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Livingstone: Used Games "No Benefit"

$40 For That Old Thing? How Used Games Are Priced on Kotaku.AU looks at how used games are priced, talking with several used game vendors, though industry leader GameStop was not willing to comment for their article. The simple economics of supply and demand are still in play, of course, and they examine how this is determined. On a related note, Retailers 'limit UK games market' on the BBC is a GamesCom conversation with a couple of publishers about games at retail and the secondary market (thanks GamesIndustry.biz). Koch Media's Georg Larch tells them digital distribution will help publishers deal with used game sales, while Eidos' Ian Livingstone says they still want to work with retailers because: "These aren't just shops, they are a marketing tool, a window into our world where software houses can display their wares." Of course some gamers buy games at full price only because they know they can later recoup some of that cost by selling games, and many gamers use the proceeds from selling their old games to buy new ones, but apparently Livingstone sees no value in this, saying: "The pre-owned market is a serious problem, because there is no benefit to developers or publishers."

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41. Re: Livingstone: Used Games Aug 20, 2009, 13:43 Beamer
 
For that matter, why isn't "the industry" complaining about places like Blockbuster and Gameflix, where people rent games? You don't see a dime for all those rentals either. Unless I'm mistaken, never heard a peep out of any of you. And now all of a sudden it's this huge problem that's "killing the industry", even though year after year after year you set record new profits?

Do you have any idea how many copies those companies purchase? Each Blockbuster will buy 3-5 copies of a big game. And all of those copies will be scratched within a few months, forcing the store to buy more. And, with the obscene price of video game rentals ($10 a week), many gamers feel there's much more value in purchasing than renting.
As I mentioned, Hollywood fought this by lowering prices ridiculously, but Hollywood has a very different economy and DVD sales are typically considered icing, not the main goal. They also appeal to a wider audience and are guaranteed more sales. But the industry is set up in a mercenary fashion with interchangeable parts hired for short-term contracts. This helps keep costs down. I don't think anyone wants to see games go this way.
 
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40. Re: Livingstone: Used Games Aug 20, 2009, 13:39 Beamer
 
People don't run a business to break even either.

No, and if you break even you have no money to invest in new projects. You're stuck doing one, waiting to break even, doing another, waiting to break even, etc.


Listen everyone, you sell the most units at marginal cost. This is always true. But you don't make the most profit, you just move the most units. Profit is centered around supply and demand, which is good, as marginal cost is virtually impossible to determine with video games.
But GameStop screws up supply and demand. It sets its pricing at 10% below new as a rule. This prevents the gaming industry from playing with their pricing much. It 100% prevents the industry from lowering costs, as they know that will benefit used games as much. They lean more towards raising costs because they know they can rely upon a certain percentage of gamers that will always buy new, yet if 10% matters so much to those buying used they'll still go for it if prices fall.


The bottom, unavoidable line is this hurts you as consumers. Less revenues are going to those creating. As a result they have less money to invest in new projects and less money to risk on trying new things. The industry is instead incentivized to gravitate towards what they know will sell well, particularly new, as certain games do better this way. You have the industry wasting creativity trying to get around GameStop, and you have companies that might have stayed afloat sinking because their revenues were chipped away at via used sales widely pushed by GameStop.

Again, no one thinks you shouldn't be able to sell your games, they think GameStop shouldn't get rich on it.
And you know what will happen? Eventually the industry will find a way to really stop used game sales. Eventually they'll find that silver bullet that makes used games virtually worthless. And its all the defense of GameStop that pushed that. You won't be able to sell to your neighbor, or put it on ebay, the kind of sale no one really complains about, because that ability was lost in an effort to beat GameStop. A way may be found before digital downloads become the norm, but those will kill it. Mark my words: you'll never be able to transfer digital downloads. And this makes sense, otherwise people would just freely trade via message boards non-stop, as there'd be no barrier against it (you wouldn't even have to leave your house, just post "looking to trade Game X for Game Y somewhere and wait,) and the whole industry would crumble.
The fact that any kind of wear-and-tear incentivizing away from used sales disappears with digital downloads is terrifying to those that create content.
 
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39. Re: Livingstone: Used Games Aug 20, 2009, 13:35 Creston
 
Mick,

The issue here is that much of the industry's revenue is via used games.

