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May 24
2013

Xbox One’s Attack On Used Games

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Xbox-nope
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The Xbox One has completely failed to impress me. Like, at all. Mostly it was just ho-hum banality about what an awesome tv-thing it’ll be, but the one thing that actively bothered me and has me considering a PS4 – or, hell, just building a gaming PC – is Microsoft’s attack on the used game market by tying of licences to Live! accounts. Not a few people share that sentiment, but a notable dissenter is Ben Kuchera over at the Penny Arcade Report. He’s an insightful and talented writer who I respect, so I thought I’d see what he had to say in an article he wrote about how the death of second hand sales is a great thing.

Now that I’ve read it and read it again, Ben needs to spread his legs and put his hands against the wall because he’s about to get fisked.

Accounts

So you can play your games on another system, but you must use your account. This is good news for households with multiple systems, or people who like to game with their friends.

Multiple accounts on a single console truly isn’t a big deal. You hit the Xbox button, switch users, and off you go. Using a single account on multiple consoles is a pain in the ass. Unless Microsoft has something impressive in mind, like a totally not creepy centralized Kinect database that’ll recognize your face at any console, the precedence is that it requires: 1) getting to the proper menu option, 2) typing in your email and password with the cumbersome controller hunt-and-peck method, 3) waiting for all the data to download, and then 4) hoping it all went off without any problems. This is in no way an improvement over just popping the disc in and playing.

Loans

 It also means you can’t “loan” a game to a friend anymore, as you’d have to give them access to your entire account.[...]For Microsoft, this isn’t a problem. If your friend wants to play the game, they can damn well buy it. [...]They’re not charging you a fee to play used games, because there is no longer such a thing as “used games.” Just licenses.

Ignoring for a moment that the “fee” is “full retail price”, this is a crappy attitude to have. Anecdotally, I wouldn’t have bought the Mass Effect trilogy if a friend hadn’t loaned me the first one to convince me that it was worth my time. Same thing with the Bioshock series. Loaning games are a form of marketing. When a game is loaned, another potential customer is made aware of an IP and a studio, and even if they don’t wind up buying the title that was loaned to them, they become familiar with the quality and will be more likely to buy future games from that IP and/or studio…assuming the game was any good, of course.

Selling back to Microsoft

 Based on this information, it sounds like you’ll be able to “sell” your used games, but no one except Microsoft will buy able to buy them. Microsoft becomes the entity that controls the entirety of the transaction, and no lower-priced tier of “used games” is ever created in this scenario. They simply give you some amount of something in exchange for turning off your license, while anyone who wants to play the game still has to pay full price.

THERE IS NOTHING ABOUT THIS THAT IS NOT TERRIBLE!

In the present market, you as the game-seller have options: you can sell to GameStop or other corporate chain used game store; you can sell the game to a local mom-and-pop game store or even a pawn shop; you can gift or sell the game to a friend; you can sell it at a garage sale; you can put it up for sale on Craigslist, Amazon, or eBay. All of these allow you to get the most bang for your buck. If GameStop is offering you $5 for the title you paid $40 for, you can throw it on Amazon for $10 and see who bites. Or you can decide a friend would benefit more from the game and pass it his/her way to enjoy.

In the Microsoft-only model, they will have no incentive beyond good will to offer you anything but an arbitrary bottom dollar for the title you’re selling. Either take the $3 they offer for the $60 game you bought, or just deal with it, because no one is going to pay you money for a disc that they’ll have to add full retail price to once they get it home.

Piracy

This is good news for a few reasons. The first is that piracy will likely be reduced. If the system phones home every so often to check on your licenses, and there is no way to play a game without that title being authenticated and a license being active, piracy becomes harder. You’ll never be able to stop pirates, not entirely, but if you can make the act of pirating games non-trivial the incidence of piracy will drop. This is a good thing for everyone except those who want to play games for free.

Yes, piracy would indeed be reduced from it’s whopping 4% piracy rate. Making life harder for pirates is not a bad thing, no argument here, but pirating on a console requires no small amount of technical knowledge and often requires both software and hardware hacks. Plus, Microsoft has already shown that they can efficiently track down pirates and nuke their Live! accounts. Given that the One is going to require an almost-always-on connection a nixed Live! account will pretty much kill the console, making piracy too risky for all but the most dedicated thieves. As Ubisoft and EA’s many DRM debacles have shown, it is not worth pissing off the majority of your legitimate consumer base with a broken product just to make life harder for the few that are going to go outside the law…and will likely hack around the DRM in any case.

