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How Gamestop Reduces Developers' Sales


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#1 The X Factor   Members   -  Reputation: 92

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Posted 21 May 2011 - 03:48 AM

Introduction
Hello all, I am going to inform you on how Gamestop is (non-intentionally) reducing first hand sales so the video game developer's don't get the money.

Pre-Owned Games
If you have ever shopped at Gamestop you will notice the Pre-owned section. This used to be a section only but now pretty much everything at Gamestop is pre-owned. This is because they have developed a selling tactic that will make them money by selling the same game over and over again, while the developers who made the game get nothing because no new copies are being bought or sold.

It's Just Business
Gamestop orders exactly enough games from developers for those who Pre-order the game so they can keep exactly that amount of game's in circulation. The pre-orderers get their game, play it, then return it and are paid back. But now Gamestop has the same game and don't have to pay for anything and just sell it again. They keep selling all of the game's and keep them in circulation while they make big money while the developers make nothing. Therefore the ones who work extremely hard and put lots of money into development are in a way, creating, advertising, and publishing their product only for Gamestop to buy it and take advantage of it. Then they lower the prices for the Pre-owned games which also lowers the value. This is how games and their developers die.


A solution?
Electronic Arts recently devised a plan to avert this, a plan called the "Ten Dollar Project". Other companies are beginning to accept this idea and use it in their own games. But it may be annoying and inconvenient to customers.


The Ten Dollar Project
When the game's are sold for the first time they will include coupons or codes that the customer will use to download multiplayer itself or multiplayer content. Once the first buyer uses these codes they are useless. Then they return the game. Gamestop takes it in and sells it again as usual. The second buyer however doesn't have these codes or multiplayer, therefore they have to go online and pay for the content and wait for it to download. Many companies have taken this idea and utilized as Electronic Arts has done/ will be doing with their new releases such as Battlefield 3 and Crysis 2.


Here's an Idea (in response to some of the replies)
Most game's today get repatative and have almost no replay value. For instance games like Call of Duty have been around for a while, but now they are starting to turn into the exact same games. With the exception that there are new guns and customizations which are just eye candy. Not to mention that Activision is going to release one every year. Which may be an indication that the games are barely worked on. Now maybe they have a massive team of developers and they can get it done within several months, I don't know.

Games are pretty much the same thing now, these big companies are trying to play it safe and know that the games will be bought so they don't bring any new ideas to the table. So video games are now only getting worse with the exception to good games that go unnoticed. How about they bring new ideas to the table and make something that's fun instead of eye candy and poor gaming experience. Then they people might not return the game because they actually think it's FUN! Games used to be something for sheer entertainment and so you can have fun when there are rainy days or just play it whenever, no matter how bad the graphics were as long as you had fun and had a good gaming experience. Now games are all about the graphics and gameplay, story, fun, and a good gaming experience are no longer important factors for most studios developing new games. If you don't want your game returned then put some more work into it and make sure the customer will get some fun out of it and then they may get more first-hand sales.

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#2 DaBono   Members   -  Reputation: 1020

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Posted 21 May 2011 - 04:19 AM

I really don't agree with this trend to call GameStop's business model 'stealing'. I thinks it really says more about the game development-business than of Gamestop.

Because, seriously, how is what they do different than a second hand furniture shop? Do we see carpenters parading the streets how criminal it is that people sell of their furniture, allowing other people to buy them so they won't get new assignments? Are they devising ways to have their chairs break as soon as they are placed into a different home?

Good furniture lasts years. Really good furniture becomes antique and gets passed from generation to generation. Video games that end up at Gamestop apparently have lost their charm after a few days, or maybe even hours of play. That's where your problem is. Development budgets skyrocket, but they yield products that do not generate equally bigger sales/profits. I think it's not fair to blame others for that problem, and especially not implying they're 'criminal' like what's happening now.

So, developers: make products I want to keep. Let me have that game I'll pop back in now and again (and not fail because the DRM-server is down).

#3 Hodgman   Moderators   -  Reputation: 31798

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Posted 21 May 2011 - 05:01 AM

So... how much money has game-stop "stolen" from you?

You know what's a good solution? Make a good game that people don't want to re-sell.

If you really wanted to, your distributor/publisher could sell your box with a "no re-sales" clause, which in turn would probably cause game-stop to order zero copies of your game. At least then they won't be "stealing" from you.

