Used Games Not Surging, But Outcry Is

GameStop financials suggest second-hand market's slice of the industry barely larger than a decade ago, despite hullabaloo from publishers and developers.

While game sales have been down across the board this year, industry hand-wringing over the used market is at an all-time high thanks in part to rumors that Microsoft and Sony could block used games from playing in their next consoles.

Used games are one of the hottest topics of 2012.

In February, Volition design director Jameson Durall said the industry could "fall apart" due to used game sales, adding that in his mind, a next-gen console that blocks used software would be "fantastic." That was followed up by word from Silicon Knights founder Denis Dyack, who said in March that secondhand sales are cannibalizing the business, and that "there's not going to be an industry" if used sales continue. And in April, Crytek director of creative development Rasmus Hoejengaard said from a business perspective, a next-gen console that curbs used games would be "awesome."

Publishers and developers alike clearly have used games on their minds now more than ever, but is there a good reason for it? We looked at GameStop's financial reports from the last decade to get an answer to that question. Below is an annual breakdown of the firm's revenue from used games.

Fiscal 2002: $296.4 million
Fiscal 2003: $403.3 million
Fiscal 2004: $511.8 million
Fiscal 2005: $808.0 million
Fiscal 2006: $1.31 billion
Fiscal 2007: $1.59 billion
Fiscal 2008: $2.03 billion
Fiscal 2009: $2.4 billion
Fiscal 2010: $2.47 billion
Fiscal 2011: $2.62 billion

As the chart shows, GameStop has raked in more and more cash every year from used games in the past decade without a single exception. For GameStop's latest fiscal year, the company took in $2.62 billion from used games, nearly nine times the $296.4 million it tallied during fiscal 2002. This increase is attributable to a number of factors, including GameStop's takeover of EB Games in 2005, the overall growth of the gaming industry over that same time frame, the firm's expansion into overseas and digital markets, and other factors.

But while GameStop is making more and more money every year from the sale of second-hand games and peripherals, it hasn't grown much at all relative to the rest of the company. Take a look at these charts to see just how little:

In the past decade, GameStop's used business is only 5.5 percent more of the company's revenues, and the year-to-year change has never been more than 3.6 percent. It hasn't been constantly growing, either. It peaked at 27.8 percent in the company's fiscal 2004, just at the tail end of the last console cycle. Once the Xbox 360 launched, it gradually declined to 22.4 percent in fiscal 2007. Since then, it has trended upward, with GameStop drawing 27.4 percent of its fiscal 2011 from used games. That's just about even with the percentage second-hand products accounted for late in the last console cycle.

Granted, GameStop does not encompass the entire worldwide second-hand market. And though it is just one player in the used sector, the company controls 90 percent of the market and are "the only ones that matter," Wedbush analyst Michael Pachter told GameSpot.

"Now that publishers can control it to an extent, they're building it up as a bigger problem than ever."

So why the increased discussion when the data suggests that used games make up about the same piece of the pie as they did a decade ago? The biggest change is that publishers now feel they have ways to thwart the market. Chief among these changes are downloadable content programs that keep gamers holding on to their discs while publishers drip-feed new content out over the space of many months, and online pass initiatives that force second-hand players to pay $10 to play games online. And this--coupled with audience fears that next-gen consoles will block or in some way curb used games--has led to the increased discussion.

When used games were a fact of life, companies like EA, Sony, Microsoft, and others accepted that and moved on. Now, in 2012, when the sale of used games is something that can conceivably be controlled for a profit, these companies are building it up as a bigger problem than ever. EA, in particular, is capitalizing on the Used Game Problem all the way to the bank; the firm tallied a record $1.2 billion in digital receipts for fiscal 2011. This was bolstered in part by, you guessed it, the firm's chief used game demotivators: subscription fees and DLC.

Written By

Eddie Makuch is a news editor at GameSpot, and would like to see the Whalers return to Hartford.

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Discussion

543 comments
dogpigfish
dogpigfish

GameStop sales figures and the industry are apples and oranges. They only sell hard copies and more than half the games Most people buy are downloadable.

division_9
division_9

Imagine how much the car industry could whine about used car sales. Now multiply that by ten and add in the music industry's problems and that's Jameson Durall's rant. Nah I'm kidding but seriously just don't make games if you don't like the profit margins. The industry doesn't need help to survive. It'll always be here.