Pricing

Once that secondary market is removed you can suddenly profit from every copy of your game sold, and as profit margins rise it’s possible we’ll see prices drop. Some stodgy publishers will likely stay with the $60 model, but they’re dead companies walking already. The smart companies will see this opportunity to play with pricing and see what works and what doesn’t.

As profit margins rise, what we’ll see is that successful publishers will make even more money. Consumers are used to paying $40-$60 for a new title, and since that is what the market will bear there is zero incentive for anyone to lower their prices by one cent. If anything, the elimination of the secondary market ensures that prices will remain what they are because you as the consumer have no options. If you’re undecided about Modern Warfare 6.5, your only option is to pay full retail price. So, if your consumers only have the option to pay what you demand and the market has already proven that they’ll pay what you’ve demanded in the past, why on earth would a sensible profit-focused company lower their prices at all, especially since now they don’t have to? It’s more likely that companies will start experimenting with higher prices before lower and see just how far they can push the consumer before they experience backlash.

Shortages, artificial and otherwise

Also, the idea of artificial shortages will go away overnight. The next time a GameStop clerk gives you shit about not pre-ordering, tell him to get stuffed; all you need to do is find a disc to install the game and then buy the license. Microsoft doesn’t even need to host the game files at this point, one person could buy a copy of a game, everyone installs it and buys a license, and suddenly ten people have purchased the game…

Ok, rude. GameStop has some pretty abominable corporate policies and business methodologies, but the clerks are beholden to said policies if they want to keep their jobs. Getting chided for not pre-ordering is tacky, but seriously, what are you doing going into a game store for a title that was just released and not being prepared to walk out empty-handed given how ubiquitous pre-ordering is?

As for “artificial shortages”, that implies that game companies are deliberately holding on to copies of games or that stores deliberately under-order. Game companies and retailers judge profits on the very short term, which is part of why Tomb Raider sold millions in a month and was still deemed a failure. There is literally no benefit to creating an artificial shortage for a product whose profitability can be analyzed in weeks and will take a sharp dip in consumer demand in mere months and even flatline within a year. This is confusing GameStop and EA with Zales, who have a product that has been and will be in demand for centuries. Diamonds are forever; video games have six months.

That’s neither here nor there, though, as acquiring a hot title that’s sold out in stores will STILL require you to track down someone who owns a physical copy of the game. Unless Microsoft goes purely digital (which seems unclear at this point) there will still be shortages, they will just be slightly less onerous than before. Incidentally, one market that this will affect are the gougers who buy a hot holiday title and then sell it for an obscene markup on eBay. Hate all over GameStop all you want, but they still provide a useful service. The gougers deserve to be hung out to dry.

Other digital media

These aren’t crazy ideas. You can’t sell your games on Steam, nor can you buy “used” Steam games. The same with iTunes. And e-books, with some exceptions.

The word that should accompany all of that is “yet.” Managing the transfer of ownership of something that can effortlessly be duplicated and technically doesn’t “exist” except as digital code is still kind of murky. PC users haven’t been able to sell games to stores for a long time now, thanks to piracy, so PC users are pretty well established in the mindset that whatever they buy is theirs forever, for better or for worse. I suspect that this is why there has been little outcry from Steam users about being able to sell back their games or transfer ownership to another user, but just because something is how things “are” doesn’t mean that’s how they “should be” or even “will be.”

As for iTunes and ebooks, what would need to be done would be to find a way of transferring ownership of files in a way that doesn’t cause the labels and publishers to have a stroke about all the evil consumers who are just waiting to steal their products. Barnes & Noble tested the waters by allowing Nook owners to “loan” ebooks to other Nook owners, and if Apple could find a way to allow iTunes users to sell back MP3s you can bet they’d devote an entire wing of the mothership to make it happen.

I realize I’m being incredibly cynical about all of this, and I would love to be wrong and for the Xbox One to wind up being the most magical thing I’ve ever plugged an HDMI cable into. For me, though, this would require placing a lot of faith in the console makers, the game publishers, and the retail stores to have my interests at heart. And I don’t. Not a single one of them.

