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Used Videogames Keep them or kill them? http://upload.wikime dia.org/wikipedia/co mmons/5/5a/SNES- controller.png [1]

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Table of Contents Note to Audience The Situation: Terms of the Industry The Players within the Debate The Plaintiff The Defendant Example Advertisements The Real Numbers Hothardware Graph GameStop (GME) Stock Graph The Results: The Changing State Mobile and PC Markets Buy New Incentives Death of AA Titles & Spiraling Development Costs The Solutions: Oust All Used? Make Better Games The Retail Scene Respective Pricing Digital Distribution Supreme Court Ruling in the Works Conclusion Works Cited [1]

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Image Credits 1.[Controller] upload.wikimedia.org/wikipedia/commons 2.[Recycle Symbol, Brain] metue.com/wp- content/uploads, www.willamette.edu~gorr/classes/cs449/figs/oldbrai n 3.[Dollar Sign, Cart, Controller, and Hammer Icons] limeshot.com, thumb7.shutterstock.com, cdn2.icondfinder.com, clker.com 4.[GameStop, Amazon, eBay] nibletz.com, didyousaymarketing.files.wordpress.com, images.wikia.com/logopedia 5.[Jimquisition Still] youtube.com/watch?v==r4efpGb0DqE 6.[CHANGE AHEAD Sign] blogspot.com...change-architect-sign1.jpg 7.[iPhone, PC, and Binary] zapp2.staticworld.net, deviantart.net...balagehun1991, cartell...binary-code 8.[Pre-Order Exclusive, Online Pass] dealrocker.com...l.a.noire, gawkerassets.com 9.[Bizarre Creations, Pandemic, Free Radical, Clover Studios, Hudson, and Zipper Interactive] notourdayjob.com (first four of six), spawnkill.com, upload.wikimedia...Zipper_Interactive_Logo 10.[NOOOOOO!!!] mt-blogs- redisign.syfy.com/scifiwire 11.[Double Fine] talkandroid.com 12.[Red Mage, Ness, Bowser, and Samus] photobucket.com...zacesilverblade, nintendoagemedia.com...eb_ness, photobucket.com...smwbowser, oyster.ignimgs.com...All-Suits 13.[Shopping Bag] freeiconsweb.com 14.[Steam, gog.com] pcmedia.gamespy.com/pc/image/article, picturescream.com/images 15.[Copyright Symbol] copyrightauthority.com/copyright-symbol [1]

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Note to Audience Two out of three households in the US play videogames (Video Game Industry). I am talking to those who play games. And as the number encroaches upon newer audiences, I suggest the non-gamers listen up, as well. The industry took a revenue dive in recent years, and every corner of it wants to know why. Partly to blame was the great recession, also to blame was a dying interest from the casual gaming Wii crowd. While many factors played into the decline in sales, one topic the industry players continue to banter about is the used game market. Would doing away with it give the industry the boost it needs to change for the better? Or is it a natural outcome of a free market? Either way, I look at the issue with facts and solutions set up in a multi-genre manner intended to inform the reader. Videogames are the latest extension in the line of artistic media, replacing film. Albeit, as an infant, its hard to appreciate the potential of the medium, but as a human on this earth it is imperative to understand the arts our common form of expression. And the outcome from the used games issue affects the direction of our newest art form. [1]

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The Situation: Terms of the Industry The industry is based on intellectual property (IP) A copy of that IP is what is being sold. Buying a videogame grants you ownership to a copy, not to the IP Owners of an IP are called publishers. Owners hire workers, called developers, to make a playable videogame based on the IP Publishers and, consequently, the developers get none of the used game revenue in its current state On the other hand, individuals and businesses have found a market for lower- priced videogames by selling second-hand http://metue.com/wp- content/uploads/2009/03/recycle- games-lg-metue.jpg http://www.willamette.edu /~gorr/classes/cs449/figs/o ldbrain.gif [2]

