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Jordan Walker

How Gamestop Reduces Developers' Sales

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[size="4"]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.

[size="4"]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.

[size="4"]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.


[size="4"]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.


[size="4"]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.


[size="4"]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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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.

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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.

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In my personal opinion the trade of used games is valuable to developers for the following reasons:
  1. 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.
  2. 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.
  3. 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.
  4. 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:
  1. 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.
  2. 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.
  3. 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?
  4. Make your games more replayable; players will not sell their copies if they are still playing and enjoying them.
  5. 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.

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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.

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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.[/quote]
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.[/quote]

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."[/quote]
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.

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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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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.

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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.

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