UzzielGoldier
UzzielGoldier

Technically Developers could easily prevent used game sales entirely.

 

EA for instance has their own accounts. You link your EA games to that account and it links your PSN account or 360 gamertag directly. All they have to do is include a single use code with each game that will allow the game to run on your console. A similar setup is in place in many games for PC. It would not be that expensive or even difficult to print a code on the manuals or on a separate card that just gets slipped into the console game boxes, they do it all the time for PC. You already have to "login" to your EA account for Mass Effect 3, it wouldn't be difficult to add a "Permission check/request key" code to that login.

 

Why don't devs do this? Because they know that the first company to do so will be boycotted by the vast majority of gamers and they won't survive the year. This is why they are pushing the Console developers to make this jump. Are the console devs willing to risk their company getting boycotted for making such a move? Not likely. So the odds of this happening in the next generation of consoles is already not looking very good.

 

Another thing to consider, Lawsuits. If Sony or Microsoft were to make their next consoles not play used games it would impact the income of Gamestop or any other used gaming store. It is illegal to intentionally interfere with the business of another company. Now if the majority of developers are concerned with Gamestop selling used games they should go to the courts about it. If however Sony or Microsoft make it impossible for used games to be played Gamestop could theoretically take them to court on the grounds of unlawful trade interference.

 

Even ignoring the possibility of multi-billion dollar lawsuits (based on the used game sales listed above), I doubt that either Sony or Microsoft want to be the first ones to alienate a large portion of the gaming community by starting the "Used Game War".

wowwow27
wowwow27

I'm sure gamestop will go the way of blockbuster in the future.  tangible media is a thing of the past only to be recognized in a decade or so.

kerrelljoh
kerrelljoh

I think Sony and Microsoft would be shooting themselves in the foot to nerf used games on they're consoles. GameStop does make a ton of money when it comes to used games. I buy used, always will. I like the idea of buying a few games, playing and enjoying them for a while, then trading them in for something else. I love it. I haven't bought a new game in a while. I think Dark Souls was the last one I bought... before that I believe it was UFC Undisputed 2010. It's just makes more sense  to me to buy used, I don't make a ton of cash, or have a rich mommy and daddy. If they did go through with it, I see a bunch of people switching to PC gaming, or moving to the Wii U.

 

But back on topic: Yes, GS does make tons of cash on the used game market, but they also make the devs. of certain games a lot of cash too by way of pre-orders. Take MW3 for example. Sold tons for each platform, but a nice percent of those sales where in pre-orders from GS. It's wrong for the devs. to make a killing off of GS in pre-orders, then turn around and cry when they sell that game used. But I guess that's the way it is today. If a company is making you money, then great. But when they re-sell your product (A product that they pretty much paid for in the first place), you get all twisted and want to nerf the company. Bankrupt trade and play companies like GS, and you may as well commit career suicide.

 

And for the people here who are with the idea of nerfing used games and who are down with "Evil Corporations"... I bet you all shop at GameStop like the rest of us.

WillyChong
WillyChong

Last time on gamespot or game magazine, we heard that: what is the next great games coming up, more preview trailer on that game, a new game that will change the world, a game that is fun and everyone can play, interview with the guys who developed this game and how much work has done, the good old days,

 

Now is like, we are hearing more on: this CEO shithead saying DRM is good, the former chief dumbass saying use game suck and we must monopolized it to earn big time, that  company director saying because we are not earning enough like COD, this developer is officially out of the picture, why these days we, gamers are hearing non game developing bullshit talking politics on game, a system suppose to entertained, we don't want to hear their stupid vision or opinion, cause when they talk that in a tech show reel, they are nothing more than laughing stock, instead they took that on us, games, on a game website supposed to show good, bad and new games, and the actual developer who build it, instead we are looking at a paid site that promote politician talk on their vision, s if we have enough Bill Gate and Steve Jobs already(still respect them both)

 

