Gaming Industry Battles Over Used Rights

There are few industries where a used version of an item is almost as expensive as a new item – and it is much more valuable to retailers. In the video game industry, however, the used market is booming. New copies of games usually cost $50 – $60, but if you sell your game back to a store like GameStop as soon as you are done, you can usually get $20 – $35 back in store credit.

And for the retailer, that used game is total profit when they sell it again for $45 – $50. They don’t have to give a cut to the manufacturer, and often, the second buyer will return it yet again, so they can sell a game three or four (or more time). That’s a lot of profit for GameStop, one of the few companies that buys back used games. Many gamers have complained that the store doesn’t give as much money towards used games as they should, the prospect of money for a game you’ll never play again is hard to pass up.

Recently, though, Amazon announced that they’d be starting a used game buyback program, and Toys R Us is testing used programs at some of their New York locations, according to reports. GameStop’s share price dropped by 14% when the Amazon announcement was made, showing just how big the used market is for this retailer.

And what to game developers and distributors think about the growing used market? Many companies have been somewhat silent as they’ve watched it unfold, at least recently, but suffice to say they aren’t happy. When a gamer sells back a game and the retailer resells it, they don’t make any money on that second sale. In addition, the gamer who buys the used copy is someone who would have potentially bought a new copy, had the used option not been available. Says analyst Doug Creutz:

“GameStop continues to aggressively push their used game business, which is having a meaningful negative impact on sales of new games.

Management is frustrated with this trend and is examining ways to ameliorate the problem, which includes strategies around online play and downloadable content which extend the lifespan of AAA titles.”

One of the leading gaming companies, Electronic Arts, has also spoken out against the used game market in the past. Companies are using downloadable content (DLC) to entice gamers to keep their disks. For example, one of the biggest games of 2008 was Grand Theft Auto 4, and makers recently offered a entirely new piece of the game as a download for $20, which is a great deal – but you have to have the original disk to play it. Other companies are offering new maps and other DLC to encourage gamers to hold onto disks instead of selling them back.

Some in the industry have also suggested that retailers should have to have a license to sell used games. That would be hard to enforce and would bring up questions of the legality of selling used games individually on sites like eBay and Craig’s List – or even at yardsales.

Even the video game industry is feeling the effects of a poor economy, but this is one industry that will undoubtedly continue to grow over the coming years. It will be interesting to see how the industry deals with the growing used market.

Images via RebeccaPollard and Moe.