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Analyst: Blocking Used Games Will Mean Retailer Backlash

By - Source: Gamesindustry | B 40 comments

GameStop could ban the PlayStation 4 if it blocks the use of pre-owned games.

We already know that publishers and developers despise the second-hand market. They claim they're losing money because these consumers aren't purchasing the pricy, mint copies. Only the retailers are generating revenue from these used games and thus are driving prices of the retail versions upwards.

But some of us on the consumer side say we flock to used versions because new copies are just too damn expensive. We bought the hardware, and we should have the right to play second-hand copies.

But recent reports have indicated that the next-generation Xbox 720 and PlayStation 4 "Orbis" consoles will either block or severely limit the play of second-hand games. Full-priced retail versions will be locked to a specific user, and those who pick up those titles at GameStop or GameGiant will be forced extra to unlock the full game for a price. Wedbush Securities analyst Michael Pachter believes that if Microsoft and Sony do implement some kind of blocking feature, retailers who thrive on second-hand sales will revolt, if not ban the new hardware altogether.

"It isn't really in Sony's or Microsoft's best interests to block used games. It would benefit Activision and EA slightly, and would hurt GameStop a great deal. If Sony unilaterally did this, I could see GameStop refusing to carry their console, and sales of the PS4 would therefore suffer," he told GamesIndustry.biz.

He also added that if one console maker blocked used games, and the others didn't, the one who does will see a loss of market share. None of the Big Three would be foolish enough to do this unilaterally, and none of them are evil enough to do it together as a group.

David Cole of DFC Intelligence agrees. "A system that tried to stop used game sales would probably turn off the core consumers that rush to trade in their old product to buy new product. In other words, I don't think it would do so well in the core market," he said.

Lewis Ward, IDC's research manager, says customers would rebel. "I can certainly see Sony stepping up the idea of $10 online passes for connected multiplayer and so on, but especially for families of limited means or that have a narrowband connection at home, the ability to buy/trade use discs is an important reason why they buy game consoles in the first place," he said.

It was also pointed out that any kind of DRM/security to block or limit used games would eventually be thwarted by hackers anyway, so implementing such measures would really be a waste of time.

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  • 36 Hide
    outlw6669 , March 30, 2012 7:48 AM
    You know, if game and console makers stopped being dicks, did away with excessive DRM and dropped prices to reasonable levels they would probably realize more profits by drawing the pirating community back into purchasing.

    Lowering prices would also give a long term net gain by reducing the amount of times a game would be resold.
    That is to say, if the games where affordable, many more people would buy them new, with profits going to the 'right' corporations.

    A little common sense in the board room would go a long way....
  • 24 Hide
    cumi2k4 , March 30, 2012 8:01 AM
    Great...if they really implement this and sales dwindling, i bet the number one scapegoat will be "piracy is killing us".
  • 22 Hide
    venur , March 30, 2012 8:45 AM
    I doont understand how it cam be even legal to stop the used game buying. Also when I buy a Used car GM get no money from it. Why is sony and microsoft should make $ with used product ?
Other Comments
  • 36 Hide
    outlw6669 , March 30, 2012 7:48 AM
    You know, if game and console makers stopped being dicks, did away with excessive DRM and dropped prices to reasonable levels they would probably realize more profits by drawing the pirating community back into purchasing.

    Lowering prices would also give a long term net gain by reducing the amount of times a game would be resold.
    That is to say, if the games where affordable, many more people would buy them new, with profits going to the 'right' corporations.

    A little common sense in the board room would go a long way....
  • 24 Hide
    cumi2k4 , March 30, 2012 8:01 AM
    Great...if they really implement this and sales dwindling, i bet the number one scapegoat will be "piracy is killing us".
  • 7 Hide
    LuckyDucky7 , March 30, 2012 8:17 AM
    So I guess the labels of "M$" and "$ony" prove themselves true again.

