How The Used Video Game Market Helps New Sales Too.
The video game market is a $50 billion industry globally so while the players in this business profit from people playing games, this is not child’s play. One of the hottest topics in this multi-billion dollar business is the loss of revenue from secondary video game sales by the publishers and developers of these games and the overall effect of used game sales on the industry. From the developers’ and publishers’ perspective, with six active game platforms including PC vying for market share, there is limited shelf space to dedicate to each new game release. They say that they face many financial challenges even without this problem so you can imagine their sensitivity to being denied access to revenue from the resale of their games.
The cost of creating new games is increasing everyday and unlike their counterparts in other creative markets such as the film and music industry, where a network of additional revenue streams flow from the original, the same isn’t true for developers and producers of new video games. When retailers devote significant and valuable shelf space to used games over new ones, and they offer incentives to buy used games, the developers and publishers claim their bottom line suffers tremendously.
Claims that used video game sales defraud the industry, hurt consumers, and cheat developers are just some of the many attacks launched at the used video game market. They also claim that while revenues from new game sales are still significantly higher than those from used games, the profit margin on used games is much greater and therefore creates a tremendous advantage and incentive for retailers to sell used over new games.
On the other side of the debate are a legion of retailers and consumers who say, among other things, that the secondary market for used video games, or almost any other consumer item, helps to increase sales of new video games. Their claim is that by supporting a healthy and thriving used market for video games the value of new sales is that much greater because consumers have an outlet to sell their new games and therefore make it more likely that they will buy the game in the first place because they know, in theory, that they can sell the game at some point in the future. They use the example of how used book sales on Amazon actually help drive sales of new books.
A comprehensive study conducted on the used book market by two researchers at Carnegie-Mellon University concluded that when used books are substituted for new ones, the seller faces competition from the secondhand market, reducing the price it can set for new books. But they went on, there is another effect stemming from the fact that an active market for used books makes consumers more willing to buy new books in the first place because they can easily dispose of them later and recoup some of their money in the process. Similar claims are often made by car companies, citing the resale value of their cars when making a sales pitch to a prospective buyer.
Proponents of the used video game market say the same applies to their industry. If a consumer knows that he or she can resell a game that costs say $60 at some point in the future, they are more likely to buy the game in the first place and therefore, sales of the new game actually increase because of the existence of the used game market. They also claim that a strong resale market has additional benefits to the publishers and developers such as hooking people on series of video games and getting them interested to buy new versions as they hit the market.
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