I decided to do a little more research about movie rentals. It appears I was correct in that you don't need some sort of special license to rent movies, rentals are covered under the first sale doctrine. However most rental stores use a service called rentrak, which has agreements with all the major movie studios to lease the movies to video stores at a very low price in return for a percentage of the rental fees.

The first sale doctrine also comes into play in regards to the second-hand sale of PC games, though the EULA make it a much more complicated situation. However it would be very difficult, if not impossible for publishers to claim that console games don't fall under the protection of the first sale doctrine.

Quite frankly, I feel the arguments in the article from Intat to be, at best, a failure to understand simple free market economics, rules & legalities, and at worst, an extremely disingenuous attempt to create a new meme that game resale is the "new problem" that is killing the game market as a whole and thus setting the stage for the justification of some sort of sale/resale lock in.

Intat is obviously confused about what he’s selling. At one point he claims he’s selling "Intellectual property", and at another that he’s selling "rights to play". Neither is true: What he does in fact sell is merchandise, a tangible product, with the usual rights & restrictions for the consumer that any purchased merchandise has, including the right of first sale.

Which leads us into I what think is a misconception from some on this thread in that the "devs" and "publishers" have some right to gain something ("proper compensation") from a purchaser exercising their right of first sale. They do not, as per the Copyright Act of 1976, 17 U.S.C. § 109. Their interest was legally exhausted in the original sale (whether directly to the end user, a wholesaler, or a retailer).

Also, as others have pointed out, like every other industry that produces tangible goods, the purchaser has every legal right to sell (i.e., transfer ownership of) a lawfully purchased copy of the merchandise without permission, and without having to compensate (again & again & again) any third party. EA, like everyone else, doesn’t get to keep digging endlessly into the till after the original sale.

If the gaming industry wishes to seek a legal exception to this rule, they could certainly try to do so. However, as the law appears to stand, any anti-competitive practice with the primary or sole purpose of interfering with the owner’s ability to resell a product will probably get a very hard look from the Fed's competition regulators. The Fed really frowns on closed markets; and by frown, I mean the most likely end result of such a move is being stuck on the wrong end of a anti-trust lawsuit for restricted free trade, tying, and refusal to deal (at the very least). And when the Fed frowns, the states tend to pile on. It gets real ugly, real quick.

My next problem with the article is that Intat makes the claim that the resale market in his industry is unique, because in his market, the product doesn’t suffer from "wear and tear", and that it is this "wear and tear" process in other markets that is causes an ever widening value gap between the value of the new and resell markets. Implicit in that argument is that the value gap raises the value of the new product. Hogwash. The value of something is how much someone will pay for it. Digital goods loose their value like other goods loose their value: A lack of demand and/or a surplus of product.

For example, in the "digital market", the demand for Windows for Workgroups is nearly nonexistent. Is that because of "wear and tear" of the original distribution, or is it simply that the product has become obsolete because of other products on the market? Apply this to Lotus 123 for DOS, Diablo I, or any other obsolete product. The value proposition for the consumer isn’t the "wear" and/or "tear" of the product, but the perceived value of the offering itself.

The resale market for computer games wasn't just born. It has been around as long as computer games. Now, if the unspoken argument is that the perception is that the resell market is taking a bigger and bigger bite out of original sales*, then perhaps Intat should take a look at the value proposition of his NEW products and figure out why it’s not stacking up as well against the USED products.

* - and how would he or anyone else know this? I’m reasonably sure this kind of data isn’t being shared freely between the clearing houses/retailers and publishers

Intat’s observation that "stores should ask themselves whether they are eating into their own market by stocking so many pre-owned titles" is pretty laughable. I’m reasonably sure there isn’t a retailer who hasn’t done that kind of homework, and the answer they came up with is an apparent: "No, we aren’t". If the answer was yes, they wouldn’t be in the used market. If I can be snide for a second, if I was a retailer, I’d send Intat some flowers with a note attached that read along the lines of "Thanks for thinking of us".

Which leads me back to this thread, and another (imho) misconception: "original owner X selling to company Y who then resells it to new customer Z" is somehow wrong, as if one or more of the parties involved were stealing from a party not directly involved in the transaction.

There is are many problems with this argument, but the two biggest and obvious ones being the first sale doctrine previously mentioned, and the second being the reality is that all of parties in the transaction have voluntarily entered into the agreement. No one is being forced to do this. All involved parties have alternate markets in which to exercise their sale/purchase/resell. This isn’t an illegal activity, in fact quite the opposite – It is a transaction accounted for, and protected by, numerous state and Federal laws.