    Because that's all it is.
    But for some reason I don't see this "make more money" scheme working the way everyone thinks it will.

    I'm calling it now:

    Game consoles will have very large hard drives (since they are extremely cheap).
    Digital distribution will appear, and will exist alongside DVD/Blu-Ray/whatever physical distribution.
    Digital distribution will be priced more aggressively than physical DVDs are. It's more convenient, too- we'll say about 10 bucks cheaper than the physical media (though still what would be normal retail price).

    So the physical media (whatever it turns out to be) is still going to be re-sellable; and there will be no locks on it. But many more people will turn around and buy from the digital, locked distribution channels because it's cheaper in the short-term. So the producers ALREADY have all the money they're going to get from the people who WILL NOT sell.

    But for the people who WILL sell, they've already got their price hike out of it. So GameStop will likely still stock the console because they still have a reason to exist: or not, if this scheme actually works.
  • 5 Hide
    chumly , March 30, 2012 8:31 AM
    I think having to waste gas to go pay a middle-man money is a ridiculous idea when I can download the entire game at home in an hour or two. Goodbye, GameStop.
  • 8 Hide
    jamesedgeuk2000 , March 30, 2012 8:33 AM
    Doubtful Sony will do this as its against EU law and if they have to make a version of the PS4 that plays used games just for Europe I can just see US customers importing them.
  • 22 Hide
    venur , March 30, 2012 8:45 AM
    I doont understand how it cam be even legal to stop the used game buying. Also when I buy a Used car GM get no money from it. Why is sony and microsoft should make $ with used product ?
  • 4 Hide
    Anonymous , March 30, 2012 9:42 AM
    Start marketing games .. and the games are way too short for the price.... so what do you do if you have 2 xbox.s or 2 playstation..
  • 9 Hide
    tomfreak , March 30, 2012 9:42 AM
    It is already wrong from the first place when u buy something that cannot be resell back. I wonder why gov didnt stop these acts. looks like another reason for people to join the pirate.

  • -4 Hide
    Anonymous , March 30, 2012 10:18 AM
    Typical liberal ideology with a very linear mode of thinking.

    They say used game sales are driving up the price of new games? That assumes people buying the used games would buy the same game new if the used option weren't available. I, for one, could not afford to buy the new games I want to play. Instead, I wait a month or two until there are plenty of used copies available at a lower price.

    The way they are thinking also assumes that people like me would automatically just go buy the new product if the used option weren't available, driving up their profits. They would be sorely mistaken.
  • 20 Hide
    eiskrystal , March 30, 2012 10:26 AM
    Funny how Minecraft has made its programmers into millionaires and yet was 4 times cheaper than any PS3 title with an ever larger number on the end. I've also plyed it far more than any other game in the last 5 years. There are a lot of lessons there.

    Mainstream has got too big and it is tipping over under the weight of middle men and clueless executives. More legal teams and hacking off your customer base is not going to save it.
  • 5 Hide
    rantoc , March 30, 2012 10:51 AM
    The retail is the evilness when it comes to PC gaming, they sell for less than 20% compared to Steam who by most analysts have 75-80% of the market (rest is shared between retail/orgins ect) yet they publish those sales to make the PC look bad compared to the competition.

    Its a shame that Valve choose to not publish the actual sales because it give a false appearance of the total sales when only 20% of the total sales are shown in the charts! My bet is that the publishers don't want the actual sales shown as more people would demand better quality!
  • 11 Hide
    namecnassianer , March 30, 2012 11:11 AM
    If this logic were taken to its logical conclusion, then every library in the world would have to close. Like, a book could only be read by the original person who purchased it.

