EA: Second-Hand Games a "Critical Situation"

Electronic Arts considers second-hand game sales a "critical situation" reports GamesIndustry.biz in a bit of from an interview with EA's Jens Uwe Intat that will published in its entirety tomorrow. According to Intat, senior VP and general manager for European publishing at EA, the publisher is experimenting with a number of different business models to combat the problem of the same game being sold and resold to different users. He points out that games have a unique problem compared to most other goods sold on secondary markets because they do not degrade with use. To address this, he says: "What we're trying to do is build business models that are more and more online-supported with additional services and additional content that you get online. So people will see the value in not just getting that physical disc to play at home alone, but actually playing those games online and paying for them."
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114.
 
No subject
Sep 1, 2008, 10:16
No subject Sep 1, 2008, 10:16
Sep 1, 2008, 10:16
 
EA might want to re-think over-priced games if they really want to hinder the market for used games at places like Gamestop.

EA could offer retail games from their own webportal for 10 bucks off of the retail price. That would encourage folks to buy the game new rather than wait for used copy to appear at Gamestop's shelves. It would have to be at least 10 bucks off retail to attract consumers.

Honestly, most console games are deeply over-priced at 60 USA dollars. Many consumers like myself wait for a game to go down to 25 bucks on Amazon (free shipping and no tax) or buy it used.

113.
 
Re:
Aug 31, 2008, 16:07
Re: Aug 31, 2008, 16:07
Aug 31, 2008, 16:07
 
But I believe the discussion here was hypothetical alternatives to this traditional distribution channel.

Fair enough. But I was simply trying to point out that this alternative distribution method you are discussing is unlikely in the immediate future.
I doubt most publishers see second-hand sales or even piracy for that matter as a large enough current threat to consider overhauling their entire business model.

This comment was edited on Aug 31, 16:09.
112.
 
Re:
Aug 30, 2008, 17:36
Re: Aug 30, 2008, 17:36
Aug 30, 2008, 17:36
 
Game publishers are going to be very hesitant to reduce, let alone give up on their initial point of sale transactions when that has been their business model since the inception of the industry. Even most MMORPGs which make most of their money from subscriptions still try to milk as much out of the point of sale transaction as possible.

Absolutely. But I believe the discussion here was hypothetical alternatives to this traditional distribution channel.

111.
 
Re:
Aug 30, 2008, 17:21
Re: Aug 30, 2008, 17:21
Aug 30, 2008, 17:21
 
Game publishers are going to be very hesitant to reduce, let alone give up on their initial point of sale transactions when that has been their business model since the inception of the industry. Even most MMORPGs which make most of their money from subscriptions still try to milk as much out of the point of sale transaction as possible.

110.
 
Re:
Aug 30, 2008, 17:08
Re: Aug 30, 2008, 17:08
Aug 30, 2008, 17:08
 
I think what EA is actually talking about is expanding on the Battlefield:Bad Company model. Make the gameplay online centric so they don't play through it once (or rent it once) and then immediately trade it in. Furthermore, they can then try to charge for online "features." You pay for DLC (which can't be returned) to get new guns ect.

To take this one step further: What if the game company didn't care about the media after the initial sale? Sell it, trade, it whatever. The value proposition for them would be the value add post initial sale.

Basically your trojan horse model, where the physical/electronic install media is simply the gateway to the product. You don't really care about monetizing that part of it (just breaking even on the distribution costs).

In this scenario, you WANT the secondary market, as it exposes more consumers to your product.

Actually, wait, I've seen this done already. Those $1 WOW demo cd's at gamestop. Le crap. Ok, never mind.

This comment was edited on Aug 30, 17:09.
109.
 
Re:
Aug 30, 2008, 17:00
Re: Aug 30, 2008, 17:00
Aug 30, 2008, 17:00
 
When they put a game in a console it works or it is broken and gets returned.

Excellent point.

I think what EA is actually talking about is expanding on the Battlefield:Bad Company model. Make the gameplay online centric so they don't play through it once (or rent it once) and then immediately trade it in. Furthermore, they can then try to charge for online "features." You pay for DLC (which can't be returned) to get new guns ect.

