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GameStop: Used Games are Good for the Industry

By - Source: Gamasutra | B 36 comments

Despite what developers say, used games sales is good for the industry.

In an interview with Gamasutra, GameStop CEO Paul Raines points out that 70-percent of the income gamers receive from turning in their used games is spent on new gaming products. That, according to his stats, is a nice $1.8 billion injection into the games industry. Yet developers -- and some publishers -- will have everyone believe that the used games market is actually killing the industry.

"My answer to developers is that we are driving growth in a category that needs to grow," he said. "We think there's a real lack of awareness as far as how it's good for the industry. The transparency you're seeing from us is because we want people to know about it, helping people understand what we're trying to do for the industry."

There is a point in the interview that Raines seems to understand where developers are coming from in regards to their angst against the used games sector. After all, the work of art they've poured their life's blood into is now being sold at a discounted price, and they're not seeing a dime. It's understandable, but car manufacturers don't receive royalties from second-hand sales at car lots either.

Many gamers see the trade-in model as currency, a means to purchase a new title they couldn't afford with straight-up cash. And it's not just the games either: used consoles can be traded in towards a newer version, to purchase a batch of used titles or the latest AAA shooter on the market. Either way, the money is usually dumped back into the games industry.

"We're really not cannibalizing new game sales," he said. "That's a common misconception. So my answer to developers is that we are driving growth in a category that needs to grow. We think there's a real lack of awareness as far as how it's good for the industry. The transparency you're seeing from us is because we want people to know about it, helping people understand what we're trying to do for the industry."

Of course, the whole topic of discussion here is used console sales. At one point, GameStop accepted PC gaming trade-ins, but discontinued the program years ago because of piracy and falling sales. Now gamers are lucky to get a few racks for physical copies of recent Windows-based titles, and a slew of digital distribution platforms like Steam and Origin makes it difficult for GameStop to compete without exclusive incentives.

That's where the company's new plan to sell pre-purchased keys come in. It's much easier to sell used PC games by acquiring the activation key itself, a possible service GameStop is currently investigating. "It’s very interesting," said Raines in another recent interview. "There are some technologies out there in Europe, and we’ve looked at a couple that are involved. We’re interested; it’s not a meaningful business yet. Right now we’re not seeing that as a huge market, but I think we’re on the leading edge. There are a few companies, a few startups, out there that we’ve talked to that are doing this."

Still, consumers and retailers like GameStop will seemingly always be considered the bad guys because the former wants to save a buck and the latter wants to make a buck. As Raines points out, there will always be people on the internet saying negative things about the company from time to time.

"It's going to get picked up," he said. "There are a lot of people [on the internet] who tend to be very developer-centric, they love the developers. Anyone who is perceived as doing anything whatsoever to detract from the developer is going to catch some vitriol from the [internet] folks."

The full interview can be accessed here.

 

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  • 20 Hide
    phamhlam , August 7, 2012 8:05 PM
    Gamers would spend more if they got back more. Gamestop makes a killing off used games.
  • 14 Hide
    Anonymous , August 7, 2012 8:20 PM
    yeah, IT's good for them. Not really US the customers.

    Take in a $60 new game to get told they will give you $20 or so then they resell it for $50.

    Take in an older game, and get told you will get less than $10, then they sell it for $20-25

  • 13 Hide
    sp0nger , August 7, 2012 8:27 PM
    I havent stepped into a store to buy a game in years

    I give my money to steam because they have earned my love and trust
Other Comments
  • 20 Hide
    phamhlam , August 7, 2012 8:05 PM
    Gamers would spend more if they got back more. Gamestop makes a killing off used games.
  • 14 Hide
    Anonymous , August 7, 2012 8:20 PM
    yeah, IT's good for them. Not really US the customers.

    Take in a $60 new game to get told they will give you $20 or so then they resell it for $50.