    Or games and books would have an expiration date. After a year they would just spontaneously burst into flames. Farenheit 451, baby!
  • 8 Hide
    DEVILVSANGEL00 , March 30, 2012 11:31 AM
    if the rumors are true and that the next gen consoles plan to stop being able to sell or buy used games and their limited to user accounts i know for a fact i wont be going anywhere near their so called next gen console no matter how good its supposed to be,

    i can see piracy going sky high if their stupid plan actually goes ahead, i like to share games with my friends and if i buy a game that isnt good or get bored of it id like the option to sell it and get another one to replace it, there are so many games out there that look great and when u buy them are totally rubbish and if it wasnt for being able to sell them id be very angry that i got riped off.

    i can see piracy and pc game sales going through the roof and M$ and Sony regretting their stupid idear to try and make more money out of us and ending up loosing alot more then it would make in the end as well as a bad rep to suit
  • 7 Hide
    Bloob , March 30, 2012 12:15 PM
    People only have a limited amount of money to spend on entertainment, this won't change no matter how you restrict things. The game industry is just at a point again where there is more supply( of bad / average games ) than there is demand, so naturally not all games will sell well, or even make a profit.
  • 5 Hide
    yumri , March 30, 2012 12:52 PM
    I think instead of trying to restrict games they should try to make games longer and funner so the avg game is fun to play and replay for weeks and/or months not just hours as they are now. This is also why i basically have stopped playing and buying newer games they are just not fun anymore for most of them it is just the same canned plot put to a different title for example Mass Effect 3 is feeling just like Halo 1 and Mass Effect 1 merged but with a weaker plot then either.
    @eiskrystal um i agree with you but the devs over at Minecraft have to update the coding so it will work on the newer hardware like Intel's integrated GPU, AMD's integrated GPU, the nVidia 500 & 600 series, and most likely AMD's 7000 series also. Otherwise Minecraft beats most newer games into the ground running on less hardware and making us more entertained.
  • 5 Hide
    flapjackfritz , March 30, 2012 1:22 PM
    I have to wonder -- if the big three console manufacturers all together decide to change their system to block out second hand sale retailers, is there some kind of anti-trust or monopoly law they will be breaking? It seems like it might be something that creates a non-competition atmosphere.
  • 1 Hide
    zak_mckraken , March 30, 2012 1:57 PM
    Quote:
    Wedbush Securities analyst Michael Pachter believes that if Microsoft and Sony do implement some kind of blocking feature, retailers who thrive on second-hand sales will revolt, if not ban the new hardware altogether.

    Or, you know, go out of business. I don't like it more than anyone else, but seriously, who are they kidding? People will just buy the consoles at Best Buy or Wal-Mart.

    Ultimately, I think console makers will simply see a reduction in sales. People who are buying new games now will continue to do so in the future, while people who buy only used games now will simply not buy the console. Overall, games sales will be the same while console sales will drop. My 2 cents.
  • 1 Hide
    zaznet , March 30, 2012 2:10 PM
    The game makers are already doing this by locking online and DLC content to the original purchase of the game. It is their problem and they are solving it. If consumers don't want those locked down titles then the game makers will pay in loss of sales.
  • 1 Hide
    willard , March 30, 2012 2:42 PM
    namecnassianerIf this logic were taken to its logical conclusion, then every library in the world would have to close. Like, a book could only be read by the original person who purchased it.Or games and books would have an expiration date. After a year they would just spontaneously burst into flames. Farenheit 451, baby!

    Actually, if I remember correctly publishers considered crazy shit like this with ebooks (specifically library loaning of them), claiming if they didn't the industry would die. Years later, they're still just fine, though the measures they took to artificially inflate the price of ebooks are biting them in the ass (finally).
  • 0 Hide
    bourgeoisdude , March 30, 2012 3:41 PM
    I honestly think these "leaks" are intentional just to see how negative consumers and retailers will react to banning used games. I still find it unlikely Microsoft or Sony are stupid enough to do this without really digging into the pros and cons of each approach. Basically--unless everyone does it, nobody will. If Wii U, for example, allows used games, Sony and MS will as well. Or they'll find out the hard way, but I don't think they're that stupid.
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