Used Games

(20/06/13): Due to a large policy change from Microsoft, some of the information about the Xbox One no longer is accurate. Further clarification at the end. 

What springs to mind when you think of 2013's E3? Probably something to do with Sony, Microsoft and the subject of used (or "pre-owned") games. Currently Microsoft has engendered hatred, pitchforks and fire for attempting to regulate the re-sale of video games. Meanwhile Sony has gamers kneeling down, brushing its hair and licking its shoes with a very 'pro' policy on the matter. 

The core of the debate is simple: should you be allowed to sell your copy of a game to a third party? Surprisingly, this is not about legality but principle and ethics. Do companies have the right to try and prevent it? If public opinion is anything to go by then the answer is firmly "no". This debate focuses on console gaming since PC games have not been re-sellable for some time. 

The issue at hand

But before we delve into the ethics of it all, I want to clear up something first...

Bad Analogies

Analogies are lovely to use. It always feels satisfying to extrapolate a theoretical point into a 'real world' example. I love doing it, and in researching this subject have encountered numerous examples of other people who do too. However, I feel they are being misused in this discussion and that people should treat them with caution.

An analogy is the act of transferring meaning from one set of variables to another, i.e. "video games are like DVDs. I can sell my DVDs, so I should be able to do that with a game". It sure is a good way of illustrating a point, but is not an argument. Nothing has been proven here; just a comparison between two objects that seem to conceptually share the same space. There is no reasoning. Logical steps. Rationalisation. Evidence. None of the elements that prove helpful in a debate. Any conclusion formed is from an apparent similarity and the sentiments of the listener.

At first glance analogies often seem perfectly reasonable. It may appear sensible to compare a purchase of a video game to a car, or DVD, but only at an extremely simplistic level. Almost by definition a video game can not be a DVD; they are different entities. Only vague conclusions could be drawn from vague comparisons. To be any more specific is unhelpful to discussion.

Analogies are not inherently bad and have their rightful place in our conversational toolbox. Just bear in mind that a reasonable sounding analogy is not necessarily based on reason. Always go looking for the base of the argument. 

Why is this suddenly a discussion?

The general principle of consumer purchasing is pretty straightforward for most: "If I buy something, it is mine". This generally entails a right to "sell it on, resulting in a loss of my ownership". I think we can all agree that this is how things have worked for a long time. Should I choose to sell an item I would reasonably expect this item to sell for less than it was purchased for, due to:

(a) the passage of time lowering its value. New and better items etc, and/or 

(b) most items have a fixed lifespan/quality, which degrades over time or use. An object that has been used 100 times, will have 100 less uses of it. 

The phrasing is a little odd, but hopefully this adequately sums up second-hand purchasing. Note how this does not apply to the sale of houses; something which has always fascinated me.

All new, All digital

But the rise of digital media and the notion of second-hand digital products has added a new element. It is true that (a) still applies; graphical quality of modern games is certainly higher than games created 10 years ago. But (b) does not apply: the 'game' does not degrade through use. Of course, the physical method by which the game is delivered may become damaged, but the game itself remains perfect. This is further complicated by digital distribution, where a purchased title can be played an infinite number of times (in theory) and will still each time provide an identical experience.

Whilst perfectly acceptable to purchase a second-hand item for a lower price, with it's coinciding drop in quality, is it the case with digital media?

The Good, the Bad and the...

There has been an exponential rise in second-hand sales within the video games industry, driven by retailers and consumer desire. Second-hand will always be cheaper than 'new' (even if only slightly), does it make sense to buy a 'new' digital product? You could make some argument about how the "disc might become scratched", but that is a rarity now and perfectly solvable if it happens (Disc Resurfacing). And if the disc was broken, then it would be an illegal sale anyway (unless explicitly listed as faulty). 