    Take in an older game, and get told you will get less than $10, then they sell it for $20-25

  • 2 Hide
    dimar , August 7, 2012 8:21 PM
    How about the seller bargains with GameStop, to decide what profit goes to GameStop, when a game is sold?
  • 0 Hide
    bystander , August 7, 2012 8:21 PM
    Let's see. The average gamer who sells a game to GameStop uses 70% of what he gets back towards a new game, while the person who buys that used copy spends 0% towards a new game. That 35% of the money the developer wants.

    I'm sure it's good for GameStop, but not necessarily good for the dev's.
  • 13 Hide
    sp0nger , August 7, 2012 8:27 PM
    I havent stepped into a store to buy a game in years

    I give my money to steam because they have earned my love and trust
  • 6 Hide
    ct1615 , August 7, 2012 8:27 PM
    you need to recheck your math and stats bystander. it's 70% of people who sell their game re-use that money for a new game, not they use 70% of their trade in value. also, 70%+35% =105%

    i think selling games is good for the industry. too many can't afford $60 games, especially ones that get hyped up by sites like ign/gamespot/etc., even though the previewer knows the game(s) suck

    luckily i get all my games from steam & amazon sales
  • 2 Hide
    hotroderx , August 7, 2012 8:31 PM
    bystanderLet's see. The average gamer who sells a game to GameStop uses 70% of what he gets back towards a new game, while the person who buys that used copy spends 0% towards a new game. That 35% of the money the developer wants.I'm sure it's good for GameStop, but not necessarily good for the dev's.


    Thats not 100% accurate we can use the same argument that is used with people who pirate. The average person who pirates would not buy the software even if they couldn't get it for free.

    The same could be said here the average customer would not buy the new game if they where having to pay full price for said title instead of getting a % off. Today's games are so hit and miss its impossible to judge them before playing them.

    I wonder how many people would cut back on buying new games if they knew the following

    1. They knew it had no value after it was purchased (cant sell it back).
    2. They knew they would have to pay full price for said title.

    One other thing that has really hurt the industry as a hole is EA Games and Blizzard with there lack luster Block Buster Hits being complete trash. I wonder how much faith people have lose which makes the above even more true then before.
  • -1 Hide
    ct1615 , August 7, 2012 8:39 PM
    * bystander quoted Tom's and they got the quote wrong. what the gamestop executive said was
    "Company president Paul Raines draws the stats from his holster, saying that 70 percent of income that gets handed over to consumers for traded goods is immediately spent on new games."

    not

    "70-percent of the income gamers receive from turning in their used games is spent on new gaming products." as tom's posted above.

    simply put, gamestop says seven out of every ten people who get trade in credit is used on new game purchases.

  • 5 Hide
    Vorador2 , August 7, 2012 8:43 PM
    Color me surprised that GameStop, the company that makes a killing off used titles, say that. I could have never guessed.
  • 0 Hide
    m32 , August 7, 2012 8:44 PM
    If they think everyone is going to spend $60 on new games then they are sadly mistaken. I'll spend it on must have title, but other than that I'll wait 6-12 months and be happy with cheap Steam games.

    LOL. It would be kinda messed up if console makers try make a disc/game unique to the first console it goes into. Talk about killing the used game scene. I wonder if Gamestop could even exist in a few years if they did that?
  • 0 Hide
    ct1615 , August 7, 2012 9:02 PM
    the next consoles want (aka will have) digital download stores, the issue being is storage for all those games. HDD shot up in price and SSD are still to expensive for a console that needs to be at a $399 price point of it won't sell. does that mean cloud storage? that's a big investment by MS & Sony and that price needs to be passed on so you get back to to the price again. gamestop knows it days are numbered as a brick and mortar store hence the purchase of impulse digital download. a used game market will let them hang on to the brick and mortar business a little longer.
  • 2 Hide
    gigantor21 , August 7, 2012 9:19 PM
    While I hate Gamestop's handling of trade-ins, the CEO is right on one thing. Used games ARE a net positive for developers. They let more people play the games, and give devs more exposure. The simple fact of the matter is that there aren't ANY games worth a $60 base price + DLC for everybody.

