. Oh yeah and to sell consoles as well, that's kind of a big point as well.

The implication that Gamestop's, or other used game retailers used games control the digital prices is donkey poo. The fact that new games are sold in so many retail outlets control the digital prices. Why would Walmart want to buy a million copies of a game if you can get it digitally for $10 cheaper? They'd be undercut by the people they buy the games from! Well guess what, now I don't want to sell your stupid console either! Microsoft has to keep all the retail stores happy, not just Gamestop since they have used games. So let's make this abundantly clear. USED GAMES DO NOT CONTROL PRICES ON NEW GAMES. Ahem, so do we all understand now how all games, not just used games, need to go away to make the many good things of digital distribution possibly come about? Great! Now let's dive into the bad!

I need everyone to take a trip with me. We're going to fantasy land where somehow Microsoft and Sony (okay Nintendo can come too) have just kicked the crap out of every retail store in the country and pulled all the physical copies of games. These retailers also magically will be perfectly happy selling the console and never making any money on games anymore. Whee! Fantasy Land sounds great!



All right, so now that this has happened, let's look at all this "good" that can now occur in the digital revolution! Hey, everyone publishing games decided to drop prices since they keep more of the profit directly!!!! YAY!

Oh wait a second, they decided not to do that, because they have no competition besides each other, and as long as the prices stay comparable between major consoles there's really no need to drop the price. I mean why drop it to $40 when everyone is used to paying $60 new. They can drop it to $40 when sales drop, they'll make 50% more this way on all these sales around release time, instead of this silly $40 revenue. Do I need to throw a Bobby Kotick quote in here?


Hey guess what? The music industry is SOO much better now because of all these digital options, look how the video game industry can get some of this good!

Oh wait a minute! I forgot a few things. You know like how comparing the music industry and video game industry is like comparing apples and pizza. Like how people used to have to buy a whole CD to get the one track they liked if it wasn't released as a single. How does that work in video games? I totally loved level 4 (I watched it at a friend's house) and really want that level, but not 1-3 or 5-10, those levels were a bit of a suck. Or how you played the entirety of a video game on your car radio so you know exactly what you are getting, just like you heard that new song there too!

Oh oh oh, I bet it's how any idiot with a pretty face and a decent voice can make a hit song with an hour of work, yet video games have teams of people and take years to make. See how they are totally the same? Can't you see the good in this? Did I forget to mention that only Sony makes Playstations and only Microsoft makes Xboxes, yet every electronics company known to man can make something that plays an MP3?



Oh you want more of the music/video game comparison? Okay I got more. Let's look at a good distributor of music (IMO), Amazon. You buy a song for $.99 or maybe $1.29 and you can download it on your computer, your kindle, your ipad, your every damn thing you've ever had because it's yours! I've downloaded a song I've purchased on literally 7 or 8 devices now, I am not sure they even have a limit!

Then let's look at a Microsoft company, Zune. Well I purchased a song on my Windows Phone (because I'm oh so loyal) about a year ago. Well my phone's internal memory crapped out about 6 months ago and I repaired it myself. Just the other day I decided I wanted to redownload the song, you know the one I paid for? Oh, sorry, connect to the computer or you'll have to repurchase it. Ok, sure no problem (phone connected to computer), oh look there it is in my paid history! Let me just click to redownload it to the same phone! BZZZZZ! Sorry, you've reached your download limit for this item? WTF I paid $1.29 for a song I can download once?!! Well I'm not buying from Zune anymore!



The place you purchase your digital music makes a difference in how you have access to it! Do you really think you're going to have multiple places to buy a digital copy of Modern Warfare 15? Nope. Microsoft store on your Xbox One. With a system like this they (the publisher, obviously with Microsoft's blessing) have complete control over the costs, and the number of uses of a product. While they may decide to be nice to us as the consumer (especially in light of the announcements of sharing games, etc), that tune may change when the consumers have no choice but to buy it this way.

Have I made my point? I sure hope so because I could easily write a dozen more paragraphs on this subject. Now obviously some of my points are pretty extreme, assuming that every publisher of games will be money hungry and all of them will conspire to get every dime from the consumers. This isn't likely to be the case. However too many people simply turn a blind eye to all the potential problems of digital distribution. We simply don't know with certainty how the video game industry would operate on digital only, even the music industry isn't all digital, nor did it do away with used CDs (though they are harder to find now). So on to the good of digital distribution (okay I lied about not going into it).