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The Situation: The Players within the Debate Publishers In charge of the funding a typical videogame receives; paid by distributors Distributors (Gamestop, Best Buy, Disc Replay, Wal-Mart, etc.) Sell used and/or new videogames to the public Paid by consumers Consumers The ones buying used and/or new videogames Caught between the feuding publishers and distributors (Narc_Cop33) Think with their wallet and look for incentives (Mihulec) Developers The people who work to create a videogame Paid by publishers Opinions on used videogame sales vary within each category, but generally publishers and developers dislike them, while consumers and distributors like them. http://limeshot.com/images/bl og/dollar-logo.png http://thumb7.shutterstock.com/th umb_small/251461/251461,12475 73008,2/stock-vector-shopping- cart-icon-33640687.jpg http://cdn2.iconfinder.com/data/ic ons/ecqlipse2/GAMECONTROL LER.png http://www.clker.com/clipar ts/0/d/4/a/11971260562074 209608alst_hammer.svg.me d.png [3]

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The Situation: The Plaintiff Here is what the opponents of used game sales say: Publishers are the risk-taker in the equation, while distributors reap the benefits without the risk (Boesky) Gamestop can sell a used game, buy it back, sell it to the next guy at a profit, buy it back, sell it for a profit to the next guy, and on and on making multiple sales off a single game (Boesky) The more profit publishers make on new games, the more games they can fund and release to the public (Moriarty); listen to the snippet from the podcast on the left The window of new sales is so short nowadays, only about three months There are no long-tail revenue streams (Brightman) Designer Richard Browne: If used sales fuel new sales, new would have spiked a few years ago when used was in its heyday, but sales have actually declined (Hruska) Publishers want the money the used market is generating, or at least some of it (Usher) http://images.wikia.com/l ogopedia/images/3/3b/25 -08-08-ebay-logo.jpg http://nibletz.com/wp- content/uploads/2012/ 05/95-logo- gamestoplogo1.jpeg http://didyousayma rketing.files.wordpr ess.com/2012/05/a mazon-com-logo- online-store-sales- deals.jpg [4]

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The Situation: The Defendant Here is what the proponents of used game sales say: Gamestop, which controls 90% of the used market (Lloyd), says that they bring $1.2 billion in store credit to the industry; bleeding edge core gamers sell their used items to fund new purchases (Brightman) Used sales are not all lost sales for publishers; many people who buy used would not buy new at all if used was no longer an option anymore Used sales are legal and capitalistic; publishers are monopolistic; capitalism has gotten publishers to where they are - they have earned huge sales numbers, but they have also drawn competition in the form of used markets (Sterling) [watch the video by clicking the image] http://www.youtube.com/watc h?v=r4efpGb0DqE [5]

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Example Ads by Gamestop They push new sales......but also really want your used games. http://www.gamestop.c om/gs/newnews/fsi/ima ges/ebc3010438.jpg http://desmond.imageshack. us/Himg18/scaled.php?serv er=18&filename=couponsfl 2.jpg&res=landing [Advertisement 2] [Advertisement 1]

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The Situation: The Real Numbers While used distributors, like Gamestop, make a 50% profit margin on used games, publishers only get 20% of the new game sales (Lloyd) 23% of the U.S. console gaming dollars go toward pre-owned purchases (Orland) 60% of core gamers buy used; see graph above (Used Video Game) Core gamers will grow the industry from $52 billion in 2011 to $70 billion in 2017 (Caoili) Many gamers indeed sell used items to fund new purchases (Mihulec) The graph below is from a 2008 study, and it shows that less than 10% of sales comprised of used with 90% still going toward new; see graph below (Used Video Game) Retail sales dropped from $10 billion to $8.8 billion from 2009 to 2011 (Snider) Nonetheless, $25 billion was spent on gaming in 2011 (Snider) Fun fact: the value of one Atari game in its time is equal to the value of one copy of a multi- million dollar production sixty dollars (Moriarty)

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Contrary to Brownes earlier statement, new sales increased with used sales -- used helped new [Hruska]

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Additionally, Gamestop (GME) stock has tanked since the highpoint of used games in January 2008, not reflected in overall industry trends -- used does not dictate the industrys success or failure [Google Finance]

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The Results: The Changing State So Gamestops used game sales plummeted over the recent years, but the industry did not (although it may have dipped to a degree) This shows that the stake Gamestop and other used game retailers had in the entire market was not as influential as thought What shifts occurred to uphold the videogame market in the Gamestop crisis? Some clues have been given thus far in the presentation, but further answers are ahead... http://1.bp.blogspot.co m/- 2y6HO_qKRBA/T1w KWUBnEvI/AAAAA AAAAJY/j2ETxjMvw Lc/s1600/change- architect-sign1.jpg [6]