This would be an excellent approach - the value add. It creates a secondary revenue stream for them competely within the legal framework. Product PLUS is a great idea, product MINUS (ie, chained to your leg) isn't.

108.
 
Re:
Aug 30, 2008, 16:57
Re: Aug 30, 2008, 16:57
Aug 30, 2008, 16:57
 
This seems to be a common misconception on this thread - that a business or cartel of businesses can set or dictate legal policy, i.e., the "Je suis le roi, je suis le droit" theory.

If I may quote my own post - let me clarify something that I don't think I've done a job of explaining, as it at the heart of my arguments:

Trade, competition, and contract law isn't some new invention. Western law is based on the constructs or rules laid down and codified thousands of years ago. American law is centered around the concept of open markets for goods and services.

There are quite literarly thousands of decisions that reinforce this concept. Very few corporations get to have a closed market. One might even say it takes an act of Congress to avoid anti-trust issues (ie, Major League Baseball).

This concept is so hardened and entrenched into the core of American law that you have large extensions of law that deal with specific anti-trust situations, even down to mergers and acquisitions of different companies (Google + Yahoo for example).

Therefore, EA, and every other corporation in America has a large, and well defined framework that defines what they can and cannot do. They cannot as a company, or as a cartel of companies simply discard this framework. This is my primary argument here: They must obey the law, whether they like it or not.

Thus, while they can come up with ways to COMPETE with both other companies and the resale market, then cannot legally lock out those competitors with anti-competitive practices*.

* I'm not saying they won't try. The software application and O/S industry has a long history of trying this, and getting smacked down in the courts. One such company has been under direct Federal monitoring for the better part of a decade for its anti-competitive practices.

This comment was edited on Aug 30, 17:04.
107.
 
Re:
Aug 30, 2008, 16:55
Re: Aug 30, 2008, 16:55
Aug 30, 2008, 16:55
 
Legally speaking I agree that the publishers don't have a leg to stand on due to first sale law, but there are many options they can pursue to make "new" versions of their products more appealing and "used" versions of their products less appealing to purchase.

I hope that if publishers decide to combat used game sales they do it with value added features that make their products more appealing rather then punishing their customers in some short sighted effort to stop used game sales, which I feel they have done in their effort to combat piracy.

This comment was edited on Aug 30, 16:56.
106.
 
Re:
Aug 30, 2008, 16:06
Re: Aug 30, 2008, 16:06
Aug 30, 2008, 16:06
 
They can indeed change the rules...

This seems to be a common misconception on this thread - that a business or cartel of businesses can set or dictate legal policy, i.e., the "Je suis le roi, je suis le droit" theory.

Unfortunately for EA, and everyone else, to be able to change the rules implies they are in charge of the rulebooks. The rulebooks in this case are Federal and state law. They are not in charge of those. They are, however, accountable to them. They are, like us, the servant of the law, and not its master.

Games will start to be tied to online profiles or login accounts just like they are starting to do on the PC.

I think, to date, that all game manufacturers that have tied the use of game to a login account or a certain number of installs from the original media have been very careful to make sure that there was an "out" for the end user - usually in the form of contact information to someone who can reset/change the information. My gut feeling on this is that they're well aware (as per their lawyers) the legal dangers of artificial lock in.

...the gaming industry will find a way to fight this...

If by "fighting this" you mean removing the perfectly legal and protected right of first sale, then it starts looking a little suspect: "The gaming industry will find a way to lock consumers out their legal resale choices in order to maximize their own profit at the expense of the consumer".

Competition with the resale market is one thing, but tying and non competitive practices will most likely attract some legal attention, either from the Fed in the shape of an anti-trust suit, or from private lawyers in the shape of a class action suit.

This comment was edited on Aug 30, 16:06.
105.
 
