Monday, February 28, 2011

Video Games. Trading in games better than piracy for industry

A sign offering customers credit for used games can be seen in a GameStop store in New York City. (Shannon Stapleton/Reuters)   
Video Games. Trading in games better than piracy for industry
Developers should stop punishing players for buying used games
It's becoming pretty obvious that video game makers don't really like the retailers that sell their products. Why else would they continually be thinking of new ways to keep players from trading in their used games, which make up a good portion of sales at such stores?

It's the wrong attitude to take, though, because the used-game market is actually helping to insulate producers from the larger piracy problem that is plaguing their counterparts in the music and movie industries.

The way the resale market works is simple. A brand new top-shelf game usually retails for between $60 and $70 while the used version goes for at least $10 to $15 less. If the consumer trades in a new game within several weeks of its release, or later if the game is particularly in demand, the retailer will generally give a trade-in credit of $30 to $40.

Estimates suggest that, in the United States alone, about a third of all games are sold this way, costing developers about $2 billion US a year in lost sales.

But under the trade-in scheme, the retailer gets to sell the same game more than once, and the consumer gets a bit of a return on what is ultimately not a cheap entertainment expenditure. In turn, they inevitably spend that credit on more games. In effect, everybody wins.

So far, many of the efforts by game developers, such as Electronic Arts, Activision and Ubisoft, to fight trading-in have been benign, even consumer friendly, coming in the form of extra bonuses.

Some companies have included single-use tokens in the packaging that can be redeemed for extra downloadable content for the game, such as a new gun or character. Many other games feature addictive online multiplayer modes, with new downloadable maps being made available periodically.

These tactics either convince the player to buy new or to hold on to the game longer. Ultimately, they've had little impact on the used market because consumers view them simply as bonuses that they can easily live without.

Companies stepping up tactics

The heat is being turned up, though, and the climate might be turning nasty. EA, for one, has enacted a plan called Project Ten Dollar where a serial code must be input in order to activate a game's multiplayer mode. EA's recently released sci-fi horror shooter Dead Space 2 is one game that includes this code.

 The code is single-use, meaning that if a gamer buys a used copy, he or she must then purchase a new $10 code from EA in order to play the online portion.

Many gamers resent the move and say it's "double dipping," because they already pay monthly fees to some console makers to play online. Retailers don't like it much either, because it inevitably drives the resale price of a used game down by $10, which means less trade-in value for the consumer.

The game makers feel they are justified in enacting such measures — primarily because their products are expensive to produce. So-called triple-A titles can have production budgets comparable to those of Hollywood blockbusters, yet games don't have the same income streams. They only have retail whereas films have box office, DVD, television and other ancillary revenues.

Some producers also privately resent the fact that retail chains that tend to devote the majority of store space to used games, such as EB Games, are profiting off their marketing expenditures.

Gamers often don't see it that way. While a $70 game that might take 15 hours to complete certainly provides more initial bang-for-your-buck than a $30 two-hour movie or $15 one-hour CD, the value starts to come down after a while. While movies and music tend to be enjoyed again and again, few people play their games over and over — unless they have a good online mode.

While the game makers may think that putting further restrictions on products is a good way to stem the loss of revenue, it's ultimately a good way to alienate customers and drive them to getting their games through even cheaper means.

Games aren't exactly easy to pirate, at least not for consoles. They can be easily found on file-sharing directories, but the downloader needs a specially modified console to play them.

Like their fellow entertainment businesses, the game industry complains about piracy — especially on PCs, where it is easier to do. The difference is, game makers have yet to really rile up their customers against piracy the way that the music and movie businesses have.

Taking away customers' ability to reclaim some of their expenditure is a good way to motivate them to go through the trouble of modifying their console. While game makers will likely never support the used market, they should at least stick to trying to incentivize people to keep their games rather than punishing them for trading in.

Dead Space 2 from Electronic Arts has a serial code that players must input in order to activate the game's multiplayer mode - one of the measures companies use to dissuade customers from buying used games. (Electronic Arts/Associated Press)