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The Results: Mobile and PC Markets PC Gaming generated a 2011 revenue of $18.6 billion (DeCarlo) $4 billion was spent on microtransactions within free mobile games (Snider) Digital sales from 2009 to 2011 jumped from $5.4 billion to $7.3 billion, while retail is expected to decline 5% in 2012 (Snider) Analysts expect that by 2017, 66% of the $70 billion game industry will be from digital distribution, the primary manner of acquiring content on PC and mobile platforms (Caoili) http://fc05.deviantart.n et/fs50/f/2009/283/0/6 /MY_Computer_icon_ by_balagehun1991.pn g http://zapp2.staticworl d.net/reviews/graphics /products/uploaded/ap ple_16gb_iphone_4_c dma_verizon_794204 _g8.jpg http://www.cartell.i e/car_check/wp- content/uploads/20 10/10/software- binary-code.jpg [7]

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The Results: Buy New Incentives EA and Sony drive up new sales with pre-order bonuses, such as exclusive downloadable content (Mihulec) Other times, publishers put limits on those who buy used, namely in the form of 1-per-game online access codes If you buy used and the code has been used, it costs between $10 and $20 to get a new code to be allowed access of online multiplayer (Moriarty) Here is a link to EAs website on how to obtain said pass for one of the most popular online shooters, Battlefield 3 on the Xbox 360link Some buyers of used are infuriated by these blocking measures put out in recent years; other buyers find that the incentives still dont outweigh the savings of buying used (Skerritt) http://cache.gawke rassets.com/assets/ images/9/2011/12/ 4f105041bfb747fd 3646823de4564e3 7.jpg http://blog.dealroc ker.com/wp- content/uploads/20 11/05/pre-order- l.a.noire.jpg [8]

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The Results: Death of AA Titles & Spiraling Development Costs Few franchises can support the $100 million budgets of mainstream game production, so the mid-tier development studios cant afford to take a hit on a poor-selling product Consequently, mid-tier studios disappear (Brightman) The lost sales that go toward used games is not felt equally by all game studios, and all videogames are not equally bought used; some studios hurt more than others: the mid-level studios Developers wont make games that wont sell. Publishers dont want to take that risk. Only the broadly appealing games will get made (Brightman) All studios below (indicated by their logos) have been shut down in recent years due to a lack of performance; shown are some of the most well-known companies, which brought beloved titles to the market http://www.notourdayjob.com/blogweb/uploads/T op10/topten_closed_biza rre.png http://www.notourdayjob.com/blogweb/uploads/T op10/topten_closed_pan demic.png http://www.notourdayjo b.com/blogweb/uploads /Top10/topten_closed_f reeradical.png http://www.notourdayjob. com/blogweb/uploads/To p10/topten_closed_clover. jpg http://spawnkill.com/ wp- content/uploads/2011/ 02/hudson-soft-logo- 421x304.jpg http://upload.wikim edia.org/wikipedia/ en/thumb/f/f4/Zipp er_Interactive_Log o.png/295px- Zipper_Interactive_ Logo.png [9]

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The Solutions: Oust All Used? So, should the industry oust the sale of used games as we know it? NO! Having no used option available would drastically lower the number of gamers (Reisinger) because selling used items to put toward new purchases would become non-existent (Moriarty) As shown through the statistics above, the used games market is not a leech on the industry and in many respects, helps it Certain avenues have opened up recently where used game purchasing is out of the picture (think digital) But is that necessarily good for the industry? There are always going to be trade-offs http://mt-blogs- redesign.syfy.com /scifiwire/assets_ c/2010/01/StarWa rs_vader_noooo- thumb-550x378- 32922.jpg [10]

