Critical Hit | Could Sony Fizzle Out Used Games Market?

By Jorge Ba-oh 05.01.2013 17

Critical Hit | Could Sony Fizzle Out Used Games Market? on Nintendo gaming news, videos and discussion

There's nothing quite like gently tearing through a factory-sealed wrapper of a brand new game, smelling the fresh moulded plastic and shuffling through a game manual with unrestrained excitement.
 
But of course there's nothing wrong with used games:  whether it's winning an online auction, discovering a find in a used-games store or simply borrowing one from a friend. For the consumer it's a win situation - a potentially cheaper price for what, in theory, should be the same experience if purchased new.

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For the publisher on the other side of the coin, used games can be considered a loss in revenue though: granted a new player, but a loss from those who would purchase a new copy. It's more than fair that developers receive as much recompense as possible for each game sold, but with a growing RRP on newer games, up to £50/60 in Britain in some cases, used games can be a more appealing option.
 
The debate certainly isn't new but was nudged into the spotlight this week by an unearthed patent filed by Sony that involves a physical implementation with the used games market specifically in mind - to be "eliminated reliably".

...The users who have purchased the second-hand items are somehow no longer potential buyers of the content, the developers would lose their profits otherwise gained in the first place.

 
Whilst a patent filing could simply be an early precaution if Sony does decide to use it in some form eventually, the detail does pose a daunting future for the used and rental game market if it comes into effect.
 
The concept states that discs, presumably in the next PlayStation console, could be embedded with RFID chips to prevent use on more than one machine and "reliably restrict the use of electronic content dealt in the second-hand markets". To do this the console would save unique data onto these chips - like a hardware ID as a means of "user permission".
 
Effectively when playing a new game your console information could be encoded onto the disc, so it might not function completely, or even at all, on a friend or second owner's machine.

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RFID chips are used in a wide and growing number of industries already including Passports, Bank Cards, microSD cards in mobile phones, animal tracking and even a trial run of uniforms in some British schools. It's wireless and uses electromagnetic fields to transfer data from a tagged object, in this case game discs, to a reader - the console.
 
The main reason for a physical chip would be to provide the ID allocation whether a user is internet enabled or not. The patent describes a situation where a player may decide to share his/her online password for a game with a friend and "therefore the second-hand sales and purchase cannot be eliminated reliably".

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The finer detail isn't covered by the patent itself, just the key technical implementation, but a restriction like this would certainly cause a dent on two vital markets: used and rental games. Not everyone has funding to purchase new packaged software, especially those that might be out of print or had limited stock to begin with.

Likewise if a player tries out a new game for a matter of hours and doesn't wish to keep it, the return or resale value could be zilch, zero, nada.
 
Another angle could be a means of protecting publishers from piracy concerns as only genuine discs with a RFID chip would be able to run on a system. That said "second-hand markets" is still a primary highlight of the documentation.
 
Of course a patent like this may never come into effect or more likely come with some conditions for use.
 
For example a used game might require a new owner to purchase an "unlock key", in a similar means to the "online passes" employed by some publishers like EA Games and Ubisoft. These passes can only be used once and second hand users would need to purchase a new pass in order to use certain features. It still allows access to the core parts of the game, so resale/rental opportunities are possible, but the balance is there for publishers to recapture some of the lost revenue.
 
This may well be an over-reaction to a potentially dormant patent, but there is a growing shift towards publishers trying to minimise the used games market. If the ID process for game users becomes physical by use of RFID chips or other methods, it could fizzle out the used market to just older games in a matter of years, forcing users to potentially find cheaper digital deals online.
 
Of course developers and publishers should be supported, especially in an industry that's been in a flaky sales period. "Online passes" and similar schemes seem to be a reasonable balance between used and recouping revenue, but to phase out used games completely would do more harm than good.

What do you think about the potential use of RFID chips in retail game cds in future hardware - should gamers be free to resell/share their collection?

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Good article Jeebs.
I think it's a pretty frankly disgusting idea! I seem to recall Sony came up with this sort of this a while back for the PS3 too, but it never came to light and I'm genuinely hoping this doesn't either.