All three – hardware, publishers, retailers – have at various times and to varying levels of offense treated their consumers as annoyances that they have to suffer through to get to their money. I get that’s how things work in a capitalist society, but it means they get no benefit of the doubt from me until they’ve proven what they’re selling doesn’t screw me over in the end, and right now Microsoft is all but telling me to lube up and pass the poppers.

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About Christian Walters

(Writer) Christian lives in El Cerrito, CA which is close enough to San Francisco to count. When not busy being unimpressed by press releases and AAA hype, he spends his time singing, finding heavy things to pick up and put down, and occasionally going out on the town in naught but cowhide. He has worked in the industry with companies like Sega of America and Trion Worlds, and one day hopes to design a game of his very own.

19 Responses

  1. avatar Bearfamily says:

    After the “its not always online but you DO have to sign in every 24 hours” and the used game stuff, well its a total write off for me.

  2. avatar Kid Amnesiac 1979 says:

    Yep, it appears that I will be strictly PS4 or throw down enough cash for a decent PC in the next generation of gaming. No used games, “always-on”, and the whole “must-use” Kinect thing have completely made me turn my back on the XBox One. Ugh, don’t even get me started on the name of the console itself…

  3. avatar Ray says:

    Question: Is your current system hooked up to the internet?
    Answer: Yes.

    Question: Will your next system be hooked up to the internet?
    Answer: Yes.

    Where’s the problem? If you don’t have internet, you can’t play next-gen games. There’s always old-gen games for those people who refuse to join society on the internet.

    As for used games? Sure, you can’t lend your games to friends anymore, but if they’re your friends, you can still go to their house and play with them. GameStop is the only one who suffers, and they are a vile company. They pay absurdly low prices for your games and then sell them for the slightest discount. Personally, I have never sold my games to them nor have I ever bought a used game from them.

    Steam is the model of the future, so why is everyone surprised that MS is trying to implement that model?

    • avatar leap says:

      How can Gamestop be so vile that is warrants screwing over the consumer? Microsoft’s motives aren’t as noble as their defenders seem to believe. They want the money that Gamestop is making, and they’re willing to do whatever it takes to get it.

      • avatar CC says:

        Gamestop can be annoying, and even aggrivating sometimes, but I’d take them over this xbox one game model in a heartbeat.

  4. avatar I am Disappoint says:

    Thank you so much for writing this.
    I was so scared reading the commentary the entire staff made… and nearly went on a tirade about what you have just written. People should not reassure themselves or others into supporting bad company policies.
    EA has been voted as the worst company in America for the second year in a row, and they don’t give a shit. No matter how many internets explode over their abysmal company policies, horrible deadlines and treatment of their employees… people still buy the games, so why should they change tact?
    We cannot, in good conscience, object to Microsoft’s tactics and buy their product.
    The only message that give them is ‘we will while, but you will still get our money’. No consumer should ever give that message.

    Also, side-note, Steam is also much more acceptable as a marketplace as they have adjusted and reduced their prices based on how they are purely digital and single usage licenses. I have no faith Microsoft will do that.

  5. avatar Bearfamily says:

    @Ray

    That an awfully big assumption about my Xbox being currently hooked up to the net, it isn’t. Not because I don’t have internet but because my house is made of concrete and the signal cant reach the room that the xbox is in due to it being on a cable broadband box in a specific location.

    If DLC comes out that I want I bring the xbox to the room with the modem/main TV and download it then return it to the room designated in the house for gaming. I can’t tie up the TV with 3 others living here out of selfishness. And that is just one example. The world isn’t fully connected despite the impression you may have, stable internet is not in every household all the time.

    This model is not acceptable for consoles, Steam is for the PC market the one thing that for 99% of people IS hooked up to the net 24/7 baring some outage. Its acceptable for a service to evolve within a ecosystem that supports it from the ground up. Consoles evolved in a far different environment, maybe next generation this will fly but it wont this time around.