I personally think if it's done correctly digital distribution only can/will be a great thing for us. Hey Microsoft, how about your own digital version of Gamefly?!?! No more being screwed because they only had so many copies of a game at release, it's a digital license with a limit or turn it in like you do a rented Kindle book. This would be absolutely amazing, but it requires it to actually happen. The problem is that only Microsoft or Sony could do it, no third party could come in and offer this service without Microsoft or Sony approving it as each company would have a monopoly on how you get games for the system. Yes they would still compete with each other, but if neither one feels offering something like this would be profitable, it simply won't happen.

I've had some good glimpses of how digital distribution can be equal or better than physical copies of games, such as the big sale a few months ago where many older games were $3 or $5 for a digital copy. Hey that's great pricing to begin with, plus with the current licensing, I can play the game on one xbox (because I bought it), while my son can play the same game at the same time on the xbox I purchased it on! Score, two copies for the price of one! Add that in with this announced licensing for Xbox One (if it works how it sounds like it will), I could literally have every member of my household playing the same game on multiple boxes! That's amazing! For someone who has three xbox 360s in the house at the moment I nearly wet my pants when I heard about this!


Yeah I'm pretty sure this was my face when I thought about it


It does have the opportunity to allow publishers to keep more money directly, and hopefully would encourage smaller developers to make quality games. Look at XBLA games now, there are some quality games being developed for this at reasonable prices. But you still don't know exactly how much you may enjoy a game, but most of these games are priced at no more than $15 to start. If there is no drop in digital prices for retail games, many people won't take the chance on a new game they know nothing about and can't do anything with other than gift to a friend.

Yeah. There are a few other possible good things, go read that other article if your eyes haven't fallen out, or been gouged out because you're tired of reading this. I'm just trying to point out that there are plenty of possible bad things about 100% digital distribution. Plus for all you awaiting the digital revolution, please stop the hate on my used games. You need to hate retailers and all non-digital copies of games, that is what prevents the digital prices from potentially dropping, not the fact that I trade in 5 used games so I can BUY A NEW GAME THAT I WOULDN'T HAVE PURCHASED NEW OTHERWISE. Did I also mention how a physical copy of a game can't ever be delisted?




Okay, I'm done.
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Some great points! +1 for Clint Eastwood picture and "My Horse and Me" reference.
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a lot of good points,made me rethink my views on digital distribution. great article.we need more articles with clint eastwood lol
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Physical copies make the world go round.
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tl;dr
jay kay

Personally, I'm neutral towards Digital Distribution I don't love it but I don't hate it, I can see why they're adding some of these restrictions (player A signs in to profile C to play a game owned by player C, player B does the same thing in a different country.) as players took huge advantage of exploits over the years. That doesn't mean I have to like it. But I digress

Great read Mini
If they can add deals like Steam it would make Digital Distribution all the better!
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Great article...very well written...excellent read
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Quote by DeWayne:


Great article...very well written...excellent read



I 2nd that!
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pretty much hit the nail on the head, in my opinion.
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It's all about choice, I think. The point of technology progressing should be to make all gamers happy by allowing them to buy and play games however they prefer.
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Ugh... I thought I deleted this!
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Nice article Mini! Has anyone seen the how to share games with friends on PS4 its hilarious (I would post a YouTube link but I'm rubbish on my phone.)
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Mini have you read Cliffy B's article about how high budget games can't exist in a used game economy?

It's irrelevant crap like all of his opinions...
Re: Re: Digital Distribution and Used Games, The Good, The Bad and the Unrelated
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Quote by Kat:


Mini have you read Cliffy B's article about how high budget games can't exist in a used game economy?

It's irrelevant crap like all of his opinions...



No, I'm not sure how anyone in his position (or former position) in the industry can even act like they are impartial and write a decent article about the topic.

Obviously I know the same could be said about myself as a consumer and not having the knowledge of the industry like he does. However I'm just more pointing out potential issues with the system, not claiming what I've said is fact (which I'm sure Cliffy B is claiming).

Anyone who claims they "know" how it will be if there are no used games, or if distribution goes all digital is full of crap. We can't know, all we can do is speculate. My opinion lies in the fact that they have no real numbers on how many people trade old games in to purchase that new game, and if they force people to only buy new and not have any value in the games that they have, many people will be forced to be pickier about the games they do purchase. Which translates into less sales on some games. Which games those will be, I don't know, and obviously I don't know how extensive this dip in sales will be for them, but it will still be there.
Re: Digital Distribution and Used Games, The Good, The Bad and the Unrelated
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I'm pretty sure (based on conjecture) that Cliffy B has a tiny penis and I'm willing to pass that off as fact. But every other industry manages to get bigger and better regardless of used sales, renting and even pirating. So whatever point he feels he's making is invalid, and he's left being just a biased one trick pony with a tiny penis.
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Good read, Mini.
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