Xbox 720 Rumors and Pre-Owned Problems


GamingBy: Stephen Crane (Photo: clevercupcakes)

Rumors have been flying around for quite some time about Microsoft's newest console: The "Xbox 720". Let's just summarize all the rumors real fast.

As the excitement has grown for the potential new system, but few gamers are comfortable with that last point. If the rumors are true, it feels like the industry is addressing a potential problem by being consumer un-friendly and restrictive instead of adjusting business models to ensure mutually beneficial outcomes.

It's unfortunate, but well known that the games industry has been against the idea of used games for quite some time. Game developers and publishers have seen pre-owned sales put a dent into their own figures, and have been looking for a way to fight back.

Lately we've seen "online passes" included in the original purchases of games and available online. This allowed users to play single player on used games, but pay a small fee to be able to play online, unless a new copy us purchased. It's clunky and, quite truthfully, a little obnoxious for gamers who feel it a hostile tactic that gets in the way of a streamlined, enjoyable experience.

I will be the first to admit that yes, used games do hurt publishers and developers. The sale of used games results in pure profit for retailers while cutting out associated fees like printing, delivery, and development.

A new game in GameStop sells for around $60. The retailer gets around $15, the distributor gets around $4, the platform the game is made on gets $7 in royalties, and the publisher gets $27 with $7 left over to factor in potential costs of returning unsold inventory (source). The numbers may vary slightly, but in the end it will roughly come out similar.

When GameStop sells a used game for $45, they get $45 minus the trade-in value, which is notoriously low. Let's say a game like Super Mash Bros. Brawl has a trade in value of $10, and a used retail value of $45. A gamer may buy the used copy because it's still cheaper than a new retail copy, and GameStop then sees a $35 profit, more than doubling what they would earn selling new games.

The situation as it stands raises some interesting questions. Is it immoral for retailers to sell used games while keeping the developers out of the loop entirely? Is it immoral for developers to try to find a way to get some money from used game sales? In theory, the answer to both these questions is "no". An issue arises in how both sides handle this problem.

For consumers and retailers, and to an extent the industry, used game sales make a lot of sense. It allows gamers to get a little extra value out of a game when they're finished with it, get a game cheaper, or legally find one that is out of print. For publishers and developers, it increases the potential fan base who experiences their creations and may be more likely to purchase one of their products in the future for full price.

The way GameStop handles used games, however, reeks of questionable methods and little added value to the gamer. Let's look at a rather popular title I mentioned previously: Super Smash Bros Brawl. For a new copy of the game, a consumer can pay $50. This is a game that was released back in early 2008. One would think that after almost four years, the retail price would have dropped more than $10, but never mind that. At GameStop, they don't stock new copies of that title. Your only option is used. If you decide to buy from them, the game will cost $45.

That's $5 savings on a used, four year old game. With no significant savings to the customer, and by only keeping used copies in stock, GameStop is effectively forcing the consumer to stop supporting publishers. It takes away the freedom of saying "Yeah, I think $5 extra is worth supporting the people who made the game." It's a rather immoral method that creats problems for developers who often need to sell more than a million copies of a game to break even.

This system designed by GameStop in turn forces developers to enact measures like EA's Project Ten Dollar. While it's not necessarily bad in theory, the way it was enacted feels inherently anti-consumer. No one feels rewarded with this type of initiative. People who buy used copies feel like they're being shaken down while gamers who purchase a new disc have to deal with extra steps after-purchase before the game can be played.

According to the rumors, it sounds like Microsoft has heard the griping on both sides and decided to make it a non-issue by removing the pre-owned market entirely. The methods behind this measure haven't been extracted upon, but the idea of completely halting the used game market has drawn a fair amount of criticism from consumers.

The idea of cutting out the pre-owned market is obviously directly targeting GameStop's business model, but it does so by catching consumers in the crossfire. Developers need to take the time to figure out how to make a Project Ten Dollar that is more consumer friendly and feels less like a shakedown. Completely shutting down an entire market is the wrong way to approach this issue.

Of course, the loss of a pre-owned market won't kill games. There is little-to-no used market for PC game sales, and the PC is still a relatively healthy gaming platform. We have digital downloads and single-use codes, and any look at Steam's numbers will show you that the PC market is still viable.

The real complaint is just that Microsoft's rumored anti-used-game measures will take away something that has been a part of console gaming since the beginning: the ability to trade and share games with friends, or to get some extra value out of a game that would otherwise collect dust on a shelf. It's a practice that has enriched the console community, and I believe the community would suffer without it.

Of course, everything about the Xbox 720 is speculation and rumor. I might not be true, but these rumors do make pre-owned games a part of the discussion for the future of consoles.

Nothing is set in stone for the system, and that's exactly why we need to speak up now. The sooner we can let Microsoft know the potential market for the system cares about the used game market, the more likely Microsoft will be willing to research and implement consumer-friendly policies. It's a long shot, but it can never hurt to voice our opinions in a constructive way.

The consumer is not at fault either morally or legally. The consumer does not institute poor business practices, or even always willingly cut out the developer. We need to stop being punished or treated as accomplices in the poor practices of retailers.


About Stephen Crane

Stephen was hooked by the NES at a very young age and never looked back. He games on a daily basis and is currently trying to climb his way up the ranked ladder on League of Legends! Outside of the video game world he actually likes running and owns a rapidly growing collection of toed shoes. Stephen Crane is the owner of Armed Gamer.

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