BTW don't double-post.

#4 RivieraKid   Members   -  Reputation: 375

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Posted 21 May 2011 - 05:06 AM

sounds worse than piracy!

in the UK you dont get much for returning games and the preowned section generally isnt much cheaper. Exactly how many sales are they loosing?


To be fair, if the game is worth returning then it wasnt worth $50 to begin with so it kind of balances out.



#5 jbadams   Senior Staff   -  Reputation: 19330

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Posted 21 May 2011 - 05:36 AM

In my personal opinion the trade of used games is valuable to developers for the following reasons:
  • Gamers do not always have a lot of money, and games are expensive, so the ability to trade in games and get some money back (or in some cases a discount off a new purchase) after they have played them can be an incentive for those players who do purchase new copies to continue to do so; were they unable to get some money back from games they're finished with they would probably buy less often, and might be more likely to consider piracy or (somewhat ironically) finding used copies.
  • Following on from the above, players can not always afford to have all of the latest and greatest games, so they'll probably stick to purchasing the ones they've already played and are fairly certain they will enjoy. A player who has played one of your games second-hand and enjoyed it might be more likely to save up and buy a new copy when you release a sequel. Say for example Alex can only afford one new title per year, but also buys a couple of used games and occasionally rents a game from a video store; next year when Alex is deciding what new title to purchase, do you think she will buy your game, which is a follow-up to a game she was unable to try, or the follow-up to your competitor's game which she couldn't afford to buy new but did get to try used.
  • Gamers will often buy the same games their friends are playing. If we look at the not uncommon example of gamers who can and do purchase new titles but have friends who can only afford used, do you think depriving that potential customer's friends of used copies will help sales of new copies? Unless your game sucks, getting it into the hands of more players can only help you.
  • Gamers who purchase second hand probably weren't going to buy new. Perhaps they can't afford a new copy, or perhaps they can but just aren't interested enough to spend that much. They might however consider buying a new copy in the future if they've enjoyed a previous game in the series, or even if they recognise that you're a developer they like. The availability of used titles probably isn't really costing you all that many customers, because the people who buy them probably never were potential buyers for a new copy. Unless you can change whatever condition causes them to not want a new copy of your game, depriving them of a used copy probably isn't going to help you.

If you want players to buy new games rather than used I would suggest adopting one -- or more ideally some combination of -- the following suggestions:
  • Lower the selling price of new titles; if you can find a way to cut the price so that a new copy doesn't cost more (or much more ) than second hand then players will probably prefer the new game. If player's prefer to buy new copies then businesses like GameStop will either stock new copies or risk going out of business. Possible ways to put this into practice involve lowering production costs buy working on smaller, lower-risk games, reusing existing code and assets, cutting out the middleman via digital distribution and possibly by distributing games episodically in much smaller pieces, thereby allowing a much lower cost.
  • Make it easier to get new titles; if players can get their hands on new titles more easily than used then unless the cost difference proves to be prohibitive they will buy the new copies. Again, digital distribution is a good potential solution.
  • Provide some benefit to buying new titles; give players something cool for buying a new copy that they probably won't get with a used one. This could be downloadable bonus material, or a manual with awesome artwork, or free posters, free miniatures, or any number of things. Note however that this is different from the approach described above, where rather than adding value to new copies you describe an approach that attempts to remove value from used copies; do you really think ripping off the purchaser of a used title will encourage them to buy a new copy from you in future?
  • Make your games more replayable; players will not sell their copies if they are still playing and enjoying them.
  • Provide some benefit to keeping the game; releasing additional packs of content, or making a highly moddable game and encouraging the hobbyist community to make cool mods might encourage players to hold on to their copy rather than selling it, as they won't want to miss out on the cool new stuff.

In summary I think you're trying to solve a non-problem, and I think that the solution proposed in the OP is potentially robbing gamers of value rather than adding value to purchases of new copies.

#6 The X Factor   Members   -  Reputation: 92

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Posted 21 May 2011 - 05:54 AM

Thanks for the replies, I see your points now, a friend (a member of our team) wanted me to do this since he did all of the research by the way I wasn't trying to develop a trend more like propose a problem and find a solution for it.

#7 jbadams   Senior Staff   -  Reputation: 19330

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Posted 21 May 2011 - 06:06 AM

You might also be interested in the following GamaSutra feature from December 2008: As Recession Deepens, Used Games Get More Painful.

