Most everything else can be bought then resold. Books, movies and even clothes can live with consumers selling off their old items.

So there is no reason gaming can't live along side used game sales. In fact they have done so pretty much as long as gaming as existed and the industry has managed to grow.

The problem is that games do not offer a good value. Image if books only had a handful of genres and within those genres the books were pretty much all the same. Of course consumers are going to look at paying as little as possible. Games just aren't worth their price in most cases. The whole promise of prices coming down with the advent of disc based gaming never happened. In fact prices are back up at N64 cart prices. So how is it that with physical costs around $1 rather than $35 they still can't lower prices or give retailers a better margin so they have an incentive to sell new games?

Again the problem is they don't attempt to appeal to everyone or do new things. They focus on selling no brainer cookie cutter games to teen males. They sell buggy games and sell junk hardware (ie rrod). They're doing nothing to prove to consumers that there is value in gaming. We also have fewer genres than in the past. If it weren't for Nintendo inventing new genres (as simple or boring as they may be) we'd definitely have fewer genres than in the past. We're going backwards not forwards. So how can they expect the consumer to value gaming enough to pay a bit more for new games?

Nintendo opted to change and innovate which has lead to them being the top hardware company, they aren't having lay-offs and in fact are building a new R&D building.

Developers need to change too. It's no surprise the number of devs are shrinking as the larger companies buy them up. Think about it, do we really need more than one or two companies if they're simply going to make the same games?

“…While customers wanted to buy a new, say, Killzone 2, they weren’t going to wait the week or two weeks it took to get the credit, then buy Killzone 2. They want Killzone 2 the day it comes out. They need the money and the credit right now.”

That's true if the person trading in wants a new title now. I want to trade games in to Amazon to get credit to use toward *anything* they sell, not just games. Amazon's model is serving a different consumer with different goals. Gamestop couldn't make trade in's by mail work because all they sell is games. Amazon sells everything, and used games will be just one more revenue source. In that respect, they don't have to be as successful as Gamestop.

As far as developers are concerned, no one has ever explained why games should be different than any other product. If you sell your used car, jeans, laptop, DVD player, whatever, the original manufacturers of those products don't see any more revenue. Why are game developers special? If developers want more money at launch, then they need to focus on making titles worth buying, rather than shoving out the junk that makes up most releases. Add incentive with DLC, which some are starting to do already.

I have already made my thoughts known here:
http://www.edge-online.com/blogs/what-can-be-done-about-used-game-market

Echoing Braben, he adds, “Problem is, it's not a sustainable market. The more that people's money goes toward used games, the less goes into making new games. Without new games, there aren't any used games. Less revenue for new games leaves us with only two choices in order to pay for their development: 1) Spend less money on making the games in the first place 2) Charge more for each game that is sold. So this only leads to bad games or more expensive games. Either way, it’s not a great outlook, is it?”
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I swear sometimes, the videogame industry has to be made up of the absolute out of touch executives of any industry on the planet. I expect politicians to think in terms like this, not businessmen. And what we have heard out of the game industry on both sides of this dispute, has been the same sort of sabre rattling one expects out of the Bush Administration, not from savvy executive staffs of a multi-billion dollar industry. However, the entire fight over pre-owned games, and even the shift to digital distribution, always comes down to these two "solutions" - more crappy games, or higher prices for games . . or worse still, both. And the end consumer, who pays the checks for all parties in this dispute, are the one's who are going to be victimized the hardest, from both sides, before all is said and done, at the rate things are going.

To quote Bugs Bunny, "What a bunch of maroons!"

The real solution, is and has always been, the same solution that happened to VHS in the mid-1980s. Lower the price of the software to mass market prices, and grow the consumer base for your product, exponentially on the backs of the savings.

In all honestly, if the price of games were lower, then the pre-owned market as it exists today, would all but dry up. Your $60 and $50 premium videogame, should MSRP for $30 and $35. With the price of consoles like the Xbox 360 and the Wii, already being at mass market pricing for the hardware, and with PCs being nigh ubiquitous in every home on the developed world, the only thing left to catch up are the actual prices on the software.