What happens is this. Retailers purchase games from consumers for cash, or trade-in currency, and then re-sell as "pre-owned" copies. How much the game is worth is still linked to supply and demand, just like any item. As they are providing a service they are entitled to make a profit on that service, so the game is sold for higher than was purchased. For example, the UK retailer CEX will currently pay £136 for a Wii U console, which will be sold at £235. 

Is this a good thing? Well, it is for the consumer who saves money, and can even make a little back when finished. In fact it is easy to imagine a situation where gamers exclusively buy pre-owned titles, which are then returned for a discount on the next pre-owned title. A second hand sale is also extremely good for the retailer, as it is a highly profitable source of revenue. But for everyone else used games are ultimately bad. 

A typical inside of a Gamestop store

Why? Because the money from a pre-owned sale only goes to the retailer. Purchasing a 'new' copy filters money back to either the developers of the game, or the publishers - people involved with its creation. And before you say that all publishers are evil and deserve no money, let's just remember that they pay the initial cost of a game; so obviously need to be compensated. Modern triple-a titles can cost a fantastic amount of money to produce. Call of Duty: Modern Warfare 2 is estimated to have cost between 40 and 50 million dollars. CliffyB (him) recently mentioned that the latest Assassin's Creed game employed thousands of developers. These people need to be paid as they work - not just afterwards. Let's not forget that beyond all this discussion is a real world of real people who work. Have bills. Need to live.

But why is this such a big deal here? Surely every digital item is subject to the same problem? This is true, but video games are handicapped slightly by only having one revenue stream: the point of sale. By contrast a music artist can charge (often extortionate) ticket prices for music concerts or appearances. They can license their songs to radio or TV/films for royalties extending long past the song creation. As well as selling their songs through CDs or digital distribution. Note I am in no way justifying the stealing, or free sharing of music; it will still negatively impact the artist in some way. The point I am making is that video games are hurt more by this practice than someone with alternative revenue streams.

If I was a publisher or developer I would hate video game retailers, and their system designed to effectively steal profit from my work. Microsoft has decided that it was time to build a console that addresses this problem. Xbox One games can only be sold at 'participating retailers', i.e. retailers that agree to terms and conditions about the allocation of second-hand revenue (to the publishers, not Microsoft). A game may be given free of charge to a friend, but only once. This is a publisher and developer friendly idea, but will be seen as restrictive to consumers - which it is. To enforce this system, Microsoft requires the Xbox One check-in with servers every 24 hours. This is essentially how the Steam platform works, although with more frequent checking.

A fairly common sentiment 

Restrictions will always be unpopular, and the publicity backlash against Microsoft has been overwhelmingly negative. It does seem that Microsoft could have handled this a little better, and Sony have capitalised on it. Whether or not viewed as necessary, this sort of thing will never be liked by consumers as it equates to less choice.

A couple of counters
Many arguments have been made in support of used games sales, and a couple of them I feel have merit enough to be worth addressing. Whilst I do agree with the right of a consumer to sell something on, I also do not agree in a mass system designed to exploit this right that harms content creators. There is a large difference between a local car-boot sale/friend, and an international games retailer.

● "Video games are too expensive. Second hand titles allow me to save money to buy the occasional new release" also
● "Second-Hand sales get consumers into the industry that wouldn't otherwise"
Very understandable. A standard console title on launch is quite expensive and if you could prove to me that more 'new' copies are sold due to commercialised second-hand availability, then I would support them. Gamestop president said that that "70 percent of income that gets handed over to consumers for traded goods is immediately spent on new games" (source). I am not sure how they are able to track this statistic except for in-store currency purchases, and in my personal experience more 'new' sales are lost, than gained overall.

I feel it is important to mention that PC gamers have cheaper titles on release, and no second-hand sales. Add this with the Steam Sales where temporary large discounts sell tens of thousands of extra copies with the money going still going to the developers. This shows that ultimately price is dictated by consumer willingness to pay and second-hand sales might be keeping console prices higher. If the removal of second-hand titles leads to a general price drop, would that be an acceptable?