    If they really want to crack down on used game sales, they'd better be super aggressive in pricing relative to demand. And judging by how haphazard pricing is on Xbox Live and PSN, I'm not optimistic. It's more likely they'll do a piss-poor job and I'll end up buying far less games for the new consoles.
  • -3 Hide
    g00fysmiley , August 7, 2012 9:24 PM
    bad argument is bad... so they sell back a game and 70% of that credit goes to a new shinty game... but then they try and force used games on you and usually its like $5-10 bucks less htan the new game and good luck convincing them to ell you a new copy if they have used copies there i've left a gamestop without a purchase (but with names of employees and store numebr to write to the store and better buisness burue abotu thier refusal to sell em a enw copy i was looking at on the wall and knew they had in stock)

    used games are a cancer i mostly only get some whackamole games on consoles but am so sick an tires of game stop even if it is a must have or a motion sensor game for kinect i want i will wait the extra time and buy it online... gamestop can't go out of buisness fast enough imo
  • 2 Hide
    snowzsan , August 7, 2012 9:59 PM
    I dont even understand the reasoning for people to purchase used games from Gamestop/EB Games in the first place. Considering that when you trade the game in, you get say... $20. They turn around and resell it usually only $5 cheaper than purchasing it brand new, so in all reality, you may as well purchase it brand new and not risk running into the "Disc not readable" a few hours in!

    It's utter stupidity. The concept is good, trading in your older titles that you don't play anymore, but the way Gamestop/EB Games does it is a ripoff in itself. They have no leg to stand on with this argument unless they're going to at least be willing to give gamers half of what they're going to resell the game for. It's not the best but at least the company can still make a profit and the gamer isn't getting absolutely ripped off....

    ... Only slightly.
  • 1 Hide
    teh_chem , August 7, 2012 10:31 PM
    Used games are not good for the industry--they're nothing for the industry. They're good for Gamestop, and they're good for people unable to afford new games, or unwilling to pay the (often times exorbitant) "new game" price (I'm a fan of the latter)

    How odd for a business to claim that their biggest cash cow for their business is "good for the industry."

    My view on used games: Those selling have paid the developer. Those buying them probably had no interest in buying them new/full-price in the first place, so it has a net zero financial effect. But I do agree, despite my pessimism of it coming from Gamestop, that there are important secondary/collateral effects of keeping used game sales going--the main one that comes to mind is someone not buying a big-title game at debut price because they weren't sure it was worth the money, only to find out they enjoyed the used game immensely--they may be more likely to buy a sequel/other game from that developer on-release at full-price. I could kinda see that argument. But I think GS is overstating their impact.
  • 0 Hide
    Anonymous , August 7, 2012 10:38 PM
    The digital age of streaming and digital downloads of games will eliminate used games. Stands to reason it is hurting game manufactures who face losing a sale of a new game to a sale of a used game. Gaming is dying off slowly anyway as money keeps flowing to different avenues of tech. Their is only so much money to be spent of gaming and still buy other things. I think online gaming is becoming more apparent because of broadband coverage and I think renting or subscribing services means you pay for what you use. I see a time as in music subscriptions and other content that we don't own anything. We simply pay a fee to use it.
  • 3 Hide
    SGTgimpy , August 8, 2012 12:02 AM
    "It's understandable, but car manufacturers don't receive royalties from second-hand sales at car lots either."

    This Quote I believe sums up this whole “Used Games hurts the developer’s” argument. I don't see GM, Ford, Toyota, Nissan, Honda, BMW, Mercedes, VW, etc.… complaining that a car dealer is selling used cars and not giving them a cut back to them. (Manufactures actually give dealers incentives to sell used cars.)

