New Start Up Video Game Retailer Will Share 10% of Used Game Profits With Publishers

[The 1 2 P]

It's actually a new online retailer but I couldn't get enough characters to type that out. So anyway, this (http://www.gamesindustry.biz/articles/2012-04-24-retailer-plans-to-share-10-percent-of-pre-owned-sales-with-publishers) is what publishers have been crying about the last few years. While I don't expect this new venture to put a dent in Gamestop it can atleast be used as a small gauge as to how publishers might adjust their game content when they get alittle more money back. Or maybe it will mean they can buy a Ferrari instead of having to settle for a Porshe because of the big bad Gamestop and it's evil customers that they sometimes liken to pirates. How do you guys see this scenario being played out(if this start up actually gets launched)?

[Tupin]

If publishers are really losing that much money on their games because of used sales, maybe they should lower development costs. Not every game needs to be Assassin's Creed or Call of Duty.

[stalepie]

I think it could lead to publishers favoring the company in special deals and promotions, and then Gamestop or Game would follow suit.

[Bojay1997]

Yeah, it's the guy from Gamegavel. The thing he seems to have forgotten is that giving publishers and developers 10% of his revenue does nothing to help his customers and frankly, is another poorly thought out business angle. I would expect this to go nowhere as he won't be able to turn a profit by both paying more for trade-ins (he claims he will pay $20 less than MSRP for used games or $40 for a $60 game) and giving 10% back to developers. Where does that leave buyers? It sounds like he will be at the same price levels as Gamestop without the advantage of a larger selection or all the coupons and other gimmicks they give to encourage people to get sucked into their used game cycle.


It's actually a new online retailer but I couldn't get enough characters to type that out. So anyway, this (http://www.gamesindustry.biz/articles/2012-04-24-retailer-plans-to-share-10-percent-of-pre-owned-sales-with-publishers) is what publishers have been crying about the last few years. While I don't expect this new venture to put a dent in Gamestop it can atleast be used as a small gauge as to how publishers might adjust their game content when they get alittle more money back. Or maybe it will mean they can buy a Ferrari instead of having to settle for a Porshe because of the big bad Gamestop and it's evil customers that they sometimes liken to pirates. How do you guys see this scenario being played out(if this start up actually gets launched)?

[Press_Start]

This kind of plan won't make game corporations any less the privileged @ssholes they are, in fact, it's makes it worse because it's legitimizes a falsehood. What's killing the video game industry isn't lil Billy giving 10 bucks to his neighbor Jimmy for his copy of Madden '12. What's killing the industry is every idea is anchored down by bean counting and it has taken something birthed by imagination and wonder broken down to cold, stoic profit formulas.

[Berserker]

By this point I imagine the mindset of these publishers must be not unlike that of the high roller in Casino: they won't see it as gaining 10% from that used game, they'll see it as losing 90% by not having made that game download-only in the first place.

[Bojay1997]

This kind of plan won't make game corporations any less the privileged @ssholes they are, in fact, it's makes it worse because it's legitimizes a falsehood. What's killing the video game industry isn't lil Billy giving 10 bucks to his neighbor Jimmy for his copy of Madden '12. What's killing the industry is every idea is anchored down by bean counting and it has taken something birthed by imagination and wonder broken down to cold, stoic profit formulas.

You seem to raise this same point in every video game industry thread and yet you have still failed to ever provide any support for your contention that used sales don't impact game publishers and developers. While I agree with you that used sales alone aren't the entire story, there is no doubt that they shift revenue from the publishers and developers to third party profiteers like Gamestop and other used game resellers who take their product and buy it for pennies only to resell it for nearly MSRP all the while screwing customers on both sides of the transaction. Video games are a business just like any other business that sells creative expression in the form of entertainment and trying to blame the fact that the people who invest in game developers and publishers actually expect a return on their investment for damaging the industry is a pretty weak position to take. I agree that game companies will need to get more creative and explore other models to remain successful, but as much as you might hate it, the next model is likely going to be restricted direct sales to consumers on an individual license basis, not some open source or user supported shareware model.

[Griking]

What's killing the video game industry isn't lil Billy giving 10 bucks to his neighbor Jimmy for his copy of Madden '12.

