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GameStopped

Gotta love this news headline: GameStop’s stock in free fall ‘as business burns to the ground‘.

Couldn’t happen to a better company, am I right?

Still, I am a touch concerned. As the article notes, GameStop revenue is down as more and more gamers rely on digital purchases and streaming services than physical games. It’s been more than five years since I bought an actual physical game, myself. But it is vitally important to me that physical gaming continues to exist because otherwise we consumers lose the ability to resell our games.

While there have been attempts to make inroads in digital resell, the lack of recent headlines leads me to believe things have stalled. The most recent article I could find was from last year, wherein a new storefront (sigh) was going to be launched that could allow digital resell based on blockchain technology. Except, you know, the consumer’s own cut was going to be only 25%.

Which kinda makes GameStop look downright charitable in comparison, yeah?

In any case, if GameStop goes away, I am not entirely certain what fills the gap. There are a few off-market used game stores in my area, but none of them have any particular web presence or meaningful sales. Perhaps we will see more eBay storefronts open up, but where are they sourcing the games? My fear is that once GameStop goes under, there won’t be a big enough lobbying voice to dissuade game makers from pushing an all-digital future and thereby removing one of the last bastions of gaming Consumer Surplus.

In Defense of Used Games

I have talked about used games before. I am going to talk about them again, as a rebuttal against this video from Total Biscuit regarding how he justifies his belief that used games are bad.

Before I start, there is one fundamental truth that needs to be acknowledged: a used game sale is a new game sale at a lower price-point. No one is seeking out used games because they are used, they are sought because they are less expensive. Incidentally, this same principal applies if someone is able to re-sell a game they bought, as the ability to recoup part of the cost means the original purchase becomes less expensive.

Without further ado, let me examine each of TB’s arguments against used games:

1) Used Game Sales support shady/pushy retailers

Or, the GAME (in UK) and GameStop Are Bad argument.

It is absolutely true that retailers who specialize in used game sales push used games sales over new ones; the original sale is a recouping of an investment for the store, whereas each additional resell is nearly pure profit. I am not interested in defending the practices of GameStop (etc) though, primarily because it is irrelevant and red herring besides. No matter how much you swing the “games as licenses” argument, the fact remains that used game sales are legal in the United States and presumably elsewhere – GAME and GameStop would have been sued into the ground otherwise. The shadiness of any organization does not reflect on the product they provide. You can picket Wal-mart for all sorts of legitimate reasons, but that does not make cheap groceries immoral.

I have gone into a GameStop all of twice in my life, whereas I frequented a mom-and-pop used game shop next to the local theater for the better part of a decade. I went there because their used games were cheaper, and you received more store credit (or cash) than GameStop provided, all in a no-pressure sale environment. Ergo, any argument that uses the removal of used games as a vehicle to attack a retailer you don’t like is simply ridiculous. GameStop’s practices have nothing to do with the “question” of used games, as there are alternative stores which do not behave in similar fashion.

2) Used games do not depreciate

This honestly reminds me of the “you wouldn’t download a car” PSA. Even if we take this claim on face value… so what? Is the argument supposed to be that used game sales would have been fine if the AI started glitching out on its own five years from now?

To be charitable, I am going to assume instead that people are referring to how physical depreciation of goods naturally differentiates two otherwise identical products, potentially justifying the premium on the unused version. In which case, I’d argue that something similar already occurs even in purely digital products.

Videogames are not released in a vacuum – they are always a product of their times. While the actual data bits do not decay, the value and meaning of them in the mind of a player certainly can. There are whole classes of videogames that I literally cannot bring myself to play anymore, because the graphics are too primitive, or the resolution too low, and so on. Innovation in mechanics or design can render older titles feeling stilted or slow, even though nothing in the original game itself has changed. Some games hold up better than others, of course, and many older games are arguably better than new titles. But on a certain base level, videogames do depreciate, if not literally then culturally.

If you do not find this counter-argument particularly compelling, that’s fine, but allow me to make two final observations. First, no one expects a game to remain $59.99 two, three, four years after release. If games do not depreciate in value, why do you think we see the companies themselves reduce the price? Second, how much do you think your unopened City of Heroes or Battlefield 2 box will go for these days?

3) Music and Film industries are less harmed by secondary sales

TB’s point here is a roundabout justification for how videogames are a special case when it comes to secondary sales, despite music and movies also being digital goods without depreciation. Buying used movies is less harmful to studios, he argues, because a particular film can make the bulk of its money in the theater, followed by Pay-Per-View, DVD sales, rentals, and finally syndication on TV networks. Similarly, music artists get the bulk of their profits from concert tickets, in addition to (small) payments from streaming services and finally the default CD sales. In other words, music and movies have multiple revenue streams whereas videogames have just the one.

To which I must ask: whose fault is that?

As a consumer, you are not responsible for a company’s business model. It is perfectly fine to want the developers to be paid for their work, or to wish the company continued success. But presuming some sort of moral imperative on the part of the consumer is not only impossible, it’s also intellectually dishonest. You and I have no control over how a game company is run, how much they pay their staff, what business terms they ink, or how they run their company. Nobody asked EA to spend $300+ million on SWTOR. Nobody told Curt Schilling to run 38 Studios into the ground. Literally nobody wanted THQ to make the tablet that bankrupted the studio.

What is worse though is the implicit moral superiority that is derived for buying “legit.” If game companies and their designers deserve to be paid, and we have some moral obligation to do so, doesn’t that mean they deserve ALL the money? I cannot even begin to imagine the mental gymnastics Total Biscuit had to perform when he denigrated used games and celebrated Steam sales in the same breath. When you buy a game for 75% off, that is you robbing the game company of 75% of the money they deserve. Not even deserve, really, considering by many metrics they are entitled to much, much more than the purchase price given the total amount of enjoyment derived.