    As for the second hand thing? I buy collectors editions whenever there is one available and with the exception of games that I simple cant purchase new, I buy new games. But that does not mean I am so self centred that I can not realise that this will cause an issue for others who may not be as well of as myself or others. This is about contempt for the customer and branding us all untrustworthy thieves who must be checked up on every 24 hours to make sure we didn’t do something as disgusting as load a game to a friend. This is guilty until you prove yourself once a day of your innocence.

    And that’s one game I’m NOT playing.

    • @Bearfamily

      This. Your comments about the Internet is spot on. In fact I haven’t bought a WiiU for one big reason: I’m moving to Australia later this year, where the Internet is much patchier. Until I see any of these systems become commonplace among kids and other non-elite users, I am too wary of the potential inconvenience of always-on Internet requirements. Why would I buy something that my changing Internet situation might make unusable?

      I can definitely understand your anger about the high price of new games as well. If it’s any consolation I don’t think the days of $60 games are likely to last. Nintendo is already trying to convince customers to buy their games from the eShop instead of Gamestop. True, their digital downloads are priced the same as physical retail copies, but I think that’s only because at present it would be corporate suicide to totally cut Gamestop out by one-upping them. If Gamestop’s clout were to drop, or people became more confident in buying used games, Nintendo would probably lower their eShop prices in order to sell more copies. It’s coming, someday.

    • avatar Evan says:

      @bearfamily

      I was writing out every word that you wrote and as I was about to post it saw your response, you said everything that was going through my head. Wish I had read it before I wrote out my novella hah.

      • avatar Bearfamily says:

        @Evan

        Even if it was the same sentiment that I have its important, it shows that its more than one person with the same feeling around this practice :)

  6. I’m still undecided about the Xbox One, but your rebuttal to the PAR article doesn’t address its most important claim: Eliminating the used game market may save an economically unsustainable industry. Game development and publishing costs have ballooned ridiculously, and now the idea of a $100 million dollar games is becoming commonplace (I don’t think this is good, but it’s the current state of things). Combine that with profit margins gutted by the used market and you can see how developers are going bankrupt despite games costing $60 a piece.

    I know people who are the sort to buy every AAA title when everybody else does. They bought Skyrim for $60 and played it for a week or three. Once it was no longer the hot thing, they were bored, and there were no more water cooler stories going around at work, they sold it back to gamestop for $25-30 (because it’s still newish) and bought the new Call of Modern Battlefield. Lather, rinse, repeat.

    There are to outcomes to this cycle: The cost of games for these consumers effectively goes down from $60 to $30, which is somewhat more reasonable. Second, Gamestop sucks up a hell of a lot more profit than the original developers make. Also, game publishers only care about first week sales because for most games that’s all that matters. So we end up with stories about how the new Tomb Raider was a flop because it only sold like 4 million copies in the first week.

    Without the used game market, the theoretical frequent game buyer above will buy fewer games (or go broke faster). Profit margins for developers/publishers will increase, and Gamestop will go out of business. At that point, where will the dust settle? I’m not sure. Publishers would be faced with the option of selling fewer games for $60 or selling more for $30. While they’re sorting that out the indie games market will continue to make more interesting product and sell it for $10 or less, so I think that might drive them to lower their price points. That would make people like me, who only buy a new game three or four times a year and hold on to it for ages, much happier. Is this certain? Nope, but it’s an interesting thought.

    Don’t get me wrong, I have issues with what Microsoft is doing, but the most troubling issue surrounding this whole brouhaha is not unique to the Xbox One. Now that the 360 is approaching end of life we have the first generation of console for which a hell of a lot of games will soon be unplayable. What happens when XBL goes offline? Someday it will happen.

    I’m 31 and remember the days of tracking down, storing and reselling physical cartridges. There is something very nice about knowing that if I buy a cartridge and a SNES I will always be able to play it. But you can still do this digitally, as long as the mechanism is in place to support it. Old PC games I bought years ago came with unlock keys, and most of those games I can redownload to this day as long as I retain my individual license key. I hope that today’s content providers are going to do their part to ensure that players can continue to enjoy the “licenses” they’ve bought for years to come.

  7. avatar Michael says:

    I can hardly believe Ben wrote all that stuff. Did microsoft have a gun to his head while he typed away? Has anyone checked if he’s driving a brand new ferrari?

    I loved your every response though. There wasn’t one thing you said that I disagreed with. Just one more reason I come here and not to the penny arcade.