Gamestop, personally I've never seen it in Malaysia, that's that, and I never buy used games, cause games that worth buying original or not worth playing at all. But please, don't waste pages showing such statistic, the next time will be gamespot publishing who will be the next president or EA or Activision, instead of showing us what new games is up. Money, the force of slavery XD 

skeletor1984
skeletor1984

Also, 10 years ago there wasn't a gamestop on every goddamned corner, either. That's a big contributor to the size of growth. They have really destroyed the boutiques shops and import stores scene til there's nothing left. I remember Funcoland, Babbages, E.B., etc, all swallowed whole by these profit mongers.

skeletor1984
skeletor1984

Man, I hope they do. I don't for a second believe those gamestop numbers are correct. They absolutely RAPE you on used games. Then, they turn around and put a couple-month-old game back on the shelf for 54.99, when they try to give you 14.00 in store credit. I hope Sony and Microsoft burn it to the ground.

talamalopilis
talamalopilis

i just thought about this.. the wii U is considered a next gen console therefore it will be competing with next gen.. we can take some of the concept of the wii U to see what to expect. the wii U has no used game restrictions therefore it is most likely that the other next gen consoles wont either or else they will lose business to the competitor being wii U.

the next gen could block used games if the ps4 xbox 720 and wii U all agreed to it. but as we can see the wii U did not, so it is extremely unlikely that ps4 xbox 720 will.

juboner
juboner

Being older now I have come to buy only used games there are so many great games out there i do not need to buy something when it first comes out i will play older good games first and wait until the new game comes down in price used

robfield
robfield

It is certainly surprising that Gamestop's used game sales do not make up more of the company's revenue. I certainly guessed that used game sales had grown relative to total revenue

NEEBUCKLER
NEEBUCKLER

Who wouldn't be surprised w/ what's happening w/, even, the discussion of consoles not playing used games.  While, personally, I think it's B/S, what do publishers expect gamers to do when we're forced now to pay close to $80 for one game?  Not to mention the extra we have to pay for the whole online play set by certain publishers.  It's getting to where we're having to pay well over $100 to play 'one' game and it's entirety...  So of-course gamers are going to cut corners where they can 'just' to be able to get their hands on a game at a more competitive bargain.  This whole concept of the new consoles not allowing the play of used games could very likely slow games sales and assign respective gamers to moderate themselves to a more narrow gaming experience, which, I think, ultimately will cut the consumer base for game publishers abroad.  This will be interesting to watch play out.  Though, you can bet that I'm already choosing what game of each genre I'll be committing myself to. 

Diarma10
Diarma10

When games get released you see comments all over gaming sites more or less saying :

"I'll wait until the all-in-one pack is released before I buy it". Gamers are getting more savvy to the ways of publishers. I'll tell you something else though, Publishers don't favour single player games for a reason...

jdeamaral
jdeamaral

Why doesn't Microsoft just buy Gamestop? They can sell their own used games and make a profit this quarter, instead of the $400 million plus loss they just did.

Brokendemise
Brokendemise

All thats going to happen is that launch sales will be much lower than before and people are going to base their purchases off of word of mouth and review scores from websites like Gamespot and IGN. Rather than initially purchase the game, find out it's not to their liking and then sell it back, people will only buy a game that is a AAA title, which a lot of small scale publishers are not able to create.

Hells_rebelion
Hells_rebelion

Sounds like a good time to switch to another hobby.  So Glad I got to enjoy a good 24 years of gaming before all the monopolies took over.

PlatinumPaladin
PlatinumPaladin

I don't know why I keep reading these articles: I full on don't understand a damn thing about business financials, but it wouldn't surprise me if the publishers have been blowing it all out of proportion.

frostdawn99
frostdawn99

I also noticed that there hasn't been any mention of the slowly growing trend of microtransactions within games. Games like "Shoot Many Robots", "Crimson Alliance", etc. A viable business model for devs, but freakin annoying for consumers.

frostdawn99
frostdawn99

Things not taken into consideration:lousy economy= not everyone is flush with expendable income to sink into new title sales

too many lackluster games and game clones out there  

platforms causing strife- M$ changing their console UI almost annually, things like Sony's network security blunder- those kind of things can conceivably drive customers away