Re: The Sky is Falling!
Aug 30, 2008, 16:01
Re: The Sky is Falling! Aug 30, 2008, 16:01
Aug 30, 2008, 16:01
 
Btw, didn't Microsoft recently (few years back) get their ass slapped for trying to prevent Windows users from reselling their copy?

Yes. The portion of the EULA dealing with the right of first sale was deemed to be unconscionable. Autodesk also just got recently slapped as well in another resale-EULA related suit.

The nice thing about contract law in America is that all contracts are subordinate to Federal and local laws. You can write in as many unconscionable clauses as you want, but you run the risk of having it tossed out.

The gaming industry would be in the same boat if it were to follow these companies by putting something along the lines of "Purchaser waives all right to first sale." into their EULA.

This type of clause would have some serious issues. For one, it clearly violates the Copyright Act of 1976, 17 U.S.C. ยง 109. Secondly, it would stand a good chance of being so unjust/one-sided in favor of the seller (who has superior bargaining power) that it would be declared inconscionable on those grounds alone.

104.
 
Re:
Aug 30, 2008, 15:32
Re: Aug 30, 2008, 15:32
Aug 30, 2008, 15:32
 
Truthfully, this would probably just encourage retailers to stop carrying games. Console gamers aren't like PC gamers. When they put a game in a console it works or it is broken and gets returned. So any DRM of this manner would have to be completely transparent or it would encourage their current market to leave.

I think what EA is actually talking about is expanding on the Battlefield:Bad Company model. Make the gameplay online centric so they don't play through it once (or rent it once) and then immediately trade it in. Furthermore, they can then try to charge for online "features." You pay for DLC (which can't be returned) to get new guns ect.

If they shifted to a model where you make a game, lock most of the content, and then sell it at a highly discounted price (say $20), but have to pay another $20-$30 to get the rest of the game via DLC it would really hurt the used market (which currently preys on the over inflated prices of most games) and help ensure they make more money off of each used sale. Turn the game into a trojan horse that is there to get them to buy DLC.

103.
 
Re:
Aug 30, 2008, 15:16
Verno
 
Re: Aug 30, 2008, 15:16
Aug 30, 2008, 15:16
 Verno
 
Exactly, they've already done this with DLC in certain games too so there is a working system in place. I imagine it wouldn't be much effort to extend it further. I'm fine with individuals selling games to eachother but the big shops like Gamestop and Bestbuy could do a lot of damage here. I also don't like Gamestop's latest tactic of purposely limiting their orders of newer games to force people buy up their stock of used games - the place where they make a vastly bigger profit.

Playing: Elden Ring, HZD: FW, Kingdom Rush series
Watching: Severance, The IT Crowd, The Batman
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102.
 
Re:
Aug 30, 2008, 14:36
Re: Aug 30, 2008, 14:36
Aug 30, 2008, 14:36
 
Games will start to be tied to online profiles or login accounts just like they are starting to do on the PC.

Unfortunately this may indeed be where things are headed.
There were rumors before the release of the PS3 that each game would be tied to the first system it was installed on, this of course didn't come to pass but I'm not convinced it wasn't considered by Sony as a possibility.
Publishers could even set up a system so that a game will work on additional consoles but certain features would be disabled such as multiple player, this would heavily damage the value of used games as multiplayer is becoming a more and more important feature in console games.

This comment was edited on Aug 30, 14:38.
101.
 
Re:
Aug 30, 2008, 13:37
Verno
 
Re: Aug 30, 2008, 13:37
Aug 30, 2008, 13:37
 Verno
 
You're not seeing the forest for the trees Creston. They can indeed change the rules and that's exactly what's going to happen, just not in the manner you think. Games will start to be tied to online profiles or login accounts just like they are starting to do on the PC.

I don't know if you read the news a few weeks ago but Best Buy is entering the used game market now too. If this gets really out of control then publishers will indeed make changes and seeing how Gamestop isn't a game publisher, I don't see what they can do to stop them.

If you think consumers won't tolerate it, I think you give the average console consumer too much credit in terms of their bullshit tolerance level.