No. Much of GAMESTOPS's revenue is via used games. Gamestop is not the industry. A 30 something billion dollar industry shouldn't complain that it's getting only a fraction of the money.

This means that the money that a certain percentage of people playing the games pay goes directly to used games stores; zero percent goes to game devs and publishers

Yes. You know why? Because your games are overpriced for what they offer. Want people to buy and keep your games? Make a game worth keeping.

This in turn hurts the sales from which game companies need to survive.

Every time a consumer buys a used car, the car manufacturer doesn't make a dime. I don't hear the car manufacturer complain? Every time a person sells a house, the builder of the house doesn't make a dime. I don't hear house builders complain?

For that matter, why isn't "the industry" complaining about places like Blockbuster and Gameflix, where people rent games? You don't see a dime for all those rentals either. Unless I'm mistaken, never heard a peep out of any of you. And now all of a sudden it's this huge problem that's "killing the industry", even though year after year after year you set record new profits?

You sound like the oil companies complaining that their costs have gone up so much, even though they just announced a 30 billion dollar net profit in the last quarter. Nobody gives a shit about your problems. (not meant personally to you, this is the consumer's attitude towards you as a business.)

Game devs and publishers are not out to say you can't sell your property

Really? Have you read one of your pretty EULA's lately? Most of them will try to say something EXACTLY like that. Sadly for you, the United States courts still feel that if I buy something, I can do with it whatever the fuck I want.

Instead, we are coming up with new solutions so that the money goes to the right places instead of the pesky middlemen.

Those pesky middlemen are also selling a ton of new copies for you. Those pesky middlemen are simply doing smart business. Trying to exterminate them isn't going to win you any favors.


To put it bluntly, those who do the work need to get paid. Much of the work is going unpaid. There is nothing greedy about it.


1) You ARE getting paid. Before a copy can become used, it has to be sold. Therefore, it is a sale. Gamestop isn't stealing copies of your games. It's selling them. Then it buys them back and re-sells them. Does that mean that future sales of that copy prohibit the sale of a new copy? It might, yes. In quite a few cases, it probably does. In the rest of the cases, it probably doesn't, because people that predominantly buy used games have obviously decided that your prices are too high for new games.

How do you combat this? Make games people want to keep playing. Instead, the industry keeps throwing out five hour playtime shovelware trash, then whines and bitches that people don't buy a new game every week.

Alternatively, lower your prices. The explosion of the huge used market should be like a giant fucking neon sign that screams "NEW GAMES ARE TOO EXPENSIVE."

Instead, all the industry sees is evil Gamestop stealing "their" money.

You are not special. You are an industry providing a product to a consumer. For that product you get paid upon the sale of that product to the consumer. What happens with that product after that is none of your business, none of your concern and you have no right to try to interfere with it.

However, I do think that the gamers out there should be more ready to support measures by game devs and publishers to combat this major issue, if anything, to keep the game studios who make the games you love in business.

Oh right! Because those selfsame game studios SO support us, the gamers, in exchange right? That's why we keep getting more and more games with nothing but fluff, we keep getting shorter and shorter games, we keep getting games that require more and more patches, and we keep getting more and more DRM shoved up our asses.

And in return, we should just happily throw money at you because you enrich our lives so!

You know what? The days when devs made games out of love, and the gameplayers loved them in return, are long fucking gone. You (the industry) are not the bitmap brothers, making Speedball with your brother in your garage. You're a multi-billion dollar corporation who treats its customers as garbage, assumes they are pirates even if they BUY YOUR FUCKING GAME, and you expect any kind of sympathy? You have got to be kidding.

As the supplier of a product, you get paid for that product upon first sale. After that, that product no longer belongs to you, and you do not get paid for it. Ever. Welcome to global economics.

Creston
 
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38. Re: Livingstone: Used Games Aug 20, 2009, 13:29 Beamer
 
That's the point I've been trying to make about lower prices for new games. People just want a lower price.

And the industry is trying to educate that a lower price comes with sacrifices. Is hurting the industry really worth saving $2 on Thrillville?
The industry itself can't lower prices. Let's say they make new releases $55 instead of $60. GameStop then takes $8 off the buying price from gamers and $5 off the selling price to gamers. So the industry cuts down to $50. Now GameStop sells used for $45.
Where does this stop? In the end everyone is making less money.