 

(feel free to glom onto this list)

RSG003
RSG003

I agree the games are priced to high at $59.99 as the great bulk of them "Suck". There is also nothing worse than paying "59.99" for a game that is 10-15hrs...I also buy mostly per user reviews and if it doesnt get at least 7.0 I dont buy it "New".

npkgardens
npkgardens

Easy fix: developers sell games directly to customers via digital downloads, and useless bloated corporate publisher dinosaurs like EA and Sony are relegated to the dust bin of history.   Developers get more money, customers pay less, and the environment is given a break (no useless plastic and cardboard boxes being shipped around).

bluecapsule24
bluecapsule24

gamespot should do a tally on those who would refuse to buy next gen consoles that blocked used games.  I'm number one

WolfGrey
WolfGrey

Well isn't that a shame, the devs are getting pissy.

 

Guess what Devs, i constantly buy games on steam sells for less than the used game price.You only make a tiny amount off those, you gonna cry now?

 

Seriously though, just make your games worth buying.I barely buy anything new these days unless it is on steam.At least then i am getting my money's worth.Give me more than 30 hours of gameplay and a well thought out game , then i will care more to buy new full price.

 

Atm though, very few games earn my respect enough for me to buy full price.

JustPlainLucas
JustPlainLucas

I've said it a thousand times, so I'll say it a thousand and one times.  The video game industry is the ONLY industry to cry about losses of sales to a used market.  Fact: The video game industry has been thriving since the NES.  Fact: the used game market existed before the NES.  There will NOT be another video game crash, at least due to used sales.  I have no respect for any publisher or developer who blames the used market, and I have no respect for any gamer who sympathizes with them.  

Hvac0120
Hvac0120

The developers and publishers who are rallying up against used games are under the impression that games are a software service and not a property. They may compare it to a service, such as your internet connection. When you stop paying your ISP for internet service, you no longer have that service and cannot sell that service to someone else.

 

Back when games came on cartridges and discs and couldn't be updated via internet, games were a property that gamer's purchased and kept. Online MMO's are a game plus a service and may be a cause for some of the confusion.

 

When I buy a game, I don't think of it as a service. It's a toy that I bought and own and should be able to use and discard how I see fit. I have the right to make a backup of the software in case the original gets damaged. I own my games and I don't want that to change. When I start buying digital, I expect there to be some way for me to create a backup (physical or digital) that I can later use or sell.

 

Case in point => Games are property, not services; except in special cases where the developer/publisher is committed to providing servers for persistent online worlds (read: MMOs). In those cases the games are still property, but the services that the game taps into are not.

Sekhemket
Sekhemket

I wish all the middle men could be cut out. Let all the Money go to the creators and Not some corporate suit wanting to place a 3rd Gold plated Garage next to his home. 

Cronicx-
Cronicx-

I swear, if for example, the next-gen Xbox and Wii block used games, but the Playstation doesn't, I'm getting a Playstation. Like if blocking used games is literally something that gets put into consoles. I'm buying the console that doesn't do that, because it says to me that this company cares about it's customers and their freedom to do whatever. Fuck the long fought about console wars. Which ever console allows you to play used games, wins that war hands down.

DbleBassDrummer
DbleBassDrummer

 @skeletor1984 That's a very one dimensional way to look at the profit margin. It's easy to see a $30 or so price gap and think that you're being ripped off, however you need to realize that there are a lot of costs to cover. Think of all the copies that get traded in that DON'T get sold back: The copies that come back defective, the copies that sit on the shelves and don't get sold EVER, the copies that are given away for FREE as part of buy2get1, and also remember that games are a CONSTANTLY DEPRECIATING IN VALUE!!! Supply and demand dictates the price of a game, and games are constantly being traded in and often lose their value and some make no profit at all. They also have to pay their employees, pay their overheard, make a profit and grow the business. The price difference is because they eat the costs, and find a buyer for whatever game you have to bring in, even if it's a piece of crap. So you don't have to get off your lazy bum and sell your stuff to a weirdo on Craigslist.