  8. avatar leap says:

    Wow… Ben’s article just rehashes the same arguments all of Microsoft’s defenders have been using since the rumors started. His article can basically be boiled down to “Gamestop and piracy are bad, so anything they do to stop them is good.” He’s giving them a pass for screwing the consumer over. It’s shameful.

    Literally every argument defending this decision is the same, and I’m not exaggerating. Nobody can come up with anything that doesn’t involve Gamestop and piracy. The big game companies aren’t at fault here. It’s not the bloated budgets and ridiculous advertising making them lose money. Nope, it’s Gamestop and piracy killing the industry. So we have to stop them at any cost.

    If this trend continues the indie game market will continue to rise as big budget games fail more and more. I can’t wait for that to happen.

  9. avatar benwa says:

    This will end up in the courts. they had a ruling along this type of copyright issue already so it will get sorted out faster than later…

  10. avatar Ray says:

    Question: Why are Steam and indie games becoming so popular?
    Answer: There are many answers, but a major one is cheaper prices. Why are they cheaper to buy? Often, they are all-digital, which means no physical duplication cost. It also means there’s no (or less) middle-men taking a cut of the price (aka retailers). Also, with digital games, and indie games in general, there is NO USED MARKET. Who needs a used market when the games are so cheap already? That is the future.

    Question: Why are DLC and the free-to-play model becoming so popular?
    Answer: Fewer middle-men to take a cut of the price.

    Many gamers don’t stop to think, “How did this game get to my living room?” There are millions of people that work to get that game to the console to play. They all have to be paid. That’s why games are so expensive, and why indie games can be so cheap. When GameStop buys a used game for a fraction of the price, and sells it at a minor discount, that’s robbing those millions of people from another sale. That’s a HUGE reason why games are so expensive. GameStop is hurting the industry more than it’s helping it. With digital games and licensing being possible now, it’s the most logical solution.

    • avatar konkrypton says:

      Millions? Really? I think that’s an overstatement, don’t you? At most, you are talking hundreds, if that. The game developer has maybe a hundred or so people (digital artists and coders) plus a few managers, and the game publisher has a rep or manager that interfaces with the developer. And there are beta testers, who probably are unpaid or paid very little.

      Look, I don’t use Gamestop, I buy a game and keep it. But I also understand the gamer that buys a game, runs through it in a week or month, then wants to sell it to help them buy the next game. And I see nothing wrong with that. In fact, it’s very similar to movie rentals, another area where the brick and mortar stores are dying because of digital downloads.

      But honestly, I think this BS of having to buy a license to even test a game is just that: BS. Mark my words, this will hurt the XBox One.

  11. avatar Chris says:

    I’m poor, I’ve siad it before on here, but no one ever remembers me so I’ll say it again. Prior to Bush, GW, my family was upper middle class living in an upper middle class neighborhood. Post Bush we’re now considered poor.

    So as a poor gamer I almost always buy used, from Gamestop. If it wasn’t for the used market I wouldn’t own three quarters of the games I do, and my collection is SMALL. With this new no used games scenario I’ll probably be getting one or two new $60 games per year, maximum. And what happens if I do save up for the system, and a new game, but can’t afford my internet for a few months? It’s happened, and recently. And once I got it restored Comcast had issues right across the street and my whole street had no internet or tv for 9 days. Then after that was fixed it went out again for four days just a few weeks later. I’ll be unable to use the console or play the game I just shelled out $60 bucks for? That’s just fucked up, and anyone that thinks it’s a good idea is fucked up.

    Things happen, monetary things happen. Xbox’s stance seems to be get fucked. For now it seems like next gen consoles can get fucked as well.

  12. avatar CC says:

    >Game development and publishing costs have ballooned ridiculously

    Most of this increase in budget is due to marketing costs though. Look at the recent battlefield release or the call of duty releases, and anywhere from 4 to 10 times the actual game development budget is spent on marketing.

    They are spending significantly more marketing the game than they are making it. I don’t really care to subsidize that.

  13. avatar leap says:

    I figured out what Microsoft is going to do! They’re making everyone hate them on purpose, then at E3 they’ll announce they’re not doing all the things fans are angry about. They’ll look like the heroes, like they “listen to their fans”, and everyone will fall for it.

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