● "Often it is the only way to find old titles"
If second-hand is the only way to buy a sought after title then there is nothing wrong; it is hardly the fault of the consumer if retail does shelf a new copy. My only suggestion would be to perhaps try a service like Amazon, with a large selection of titles and competitive pricing. True you have to wait an extra few days which may be unacceptable for some. 

This is one of the problems that is completely solved through a digital distribution system. Titles are available for much longer; in fact they theoretically could be available forever. I had a quick look for some games I played when younger on Steam:
- Quake 2, £5.99
- Jedi Knight 2, £6.99
- Max Payne, £5.99
- Tomb Raider 2, £4.99
And I know that if I buy it, the money is still going to find its way back to the creators.

My Conclusion

I simply do not support the purchase of used games (if the game is reasonably available 'new'). The last few years has seen a record closure of development studios, and even big publishers like THQ have been ruined. I loved THQ's Darksiders 2 (review), but these games have to be paid for. Of course, I would not suggest that THQ failed exclusively because of pre-owned sales, and/or piracy. But I am incensed at the very idea that creators of quality games lose their jobs because money is taken away from them - just so the consumer can save a few pounds/dollars/euro.

I do not agree it is acceptable for a retailer to keeps all profit from a pre-owned sale, and as the product is digitally identical in quality they can fractionally undercut the prices of new copies. It seems frankly bizarre to me that a store that sells games spends so much effort in denying profits to the people who made the product it trades in. Stories about the retailers training their employees to push second-hand titles at all times to customers should also be considered unacceptable practice - if true.

Did you cheer?

Therefore, and this is a little harsh, I look down on all those who loudly cheered Sony for 'supporting' used games sales. Do they not realise how they are effectively cheering a system designed to deny money from the games creators? Just because it saves them a little money. I am not a rich person and games are expensive to me, but I can see where this sort of practice will end up if it keeps going. If we start denying people their rightful profit, then why should we expect them to keep working hard to produce quality?

This is not the first time the industry has tried to deal with this, but every attempt is met with a backlash; especially against publishers. EA is considered the most evil company on Earth by some. It is time to start looking at the bigger picture. Truly, Microsoft's attempt to sort this out is not perfect, but would they even got involved if consumers were more responsible? Truly, publishers have the potential for very money orientated practices and should be held accountable for some, but used games is not that way.

So...

...to Microsoft: I support your idea to get a handle on this, but do it better. It seems possible to create a solution that would not cut off legitimate gamers if their internet fails, or is unavailable, or when your servers fail (which is probable)

...to Sony: It was a very clever piece of PR and you are doing some great things with regard to indie development. But come on now. You know that this is bad and are kind of exploiting consumer ignorance to sell more PlayStations.

...to the Gamers: Time to think about that bigger picture. Pay that extra cash and properly support the creators. And if you are just cheap, or can not afford a new game, then wait for a sale or price drop and buy new then. If you went to E3 you obviously cared about the industry; act like it. 

* * *

Update : 20th of June, 2013
It appears that Microsoft felt that reforming the approach to used games sales was too harmful to their product. As of last night, they have changed their policies on two controversial issues. Now:
- the Xbox One will no longer require an internet connection once per 24 hours.
- the customer will be free to resell/lend a disc-purchased game as they see fit with no restrictions.

As I see it, this is both good and bad. Good in that the Xbox One will be more successful as a console now, as it is more consumer friendly. Bad because the more progressive digital benefits (such as the ability to play any game you own on any Xbox, or any member of your family able to play a single copy) will have to be removed - since the 24 hour DRM-thing existed to enforce them.

A shame really but perhaps the world (...or just gamers) is not ready. I am still happy Microsoft tried to change the industry for the better, and I am happy they are willing to change policy based on feedback. Everyone makes mistakes - even big companies. Used Games sales will eventually disappear but it seems this generation is not the time.