Opinion: Leave pre-owned alone
Rumours of Microsoft's Xbox 360 successor have been swirling for some time now, but reports overnight claimed that the company's new console will feature "some sort of anti-used game system." Kotaku's source didn't go into detail on how such a system might work – single-use codes, perhaps, or linking games to a single Xbox Live account, something Activision is already doing with Modern Warfare 3 DLC – but either way, Microsoft would take on the second-hand game market at its peril.
The industry's position on pre-owned is, to a point, understandable. It robs publishers, developers and distributors of revenue, with the retailer retaining the entire proceeds of the sale. Bricks and mortar stores give great prominence to their second-hand stock for this reason, and on several occasions in the past we've taken new games to the till only to be offered a second-hand copy for a slightly cheaper price. Some are going even further than that: last year Game Group began taking pre-orders for pre-owned games, available a fortnight after release for a fiver off. Canada's EB Games merged its new and pre-owned stock and made them virtually indistinguishable from one another. The trend spread beyond specialist retail, with UK supermarkets seduced by the promise of greater margins.
But those within the industry often overstate the severity of pre-owned. Last May, Lionhead said sales of second-hand Xbox games were worse than PC piracy; in 2010, Blitz Games agreed. Epic Games' Rod Fergusson said pre-owned was a "culture that you have to actively fight against." From that perspective, thwarting the second-hand market at a hardware level would be a welcome move. Gamers, however, would likely argue the exact opposite.
Publishers and developers might complain that times are tough and revenues are down, but the same applies to retailers, and consumers as well. Rarely is it recognised that trade-ins are used to fund the purchase of new games; take away the ability for consumers to exchange their old, unplayed games for a new one on the weekend of its release and sales will surely suffer.
If increased sales are the goal, perhaps we could reduce our long-standing reliance on Q4. For the first time ever, more than half of UK retail revenue in 2011 – over £700 million – came in the final three months of the year. It is unreasonable to expect gamers to keep on top of new releases without giving them some way of offsetting the cost.
One could even argue that pre-owned is necessary because publishers ignore the sales potential of their back catalogues. Inspired by the Vita version, a recent attempt to track down a copy of PS3's Everybody's Golf: World Tour was met with frustration: only one online store had stock. Pre-owned keeps these games alive. That, it could be argued, is because there is no value in Sony committing to another print run of a four-year-old game if retailers only give store prominence to new releases. But a more compelling argument is that a reprinted Everybody's Golf simply wouldn't be price-competitive.
Because here's the thing: pre-owned games get cheaper. New games launch at £40, get discounted a month later in a bid to maintain or improve their chart placings, then go back up and eventually vanish. Walk into your local Gamestation right now and you can have four five-year-old games for £20. Why should a retailer give valuable shelf space to a 2006 release that's stickered up at £35 when no-one's going to buy it?
While platform holders understand the importance of reducing prices as their production overheads come down, game publishers who set trade prices seemingly don't. Look at the console distribution services: Mass Effect 2 was the first PlayStation 3 game to be released day-and-date on PlayStation Store and at retail. It should have been a landmark moment, a test case that showed once and for all whether there truly was an appetite for digitally distributed, triple-A console games.
It wasn't. Despite the removal of manufacturing, distribution and retail costs, the PSN version of Mass Effect 2 launched at £47.99. At the time, it was available on Steam for £19.99. Driver San Francisco was another simultaneous digital and retail release; that one cost £57.99. Is the aforementioned Everybody's Golf: World Tour, a firstparty-published game that's apparently impossible to find at retail, available on PlayStation Store? Of course not.
Besides, the industry is already doing plenty to combat pre-owned in a way that rewards loyalty rather than simply hampers consumer choice. The online pass system works, though we're no fans of it being used to put singleplayer content behind a paywall, as seen in Batman: Arkham City and Rage. Companies are now planning DLC support for up to a full year after a game's release, doing much to keep discs in trays and out of the pre-owned bins, as well as potentially monetising those that choose to buy pre-owned.
The solution seems simple. Give gamers a viable alternative to buying second-hand by ensuring the availability, and depreciation, of older games, either on the high street or the download services. Cut retail some slack by reducing trade prices as time goes on, giving them a reason to give prominence to new stock. Retailers have already expressed willingness to share pre-owned revenue with publishers in return for lower trade prices. Above all, stop treating potential customers like pirates because they really want to play your new game but can't afford to do so without trading in a few of their old ones.
Platform holders understand the importance of retail when new hardware comes around; Game Group's chances of survival rest on successful 2012 launches for Vita and Wii U. How odd, then, that Microsoft is reportedly looking into driving what would surely be the final nail into the coffin of an increasingly ailing sector when, soon enough, it will be in need of its services.