Look at cinema. When VHS initially shipped, the tapes ran as much as $90 each, and the players were even more expensive. As a result, at the time over 99% of all revenue generated in the cinema industry was at the box office. Today, home video accounts for over 75% of all revenue generated in that industry, and the industry consumer base has grown exponentially since. More people watch movies now than ever could have been imagined back in the day before the VCR. But it all started once the film industry realized that home video was useless for nothing other than bootlegging and piracy, if they did not lower the price of the media itself, from an average of $90 per tape, to the mass market price of $20 per tape. Later, using the exact some model, DVD would come along to utterly crush the numbers that VHS had accomplished. Videogames are fast reaching the point where they need to do the same, if they expect to truly grow into a true mass market, mainstream medium.

What the game industry needs to do is quite simple:

• lower the price of new release, premium videogame titles to the $30 - $35 mark
• fix the prices of premium games at that mark for the first nine to twelve months following release
• extend the value of premium games via DLC; with initial DLC releases taking place within the first 30 to 90 days following a game's release, and others to follow at a regular basis at intervals no longer than six months apart

This strategy works on several different levels. For the most part, the old saying about capturing more flies with honey than vinegar, applies. What this plan does is create incentive all the way around for the consumer. The pre-owned market is very much like IP piracy. If the initial price is low enough to begin with, then it makes it worth no one's time. If you take a look over at eBay, Craig's List, Half.com and even Amazon, the average (sold by the owner) used game is moving for around $30 to $35 each. This price point is simply a base point where most consumers are most comfortable with spending their money. No amount of chest pounding by foolish execs in the industry is ever going to change that - either your customer has $60 to pay for your game, or they do not. And if they do not, the consumer will usually resort to pre-owned, rentals and even piracy - of course, largely based upon that particular costumer's mean income.

So on the front end, we add an incentive - an incentive not only to buy new, as opposed to pre-owned, but also an incentive for more people to buy new than ever before.

We follow that up with even more incentive - the incentive not to wait around for a discount on the game. In today's market, games drop in retail price fast. Most games, especially 3rd party games, if you wait around for them, you can pick them up for a nice discount for having a little patience. Example, over the last couple of months, I have personally purchased Prince of Persia, Gears of War 2, Fable 2, Fallout 3, Saints Row 2, Far Cry 2 and Resistance 2. All of them brand, spanking new, still in their original seal. All of them for around $30 to $40 each. And each of these games just came out in the last five months. I exhibited a little patience, waited a couple of months, shopped around and wound up saving around $180. That is a 43% savings on the sticker price and still got all the games I wanted from last fall, brand new and in the case with the original seal still on them. On average, it's as if I only paid $34.20 for each title.

A lot of gamers like myself know how to exploit this weakness in how the game industry is setup. By lowering the price to that point in the first place, and then locking those prices in stone for a nine to twelve month window, you have now provided an incentive to stop gamers like myself from waiting to make a purchase three or four months from now, and just buy it today.

We follow that up with even more incentive - the incentive to keep the game longer. Bungie has the right idea with Halo 3. Valve has the right idea with Half-Life 2. Rockstar has an even better idea with GTA IV. Incentivize gamer to keep their games longer. The only problem so far, is execution. Bungie's focus is primarily on multi-player. While nice, simply does nothing for half their fans. And both Valve and Rockstar seemingly take too long to between DLC updates. Ideally, the industry needs to bring down the gaps between updates significantly, while maintaining the same level of quality as found on the disc, and with a focus on both single and multiplay where possible. Give the customer a real reason to keep their games longer, and most will. The longer the average Joe keeps his game, the fewer games wind up as pre-owned sales. It really does not get any simpler than that.