WillyChong
WillyChong

 @Diarma10 What? So you support them to buy everything one by one? You are very rich indeed my friend. Why should I buying the package one by one, knowing that the final all in one pack has the price of 3rd quarter you use to pay, publisher prefer to give you expensive dlc, than giving you a complete game. next time when you call a happy meal, they give you only one burger for a happy meal price, and additional charges for the drinks and fries and the tomato sauce you're going to pick, pick one baby!

Latebloomer9
Latebloomer9

 @Hells_rebelion  Do you remember the Sierra company?  The Beast Within,  Phantasmagoria, Shivers...?  I remember playing some Egyptian murder  mystery game on PC too... almost like a Nancy Drew type thing.in some Museum  .. & Eye of the Beholder....  I remember playing Ceasar's II - real early strategy type game.   Those were the days.  But I love the games out now, it's just that it's getting complicated in what gamers want - you can't please everybody & I think gamers are getting spoiled some too, but that's another discussion.:)

frostdawn99
frostdawn99

 @RSG003

 And the sad thing, even reviews aren't a reliable way to judge a game. Reviewers can be (for lack of a better phrase) bought off by developers. Not to mention the problem of their tastes won't always mesh with yours, so you're still faced with a hit or miss on game titles. In this, rentals would conceivably thrive. Rent a game and try it out. Like it? Buy it (new or used- your CHOICE).

 

The problem with the samples/demos made available is that they often grossly misrepresent what you will ultimately get out of the game. A lot of titles ramp up what it offers in terms of game play to ease you into the story and/or UI of the game. So a luke warm demo falls short of what the game offers so you might pass on what could have been a great game. Likewise, a demo could seem to be awesome, but you could later find out that the short interface you got in the demo is ALL the full game offers. So you wind up feeling gyyped.

talamalopilis
talamalopilis

 @npkgardens in that case EA would pay big money to buy the rights to digitally distribute a game, they wont go away this easily.

 

But i am all for a developer controlled game. 

frostdawn99
frostdawn99

 @npkgardens

 I'm not a fan of pure digital content though. If you need to get a new console for whatever reason (RROD, theft, damage, etc)? All those past sales are gone. You now have to repurchase all those titles. The developers would LOVE that, customers would get screwwed, ergo not a good, equitable solution.

frostdawn99
frostdawn99

 @npkgardens

 I could see the argument of allowing the sale of used games, but participating in online use of the game would require a fee to the developer. Customers who get the game new would have this cost incorporated into the cost of the initial purchase. Second hand customers would get the game at a discount, but have to pay the developer cost to access online gaming. This way, the developers could still make some profit off of the second hand market. And customers who aren't up to their eyeballs in expendable income can still enjoy a lot more games than they otherwise would not if they were strong-armed into new sales only as is being bandied about in the industry. 

Hvac0120
Hvac0120

 @npkgardens Customers should be able to make a backup of any digital download they purchase and they should have a way to transfer ownership of the digital download to another person for a fee if they choose to charge. Gamestop (and other stores' like it) should be allowed to be middle-men for digital download resales just as they are with the current physical market. But the publisher can have their own resale program/store for gamer's to choose if they want to throw a little money back at the people who marketed the game.

 

Digital downloads can bring down cost and have other convenience benefits, but are not the answer to the user game "problem". Digital downloads just cause more complications and confusion about who owns what and who can sell what when. 

Latebloomer9
Latebloomer9

 @bluecapsule24  It's not even cost effective for me to buy one since I wouldn't be able to  afford the games after I put out the $$ for the new console!!!  What's the point?

Most gamers  I've read won't buy it - If this rumor is true about blocking, I might actually invest in a 2nd 360 to make sure if mine breaks down that I have a backup that works to play my current games  [since I  keep all mine to replay].

Screw them.

WillyChong
WillyChong

 @JustPlainLucas You sir are the talk of vision! Any major game company CEO should drink their own piss and bow to you my friend. 

leimonides
leimonides

@JustPlainLucas plain and simple.

leimonides
leimonides

@Hvac0120 definitions to keep in mind for all the whining "professionals".

lfavelino
lfavelino

 @Sekhemket why? could you elaborate on that?

 

do even have any clue on how the economy works? cutting off the "middle man" is just killing jobs and stop earning taxes to the state.