The game "market", like all markets, has come to a working balance for value for both the sale of new and resold product. This is the core problem that Intat’s is running into. The market has decided the value of his offerings, for both new and used product. By removing one, he hopes to increase the value of the other.

The bottom line is regardless of whether or not the sky really is falling, it looks like EA is going to try to increase revenue by creating artificial scarcities of their product. For that to work (assuming they jump the legal hurdles), you have to offer something unique that no one either CAN or is WILLING to offer. It’s a tough job, and even if you succeed at locking up the high end market, you almost always end up spawning a secondary market of cheap knockoff’s that undercuts you the same way or worse then the resell market.

Amazing what the word "to" can do; "regulators" not "regulars"
Reformatted

This comment was edited on Aug 30, 01:44.

I believe it is somewhat of a myth that you have to buy some special "rentable" DVDs, at least in the US.
My understanding is that large chains such as blockbuster have reached voluntary agreements with the major movie studios, basically the movie studios provide large numbers of DVDs for next to nothing on release day in return they collect a percentage of the rental fees. Such an agreement would allow blockbuster to stock large numbers of new releases without a large initial outlay of capital every time a new movie is released and without the risk of losing money if a movie rents poorly.
Then again I'm not in the industry, so I could be wrong.

It definitely did used to be that way with rentable DVD's, I worked at an old franchise that got bought by Blockbuster up here when I was a teenager. I wouldn't be surprised if they did licensing fees or percentage points instead these days, it seems to make more sense but really the principle is the same - making sure the IP owners get compensated when one product is used many times.

This comment was edited on Aug 29, 23:37.

I believe it is somewhat of a myth that you have to buy some special "rentable" DVDs, at least in the US.
My understanding is that large chains such as blockbuster have reached voluntary agreements with the major movie studios, basically the movie studios provide large numbers of DVDs for next to nothing on release day in return they collect a percentage of the rental fees. Such an agreement would allow blockbuster to stock large numbers of new releases without a large initial outlay of capital every time a new movie is released and without the risk of losing money if a movie rents poorly.
Then again I'm not in the industry, so I could be wrong.

Creston I think he was talking about movies there, not games dude. He was saying the same license fee that video stores have to pay for movies could be applied in a similar manner to game stores like Gamestop. That way the developers get compensated for their work, you get to still trade in your stuff and Gamestop still gets to sell their used games. The only loser in the scenario is Gamestop who are making out like bandits off both your and the developer/publisher's backs. They'd still make profits, just not as much as before. Best of all gamers would retain their right to resale on an individual basis as long as it wasn't a commercial entity.

Looks pretty win win to me. This failed previously in court long before the videogame industry lobbies had the clout that they do nowadays. Would be an interesting battle.

This comment was edited on Aug 29, 21:11.

Of the many jobs I've had, one of them happened to be managing a video rental store (Yes, it was part of a big chain) and I'd take a solid bet that I know more about that particular industry than you do.

Sure thing Teddy. I SOLD those games to video store chains and if you didn't offer them a massive discount, they'd simply go somewhere else.

You cannot buy a movie and rent it out legally without the express permission of the studios that hold the copyright

I never said you didn't need permission. I did say that if you're a big enough customer, you get discounts. You don't pay more.

Next time you think to open your mouth on a subject that you know jack shit about, maybe you should just save yourself the time and stick your foot in first.

Edit : Toned down the aggression somewhat.

Thinking it over, I realize it's possible that there is a huge difference between the American market (which is what you are talking about) and the European market, which is what I was talking about (or at least, what I had experience with.)

I seriously, seriously doubt that Blockbuster pays 60+ bucks for a console game. They'd have to rent out each copy 20 times before it breaks even. That's like burning money.

Still, without actual experience in the American market, and seeing that blockbuster manages to kill itself quite well, I guess it's possible.

+1 to European videostores who simply don't accept that crap.

Creston

This comment was edited on Aug 29, 20:12.

More importantly, it doesn't stop people from selling their copies second hand to a store either. It doesn't hurt anyone except those trying to capitalize on lowballing consumers and flipping products for profit, nor does it adversely affect the rental business.

Win win. A similar license fee applied to retail stores for games wouldn't be a bad idea either. The consumer isn't affected and developers get properly compensated for their work instead of GameStop shareholders raking in profits while the devs and publishers get zip.

This comment was edited on Aug 29, 20:05.

Way to rant on and show your ignorance Creston. I said what I did because I know it to be a fact. Of the many jobs I've had, one of them happened to be managing a video rental store (Yes, it was part of a big chain) and I'd take a solid bet that I know more about that particular industry than you do. We certainly paid less per copy than a small rental store did, but it was still more than you would pay for a personal copy for the exact reason that I specified.

