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Jordan Walker

How Gamestop Reduces Developers' Sales

31 posts in this topic

[size="4"]Introduction[/size]
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[/size]
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[/size]
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?[/size]
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[/size]
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 [/size][size="2"](in response to some of the replies)[/size]
[size="2"]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. [/size]

[size="2"]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.[/size]
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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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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: [url="http://www.gamasutra.com/view/feature/3872/as_recession_deepens_used_games_.php"]As Recession Deepens, Used Games Get More Painful[/url].

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

"[b]Over 80% of the trade credits go back toward new purchases[/b]," added Bartel.[/quote]
[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. [b]The main reason that gamers hold onto a title is replayability (69%)[/b] 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 [b]even great games will enter the resale market if there is limited re-playability[/b]," says Williams.[/quote]

[quote]Braben insists that the industry needs to find new ways of incentivising the sale of new versions. "For instance, [b]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[/b]," he says.

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

"As an example, [b]Gears of War 2 offers downloadable multiplayer maps that you wouldn't get if you owned a pre-owned version[/b]," he says. "And [b]many new games come with scratch-off codes for a weekend's free Xbox Live Gold[/b]."[/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: [url="http://www.gamasutra.com/view/feature/3790/gamestop_in_2008_the_.php?page=6"]GameStop in 2008: The Mega Interview[/url], 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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[quote name='The X Factor' timestamp='1305971320' post='4813799']
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. [/quote]

I will [b]never[/b] 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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[font=arial, verdana, tahoma, sans-serif][size=2][quote name='The X Factor' timestamp='1305978875' post='4813824']
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.
[/quote]

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 "[color="#1C2837"][size="2"][size=2][i]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[/i]" [/size][/size][/color]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.[/size][/font]
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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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[quote name='frob' timestamp='1306000124' post='4813913']
[font="arial, verdana, tahoma, sans-serif"][size="2"]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 "[color="#1C2837"][size="2"][size="2"][i]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[/i]" [/size][/size][/color]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. [/size][/font]
[/quote]

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.
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This thread is only serving as an informational post. So why I am I still getting feedback?
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By the way this was supposed to be meant for informational purposes only after my first edit. Also I wasn't posting this because Gamestop was trying to steal from me or was going to do so. It was because it is messed up to take someone else's game and then resell but never buy new copies so they don't get any more profits. So Gamestop is still making money off of their product while the developer only gets so many sold products. Also since this will serve for informational purposes only, NO MORE FEEDBACK. Just leave this thread as it is.
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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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[quote name='The X Factor' timestamp='1306015917' post='4813986']
(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.
[/quote]
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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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.
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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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[quote name='SimonForsman' timestamp='1306019463' post='4814013']
The right of a consumer to sell items he bought is absolute, if i buy a copy/[b]license[/b] 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,
[/quote]

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 [i]license[/i] 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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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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[quote name='Luckless' timestamp='1306029456' post='4814065']
[quote name='SimonForsman' timestamp='1306019463' post='4814013']
The right of a consumer to sell items he bought is absolute, if i buy a copy/[b]license[/b] 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,
[/quote]

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 [i]license[/i] 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.
[/quote]

Don't confuse whats right with whats legal, If its made clear that the license is non transferable prior to the sale then thats fine, this is fairly rare though, usually its information that is hidden away in a shrinkwrapped EULA that you can't even see until after they have your money or in some cases its not even in the EULA itself but in the terms of service (for things like steam) and while the practice may be legal its definitly not moral. wether or not shrinkwrapped EULAs qualify as legally binding contracts is debatable, if a consumer is lead to believe that he is buying a copy(like he does when he buys a book or a movie) then even trying to get the user to accept to a onesided EULA that provides no benefits over owning a copy is just plain wrong. (Yes i know that "everyone" does it and that it is considered legal, but it is effectivly a bait and switch scam , except the product is switched after the customer has payed for it and gone home allready which makes it far worse) (Some companies such as Microsoft are quite clear with the primary restrictions on their various offerings prior to purchase, but they're pretty much alone)
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[quote name='Luckless' timestamp='1306029456' post='4814065']
[quote name='SimonForsman' timestamp='1306019463' post='4814013']
The right of a consumer to sell items he bought is absolute, if i buy a copy/[b]license[/b] 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,
[/quote]

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 [i]license[/i] 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.
[/quote]

I'm surprised this guy is getting slammed. Quite frankly I agree with him in that it does cost developers money. Games should have non-transfer clauses just like other software.. and it's ironic that the same people attacking the OP would jump to the defense of any software company if some dude was trying to lets say.. resell their copy of Photoshop or 3ds Max. Most of the arguments I read make equally solid arguments for software pirates.. (I wasn't going to pay full price anyway) Comparing the practice to DVD rentals is apples to oranges - DVD rental companies either a) pay a larger upfront flat fee for dvds or b) participate in a revenue sharing agreement with studios to rent out their titles

It shouldn't have taken this long to talk about media vs licenses, and license transferability in a business and law forum. For this practice to be allowed there has to be nothing in the game licensing itself that precludes transfer of that license. Calling it stealing is only true if they are indeed violating a no-transfer agreement.
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[quote name='Michael Tanczos' timestamp='1306033244' post='4814087']
[quote name='Luckless' timestamp='1306029456' post='4814065']
[quote name='SimonForsman' timestamp='1306019463' post='4814013']
The right of a consumer to sell items he bought is absolute, if i buy a copy/[b]license[/b] 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,
[/quote]

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 [i]license[/i] 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.
[/quote]

I'm surprised this guy is getting slammed. Quite frankly I agree with him in that it does cost developers money. Games should have non-transfer clauses just like other software.. and it's ironic that the same people attacking the OP would jump to the defense of any software company if some dude was trying to lets say.. resell their copy of Photoshop or 3ds Max. Most of the arguments I read make equally solid arguments for software pirates.. (I wasn't going to pay full price anyway) Comparing the practice to DVD rentals is apples to oranges - DVD rental companies either a) pay a larger upfront flat fee for dvds or b) participate in a revenue sharing agreement with studios to rent out their titles

It shouldn't have taken this long to talk about media vs licenses, and license transferability in a business and law forum. For this practice to be allowed there has to be nothing in the game licensing itself that precludes transfer of that license. Calling it stealing is only true if they are indeed violating a no-transfer agreement.
[/quote]

I don't see how you can compare reselling with piracy, we can sell our CDs and DVDs, without the artists/studios getting a dime, we can sell our books without the authors getting anything, why should our games be any different ? non transfer clauses only makes sense if you sell a discounted license (Student license, OEM license, etc), for anything else its just pure greed. (photoshop licenses are transferable btw just like licenses for all other adobe software (They only restrict it for OEM and Educational licenses, as it should be))
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