Also, just because under the new strategy, there is a focus on a lower price tag and more DLC, does not mean that the game on the disc should become less of what they are now. The average size of a game now is about 10 to 12 hours. Many gamers have commented that this is the perfect size for said experience - and they would be right. Even at $30 to $35 each, the games should remain around 10 to 12 hours long. Whatever money you think you are going to lose by selling a game this cheap, just like VHS and DVD, is only going to be made up because the game will sell new to a lot more people.

And no price gouging on the DLC either. $10 and $20 will still remain the ideal price points for DLC. With mass market pricing on both the disc game and the DLC, more owners of the disc game are going to be more willing to purchase the DLC. For example: I only paid $35 for Fable 2, so you can bet your bottom that I was quick to snag up Knothole Island for an additional $10. At $45 out of pocket, I am still coming out $15 ahead. Similar thing with Fallout 3, which I only paid $40 for, and Prince of Persia, which I only paid $30 - at those prices, buying the DLC is a no-brainer.

And while true, companies like GameStop are not going to stop trying to sell pre-owned games simply because the MSRP was lowered, the facts are, that it becomes a lot less profitable business for them at these price points. Trade-in dollars they are going to continue to offer are going to bottom out, making trading-in games, a next to worthless endeavor for all but the most desperate and cash strapped of consumers. Getting $25 to $30 of in-store credit for trading-in a new release title may seem appetizing to many a gamer, but when GameStop has to lower that to $10 and $15 as trade-in credit for a new release title, there is just a psychological barrier there for most gamers to say no. And if you as the developer/publisher are thinking about having to sell twice as many copies of your game, just to make the same amount of money, then take a moment and thing about how many copies that GameStop is going to have to sell to make it worth their time. Mandatory lower MSRP is great for developer/publisher, but is not so great for businesses selling pre-owns.

I understand that this gen, the average game needs to move around two million copies just to break even on development and marketing costs - trust me, I do understand this. But I know the solution is not making crappier games, or raising the prices of the games, or playing dirty tricks to punish the consumer like forcing them to buy all their games digitally or locking game dics to consoles. All of these frankly Draconian methods that developers and publishers keep bandying about as "solutions" to their problems, in actually are the fastest way to send the videogame industry, back to reenacting the 1982.

Here is a parting thought for everyone. Has anyone (publishers, developers, etc.) ever wondered why a hit game on a system like the PSX or the PS2, which has already moved over 100 million hardware units, still only manages to sell just a couple million copies - four million at best? I mean think about it. A hit game on the same consoles when said console had 1/3 of the number of hardware units in the hands of consumers, for the most part, moves the same number of copies as a hit game that sells on the same console once it has reached 100 million users. What gives with that?

I am sure the guys down in accounting have some fancy, fiscally technical terms, equations, charts and curves to "explain" this scenario. But for one moment, how about entertaining the thought that one of the key reasons for this phenomenon, is that the price of the hit game remained static, and as a result, the size of that game's audience.

If I recall, the Metal Gear Solid series, actually declined in sales from the first game to the second game . . . and declined again from the second game to the third. One would expect MGS4 to sell fewer copies than MGS3, as there are far fewer PS3 owners around last spring, than there were PS2 owners around when Snakeater shipped. However, there were almost double the number of PS2s in the market when MGS3 came out, than when MGS2 came out - so should not the number of copies of a hit series like Metal Gear actually climb to compensate for all the new owners; not decline?

There are a lot of factors this can be chalked up to, I am sure. But in your fear as game producers, that you are not going to make enough money, do not overlook the fact that it's harder to grow a fan base, when the product you are selling is out of the range of most of the people who want to buy your product.

Mass market pricing IS the way to go. Once backed by business savvy policies like temporarily locking the prices, as well as extending the value of the content over time, th game industry can make it work and can make it very profitable for all involved.

The thing is prices are just too high. Gamestop protects their used sale bonanza by telling companies that higher prices are ok with consumers. Meanwhile they pocket huge profits on used game sales..

If you lower new game prices to maybe $30 - $40, then used sales get pinched because the trade in values will be so much lower. Basically companies have the ability to solve this themselves, but they are just as greedy as Gamestop.

Brian
www.brianwoods.com