You cannot buy a movie and rent it out legally without the express permission of the studios that hold the copyright. That permission comes with an additional cost because you are technically making public showings of their product and making money off of it.

Next time you think to open your mouth on a subject that you know jack shit about, maybe you should just save yourself the time and stick your foot in first.

Yeah that's a great point. Digital distribution itself has the problem of game resale being almost impossible. That's the direction the industry is moving towards too.

Just means that I know I'll be stuck with the game, so I'm going to hold them to a higher standard and buy fewer games overall. Hope they're ready to provide high levels of replayability and depth of gameplay.

I think Valve has hit on a formula that is close if not ideal. By offering the occasional deals, they can sell to those people who wouldn't make the purchase at full price, but still rake in the cash from the normal price most of the time. I really don't like the fee for unregistering a game. I mean if only one key can be in use at a time, then it's not like it would be a big piracy risk. They should just let us unregister so that we can sell the game off if we want. I don't like getting stuck with a game that I know I won't play.

This comment was edited on Aug 29, 15:04.

If you are just looking to play Planescape: Torment and don’t care about owning it, you could subscribe to gametap for a month (99 cents for the first month) and play it.

I already pirated and beat the game but I want to buy it. The original 4 box version with box, manual, etc.

Publishers know that they would lose far more sales trying to exclusively sell via digital distribution then they would gain from the reduction of piracy and second-hand sales that would result from a digital distribution only business model.
Also I think its fair to say that companies are mainly worried about second-hand sales of console games, most places that sell used games have few if any used PC titles.
A digital distribution only business model in the console industry is even further away then it is for the PC, probably at least 1-2 generations from happening.

Yeah that's a great point. Digital distribution itself has the problem of game resale being almost impossible. That's the direction the industry is moving towards too.

But what about digital copies of an IP? I don't know of anything that lets you resell anything be it movies, music, or games. Somebody already mentioned that Steam has a $10 premium for such a service.

Well I just finished reading this whole thread, so I'm gonna throw my 2 cents in even if nobody is reading it anymore

I think DukeP, Creston and others have the issue nailed down. There really is no difference between games and other forms of IP. I don't understand the sense of entitlement that EA and other publishers have. It doesn't fly in other industries (although the music industry has long wanted to shut down resale of albums as well).

As far as Gamestop and their ilk, I personally don't set foot in those shops because I don't feel like getting ripped off. But if others want to sell their used games for a fraction of the cost and then buy other used games for a few bucks less than retail, that's their decision. Buy low, sell high. Basic capitalism folks. Can't fault Gamestop for charging what the market will bear. But you can still laugh at their customers

For every product there are many possible ways to price that product. EA can make a certain number of sales at $60 when a game is released. Some people simply won't buy it at that price. Sell it for $40 and they'll jump on it though. Tiered pricing is tough to pull off, and since EA hasn't done it, others have stepped in to fill the demand for games at lower prices. This is perfectly legitimate, and things have worked that way forever in other markets.

EA seems to think that they are special for some reason, but they really aren't. It's a product, like any other, subject to the same market realities. These aren't really lost sales as some people assume. If they weren't available for a reduced price, there's no reason to believe that those people would pay full retail, and even if they did, there's certainly no reason to believe that they would buy as many games in total.

If EA wants to sell games as a service, then they're going to have to make it worth people's while. Either by continually adding content, or by dropping prices significantly. If they don't, other developers will continue to create games as they do now and people will buy those instead. EA will probably whine about that too.

This comment was edited on Aug 29, 11:14.

I was speaking figuratively, you seem to support EA's claim for some reason. Not only do you support it, you argue for it

No I don't, there's a difference between thinking that they have a point and supporting their cause. I think they do have a very valid point that's applicable to the industry at large. I don't blindly support EA, EA is a company like any other to me - I don't give companies trust because its a business relationship. They make games and I buy them or not, the entire matter isn't personal. In this case I think "well EA does suck right now but they do have a point that could affect other publishers".

and yes ive read this entire huge fucking thread and you have even tried the old trick of putting up straw man arguments.

No I haven't. I've given my thoughts, read other people's and responded intelligently. When I felt someone else had a good point, I acknowledge it and think about what they had to say.

This comment was edited on Aug 29, 08:30.

I was speaking figuratively, you seem to support EA's claim for some reason. Not only do you support it, you argue for it, and yes ive read this entire huge fucking thread and you have even tried the old trick of putting up straw man arguments.

Thats why I said you need to lose the "Suit".