Nope, it's Gamestop pushing Jimmy and everyone else to buy a used copy of the game instead of the new one that he had in his hands.

[j_factor]

Is the store even getting anything in return, or are they just sending publishers money out of the goodness of their hearts? This doesn't sound like a good plan.

If game publishers want to profit off used games, there is nothing stopping them from getting into that business and competing with Gamestop. Hell, one of the bigger publishers could probably buy out Gamestop outright.

[substantial_snake]

...

Even if this retailer blows up big somehow publishers aren't going to roll back all of the methods they've used lately to combat used game sales. It was too late as soon as DLC and paid subscription services started gaining widespread customer support. I see this as wasted effort on their part unless they are getting some massive behind the scenes deal from publishers who participate...which will benefit them and not the consumer...again.

So yay?

[Press_Start]

Nope, it's Gamestop pushing Jimmy and everyone else to buy a used copy of the game instead of the new one that he had in his hands.

5035

Oh yeah! Gamestop's really robbing EA blind. :roll:


......the next model is likely going to be restricted direct sales to consumers on an individual license basis, not some open source or user supported shareware model.

If they want to go down that route, have at it hoss! Just don't expect me or anyone else dropping $60 to rent their game.

[Dangerboy]

There are other issues here as well:

All quotes from the ekgaming.com Trade-In Page


First, we are only extending credit towards console games with a "new" retail value of at least $30. If a game's value drops below that you aren't going to get much credit and would be better off selling yourself online or on our sister auction site, http://www.GameGavel.com.

So in case we can't take your game, please sell it on our rival to eBay. An auction site where the publisher will not see a dime. EKG seems more like an extensive ad campaign for gamegavel rather than helping publishers.


Mail your used games to us today, get your new games in about 1 1/2 weeks.

Trading in games is usually about spur of the moment / instant gratification. Why would you go through the same process that selling it yourself takes and take a lower value since there's now a middle man involved?


3) Mail us your games along with a note displaying your Name, Phone # and Email Address. Mail your games to us using United States Postal Service 1st Class Mail (bubble envelope recommended). We will refund your shipping costs up to $3 per envelope for 1-2 games or up to $8 for boxed multiple games. We will add this refund to your credit amount.

As stated by someone else, I don't understand where the profit margin is coming in. If he's selling MW3 for $50 (just to use a number that's "cheaper than the competition"). That means the following:

a) He pays you $40 trade in credit for MW3 = - 40
b) He gives 10% Of the *SALE* to Activision = - 5
c) He refunds you the cost of shipping your game in = - 3

That means he's $48 in the hole before he sells the used game. A $2 profit remains, and that's before the overhead of any employee / supplies / rent / bills is factored in. If he's selling the game for $55 or so, then he's no better than the competition and it defeats the purpose.

Something is a amiss...

[The 1 2 P]

It looks like nobody thinks this is going to get very far. Thats probably for the best though.

[frogofdeath]

If game publishers want to profit off used games, there is nothing stopping them from getting into that business and competing with Gamestop. Hell, one of the bigger publishers could probably buy out Gamestop outright.
I'm not sure why more people don't use this argument. If you want money for these sales, set up the store yourself. Or, as you mentioned, buy those Gamestop "thieves" and put them out of business. Companies need to stop bitching and complaining that other people are making money on used products. That's capitalism.

[theclaw]

$20 less than MSRP is suicide. Hell, $60 list price would mean they'll have to pay $40 for Lair trade-ins. Lair. :help:

And we all know popular opinion on that one. Sony has never lowered their suggestion.

[jb143]

I don't even think publishers own the copyrights to the games in all cases. The studios do in many cases. How the heck would that be handled? Leave it to the publisher to get the money to the "rightful owner"? Or does it even matter? And would they even have the financial infrastructure in place to accept the 10%? Not that they'd refuse free money but it could be like trying to pay your $75 speeding ticket to the cop when he hands you the ticket or trying to pay a bill 10 years in advance...you'll be met with "sorry sir, you can't do that" or "we can't enter that into our system". I just don't see this working on so many levels. It actually sounds more like a case of "there's no such thing as bad publicity".