Sony are ridiculous if they think this won't hurt their business dramatically. Why would gamers buy Sony games at all when they could just buy their opposition's equivalents? Developers will port more Sony games to other systems once they discover that gamers won't want to buy PS3 versions, and gamers well.. won't want to buy PS3 versions.

I know Sony's in a bit of an economic mess atm but taking it out on the consumer really isn't the best way to make any new friends. They have to bite their pride for a few years.

( Edited 05.01.2013 12:05 by SuperLink )

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I see the for and against.

I would wager that Sony would only be going ahead with it if MS will do a similar thing, too. Otherwise, yes, there's the chance people would buy the next Xbox over the PS4 if they can't play used games on PS4. Both companies have to be in discussion with publishers/developers about this to mutually ensure both their systems do it.

On the other hand, some developers might be enticed by the thought that they know every single copy sold on the PS4 will count for a few quid. But that would still count for less if more people flock to the next Xbox instead, even if used games can be bought on it.

But put yourself in a developer's shoes. You want to be making a buck on every copy of your game sold, so why wouldn't you want this sort of feature implemented? It's frustrating from a consumer standpoint, but not from a developer.

Right now in the UK, games drop so quick and so cheap that there really isn't much point to buying used when you can either get a sealed copy for a couple of quid more, or in many cases, cheaper than the average used price if you search online. My one concern, however, is that in a non-used future, the prices of games would be abused and they would charge a lot more than they do now, since they know consumers have no choice but to buy new.

I can't see Sony going ahead with this unless MS do, or vice versa. But if it is just Sony, I'm not sure how that will end up for them. Difficult to judge. I do think it's inevitable, though.

But just one more point. I'm under the feeling that a digital-only and non-used future could be the start of the next market crash, especially if they abuse the prices of games. If the only way we can buy games in the future is on a console store at £50-60, I really can't see a fun future for video games.

Well i think if Sony nail this then this would be an industry wide implemented technique. Like you said Superlink, they wouldnt do standalone.

There were these rumours with the PS3 initially...i hope they don't come to fruition, i for one like hard copies of games and i also love the preowned market.

Azuardo said:
It's frustrating from a consumer standpoint, but not from a developer.

There's no market at all without the consumer, major developers make enough to continue making AAA games and smaller developers release digitally for cheaper, I don't see Activision complaining about how little money they make due to the second hand market, they probably laugh to the bank every day. However it's those more greedy companies that would want to enforce this sort of things, their games (CoD) are the kinds of games people would buy anyway regardless of price.

I can see why it frustrates developers who get less sales.. but let's be honest, without the second hand market, there would be absolutely no demand for amazing games like Shenmue or Okami, some games perform through word of mouth because they can't sell on face-value alone. I assure you that Okami would not have gotten re-releases or a sequel without the second hand market or the game being sold for much cheaper (of course in order to combat the second hand market!). This is why the second hand market is crucial to the games industry, if we want any sort of big original or inventive new IPs to be made. I bet no one expects The Last Guardian to go on sale for £20 or less, it's not gonna sell without word of mouth or the second hand market because it's relatively niche.

Right now in the UK, games drop so quick and so cheap that there really isn't much point to buying used when you can either get a sealed copy for a couple of quid more, or in many cases, cheaper than the average used price if you search online. My one concern, however, is that in a non-used future, the prices of games would be abused and they would charge a lot more than they do now, since they know consumers have no choice but to buy new.

I can't see Sony going ahead with this unless MS do, or vice versa. But if it is just Sony, I'm not sure how that will end up for them. Difficult to judge. I do think it's inevitable, though.

But just one more point. I'm under the feeling that a digital-only and non-used future could be the start of the next market crash, especially if they abuse the prices of games. If the only way we can buy games in the future is on a console store at £50-60, I really can't see a fun future for video games.


Star'd.

I however don't think it's inevitable, and if it does happen it'll probably be rectified due to backlash; I don't think anyone wants another video game crash, least of all companies who are putting so much money into the games industry without getting a huge amount back (Sony).

But yeah I don't think we need to worry about that, there's definitely still a market for retail games and many digital games only sell if their prices are dropped.. I think it's only hugely popular IPs that can really get away with pricing at £60 and still sell, because that audience will buy the game for any price! They don't invest the time or research into games that others do so they perhaps wouldn't know any better.

