Reports continue to circulate about the Xbox One's upcoming preowned games policy, and we are already seeing its effect on brick-and-mortar retail.
GameStop, the U.S.'s largest physical retailer of new and used games, has seen its stock drop precipitously since reports began to spread that Microsoft's successor to the Xbox 360, the Xbox One, would change the terms of used games sales. At time of writing, GameStop's stock dropped as much as 13 percent to hover around $31 today.
The dwindling stock price comes on the heels of reports from MCV and Eurogamer that Xbox One will effectively allow Microsoft and publishers to take a cut from used video game sales.
In a meeting with investors yesterday, in which GameStop reported a loss in total global sales of nearly 7 percent from the previous year ($1.87 billion down from $2 billion), GameStop president Tony Bartel assured stockholders that the Xbox One would accommodate the lucrative preowned market.
Definitely, Xbox has said that they do support the trade-in resale games at retail, and that they want to handle communications from this point forward on that. I think what is important to note is that all 3 of the platforms that have launched, all 3 of the consoles that launched have now come back and they say, "I realize the value of the buy-sell-trade model," and they have built that into their new consoles moving forward. So we anticipate that we are going to be able to leverage that like we leverage it on the consoles today... Clearly, platform holders understand the value of that $1 billion-plus worth of trade credits.
As of this writing, Microsoft has not made a clear, definitive statement on the exact nature of its preowned game policy, but Microsoft's Larry "Major Nelson" Hryb said in a Friday blog post:
"The ability to trade in and resell games is important to gamers and to Xbox. Xbox One is designed to support the trade in and resale of games. Reports about our policies for trade in and resale are inaccurate and incomplete. We will disclose more information in the near future."
What we do know is Xbox One's used game system will involve a single-use code tied to a player's account. How access to the game transfers from account to account or machine to machine is still a little unclear, and will probably remain so until E3 this June.
No more open used games market. Maybe or I should say eventually no more used games market.
Some of us are already used to it on the pc though. Hell we are used to it on mobile. I can't resell my free game with $20 worth of upgrades. Not that I have ever splurged on an in-app purchase. It is just a hypothetical.
The difference, I suspect, is that due to an emphasis on retail discs and a total control over the marketplace (and the issuance of codes!) Xbox One won't have the bundles and the sales that make Steam's implementation of a similar system so palatable to most gamers. If a game starts at $60 and stays there for a good long while... that may be what Microsoft and its publishing partners want as much as anything else this could potentially enable.
@Christian thats what I also think, on Steam for example I have over 70 games at the moment and almost all of them were bought on -75% or more sales. Without the possibility to get additional money from selling games and without the possibility to exchange games with friends this implementation can only work when game prices are reduced. 60€ is well beyond what I would pay.
Possibility #1 - Console companies will attempt to keep the $60 game alive even well into the digital age. This leads to a radical increase in game piracy, after which someone else will come up with a clever system for us to resell our used games, bypassing the big console companies and publishers entirely. Finally after the huge court cases initiated by console companies and publishers against these reseller companies, some of them go bankrupt from all the legal defence fees.
Or, the console companies realize that flexible pricing models are the best course of action, even though their big publisher friends will lose millions in sales because their overpriced blockbusters will go head to head with leaner cheaper competition. The big three console companies decide that Bobby Kotick and his yarn are not worth the potential billions they will lose in the next generation, so they make their hardware kits affordable to one man teams and let game developers set their own prices on content.
Based on the events of this last week, i think we can assume they're pushing for #1, nickel and dime the consumers while making secret deals with their biggest publisher accomplices.
I think that's exactly what brought this discussion up in the first place. Publishers saw the potential of making money with games that cannot be trade-able/resold (e.g. phone apps and PC games) and thus began to want a piece of the "used" industry or wanted to abolish it altogether.
With the increasing development costs for console games, I wonder how much of this is actually trying to make a video game profitable by promoting "new" game sales as opposed to just wanting to see a bigger income.
Killing the used market isn't that big of a deal... as long as there is a cheap market at some point. This is where console games struggle. You can never find a new game for less than $20 (unless it is copies the retailer couldn't return to the publisher). If you want to kill off the used market, you better make sure at some point the games are available later on for a cheap price...
Some people want to play these games to try them out before the sequel comes out or something, but just don't want to gamble $60 away for a new thing.
Killing the used game market isn't a big deal? This article fails to mention that Gamestop reported that 70% of the $1 billion in trade credit goes to buying new games. Furthermore the article does not mention the used market from retailers like amazon, ebay, best buy, craigslist, and others. When factoring the other retailers the used market could easily be in the $2-2.5 billion range. Which would be $1.75 billion being used to subsidized new games, a pretty big chunk of change.
Used games act as a subsidy to buy new games. Get rid of used games or tax them like Microsoft wants to and people will not be as eager to trade in and upgrade.
Now if you think Microsoft is going to run sales your crazy. These games will stay at full price as long as possible plus a month.