There is not a single instance in the entire known universe where used sales somehow financially benefit the original creator of the product that's being sold. The game industry somehow feels that new rules should apply for it. It is wrong.

Gah! No! This industry already has new rules! The game industry wants to stop the new rules. Show me one industry, one, that has a GameStop. You can't! It's only games! There's no way for the gaming industry to destroy GameStop so it's trying to find ways to get gamers to avoid it.
And, as I pointed out, if you want to get specific about the car industry then Ford does profit from used sales because it takes cuts from its licensed dealerships. Yes, the little back-woods parking lot on the highway that sells crap doesn't pay to them, nor do private sellers, but these outlets aren't taking sales from Ford.
Your average new car buyer never considers a used car a proper substitute. Your average used car has significant wear and tear and is not comparable to a new car.

None of this is true in games!
 
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37. Re: Livingstone: Used Games Aug 20, 2009, 13:22 Verno
 
I agree Ray. I think the industry can give a little on price but that consumers expect too much on that front too. Everyone will always want lower prices no matter what, at some point something's gotta give and people need to understand that their games don't get made for free. People don't run a business to break even either. Everyone wants to be profitable and pretending otherwise is silly. No one thinks Gamestop is evil for wanting to make money either, I just personally think they are rather short sighted and stupid about how they went about it. They could have negotiated a resale percentage for the industry that kept this little fight from brewing but instead decided to keep the entire pie for themselves. Now the industry will fight back, the consumer will get hurt, Gamestop will get hurt and no one is happy.

This comment was edited on Aug 20, 2009, 13:25.
 
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36. Re: Livingstone: Used Games Aug 20, 2009, 13:21 Beamer
 
1) A house is unmoveable, therefore you can't compare selling it to something that... can be... moved? What?

It just means that their sale isn't a very fair comparison. It's incredibly difficult to sell a house yourself. You can't market it. You can't take it somewhere and drop it off.

2) Cars.com, autotrader.com, there's plenty of these sites. I don't know if they are publicly traded, but I fail to see what kind of basis for comparison "publicly traded" is. Cars.com is a pretty huge organization, and it makes its money solely off people selling their car.
Those sites don't sell the cars, they're resources for finding people that sell cars. They're similar to ebay or Craigslist in that regard. They don't make more money than Ford does, nor do they particularly take sales from Ford.

3) Without used car sales, most dealerships would go under. Car dealers hardly make any money on actual car sales, they make their money off servicing cars (15000 miles, 30000 miles etc.) and used car sales. Don't believe it? Go ask any dealer in your area.

Exactly. It's symbiotic. GameStop isn't. Ford isn't really losing sales to the used car market. Some, but not too many. They then make money on parts. Beyond that, it keeps their cars on the road longer which is advertising, as well as incentive for other companies to support cars in ways no longer economically viable to Ford, which is good for people that bought right from Ford.
Lastly, those dealerships that make money on used sales and servicing pay large fees to Ford, so Ford gets a nice chunk of those used sales.
None of this is at all comparable to GameStop.

4) I don't even understand what you are trying to say here. We're not talking about a third party financier. We're talking about a consumer's right to buy something, and then sell it on as they see fit, without the creator/publisher of the product being able to tell you you fucking can't.

What I'm saying is that used cars and used houses NEED an established industry around them. Games? They have the most established industry but certainly don't require it.



Again, I really wish everyone here would stop thinking developers want you to stop trading used games. We don't. We hate GameStop taking such a huge chunk of video game revenues for doing nothing. No one is coming out and singling them out on paper because GameStop's an 800 lbs gorilla. But it pisses people off. Mom and Pop stores don't.
 
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35. Re: Awwww Aug 20, 2009, 13:16 Ray Marden
 
If it stays on its current path, the entire industry will go to hell.

The industry just pushed through a whopping 20% price increase while the used game market is exploding and a significant portion of the market is hammering down games to have commodity-type pricing.

Meanwhile, places like Lamestop can often turn a bigger profit on a game - just for having it stand on a shelf - than the actual developers.

The industry should really reign in prices as well as its skyrocketing development costs, but the end consumer should grow a little backbone and pay for some quality, too.