Maybe it won't happen exactly the way I describe but they're definitely going to do something. By the way, this fucks the developers too, not just the big publishers like EA.

Whether it's digital distribution or some other model of DRM-lite, the gaming industry will find a way to fight this. I just hope that the resale right for individuals is preserved in the process.

This comment was edited on Aug 30, 13:39.
Playing: Elden Ring, HZD: FW, Kingdom Rush series
Watching: Severance, The IT Crowd, The Batman
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100.
 
Re:
Aug 30, 2008, 13:30
Re: Aug 30, 2008, 13:30
Aug 30, 2008, 13:30
 
though the EULA make it a much more complicated situation

So far, no judge has upheld the EULA where it contradicts with rights of first sale. None.

A EULA has been upheld where it concerns reverse engineering (see the battle.net clones and the UO shard clones legal battles) and blatant copying of work.

Where it concerns a customer's rights of purchase, it hasn't. No matter how much the game industry wants to, you cannot simply unilaterally decide that for YOUR product, the rules change. It doesn't work that way. A car dealer can't put in a EULA that says "You are not allowed to resell this car."

So why is it any different for the games industry? It isn't. Fuck EA.

Creston

Avatar 15604
99.
 
Re: The Sky is Falling!
Aug 30, 2008, 13:26
99.
Re: The Sky is Falling! Aug 30, 2008, 13:26
Aug 30, 2008, 13:26
 
JohnnyRotten,

You, sir, are a very well spoken man. Bravo!

Btw, didn't Microsoft recently (few years back) get their ass slapped for trying to prevent Windows users from reselling their copy?

Creston

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98.
 
Re:
Aug 30, 2008, 13:10
98.
Re: Aug 30, 2008, 13:10
Aug 30, 2008, 13:10
 
Creston I think he was talking about movies there, not games dude

It seemed to me he was talking about games, but if he was talking about movies, my bad.

I never sold movies so I have no idea how that scenario goes. I know that in Europe, if you as a game wholesaler (?) wanted to sell to big video chains, you had to give a BIG discount, otherwise they just wouldn't buy from you. (They'd go to the next guy and get their discount there.)

That market is different anyways, since few stores get to buy directly from publishers. It all goes through wholesalers. So maybe it's different here in the US.

If so, I still say that Blockbuster is crazy for paying it. If you have to rent a copy of a game out for 3-5 bucks, you need to rent that copy out a dozen to twenty times before you even break even. That's unsustainable. There might be one or two titles that you could do that with, but most games it just wouldn't work.

Edit : (and it seems from later posts that that's not how it works anyways.)

Creston

This comment was edited on Aug 30, 13:31.
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97.
 
Re:
Aug 30, 2008, 02:34
97.
Re: Aug 30, 2008, 02:34
Aug 30, 2008, 02:34
 
Movie studios used to release a "rental" version of VHS movies 2-3 months before the standard retail release. The early release rental version would carry a higher price of $70.00+, this was the movie studios way of trying to get a piece of the rental business action. Apparently they wised up about this practice when they started releasing movies on DVD and have consequently seen huge increases in the home video sales market.

96.
 
Re:
Aug 30, 2008, 01:23
Verno
 
96.
Re: Aug 30, 2008, 01:23
Aug 30, 2008, 01:23
 Verno
 
Interesting. So it seems that everyone here was talking out their ass. Why am I not surprised?

No they weren't, rental copies used to cost $80-100 back in the VHS days. The model has changed in more modern times but what he said earlier was true. And you speak out of your butt quite frequently sir, pot kettle etc.

Playing: Elden Ring, HZD: FW, Kingdom Rush series
Watching: Severance, The IT Crowd, The Batman
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95.
 
Re:
Aug 30, 2008, 00:34
95.
Re: Aug 30, 2008, 00:34
Aug 30, 2008, 00:34
 
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.
Interesting. So it seems that everyone here was talking out their ass. Why am I not surprised?

"The whole problem with the world is that fools and fanatics are always so certain of themselves, but wiser people so full of doubts." -- Bertrand Russell (I think...)
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