    When I buy a product, it is mine period. What I do with it afterwards, selling, trading it in, pooping on it then setting it on fire. It is no longer the concern of the developers, publisher’s or manufacturers anymore. The idea that I purchased a licensing it to play game is crap, the idea that I do not own the content I just bought crap. It’s a common rule of commerce that has existed since the dawn of civilization. I bought the said item whether in trade or in currency and whether said item is physical or digital, that item I just purchased is mine to do as I wish.

    So to help the industry pull their heads out of there A** here is some good ideas (common sense) for the developers to bring growth back to the industry.

    1. Start making better games and not crappy knock off or ports. Be original and take chances

    2. Tell Publishers to eat it. Example, EA you do nothing but suck the life and money out of the industry.

    3. Again Stop going for the quick buck and make good games. If it’s good, people will buy it, if it sucks and it is overpriced. People will pirate it, Plan and simple.
  • 2 Hide
    Jprobes , August 8, 2012 12:25 AM
    It is obvious that very few people use Game Stop and judging from the responses, very few even have a half truth clue about what goes on.

    Yeah, for the most part the most you are ever going to get, base trade in value for your game is 40%. (The newer the better)

    Just a quick example for people who may want to see some actual factual information from someone who takes advantage of this.

    First you really need to be a “Power-Up Rewards” member if you are looking to trade games in.
    You get an extra 10% in trade in value per title and you save 10% on used titles. (this stacks with most promotional offers)
    You almost always get an extra 30% trade in value if you apply it to a soon to be released game. (Stacks with the PUW 10%)
    A lot of the time they run promotions before the B2G1F that increases the trade-in value by 50% (does not stack with the PUW 10%)

    With that being said, Take FFXII-2 for example. Game Spot guaranteed me a $30 trade in (before promotion, 1 month after the games initial release date.)
    You apply 10% to $30 = $33, then it compounds the bonus 30% on top of the $33 and they gave me $42.90 trade in value for the game. (TBH you would be hard pressed to sell a copy of FFXII-2 used for 40 anywhere else.) I ended up using the TIV and purchased ME3 and did the same thing with that game 2-3 weeks.

    I can’t recall the last time I paid more than 30 dollars out of pocket for a new PS3 game that was full price.

    This is the key thing to remember, The only requirement you need to meet to get the extra 30% bonus is to preorder a qualifying game, ($5 min.)
    (If you don’t want the game, go back in a couple days later and cancel the pre order, you still get the extra 30% bonus.)

    Almost every game I own for the PS3 (120+ titles) was pre-owned and purchased through the B2G1. I rarely buy used games above $20 dollars, and when I do I get an equal value game for free.

    Used titles have a 7 day return policy, and Game Stop quite frequently runs B2G1F (used games only).

    I cannot tell you how many times I have bought games, and returned them completed within the 7 day window and parlayed that money into other games. You can literally rent games for free from Game Stop for a week if you front the money. (I am a trophy whore so I work the system)

    At the end of the day, they have served me very well and I know how to get the most out of their policies.
  • 1 Hide
    A Bad Day , August 8, 2012 12:34 AM
    In other news, Toyota has announced that they have a remote deactivation system if the ownership ever changes...
  • 0 Hide
    bystander , August 8, 2012 12:40 AM
    HotRoderxThats not 100% accurate we can use the same argument that is used with people who pirate. The average person who pirates would not buy the software even if they couldn't get it for free. The same could be said here the average customer would not buy the new game if they where having to pay full price for said title instead of getting a % off. Today's games are so hit and miss its impossible to judge them before playing them. I wonder how many people would cut back on buying new games if they knew the following1. They knew it had no value after it was purchased (cant sell it back).2. They knew they would have to pay full price for said title. One other thing that has really hurt the industry as a hole is EA Games and Blizzard with there lack luster Block Buster Hits being complete trash. I wonder how much faith people have lose which makes the above even more true then before.


    I said 35% of what they want, not what they would get, and I forget a big part of that too. That is 70% after on the used sale discount. So it really is more like 10%-15% that the developer gets. It wouldn't take many of those buying used to buy new, in order for the developer to come out on top vs GameStop's current system.
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