Monthly Archives: November 2011

Excerpt 1

Okay, here’s the excerpt that I said I would post today. It’s the first part of the article, which focuses on the industry point of view.

Since EA games released their Online Pass for their sports games, they have expanded it to include popular series such as Medal of Honor, Dead Space 2, and Battlefield 3. Other companies such as THQ, Warner Bros. Interactive Entertainment, Ubisoft, and Sony Computer Entertainment have since included their own 10 dollar online pass in their games. Even though EA’s website states that the Online Pass is “in order to continue to enhance the online experiences that are attracting nearly five million connected game sessions a day”, Dr. Michael Capps, the president of Epic Games said “our primary retailer makes the majority of its money off the secondary sales, and so you’re starting to see games taking proactive steps toward that by… if you buy the retail version you get the unlock code.”

According to a report by market analysis firm NewZoo, 23 percent of video games sales in the United States are those of used games. This in an industry that was down six percent in 2010, and was recently down six percent September of 2011, compared to the same month last year. When talking about the PS3 game Heavy Rain, Guillaume de Fondaumiere, co-founder of Quantic Dream stated “my calculation is, as Quantic Dream, I lost between €5 and €10 million worth of royalties because of second-hand gaming.”

With the number of companies that have adopted a system similar to EA’s Online Pass, it does not seem to be going away any time soon. But that does not address the perceived issue that drives consumers to buy pre-owned games. “I understand why players do this,” stated Oliver, “games are expensive and after a few weeks of playing you’ve either beaten it, or got bored of it so trading it back in to help pay for the next seems sensible when people are short of cash.”

Dr. Capps also agreed, stating “I’ve always said that games are probably too expensive, so there’s probably a right level here to find. We need to discuss this all together and try to find a way to reconcile consumer expectations, retail expectations and also the expectations of the publisher and the developers to make this business a worthwhile business.” Those in the video game industry are not ignorant to the reasons behind consumer actions. But money lost to pre-owned games is not going to be fixed by dropping the price of new games, not because it would not work, but because it will not happen. With the increase in digital and downloadable content, that is where the industry’s solution to the pre-owned market will come from.

 

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More Research

I’ve gathered a number of opinions and articles about my topic, and have decided to share them all in one post. I’ve been trying to look into the percentage of games sold which, which I’ve found differing data on. That’s the first group of links I’m posting below:

http://www.theesa.com/facts/index.asp

http://www.gamasutra.com/view/news/28350/Study_Used_Games_Online_Make_Up_46_Percent_Of_US_Gamers_Budget.php

http://www.joystiq.com/2011/11/07/report-used-and-digital-sales-make-up-35-of-total-console-spen/

Two of those links give studies that bundle used games and digital gaming together, which grabs my interest, because I would see them as two entirely different things.

Next, here are some links to the general state of the video game industry, starting with the most recent:

http://venturebeat.com/2011/10/13/video-game-sales-drop-6-percent-in-september/

http://www.cnbc.com/id/41062675/Video_Game_Sales_Drop_6_in_2010_Second_Year_of_Declines

http://www.wallstreetandtech.com/articles/221700056

Even though I was searching about the company profits, I still found other articles that are going to be really useful for me. One of the best one’s was about an interview by executive vice-president Mike Mauler of Gamestop. Gamestop is the biggest video  game store and earns much of its profits from used gaming. So to find an interview with his take on the issue was very useful:

http://www.next-gen.biz/news/gamestop-pre-owned-benefits-publishers

Then there were the more general pieces. The first one listed is a report on the impact of used video games on the industry. The second is about about a new company called PostalGamer, which would work  Netflix and give participating companies “a 10 percent cut of sales generated by their titles from their catalogs.” The last two articles are more pieces on views and analysis of the used gaming industry.

http://interpretllc.com/_downloads/impact_of_used_game_sales_on_the_industry.pdf

http://www.wired.com/gamelife/2011/08/postal-gamer-used-games/

http://badgerherald.com/artsetc/2011/08/31/pre-used_market_poac.php

http://www.wired.com/gamelife/2010/08/used-games/

The last article I leave you with is from 2002, when Amazon was first starting to allow people to sell used books online. It was some of the little information I could find about book authors/publisher being angry with used book sales, but there was not much beyond that point. Nor could I really find anything about dvd used sales.

http://news.cnet.com/Group-blasts-Amazons-used-book-sales/2100-1017_3-880022.html

That was something I had been curious about, why did used video games matter when I had not heard much about issues with used book or used dvd sales.

Those are the links I have for you, and tomorrow I should be putting up a small excerpt of the article I have so far.

 

Industry Viewpoint

I’ve been doing some more research this week, particularly into the industry perspective. I know that it would be hard to have my own conversation with the industry, but there is enough already said out there that it is obvious as to how industry leaders feel about used gaming. I’ve including two interviews/statements by those in the industry about used gaming.

Here’s a quote 0f the older one, of Epic Games president Dr. Michael Capps from 2008:

“We don’t make any money when someone rents it, and we don’t make any money when someone buys it used – way more than twice as many people played [Gears of War 2] than bought it…”

Second part of interview

Article taking out bits relevant to used gaming

So obviously, as my other research as shown, and the basis of my interest as shown, the industry has a problem with used games. The good? interesting? thing about these different comments/interviews is that it shows that it is most of the industry, not just a small section that feels like this.

He also briefly address digital downloading by mention Steam, which is something I want to address in my article as well.

And then there’s the second statement, by Blitz Games Studios’ co-founder Andrew Oliver. This came out around the same time EA games announced there $10 fee to play their sports games online if they have been bought used. That has been one of the biggest ways companies had tried so far to combat used gaming, so it is a situation that is definitely going to be brought up in my article.

Gathering More Articles

So far, I’ve been working on gathering more articles that have already been written on the topic.

This video shows one person’s perspective on how to fix the issue of used games, which is definitely up the alley of what I would like to explore in this article.

Here is a recent article from about 7 days ago, talking about the percentage of used sales makes up the gaming market. I must say that I was surprised while reading this article. I did think that the percentage would be higher.

One line from this article interests me. The beginning of the article talks about how copyright law makes selling used games completely legal. Plus he discusses solutions that companies have tried.

Here’s a final article that I have found so far.

All these articles tell me what I’ve already known I need to research in – the profits of the video game companies. So that is the next direction that my research will take, and probably what my next update will be about.

Brainstorming

When we were asked to brainstorm what to write for our investigative article, I admit I was at a loss. I was not sure what I wanted to look in to, so I thought about past articles I had read and had interested me. I finally, after a lot of thinking, returned to these two articles by The Real Cost of the Used Market and Owned by Pre-Owned by Ign.com writers. I have had a growing interest in trying to learn about industries such as gaming and television, so the idea of digging in to know more about the used game industry intrigued me. I had read the first article back when it was first published, and the concepts brought up in that article had been in the back of my mind since then.

The idea that there was something to explore was cemented after speaking with my brother, who is an active gamer himself. We spoke briefly, more of a way of fishing into what I was thinking, and I plan to speak to him more formally, but his negative opinions of the gaming companies told me there was a culture or a feeling I needed to explore. It was these two instances that lead me down the path of what I am writing now.