[theclaw]

Yup that's one big tangle web. Sometimes neither publisher or studio... Let's not forget the good Crash Bandicoot games.

[Griking]

I'm not sure why more people don't use this argument. If you want money for these sales, set up the store yourself. Or, as you mentioned, buy those Gamestop "thieves" and put them out of business. Companies need to stop bitching and complaining that other people are making money on used products. That's capitalism.

A program where a publisher gives you $10 coupon towards another one of their games when you trade an older one in wouldn't be a bad idea. It takes the used game out of circulation and gives the customer a reason to do so.

[Bojay1997]

I don't even think publishers own the copyrights to the games in all cases. The studios do in many cases. How the heck would that be handled? Leave it to the publisher to get the money to the "rightful owner"? Or does it even matter? And would they even have the financial infrastructure in place to accept the 10%? Not that they'd refuse free money but it could be like trying to pay your $75 speeding ticket to the cop when he hands you the ticket or trying to pay a bill 10 years in advance...you'll be met with "sorry sir, you can't do that" or "we can't enter that into our system". I just don't see this working on so many levels. It actually sounds more like a case of "there's no such thing as bad publicity".

That's actually a really interesting point. I work for a large entertainment company that has a game division and my office is one that used to be occupied by the head of a licensing division and random checks literally show up daily still to his old mail station and there is apparently a whole group of clerks who spend hours every day trying to figure out why certain checks have come in and there are apparently hundreds of checks a weeks that can't be traced right away and require more follow-up. Even after all that, sometimes they just can't figure it out and the checks are either sent back or allowed to expire. I can only imagine a game company would have a lot of trouble figuring out why a bunch of small checks were coming in from this company. Frankly, in the video rental heyday of the 1980s, Blockbuster and other companies paid licensing fees directly to a rights entity set up by the major studios that would handle the accounting aspects of dividing up the money, but I would imagine the game studios aren't going to set up anything like that for a tiny company that isn't going to generate any significant income.

[Bojay1997]

I'm not sure why more people don't use this argument. If you want money for these sales, set up the store yourself. Or, as you mentioned, buy those Gamestop "thieves" and put them out of business. Companies need to stop bitching and complaining that other people are making money on used products. That's capitalism.

Well, one of the ways that capitalism is balanced out a bit on the regulatory side is by preventing monopolies, so that's probably why game companies haven't tried to compete with Gamestop directly. I'm sure Gamestop would file suit immediately claiming preferential pricing, tortious interference and other anti-trust violations on the part of the game publishers.

[j_factor]

Well, one of the ways that capitalism is balanced out a bit on the regulatory side is by preventing monopolies, so that's probably why game companies haven't tried to compete with Gamestop directly. I'm sure Gamestop would file suit immediately claiming preferential pricing, tortious interference and other anti-trust violations on the part of the game publishers.

Unless said publishers stopped supplying Gamestop, they'd have no case.

[Bojay1997]

Unless said publishers stopped supplying Gamestop, they'd have no case.

I disagree. There are all sorts of provisions in both state and federal law that Gamestop and other third party retailers could invoke. Frankly, even Apple has faced and settled litigation from other retailers in relation to its company owned stores. Right or wrong, there are significant legal barriers to a manufacturer or publisher opening their own chain of retail outlets.

[BetaWolf47]

Even if this retailer becomes significant enough, I don't think 10% will be enough to satiate publishers.

[j_factor]

I disagree. There are all sorts of provisions in both state and federal law that Gamestop and other third party retailers could invoke. Frankly, even Apple has faced and settled litigation from other retailers in relation to its company owned stores. Right or wrong, there are significant legal barriers to a manufacturer or publisher opening their own chain of retail outlets.

Plenty of stores sell their own products, how is it different for a game company? Nintendo already has a store (albeit only one), and Sony did until recently. Namco used to own a large chain of arcades. I'm not sure what Apple litigation you're referring to, but I doubt any of it was for the offense of their mere operation of the Apple Store.