If I might quote a couple of points from that article (emphasis mine):

GameStop senior VP of merchandising Bob McKenzie and executive VP of merchandise and marketing Tony Bartel insisted that there really was no need for publishers to fear resales: "It's a significant amount of currency that we put back into the new gaming market -- over $700 million worth of games," said McKenzie.

"Over 80% of the trade credits go back toward new purchases," added Bartel.

OTX's research confirms that action games and shooters drive the resale market at 60% while only 20% are MMOs which take considerably longer to play. The main reason that gamers hold onto a title is replayability (69%) which is why the top two "keepers," OTX reports, areGuitar Hero III: Legends of Rock and Rock Band.

On the other hand, the titles that gamers had sold back to retailers most frequently were single-player games like Uncharted: Drake's Fortune, Assassin's Creed, and BioShock. "That illustrates that even great games will enter the resale market if there is limited re-playability," says Williams.


Braben insists that the industry needs to find new ways of incentivising the sale of new versions. "For instance, if we lower retail prices, gamers won't feel as much of a need to wait a few weeks in order to pay used prices," he says.

Developers should also come up with clever methods of increasing the value of new games, in addition to add-ons and expansion packs, he adds.

"As an example, Gears of War 2 offers downloadable multiplayer maps that you wouldn't get if you owned a pre-owned version," he says. "And many new games come with scratch-off codes for a weekend's free Xbox Live Gold."

Note that the Gears of War 2 example just gives additional multi-player maps, adding value. The ability to play multi-player with a selection of maps already available was not left out of the core game and is still available to users of second-hand copies; the "Ten Dollar Project" described above is on the right track, but would need to be implemented carefully so at to still provide a full and proper game play experience both to second-hand gamers, and especially to those who have purchased a new copy but can not for whatever reason download online content.

Also check out page 6 of this other 2008 Gamasutra feature: GameStop in 2008: The Mega Interview, which has a section entitled "extending the lifespan of games" relevant to this discussion.

#8 landlocked   Members   -  Reputation: 103

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Posted 21 May 2011 - 06:51 AM

Yeah that whole line is B.S., OP. If I buy something then I have the right to resell it, trade it, etc. You got your money from that sale and should be happy with that. If you want people to hold on to your games you should make them something more than sheer mindlessness that can be beaten in about 10 hours.
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#9 Sirisian   Crossbones+   -  Reputation: 1792

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Posted 21 May 2011 - 11:14 AM

Use steam distribution. Relying on old ways of selling games isn't necessary anymore and as you pointed out will undercut profits. A lot of developers have realized this. If you're really into keeping your game with one copy per person, OnLive (and maybe Gaikai) work with Indie developers to release their games on their system. That provides a route where players can play your games without ever having a copy of the actual game in a tradeable form unless they sell their account. This is an excellent solution for the problem you mentioned and will be very advantageous later.

However, I know that you can't stop all second hand sales. People sell their steam accounts for a lot of money online. It's just highly monitored and discouraged.

#10 dublindan   Members   -  Reputation: 457

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Posted 21 May 2011 - 11:25 AM

A solution to the problem? - Electronic Arts recently devised a plan to avert this, a plan called the "Ten Dollar Project". Other companies are beginning to accept this idea and use it in their own games. But it may be annoying and inconvenient to customers.

Here's how it work's - When the game's are sold for the first time they will include coupons or codes that the customer will use to download multiplayer itself or multiplayer content. Once the first buyer uses these codes they are useless. Then they return the game. Gamestop takes it in and sells it again as usual. The second buyer however doesn't have these codes or multiplayer, therefore they have to go online and pay for the content and wait for it to download. However if other content such as new features or patches are unavailable to player's that don't have internet and play the game, they can't have or use it. Therefore they return the game with the codes or things still there. Also due to my studies there are ways of bypassing this. Many companies have taken this idea and utilized as Electronic Arts has done/ will be doing with their new releases such as Battlefield 3 and Crysis 2.


I will never ever buy such a game, new or otherwise.

I am a person who buys multiple games a year and always buys them new (the last time I bought a second-hand game was on the Genesis in the 90's), so don't think that only people who buy second-hand games will stop buying your games - people like me will too. People who would have bought your game second-hand will probably not purchase any sequels. This tactic will only hurt you and I would strongly advise against it, because if you do, I will never buy one of your games.


