(...)his argument boils down generally to books/movies having more alternate streams of income than games where games rely much more on initial sales. Also books/movies are moving away from physical also, so I'm not sure that comparison holds much water in the sense that they are moving away from it in similar fashion.
I think many of us (certainly including me) have fallen into a trap of false equivalence. Buying a used game is like piracy, in that someone gets a copy of the game without the developer being paid. It's also unlike piracy, in that it has generally been legal, and it doesn't change the total number of people who own the game at any given moment. Piracy is like theft, in that it's illegal, and it causes someone to have something that they didn't pay for. It's also unlike theft, in that the pirated "object" itself continues to remain in the possession of the legitimate owner. Used games are like used movies, in that the important thing being shared is the data, not the physical media. They're also unlike used movies, for the reasons you're referring to.
The truth is that argument by analogy is not really a meaningful form of argument, in a strictly logical sense. It rests on saying that A is like B modulo membership in some set C, but if membership in set C is enough to make some claim about A, mentioning B is actually superfluous. If it isn't enough to make the claim about A, the argument is not valid. Argument by analogy is only really useful for exposing contradictions in one's thinking, e.g. believing that A has some property because it's a member of set C, while simultaneously believing that B, also a member of set C, does not have that property.