Same for all those gamers who bought Pokédex on 3DS/iOS for its ridiculous price, it's marketed at those people who will buy it regardless of its price simply because of the brand-power.

Without second hand games, first party game prices will soar. Its users who put a lot of time and money into the industry will look for the cheapest possible solution as a result, imagine the irony if Nintendo ended up being that solution!

( Edited 05.01.2013 14:04 by SuperLink )

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Some good points. It's easy to overlook how important the used games market actually is. Obviously you're right that it has helped people obtain and discover older series to the point that it creates demand for more of them (Shenmue, etc). If this changed now, those kinds of effects wouldn't be felt until a decade down the line, since in the next gen, people will still be able to pick up used PS3 games to play. The only way to counter this is by putting just about every released PS4 game on the PS5 store for cheap. But even then, the fact that you cannot download copies of Shenmue today suggests some of the best and obscure games will still be missing out.

I used to be an avid buyer of used games (still am when it comes to bolstering the PS2/DS collection), up until this gen, really, where I can get nearly all my PS3 games for £10-15 new and sealed. But I am pretty worried for the next gen with all these rumours floating around. Best not to read too much into it for now, especially since I probably wouldn't jump on board early on. But I dunno, there's the thought that I may not be so invested in gaming any more if some big changes are made. But again, surely the bigwigs that make and publish these games and consoles realise what they're doing to an extent, too, and won't seriously fuck up the whole market. I think they know they need to be careful. And maybe this will all blow over.

Azuardo said:
I used to be an avid buyer of used games (still am when it comes to bolstering the PS2/DS collection), up until this gen, really, where I can get nearly all my PS3 games for £10-15 new and sealed.

I'm the same, I'm not very picky with what I'm interested in or buy assuming I can find it cheap, but if the second hand market disappears and the "first-hand" market has no real competition, I'm going to get so picky that I won't really have a problem not really buying anything at all and simply buying games from previous gens to live off.

Until things fix, because I really think that even if the industry goes down this route it won't be long before someone adds "Ability to play used games!!" as a console 'perk' for popularity-seeking, similarly to how "Splitscreen multiplay!!" is a 'perk' in some modern games (whatever happened to these things being standard).

But yeah best not to notice, I bet 9/10 things that make it to the patent stage never make it past that. If anything it's a placeholder so Sony can jump to some sort of legal action or competitive action if they spy anyone else making a move in this sort of area.

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I'd be more open to a move like this if it meant slashing the RRP of games in store. A new game for around £25/£30 would be easier to swallow even if it turns out to be a dud.

Otherwise, no dice. I sympathise with developers in that they get none of the resell money, but fact of the matter is people aren't exactly loaded anymore, and newer games just keep getting more expensive. I'm going to either laugh or cringe at PS4/Nextbox game prices.

( Edited 05.01.2013 14:53 by Phoenom )

I'm going to either laugh or cringe at PS4/Nextbox game prices.

How much higher are you expecting them to go? They charge £60 on the PS Store right now. Some may hit £70, but I can't see them being that price in the shops. Max of £60+ in the shops, I reckon, but will probably be bargained down to £50ish. But hey, even Wii U games are coming out at £50. Whatever the price of a PS4 game, you can't ignore the fact the RRP of Wii U games is still terrible. It's terrible, but still not as bad as the SNES/N64 days when they would charge £60+ for games.

I really don't have an issue with companies tackling the used game problem, Its the reason a lot of games don't turn a profit. If a game doesn't recoup its costs in the first two months its never going to because its off store shelves(well its on, but in used form). The film industry doesn't have this issue, neither does the music industry, go into HMV they're not selling second hand Blu Rays and CDs, but they are selling second hand games.

I understand the arguments against taking away used games, but I think a lot of them are based on assumptions. They assume that no used games, will mean that game prices will stay high. This simply isn't true, when a game stops selling the price will come down, as Game and HMV aren't gonna let games pile up in their stockroom.

The argument that used games help a series long term  has always made me laugh. A person buys used and then buys the sequel new. That's great but what if the game he bought used doesn't sell enough new to justify a sequel(like the vast majority of new IP). That's not helping, that's a hindrance. 

The only issue I have is the issue of supply, if we don't have used games, I want new games for sale direct from the publisher. I don't want a stupid situation where a game becomes impossible to obtain.