There's very little inside a box these days other than a disk. With larger hard drives and faster internet connections now the norm, I'd be worried too.
If worst comes to worst, and Gamestop feels its back is up against a wall, what incentive does it have not to throw Microsoft under the bus and push Sony / Nintendo product instead?
Retail is on the way out as digital distribution takes over, but retail is still a significant chunk of the market and will be so for a while to come. Gamestop could play kingmaker this generation if they feel threatened enough.
This is a good point, but what if something similar happens in reverse, where publishers decide to punish Sony & Nintendo for *not* having this kind of system? What if publishers prefer Microsoft's approach and decide to try to push players toward the Xbone by releasing games on it first or giving exclusive DLC or something of that nature?
@Adam - yeah its a real catch 22. However, I think if PS4 significantly outsells XboxOne than they won't go this path. You would pretty much out of the gate want to start that conversation straight away.
So I guess my game of preordering chains of games on Amazon with $20 off and then selling them used after two months for the price I paid for them is out, eh..? Twas fun while it lasted.
As an aside here, how would it work with a game if I wanted to sell it to a friend. If the game goes to a reseller, they must update Microsoft that it is in there system. So it deactivates from you and is ready to sell on and activate somewhere else. Where they have stated it will not require a secondary fee.
But if I sell my game to a friend......... Currently they state if it is "lent" it deactivates on your system whilst you are logged in on their console. Once I leave they then have an option to purchase the game for their own account.
So how do I sell my game privately, I charge £10 ( say ) they take the disk install - it is still registered to me- they are then paying a fee to ( also ) buy the game.
Unless there is a feature at install that asks if you have bought the game from the previous owner, then it would deactivate from my account - I suppose. Dependent on the trade in and sale values through shops, and the install value via taken as a purchase from a friend and installing via their account to their console. Private sales could be valueless.
As much as I want to see gamestop burn in hell for their sleazy practices and throwing consumers like myself under the bus and getting away with it for basically having a monopoly on the market (especially on the east coast), this DRM from Microsoft is a huge concern... and pretty much assures I won't be touching an Xbox One or buying one until there are hack methods out there that break this anti-consumer DRM that they're employing on it.
As the industry moves to Games as a Service, and we end up being a (relatively) socially acceptable form of dopamine delivery, I have a hard time seeing the relevance of being able to resell games at all. You can still resell movie DVD's because you don't need an internet connection to watch a move. It is not a "Service". I can't imagine reselling my phone or text time after I was done with it. If I paid to go to Disneyland or a dance club, I can't see being able to resell that experience.
To me the whole idea of used game sales was an exploit of a broken and archaic business model that was made obsolete almost ten years ago. Yes I realize we still sell games under this model, but to me this is only because console makers and the developers working with them were a bit slow adapting to the changing business and technology environment.
Some of us are already used to it on the pc though. Hell we are used to it on mobile. I can't resell my free game with $20 worth of upgrades. Not that I have ever splurged on an in-app purchase. It is just a hypothetical.
Of course, this is speculative!
Or, the console companies realize that flexible pricing models are the best course of action, even though their big publisher friends will lose millions in sales because their overpriced blockbusters will go head to head with leaner cheaper competition. The big three console companies decide that Bobby Kotick and his yarn are not worth the potential billions they will lose in the next generation, so they make their hardware kits affordable to one man teams and let game developers set their own prices on content.
Based on the events of this last week, i think we can assume they're pushing for #1, nickel and dime the consumers while making secret deals with their biggest publisher accomplices.
With the increasing development costs for console games, I wonder how much of this is actually trying to make a video game profitable by promoting "new" game sales as opposed to just wanting to see a bigger income.
Some people want to play these games to try them out before the sequel comes out or something, but just don't want to gamble $60 away for a new thing.
Used games act as a subsidy to buy new games. Get rid of used games or tax them like Microsoft wants to and people will not be as eager to trade in and upgrade.
Now if you think Microsoft is going to run sales your crazy. These games will stay at full price as long as possible plus a month.
Retail is on the way out as digital distribution takes over, but retail is still a significant chunk of the market and will be so for a while to come. Gamestop could play kingmaker this generation if they feel threatened enough.
But if I sell my game to a friend......... Currently they state if it is "lent" it deactivates on your system whilst you are logged in on their console. Once I leave they then have an option to purchase the game for their own account.
So how do I sell my game privately, I charge £10 ( say ) they take the disk install - it is still registered to me- they are then paying a fee to ( also ) buy the game.
Unless there is a feature at install that asks if you have bought the game from the previous owner, then it would deactivate from my account - I suppose. Dependent on the trade in and sale values through shops, and the install value via taken as a purchase from a friend and installing via their account to their console. Private sales could be valueless.
My brain hurts. Have I got the logic right here.
To me the whole idea of used game sales was an exploit of a broken and archaic business model that was made obsolete almost ten years ago. Yes I realize we still sell games under this model, but to me this is only because console makers and the developers working with them were a bit slow adapting to the changing business and technology environment.