And yes this:

Despite what some people portray video games are not some strange new medium that are unlike any that have come before, they are no different than books, movies or music in regards to second-hand sales.
Consumers have the right to resell the original physical copy of the "copyrighted" material they purchase, they are not allowed to reproduce additional copies of the "copyrighted" material and share/sell them. This is the way it has always been and its not going to change because the game industry complains about it.

Is exactly the point I made in one sentence, in my previous post.

Arguing with Verno has no point, he is derailing the subjects with his rants.

Second Hand Books, Art, LP Records, anything that contains information is exactly the same as second hand games.

EA is being totally, unreasonably SELFISH and fucking UNREALISTIC. Which is actually very common in today's industry.

As for Verno, how bout you take off that Suit for a change eh?

Sigh I'm so tired of the petty little posters like you who have nothing at all to say so you just lash out with personal attacks. Grow up child. I don't work at EA, I don't even wear a suit to work. I'm just a guy who actually *gasp* thinks about the topic material about I start ranting and raving like a madman and posting "FUK EA" like some pathetic manchild.

Other people here have made some pretty valid points both ways on this subject, why don't you read their posts and see how easy it can be to refute someone else without attempting to act like a retarded e-bully or something. You call me names all you want by the way, I'm not going to stop posting just because you don't agree with me.

Despite what some people portray video games are not some strange new medium that are unlike any that have come before, they are no different than books, movies or music in regards to second-hand sales.
Consumers have the right to resell the original physical copy of the "copyrighted" material they purchase, they are not allowed to reproduce additional copies of the "copyrighted" material and share/sell them. This is the way it has always been and its not going to change because the game industry complains about it.
With that being said, the game industry does have many options to encourage people to purchase new copies of their games, the question that remains is whether they choose to try the carrot or go straight to the stick, unfortunately based on the methods they have chosen to employ to combat piracy which often harm the paying customer more then it prevents piracy I am not very optimistic.

One thing the publishers could implement immediately is a trade-in system where people can send in the original disc of a game and receive a coupon for $10-$30 off a game from the same publisher.

See? Do it like this guy, use that brain in your head. He makes several great points about the topic and made me think twice about everything.
This comment was edited on Aug 29, 06:46.

If you are just looking to play Planescape: Torment and don’t care about owning it, you could subscribe to gametap for a month (99 cents for the first month) and play it.

To me, a good game isn't sold - it's kept for eternity. I love replaying games I enjoyed many times.

There are certain games that have a built-in reselling inhibitor. It's called value. Look at Strategy games. How many copies of Civ 4 were sold back compared to the ones that were kept? There are people who still play the first Civ and say that it's never the same game twice. I myself still have Shogun Total War; I never sold it. Why? Because that game was so damn fun, and still is, and it has so much to offer in terms of gameplay. All of the Total War games will be mine for eternity, because of the immense value they have to me. The Simcity games; the Roller Coaster Tycoon games; the Galactic Civilization games; the Age of Empires games, etc - all keepers.

Great RPG's have that built in value as well. Show me one person who replayed Fable and I'll show you a thousand who replayed Baldur's Gate a dozen times. You can have my Copy of Planescape Torment when you pry it from my cold dead hands. Take a gander at how many people still play the Prophecies campaign from Guild Wars. There are too many to list in the RPG category.

First Person Shooters? Take a look how many people are still playing Counterstrike, Unreal Tournament, Quake 3, Operation Flashpoint, Deus Ex, Thief and others. It's the value these games offer after the first run through that keep people from getting rid of them long after there are newer alternatives on the market.

I haven't even mentioned the biggest value-add in PC Gaming - the modification. When you bought the original Half-Life, you were actually buying about 50 different games because of the huge array of diverse, awesome mods out there. There is still an entire community of people making missions for the original Thief and Thief 2. And they are fantastic. If you are at all a stealth shooter fan, trust me; do yourself a huge favor and check out the fan made missions for thief. Calendra's Legacy for Thief 2 is the best mod I have ever played and is way better than a hundred games I paid 50 bucks for.

I laugh when developers whine and cry about not getting a piece of the pie in the used games arena. Sorry, fellas; capitalism and a free market doesn't work that way. Perhaps if the average game today was more than what amounts to a day's worth of disposable entertainment, your piece would be much bigger.

Arguing with Verno has no point, he is derailing the subjects with his rants.

Second Hand Books, Art, LP Records, anything that contains information is exactly the same as second hand games.

EA is being totally, unreasonably SELFISH and fucking UNREALISTIC. Which is actually very common in today's industry.

As for Verno, how bout you take off that Suit for a change eh?

This comment was edited on Aug 29, 04:31.