I forgot to post this but a poster from NeoGAF brought forth compelling evidence that wiping out the used game market would hurt far more than it would help.
Link here.
Systems_Id
I have a number of problems with his assertions, use of evidence and his final conclusion.
Here is my own breakdown and rebuttal to some of his points:
"used games only account for 1/3rd of the game sales out there. New games sales still equate for the other 2/3rds and sell more than used titles still."
That is still a huge amount of revenue that isn't going into the pocket of developers and publishers but rather straight into the coffers of retailers like GameStop.
"for roughly every 2% used game sales increased in 2012 digital game revenue increased by nearly a full 1%. Used game sales were letting publishers sell DLC so they were penetrating that market and likely making multiple DLC sales per single unit made as it got resold."
Without knowing specifically what DLC was purchased, I think we can safely assume that a significant portion of that revenue was from Online Passes; a measure that publishers felt forced to implement in response to used game sales.
"75% of games traded in were traded in toward the purchase or pre-order of NEW games or hardware. The used market was making it affordable for the weary pockets of consumers to afford their games."
That number is a bit of a smoke screen. While it is certainly logical that most trade-ins would go to the purchase of new software, what we still don't know is how many actual new purchases are subsidized by these trade-ins and we also have no idea, on average, as to how significant that subsidization actually is.
"Around 100 million units of used games were sold in 2012 on estimate equating to around $2 billion sold. However, for the summer quarter alone digital game revenue equaled $1.47 billion in the US and $983 million in Europe...this means that quarter alone saw the videogame industry make more from digital revenue than it lost the whole year in used sales. Digital revenue goes up as market penetration of titles increases."
Again, same problem as before: without knowing what type of DLC is being sold there is a possibility (perhaps even a probability) that much of this DLC revenue came from Online Passes. If anything this evidence actually supports the DLC and Online Model as being necessary in a marketplace where a third of the software being sold is used.
"Eliminate the used game market and you not only eliminate a ton of digital revenue potential, but its incalculable how many new game purchases you'll limit yourself to without a used market for consumers to trade titles back into for money to aid them in the purchase of new titles in this economy."
It is incalculable because none of the retailers engaging in this model have released data to buoy this thesis. I think this might actually be a very real and distinct possibility but without firm data we have no idea just how much used game trades boost new software sales.
"Not to mention its also incalculable how much popularity some series will be costing themselves without a used market to help them penetrate into more units of their title in households. 100 million used units a year is a big number and you can bank that without that number a lot of titles wouldn't have as big of a fanbase as they do."
This is baseless conjecture; a clear extrapolation on the part of the author. Firstly, sequels and franchises are predicated on the success of their previous entries, meaning the only viable evidence for a publisher to consider is the sales of new software. Used software isn't data they track nor do they build franchises on the sales of games that do well in the secondhand market. (How would they even know?)
Secondly, if the consumer interested in the game bought the earlier title used, there is a strong possibility they will opt to do the same with the sequel, thus, outside of possible DLC, their purchase is meaningless as revenue to the publisher. Penetration only matters when it directly leads to more sales and there is no evidence to suggest the used market is some great facilitator of this. One could also argue that a person who buys Dead Space or Assassins Creed II for 9.00 in a bargain bin at GameStop might not necessarily be the type of consumer who would pay 59.99 when the sequel arrives later.
There are still far too many unknown variables and a dearth of quantifiable, empirical data to fully gauge just how much actual damage (of lack thereof) the used market is causing.
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