That sounds absurd, and it is, but that is my point; you cannot make the moral imperative argument and only go halfway. A company either deserves $59.99 or they don’t. Alternatively, you are not responsible for their business models at all, and are fully justified in maximizing your consumer surplus, e.g. by waiting for sales, buying used, etc. It is noble to wish these designers success, at least when such nobility is followed-up with busting out your checkbook. Otherwise, it is so many empty words.

4) Once used games are removed, games will be cheaper

No, seriously, Total Biscuit actually said this, presumably with a straight face.

Why in god’s name would anyone rationally assume that the removal of competition (in the form of secondary sales) would force or even encourage game prices to decrease? Everyone keeps pointing to Steam with its effects on PC gaming, as if Steam weren’t the exception that proved the rule. Everyone acknowledges that used games on the PC haven’t existed for quite some time, but no one seems to follow-up that thought with what should have been an obvious question to ask: were there big discounts on PC games back before Steam?

Good lord, no! You were at the complete mercy of retailers who almost never marked anything down from MSRP. And why would they? You literally could not buy these games anywhere else. If you found a good deal, it was likely because nobody was buying that game and the store wanted to liquidate their stock. Outside of fire sales, there was/is always going to be resistance from retailers over discounting a game’s price because there is a minimum cost involved with pressing a DVD, shipping it across the country, unloading it in the back, and paying people to sort and shelve it.

Incidentally, this is another reason why I don’t think future console games will be cheaper: there will still be hard copies sold. Do you think retailers would let Microsoft sell Halo 6 for $40 online and $59.99 in stores? Of course, there is a pseudo-analog that exists right now between PC vs digital download games, with things wildly alternating for no apparent reason. For example, it’s somehow $20 cheaper Amazon to ship me DVD of Bioshock Infinite than it is to download a copy of it. Or maybe that does make sense, insofar as what I explained earlier about retailers trying to liquidate stock.

If you legitimately believe Xbox One games are going to be cheaper, let me ask you two things. First, what kind of deals have you seen on XBLA titles? Similar in size, scope, and frequency to Steam sales? Microsoft has already dabbled in digital games for which no secondary sales exist, so their pricing behavior now may reflect any potential behavior in the future. Second, what kind of deals have you seen on Origin in the last, I dunno, two years? There have been a few recently, but very rarely more than 50%, and they are not nearly on a scale as Steam. That is a publisher who has as near a 100% profit margin on every digital sale as possible, and even they are not willing to compete on price with retailers who sell game codes on EA’s own platform!

The point here is that Steam is the exception that proves the rule. I bought Tomb Raider on the PC for $20 a mere three months – three months – after its $49.99 release. Granted, it was via Green Man Gaming, but it activated on Steam. Do you honestly believe that the only difference between our present console MSRP reality and a hypothetical all-digital future is the mere possibility of resell? That companies would be fine with a $30 markdown for a limited time a few months after release? Maybe. Maybe we don’t see similar sales because GameStop (etc) would buy a few pallets of discs at $20/each to sell at $40 after the sale is over. Then again, I could have done that exact same thing via GMG and just sold the activation codes. Actually… that’s not a bad idea…

Simply put, this argument requires a striking amount of faith in game publishers to work. Consumers are being asked to cede an enormous amount of implicit value, not just in resell value, but also in control over how they play these games (tied to accounts, phone home every 24 hours, no borrowing, etc). We are asked to cede these values all in the hopes that companies like Microsoft will not simply keep charging $59.99 out of… well, out of the goodness of their hearts. That is not enough for me. There is certainly every economic incentive to keep things running business-as-usual, after all.

5) Used games cost the companies money in terms of support/servers.

It is true that game companies “must” provide support to even non-paying (i.e. used game) customers in a way that movie and music companies do not. However, there are two things wrong with the argument TB is presenting. First, it sort of assumes that the game was not worth playing for very long in the first place. Total Biscuit’s example was how a company would need to provide support to a gamer for two months, and then a new player who bought the copy from the first guy for another two months, and a third person, and so on. The difference between that scenario and one guy who plays continuously for 6+ months is… what?

Total Biscuit’s second point about non-payers in multiplayer (presumably driving up bandwidth costs or whatever) caused me to facepalm IRL. Maybe he has never heard about why the Free-2-Play model works, or more importantly how it works? Someone playing the latest Call of Duty secondhand is providing content to “legitimate” players in a way that a no-longer-playing gamer by definition is not. I mean, that’s the premise of the argument, right? That the first dude sold his game, and is now an empty seat in a lobby somewhere. You do not even need to have the full F2P development plan set up to appreciate the fact that an extra body is making your multiplayer experience that much more worthwhile when it otherwise could/would have been nobody.

Summation

As I pointed out in the beginning, let me point out again: used game sales are new game sales at a lower price point. Nothing is stopping companies from lowering the prices for their games and otherwise being more competitive with used games. You might think that used game prices would simply adjust to compensate, and maybe they would, but that is an argument against selling at anything less than full MSRP, ever. Which is clearly ridiculous.

In any case, time marches on. Even though I see this forceful transition into all-digital games as a net-negative for gamers (and it is), I am obviously not against digital platforms themselves. I am just a bit miffed that the transition is being accelerated by Microsoft (etc) before the question on the transferability of licenses is fully settled, at least in US law. Believe me, the day will come when we shall be able to buy a Steam game (license) and then sell it to someone else after we are done.

At which point I’m sure the suits will pine for the days when it was at least possible for someone to lose their disc.

Edit: Removed incorrect “et tal” usage. Thanks, Tobold.