Trying to hack a way around consumer rights can only hurt you.



#11 dpadam450   Members   -  Reputation: 945

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Posted 21 May 2011 - 11:26 AM

Game developers themselves can figure a way to make games owned by a single person. Sony was going to do it remember.

#12 frob   Moderators   -  Reputation: 22697

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Posted 21 May 2011 - 11:48 AM

Thanks for the replies, I see your points now, a friend (a member of our team) wanted me to do this since he did all of the research by the way I wasn't trying to develop a trend more like propose a problem and find a solution for it.


I'm concerned about both you and your co-worker. The original post looks like either a blatant troll or an uninformed misinformation piece. As was already pointed out, there were many articles and counter-articles in a public debate on the matter about 3-5 years ago. If the COWORKER is the person with the problem, why are YOU clearly stating your own name and your employer in the first line of your grand declaration?

The broad accusation "my name is Jordan Walker from Silver Ray Studios and I am here today to inform you...[that a multi-billion dollar global company is stealing from you" will do nothing but harm both you and your employer. Such a statement could easily result in a lawsuit for defamation against both you personally and against your business. Most company policies make it clear that unless you are a corporate officer or HR person, you need to make it clear that your statements have nothing to do with your company and are your own views, not theirs. Generally employment contracts are clear that violations can be grounds for termination.


The business model GameStop and others have used is perfectly legal and has been in use for hundreds of years. Reselling your property is an age-old, established, and generally protected right of consumers. Some companies don't like it, but they delude themselves when they work to stop it. Attempts to shut down secondhand stores and property consignment simply will not work on a grand scale.

The game resale monetization debate has already been addressed many times over the years. Some groups and companies feel like this is strongly protected by first-sale and traditional property rights, other groups and companies want to heavily restrict it by contract (and EULAs) and changes to the legal code.

Services like Steam, Direct2Drive, and Impulse are attempts at solutions. Concepts like DLC and paid in-game ads, subscription-based gaming and SaaS are attempts at solutions. Mixed solutions like you mentioned (a one-time-code voucher for the original purchaser) and freemium games are attempts at solutions. This is by no means a comprehensive list, but you can see that people have been looking at this for many years.

You are not the first to pose the question, and there are many well-written articles and opinions on the matter. Many of those articles debate if this is a problem at all.

Go read about the issue and research it yourself before making accusations about specific companies and specific practices.

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#13 Amaz1ng   Members   -  Reputation: 131

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Posted 21 May 2011 - 01:26 PM

Nice business model. They make $20 per return->resell with the newest games because they resell the newest used games for around $50 and buy them back at like $30. Even once it gets old, they still reap profits off the same copy. Genius. :blink:

No wonder they always pay less than other places for used games.
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#14 jtagge75   Members   -  Reputation: 139

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Posted 21 May 2011 - 02:00 PM

I'm concerned about both you and your co-worker. The original post looks like either a blatant troll or an uninformed misinformation piece. As was already pointed out, there were many articles and counter-articles in a public debate on the matter about 3-5 years ago. If the COWORKER is the person with the problem, why are YOU clearly stating your own name and your employer in the first line of your grand declaration?

The broad accusation "my name is Jordan Walker from Silver Ray Studios and I am here today to inform you...[that a multi-billion dollar global company is stealing from you" will do nothing but harm both you and your employer. Such a statement could easily result in a lawsuit for defamation against both you personally and against your business. Most company policies make it clear that unless you are a corporate officer or HR person, you need to make it clear that your statements have nothing to do with your company and are your own views, not theirs. Generally employment contracts are clear that violations can be grounds for termination.


Their help wanted ad claims to be targeting consoles but the only thing they can offer is profit sharing its a good bet that Silver Ray Studios isn't any kind of registered company. So I don't think there is to much of a worry about getting fired over a comment. Considering the aspirations of a console release with no budget I think they can put their fears to rest about Gamestop 'stealing' their second hand game sales.

#15 SimonForsman   Crossbones+   -  Reputation: 6294

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Posted 21 May 2011 - 05:11 PM

The right of a consumer to sell items he bought is absolute, if i buy a copy/license of a game i own that copy/license and have the right to sell/transfer it to someone else if i see fit to do so, GameStop has the right to buy copies/licenses from individuals and resell them at a higher price, If the amount of money they make doing so is unreasonably high it should be possible for competing stores to offer more for trade-ins or charge less for used games. This is how the free market works,

While the free market itself is far from perfect one should think very carefully before allowing governments or corporations from interfering with how it works. (Some interference can be justified (Copyright and Patents for example are an acceptable way to make products with high R&D costs but low marginal production costs profitable, but those are regulated by law and the people has the power to get these changed if they see fit to do so).