Not, mind you, that I expect this to happen...
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34. Re: Livingstone: Used Games "No Benefit" Aug 20, 2009, 13:16 Verno
 
There is not a single instance in the entire known universe where used sales somehow financially benefit the original creator of the product that's being sold.

This is true of the consumer, not the corporation. That's the whole point here, Gamestop is a company and not a consumer with consumer rights. The industry doesn't want to remove Creston's right to sell his game. They want to be compensated for Gamestop's little loophole.

Eventually the industry will smarten up and lobby for legislation regarding resale rights for companies. The real question is why you would bother to support Gamestop in this scenario? The pissed off industry's solutions can only hurt the consumer more than Gamestop itself. Gamestop doesn't even really provide great value, simply convenience and presence. Amazon and other companies doing used games make an effort to at least compete in price.
 
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33. Re: Livingstone: Used Games Aug 20, 2009, 13:16 Atomic
 
That gamestop is making most of its money off used game sales, well, good for gamestop. Who cares? That's called a free market economy. Gamestop saw that people felt games were overpriced, they started offering them 5 to 10 bucks cheaper for a used copy, and people bought them in droves. That's smart business.

That's the point I've been trying to make about lower prices for new games. People just want a lower price.

There is not a single instance in the entire known universe where used sales somehow financially benefit the original creator of the product that's being sold. The game industry somehow feels that new rules should apply for it. It is wrong.

Exactly.
 
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32. Re: Livingstone: Used Games Aug 20, 2009, 13:15 Beamer
 
Here, I'll do a quick comparison, choosing games at random from Best Buy and GameStop.

1: Saints Row 2 for the 360.
GameStop: $26.99
Best Buy: $29.99
Are you really arguing that people that bought a $300 system, plus accessories, can't afford that extra $3 for new?

2: Oblivion: Game of the Year Edition for the 360.
GameStop: $26.99
Best Buy: $29.99

3: Thrillville for the Wii
GameStop: $17.99
Best Buy: $19.99

4: Condemned 2 for the 360
GameStop: $17.99
Best Buy: $23.99



So in one of those cases you get a significantly better deal, although GameStop has Condemned 2 new listed at $19.99, and neither new nor used are available online yet both new and used are available at the 3 GameStops nearest me.

But it's typically a $2-$3 savings on an old game, $5 on a new. People are arguing this isn't affordable in order to support the people that slaved over it instead of the zit-faced geek at GameStop?
 
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31. Re: Livingstone: Used Games "No Benefit" Aug 20, 2009, 13:13 Tumbler
 
"The pre-owned market is a serious problem, because there is no benefit to developers or publishers."

Without used games sales there is no way in hell a $49.99+ price point for games would work. At best I think the biggest titles could be $29.99. Like CoD4, MW2, etc. Most would have to be $20 or less. When you look at what people pay out of pocket for new games by trading in used games I think it's around $20? That is the real price of what playing these games is worth. (IMO)

I purchased plenty of games for $50 or so and resold them for $30-$40. In the end after fees and such I think it was around $20 out of pocket.

I think movies are a good example of a business that sells an experience rather than a product in this way. You can buy a ticket, watch the movie, but you don't get to own it. You think consumers would pay $20 for that? $30? That is insane. I already avoid movies more often than not because paying $20 for two seems like a big ripoff for at least 50% of the movies out there. Plus I'd rather watch them at home... The best movies I've seen lately aren't the big titles either, they are the movies my GF drags me to see in limited release and it's becoming the norm for those to be a lot better than the big block buster movies.
 
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30. Re: Livingstone: Used Games Aug 20, 2009, 13:10 Creston
 
1) Houses are a static commodity. They remain in one place. They don't fit the comparison.
2) No major, publically traded corporation is founded on selling used cars or lawn mowers.
3) No one, period, is making more money selling used cars or lawn mowers than the company doing the hard work in creating them.
4) Cars and houses are large purchases that tend to need financing. It makes perfect sense that there are companies that exist solely to do these transactions. The amount of capital necessary, as well as space in the case of cars, makes it infeasible for many people to sell do these transactions alone.


Beamer, you're a smart guy, but what does this have to do with anything?