 

Gamestop, Best Buy, whatever, they're there for a purpose. They take the products to millions of people that the devs would NEVER reach. They give devs the market they need.

 

People don't go out making games for themselves, mate, they need costumers, and that's what the "middle man" you seem to hate offers.

 

That corporate suit placing a 3rd gold plated garage next to his home is just putting his works results to use, and he's absolutely right in doing so. I mean, you think devs aren't doing that?

 

So try and remember that the next time you turn on the hate machine to the ones that sold YOU your beloved games.

Latebloomer9
Latebloomer9

 @Cronicx-  That's exactly what I plan on doing - the problem is if they're all going to do it.Then I'll buy none & if we all show them we won't put up with being screwed, they'll have to take their huge losses and do this our way.

Diarma10
Diarma10

 @WillyChong I'm not sure that's what I said. If I made myself unclear then I apologise. I myself tend to wait ages before buying a game,  unless I know there is no DLC etc. Certain games though I'll buy day one - Aliens CM and Bioshock Infinite are the only ones on the horizon. Gamers are getting wise to the ways of publishers. And my comment about single player games is that it pays for publishers to make MMO style games or Co-op instead of single player. Look at the new Diablo 3, this should be a classic single player game, however it's been designed as a co-op. Many shooting games are being designed as co-op too, this forces gamers to buy the original game before dlc or the "goty" release - because their friend have the game already and they want to play too. Single players games allow gamers the freedom to buy whenever they want.

dante-1776
dante-1776

 @Latebloomer9 then tell me one thing. are the games now better then they where back then? and i dont mean techincal wise but as game it self. agreed there are verry good games now days like dark souls and red dead redemption. but there are to few to uphold the high prices and bulls**t around it. i agree with Hells_rebelion, its a good time to lay down my game controler and start doing somting els.

 

Hvac0120
Hvac0120

 @frostdawn99 As @jakesnakeel mentioned your digital purchases are tied to your account, not the console. The only concern with digital is if the store (PSN/Xbox Marketplace) removes the content. At that point you no longer have access. This is the reason I strongly believe that digital purchases should have a way to be backed up and loaded without re-download.

jakesnakeel
jakesnakeel

 @frostdawn99 Obviously, it just doesn't work like this.  When you buy a game digitally, you can re-download it at any time.  There aren't any digital distributors that have a "one time only download" policy.  

leimonides
leimonides

@Hvac0120 @npkgardens that first paragraph seams really reasonable; sounds like a sound and fair solution. Although I would still like the option to buy hard copy in some fashion.

bluecapsule24
bluecapsule24

 @Latebloomer9 well said friend, especially if they're gunna charge 700 or 800 dollars for the system, i definitely have bills to pay, that's not happening, and honestly i'm perfectly happy with my 360, i think the graphics are great and it does everything i need it to do, they better tred lightly with the next gen's or shits gunna hit the fan hard

Hvac0120
Hvac0120

 @frostdawn99  This is the reason I don't like how OnLive works. I am not willing to pay full price for a game that is being streamed from their servers. If the publisher decides to pull the game from their service, then all those who already bought the game are now without and the money has been wasted. I want to own my games and be free to do with them what I want.

Latebloomer9
Latebloomer9

 @bluecapsule24   Same here Blue.  I'm 100% happy w/ my 360.  Leave it alone I'm in heaven. lol   We got hit hard w/ this crap economy for the past few years so believe me, I know the feeling . . . there is NO way I'm affording a new console and mandatory $60 games retail.   I can't even afford the games now. If it weren't for used and prices drops on new games, I wouldn't be able to game the past 3 yrs at all. :-0I hope we all pull together and stick it to them if they pull this stunt. :)

leimonides
leimonides

@bluecapsule24 @Latebloomer9 @Cronicx- haha - now isn't that just a horrendous thought!

Cronicx-
Cronicx-

 @Hvac0120 @Latebloomer9 @bluecapsule24  Yea if they all do it then I'm just sticking to current gens for as long as possible, or possibly switch to PC lol. If the day ever comes that I have to go outside instead of play video games, then I know the world is coming to and end XD