Those attempting to restrict basic property rights for the paying customers (Through the use of restrictive DRM, or restrictive EULA/ToS) are the real thieves in the software world. (Copy protection is fine as long as it only prevents piracy), If the right to resell a license is restricted in any way it should be made clear to the customer before any payment goes through. (This is something most publishers are bad at, DRM infected or restrictivly licensed software should have clear warning labels informing the customer of all the restrictions that are in place (shrinkwrapped licenses in general are a very bad thing and at the very least a basic outline of the permissions and restrictions given should be on the box itself.
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#16 Tom Sloper   Moderators   -  Reputation: 10157

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Posted 21 May 2011 - 05:58 PM

(in a now-Deleted or Unapproved post):
By the way this was supposed to be meant for informational purposes only after my first edit. ... since this will serve for informational purposes only, NO MORE FEEDBACK. Just leave this thread as it is.

Were you asking to have the discussion closed? Because a lot of people seem to be enjoying participating in the discussion you started...
Or were you complaining that you're getting some other form of feedback, like PM's or thumbs up/down?
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#17 Butabee   Members   -  Reputation: 238

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Posted 21 May 2011 - 06:43 PM

I buy most games used, but I have never sold a game back to gamestop as they usually only give about 1/5 of the game's value and to me it's just not worth it.

Developers should focus more on high replayability so people actually want to keep the game instead of beating it in 5-10 hours and never wanting to touch it again.

Imagine there was some sort of law preventing gamers from selling their games. Much less people would buy these games with no replay value.


I think the best solution is just to make better games instead of trying to sucker customers with one time codes and all that BS.

#18 slayemin   Members   -  Reputation: 2901

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Posted 21 May 2011 - 07:44 PM

I think if you're going to protest against gamestop for reselling games because it decreases the number of new purchasing customers, then in principle, you should also be completely opposed to public libraries, movie rental businesses, and swap meets.

Public libraries purchase only a few copies of a book and then let users borrow the book for a period of time so that they can consume the content. The author of the book only makes money at the time when the library purchases the book. The number of people who read the book is somewhat irrelevant. Should public libraries be banned?

A similar situation applies to movie rentals. Should Netflix be shutdown because they purchase a movie once and then ship it out to be consumed by multiple individuals? Is that cheating the movie industry from lost revenue?

To get slightly more abstract, consider a swap meet. Suppose I bought an expensive name brand purse which I no longer need because I bought a version which was more in style. I go to a swap meet and trade in my designer purse for some other property. Is the purse designer being cheated out of a lost sale? Should swap meets, pawn shops, and second hand stores be illegal?

Personally, I don't think this is a very big issue (At least for PC games industry). Most PC games are turning towards digital distribution so the seller/reseller business model of game stop is endangered -- You don't need physical media to play new PC games. As a result, you see primarily console games at Gamestop. If/when console developers get digital distribution going, gamestop is probably going to go bankrupt. I'd be selling my stocks if I currently owned any in gamestop.

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#19 Luckless   Crossbones+   -  Reputation: 1883

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Posted 21 May 2011 - 07:57 PM

The right of a consumer to sell items he bought is absolute, if i buy a copy/license of a game i own that copy/license and have the right to sell/transfer it to someone else if i see fit to do so,


Are you 100% sure licenses are protected under that? I know I have dealt with a wide range of licenses that had a non-transfer clause, and it is rather logical as a license is a contract between two 'people', and it seems rather logical to allow both parties to agree that their contract is between themselves, and one side can't randomly hand their half off to someone else.
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#20 Alpha_ProgDes   Crossbones+   -  Reputation: 4692

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Posted 21 May 2011 - 08:29 PM

The market is really not the game. It's the micro-transactions within the game. So if someone buys your game second-hand, you can still make money off the online purchases, subscriptions, and whatever other digital extras that are for said game. I think that complaning about GameStop and other businesses like it is just bad business. Matter of fact, you're probably not aware of where the money is actually flowing from.
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