1) A house is unmoveable, therefore you can't compare selling it to something that... can be... moved? What?
2) Cars.com, autotrader.com, there's plenty of these sites. I don't know if they are publicly traded, but I fail to see what kind of basis for comparison "publicly traded" is. Cars.com is a pretty huge organization, and it makes its money solely off people selling their car.
3) Without used car sales, most dealerships would go under. Car dealers hardly make any money on actual car sales, they make their money off servicing cars (15000 miles, 30000 miles etc.) and used car sales. Don't believe it? Go ask any dealer in your area.
4) I don't even understand what you are trying to say here. We're not talking about a third party financier. We're talking about a consumer's right to buy something, and then sell it on as they see fit, without the creator/publisher of the product being able to tell you you fucking can't.

That gamestop is making most of its money off used game sales, well, good for gamestop. Who cares? That's called a free market economy. Gamestop saw that people felt games were overpriced, they started offering them 5 to 10 bucks cheaper for a used copy, and people bought them in droves. That's smart business.

There is not a single instance in the entire known universe where used sales somehow financially benefit the original creator of the product that's being sold. The game industry somehow feels that new rules should apply for it. It is wrong.

Creston
 
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29. Re: Livingstone: Used Games Aug 20, 2009, 13:07 Verno
 
No, they're sore over GameStop's CEO making millions a year without contributing to the industry writing his check.
And no, they can't simply lower prices. This argument makes my head hurt. If they lower prices used games lower prices. Eventually they hit the point where they're not making enough and you see studios close and more contract work going out. Raising prices is actually a (slightly) better option, as you capture more money from the people that prefer to buy new. But getting into a price war against used games is a death spiral - they'll always be able to undercut you and people will continue going for that $5 savings.

Yeah precisely. Lowering prices solves nothing. The price isn't what makes Gamestop money. It's the percentage of that product's sale that goes directly into their pocket that makes it so profitable. Selling your games for $5 doesn't prevent Gamestop from doing so for $3 and still pocketing $2 profit. Doesn't sound like a lot of money but it's the scale that's important here, not the price itself.

This comment was edited on Aug 20, 2009, 13:08.
 
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28. Re: Livingstone: Used Games Aug 20, 2009, 13:05 Beamer
 
1) Many people cannot afford new games. Used games, then, are often sold to people that are not in the market for new games and sales are not really hurt. I'm in that camp; I'll never pay full retail for a game. Ever. So when I buy used, they are not losing a sale from me. By your very statement, I was never in their demographic anyway.

I never pay full retail, either, or rarely at least. I wait until the price drop, usually about six months. Honestly, buying used saves you $5 typically. Can you really not spare that $5?

2) This is just an argument against GameStop, not used game sales in general. What about a local mom and pop store that can't afford to stock new games because publisher's require minimum orders?

The industry doesn't mind them because they're not statistically significant, nor do they tend to exist almost solely on used game sales.

3) Pawn shops are an absolute necessity. Pawn shops exist for the very reasons you state; people need to sell something quickly, and only an established dealer has the necessary capital and space to buy quickly. Nothing sold at a pawn shop, nothing, sends a dime back to the original manufacturer of the item. Why should games by any different?

Again, you're missing that I keep pointing out that this is a battle against GameStop. And there are more GameStops in the US than pawnshops, offering more used merchandise and making a much higher volume of sales.
Also, the items in pawn shops tend to deteriorate with use, so when you buy used you get something inferior. When you buy a game used, assuming it isn't scratched, you get the exact same item.


Ultimately, used games is not the issue. The developers and publishers are just sore over supposed lost revenue, which as I stated before, could be easily recouped by lowering prices.

No, they're sore over GameStop's CEO making millions a year without contributing to the industry writing his check.
And no, they can't simply lower prices. This argument makes my head hurt. If they lower prices used games lower prices. Eventually they hit the point where they're not making enough and you see studios close and more contract work going out. Raising prices is actually a (slightly) better option, as you capture more money from the people that prefer to buy new. But getting into a price war against used games is a death spiral - they'll always be able to undercut you and people will continue going for that $5 savings.
 
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27. Re: Livingstone: Used Games Aug 20, 2009, 13:02 Verno
 
At the end of the day, does the average gamer care at all whether or not buying used games helps the developer? No.