Azuardo said:

How much higher are you expecting them to go? They charge £60 on the PS Store right now. Some may hit £70, but I can't see them being that price in the shops. Max of £60+ in the shops, I reckon, but will probably be bargained down to £50ish. But hey, even Wii U games are coming out at £50. Whatever the price of a PS4 game, you can't ignore the fact the RRP of Wii U games is still terrible. It's terrible, but still not as bad as the SNES/N64 days when they would charge £60+ for games.

Definitely won't disagree with Wii U games being a rip off, will never pay that high for a game on any format. But you have to figure that if games development costs do double or treble as has been said by that Epic guy, just how developers will recoup those costs, especially during the first few years of the newer machines when the userbase is in its infancy and there aren't millions upon millions of games buyers. More shady DLC practices or far higher game prices are my guesses.

Wii U games are a ripoff over there? In the US they cost the same or less than Xbox/PS3 games.

I don't see this being a good idea. Not to mention they would lose revenue from rental services such as GameFly. I thought much of the purpose of DLC was to offset used sales anyway. Seems to me like another big industry overreaction.

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me (guest) 07.01.2013#12

oould they not use this s some form of locking out content unless its a new game? Like preorder bonuses, or the online passes etc.

They already have some form of disc registration system- with All Stars Battle Royale on the PS3, there's an option for 'disc benefits' which allows you to download the vita version of the game without entering a code. That disc is then registered to one account, and no one else will be able to use that disc to get the vita version of the game for free. I'm guessing the same system will be used for Cross Buy disc based titles

I can actualy perfectly understand developers wanting the 2nd hand market to end.
Think about it; They get NOTHING for that sale. So, effectively, there game is sold twice when they only get paid once.
Given that many games are only played once, no mater how good (I love Xenoblade, but its 300 hours of my life - I wont play that again), theres a strong consumer pressure to sale. And as long as the disc is intact, a second hand buyer gets 100% of the expirence while the developer gets nothing.
So I think people are a little too hard on companys here, as it is a tad unfair on developers.

The solution, imho, is to make shops selling second hand games pay a percentage back to the publishers for each sale - so publishers profit from second hand games as well as the shops.

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Ya'll also have to keep in mind that a lot of games retailers can only stay afloat due to the second hand market, that's probably where they get a very considerable portion of their revenue.

If you say goodbye to the second hand market, even more like GAME will likely go out of business if the retailers can't make enough to turn a profit from all the shipments and etc they have to buy. A very risky move for the industry as a whole when you consider that not everyone is shopping online yet, a huge portion of the parents/children market window shop and purchase games in the store then and there; having games only sold online or in a tiny corner of multimedia stores like HMV will not be very good at all for the exposure or success of the medium.

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SuperLink said:
Ya'll also have to keep in mind that a lot of games retailers can only stay afloat due to the second hand market, that's probably where they get a very considerable portion of their revenue.

If you say goodbye to the second hand market, even more like GAME will likely go out of business if the retailers can't make enough to turn a profit from all the shipments and etc they have to buy. A very risky move for the industry as a whole when you consider that not everyone is shopping online yet, a huge portion of the parents/children market window shop and purchase games in the store then and there; having games only sold online or in a tiny corner of multimedia stores like HMV will not be very good at all for the exposure or success of the medium.

I really don't have much sympathy for GAME, I'm surprised they're still in business really. The variety of new games they stock is abysmal. Once their initial stocks gone, they don't seem to restock when it comes to smaller games. I think GAME will be out of business with or without the used market. A dedicated games store should have virtually every current gen game that's in anyway decent available for sale. In most cases they have less variety than HMV or Asda which is pretty pathetic.

I actually love going into independent stores and seeing the range of retro consoles, retro games lining the shelves. I don't want that to end, i don't think it will, i hope to god it doesn't. 

However as this is only applying to new games it won't. However i don't like how digital distribution prices are not lower, that is what annoys me. I see how iTunes charges more for albums than say HMV or TESCO, and with the former looking like it will be its last year on the high street i feel like by 2015 hard copy CD's, DVD's and Games may really start looking like a thing of the past.

If MS or Sony go for this, they will be dead in the US as I'm sure Gamestop won't carry their games and systems.

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