Counting Rupees: Feeling used

Each week Jeff Engel and Geoff Brooks contribute Counting Rupees, a column on the business behind gaming:

Bungie audio director Marty O'Donnell recently made some controversial remarks regarding used game sales. To quote, "It seems to me that the folks who create and publish a game shouldn't stop receiving income from further sales." Of course, this seems laughable to all of us who have bought and sold used games for years. It's my property, I can do what I want with it, right? This doesn't have any place in the industry, does it?

Legally, perhaps not. According to the first sale doctrine in copyright law, copyright holders are expected "to obtain all financial benefit for the article or product embodying the intellectual property at the time of the sale, and prohibits placing limitations on purchased items." This basically means that, once you purchase an item, the intellectual property cannot prevent you from doing whatever you want with the item so long as you don't violate copyright (by, say, copying it and then selling it -- otherwise known as pirating).

"GameStop relies on you for its supply."

But, of course, herein lies the problem. A used game sale really is not much better for an intellectual property owner than a pirated game. A used game sold at GameStop provides absolutely no monetary benefit to the game's creators, but a significantly higher profit margin to GameStop than a new game sale. This is, unfortunately, why GameStop employees are always badgering you to trade in your games. Rather than calling up its supplier for more new games from the publisher, GameStop relies on you for its supply. It's a strategy that's been working quite well for the company, to the tune of $1.8 billion in sales in the last quarter. It has to be painful for a publisher and developer to watch a good portion of that money go to used sales instead of more orders to replenish new stock. Doesn't the publisher and developer deserve a piece of that pie?

There's not a lot of precedence for something like this. Certainly, other forms of media don't currently have equivalents. Buying a used book or DVD doesn't send money back to the publisher and creator either. However, the movie rental industry, or at least Blockbuster, does provide royalties to movie studios. This is despite the fact that, by law, Blockbuster does not have to provide any royalties to studios. Instead, Blockbuster has contracted with movie studios to give them extremely cheap movies in exchange for a cut of the rental fees. This is obviously a bit different from selling used games, as the publishers don't provide the inventory (customers do), but something similar could potentially work. For instance, game publishers could give a discount to retailers like GameStop for new games in exchange for some royalties from resold used games. This would increase the margin on new games, which are, of course, necessary to sell (whether through GameStop or elsewhere) in order to create GameStop's preferred wares: used games. While publisher's would love this, it's doubtful this would be an appealing deal for GameStop.

"There's no inherent value in buying a new game over the same used game."

Would something like this be good for the industry, though? Gamers are finicky about this, as they like a good deal, but also like to reward developers (and publishers) for creating something that they like. More money for the developers would also mean more opportunities for these studios to create new games and take more chances. Unfortunately, cheaper games and rewarding developers are basically in direct opposition to each other, since you'll save some money buying used games, but then you won't be rewarding the companies that created them. The problem is that, for the most part, there's no inherent value in buying a new game over the same used game, assuming it's in relatively decent condition. Both of them will provide the exact same experience, as they're both the same data on a disc. So the question becomes, if you're paying for the same experience, shouldn't the company that created that experience be rewarded for each person that they share that experience with? And since GameStop's primary business is to sell used games, shouldn't the content creators that it relies on receive some of the benefit of the secondhand business?

If a system like this were to be implemented, it's quite possible that GameStop would respond by simply raising the prices of used games to cover royalties. Of course, this is already becoming a moot point, since game companies have already figured out a way around retailers and used game sales: user accounts and downloadable games. On the PC, Valve, for instance, requires that its games be tied to a Steam account when installed. While this lets owners play their games on any computer that they can log in to Steam with, reselling the game would be worthless since the CD key has already been registered to another account. Additionally, downloadable games both on consoles and PCs are obviously non-transferable. Sony is already selling full-sized games on PSN, and it's safe to assume that digital distribuition will continue to grow on PlayStation 3 and expand on futute consoles. But just in case it doesn't, Sony did register a handy, little patent that, in a nutshell, prevents games from being played on more than one console. Didn't think that could happen? It already has.

---

As co-editors of A Link To The Future, Geoff and Jeff like to discuss, among many other topics, the business aspects of gaming. Game companies often make decisions that on their face appear baffling, or even infuriating, to many gamers. Yet when you think hard about them from the company's perspective, many other decisions are eminently sensible, or at least appeared to be so based on the conditions at the time those choices were made. Our goal with this column is to start a conversation about just those topics. While neither Geoff nor Jeff are employed in the game industry, they do have professional backgrounds that are relevant to the discussion. More to the point, they don't claim to have all the answers -- but this is a conversation worth having. You can reach them at