Not really relevant. The point isn't that people should care or not, it's that the industry can't survive if used games sales end up proliferating.

They care that the used copy they pick up costs less than the new one. Costs less - the important part.

Nope, this is incorrect at least for games, perhaps not console hardware itself. If all people cared about was price then they would pay a lot less from other places without having to leave the comfort of their home. Gamestop offers convenience, the ability to go get hard money for your crap whenever you want. Even compared to other used games retailers, Gamestop is a terribly price value usually.

Maybe if big studios didn't have multimillion dollar budgets for their titles they wouldn't need to sell millions of units to break even, and used sales would hurt less.

Consumer expectations continue to rise with every generation. The technology itself becomes more complex. Games used to take significantly less time to develop. Should the industry go backwards in time and regress just to serve your opinion? How do you expect to keep the same conditions and standards for games with shrinking budgets? Maybe you're happy with the way things were ten years ago but I rather like the gaming industry these days.

The industry does not want to remove people's ability to sell their goods. Much of the industry are gamers themselves with their own family budgets and so on. They sell games, buy games and play them just like you guys do. They care about corporations exploiting it to maximize profits while not giving the content creators themselves any compensation.

Put simply they don't care that Verno sells Infamous to Beamer for $20.00. They care that Gamestop sells used Infamous a thousand times.

This comment was edited on Aug 20, 2009, 13:05.
 
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26. Awwww Aug 20, 2009, 13:00 Creston
 
*blinks away tear for poor Ian Livingstone*

How about that there is a huge benefit to the CUSTOMER, fucktard? Try making a game that people will want to keep playing, instead of your usual "five hours and done" shovelware.

Die in a fucking fire.

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25. Re: Livingstone: Used Games Aug 20, 2009, 12:59 Beamer
 
If you lower the price of new games, the price of used games just goes down with it. It doesn't change anything at all. The only reason there's a demand for used games in the first place is because they're cheaper than new ones, so it would stand to reason that your solution would make them even more appealing rather than less.

If anything used sales make certain that price stay higher.
 
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24. Re: Livingstone: Used Games Aug 20, 2009, 12:58 Atomic
 
Beamer, I'm not convinced.

1) Many people cannot afford new games. Used games, then, are often sold to people that are not in the market for new games and sales are not really hurt. I'm in that camp; I'll never pay full retail for a game. Ever. So when I buy used, they are not losing a sale from me. By your very statement, I was never in their demographic anyway.

2) This is just an argument against GameStop, not used game sales in general. What about a local mom and pop store that can't afford to stock new games because publisher's require minimum orders?

3) Pawn shops are an absolute necessity. Pawn shops exist for the very reasons you state; people need to sell something quickly, and only an established dealer has the necessary capital and space to buy quickly. Nothing sold at a pawn shop, nothing, sends a dime back to the original manufacturer of the item. Why should games by any different?

Ultimately, used games is not the issue. The developers and publishers are just sore over supposed lost revenue, which as I stated before, could be easily recouped by lowering prices.
 
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23. Re: Livingstone: Used Games Aug 20, 2009, 12:57 Beamer
 
They care that the used copy they pick up costs less than the new one. Costs less - the important part. Maybe if big studios didn't have multimillion dollar budgets for their titles they wouldn't need to sell millions of units to break even, and used sales would hurt less.

As I keep saying, this is where PC gaming is going.
But PC games aren't the ones being hurt by used sales, really.

But if you want console games not made with multimillion dollar budgets keep playing GingerBread Man. I'll stick with Gears of War, Halo and Modern Warfare 2.
 
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22. Re: Livingstone: Used Games Aug 20, 2009, 12:54 Narf2029
 
At the end of the day, does the average gamer care at all whether or not buying used games helps the developer? No. They care that the used copy they pick up costs less than the new one. Costs less - the important part. Maybe if big studios didn't have multimillion dollar budgets for their titles they wouldn't need to sell millions of units to break even, and used sales would hurt less. Or hell, if they didn't have multimillion dollar budgets maybe they could sell a game for less and directly cut into used sales a bit (like they'd ever lower their prices, ha). If customers want to resell their used game, good for them. That's going to happen. Nothing but the most draconian solutions will change that, and even then only for the worse.  
Huh? I'm sorry, I was thinking about cake.
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