[Bojay1997]

Plenty of stores sell their own products, how is it different for a game company? Nintendo already has a store (albeit only one), and Sony did until recently. Namco used to own a large chain of arcades. I'm not sure what Apple litigation you're referring to, but I doubt any of it was for the offense of their mere operation of the Apple Store.

I'm not aware of any major entertainment company that sells used versions of their own product. The easiest angle for Gamestop to take would be a claim that they are engaged in price and market manipulation or product dumping. Have you ever noticed that the Apple store maintains MSRP at all times and with a few rare exceptions, so too do Sony, Nintendo and Microsoft? I'm not saying it's impossible, but there would likely need to be a lot of restrictions in place to even allow them to operate and frankly, in doing so they would alienate their entire new retail network and essentially kill their new product business where they have a much larger profit margin for a lot less work.

[j_factor]

I'm not aware of any major entertainment company that sells used versions of their own product. The easiest angle for Gamestop to take would be a claim that they are engaged in price and market manipulation or product dumping. Have you ever noticed that the Apple store maintains MSRP at all times and with a few rare exceptions, so too do Sony, Nintendo and Microsoft? I'm not saying it's impossible, but there would likely need to be a lot of restrictions in place to even allow them to operate and frankly, in doing so they would alienate their entire new retail network and essentially kill their new product business where they have a much larger profit margin for a lot less work.

There is no such offense as "market manipulation". There are various offenses related to what we might call market manipulation (e.g. collusion), but you have given no reason to assume that they'd commit any of them. There is also no such thing as "product dumping". There is price dumping, but just because they open a store, doesn't mean they're going to sell their products for less than fair market value.

[jb143]

Even if this retailer becomes significant enough, I don't think 10% will be enough to satiate publishers.

But would it be enough for legal precedence? Because that's all it takes to interpret and then change the laws to make stuff like this more common place. First used games, then DVD's, then cars, then recycling aluminum cans....

I think it's more what Bojay1997 mentioned earlier. The publishers get random inconsequential checks from a little game store that they have no way of tracking so simply don't ever cash, while in the meantime the game store gets all the free publicity and SEO google hits from gaming websites discussing it.

[Bojay1997]

There is no such offense as "market manipulation". There are various offenses related to what we might call market manipulation (e.g. collusion), but you have given no reason to assume that they'd commit any of them. There is also no such thing as "product dumping". There is price dumping, but just because they open a store, doesn't mean they're going to sell their products for less than fair market value.

I never said there was. There is a whole body of law at the state and federal and frankly international law designed to prevent market manipulation. If you want specific statutory citations to law and regulations designed to prevent such manipulation, you can easily do so in Google.

I never assumed they would or wouldn't do anything. I can tell you, however, that among the reasons video game manufacturers and publishers don't open their own store chains is the potential litigation that could ensue from anti-trust claims and claims of market manipulation. More importantly, it doesn't make good business sense for them as it undermines the value of their new product and will likely cause a massive backlash from retailers that only sell their products new.

By the way, product dumping is a term used pretty interchangeably with price dumping and as far as I can tell, means the same thing.

http://www.wto.org/english/tratop_e/adp_e/adp_e.htm

[The 1 2 P]

As an update (http://www.gamesindustry.biz/articles/2012-06-05-ekg-devs-to-get-a-cut-of-pre-owned-sales-too?utm_source=newsletter&utm_medium=email&utm_campaign=us-daily) it appears that the start up(EKG) will now share the 10% with both publishers and developers, although they will be splitting the initial amount in half between the two. So still 10% total but 5% will go to publishers and 5% will go to developers.

[Bojay1997]

As an update (http://www.gamesindustry.biz/articles/2012-06-05-ekg-devs-to-get-a-cut-of-pre-owned-sales-too?utm_source=newsletter&utm_medium=email&utm_campaign=us-daily) it appears that the start up(EKG) will now share the 10% with both publishers and developers, although they will be splitting the initial amount in half between the two. So still 10% total but 5% will go to publishers and 5% will go to developers.

I'm surprised he is able to get any press at all. His Indiegogo crowd funding effort for Gamegavel was a complete disaster. I think he literally only received one pledge for $25 out of the $100K he was looking for.

http://www.indiegogo.com/gamegavel