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The Solutions: Make Better Games The sad fact is that the big-name games that get the funding are the ones that appeal to the highest amount of people. Gamers will have less choice Consequently, creativity is limited on the developers part They will be put on projects that are bland and overdone, forced by the publisher But there is hope; small independent companies have sprung up with oodles of creative works to show off Just look at Minecraft, Bastion, Braid, Limbo, Dear Esther Also, alternate methods of funding have been born in the midst of the chasm The biggest of which is Kickstarter, which has funded multiple games into production, the biggest of which being Double Fines latest game.Double Fines latest game These games are better because big-name games only satisfy so deeply, whereas grassroots games, although satisfying to a smaller audience, bring a much deeper happiness to the gamer. A study in The Journal of Marketing found that the more IPs a console has exclusive to it, the more the system sells (Blinken) http://www.talka ndroid.com/wp- content/uploads/ 2012/02/Double FineAdventure.jp g?3995d3 [11]

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The Solutions: The Retail Scene Buy todays games for $60.00 instead of the $55.00 used deal Gamestop puts up within days of a games release (Moriarty) The publishers get no cut of the Gamestop sale. Also, buy the games mid-tier developers have worked hard on Generations past where their videogames are no longer manufactured by the publisher are OK to buy and sell used (on eBay, Amazon, mom and pop stores) (Moriarty) Another solution poses the rule of new-only sales during a certain window of time following a new release (Pearson) Another solution mirrors the film industry where a law could make the sale of new and used games in the same store illegal (Pearson) http://nintendoageme dia.com/users/3864/a vatars/eb_ness.png http://oyster.ignimg s.com/wordpress/w rite.ign.com/50304/ 2011/05/All- Suits.jpg http://i487.photobuck et.com/albums/rr231/ zacesilverblade/8- bit/83686-70788-red- mage_large.png http://i22.photobu cket.com/albums/ b338/justletmesig nup/smwbowser.g if [12]

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The Solutions: Respective Pricing All videogames are not created equal Some are worth $30.00 new, others are worth well over sixty or seventy dollars One solution is to price videogames on day one according to their actual worth, instead of a industry-wide pricing of $60 or $50 new A two-version solution says that publishers could sell one version that would be non-resalable at a low price, and a resalable version at a bit higher of a price (Pereira) www.freeiconsweb.com/Icons- show/shopping- bags- graphicsfuel/brown -shopping-bag- 256x256.png [13]

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The Solutions: Digital Distribution No pressing discs, no retailer cuts of profit, and no shipping costs are three areas of money-saving benefitted from digital sales (LeClair) Digitally re-release past generations of games (Miller) and price them on a tiered scale (Moriarty) Some of this is done by publishers, but the selection is anything from comprehensive The process is slow-going and only the most popular vintage games get re-releases Also, to allow play of these older titles, publishers could manufacture their own mod chips to legally sell to consumers (Miller) Pricing must be extremely competitive since todays private emulators are free and the roms (games) are free via illegal downloading Also, the convenience of digital shopping could positively affect sales numbers (LeClair) Common digital retailers: Gamefly Amazon Steam GOG http://pcmedia.ga mespy.com/pc/ima ge/article/112/112 8069/steam_1287 071486.jpeg http://www.picture scream.com/image s/46442906zyz.pn g [14]

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The Solutions: Supreme Court Ruling in the Works The Supreme Court of the United States is going to rule on a case that decides whether foreign goods have the First-Sale Doctrine applied to them or not The First-Sale Doctrine says once an item is purchased, the copyright holder has relinquished control of the product you can sell, destroy, or give away the item Three lower courts have or have had cases concerning the First-Sale Doctrine and its amendment (Supreme Court) The amendment would remove the right to resell foreign copyrighted items (CDs, iPods, clothing, cars, trucks, etc.) To sell anything copyrighted and imported would require contacting the copyright owner and receive permission to resell the product in the States (Supreme Court) Consequently, the used games market would be greatly affected, most likely destroyed Most, if not all, videogames are manufactured in Asia The ruling is not currently dated (after all, the case has only been accepted), but there is a DemandProgress.com campaign for consumerist interests; I must say I dont think the Supreme Court will rule absurdly against the doctrine, but the case shines light on the necessity of regulation during the Internet age of intellectual property DemandProgress.com http://www.copyrig htauthority.com/cop yright- symbol/Copyright- Symbol- images/Copyright_s ymbol_9.gif [15]

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Conclusion It seems the used game debate is becoming somewhat of a dead issue now that digital avenues have become a mainstream means of purchasing videogames Although, traditional console gaming has another decade or so before it shifts heavily over to digital No publishers have stepped forward trying to work with distributors This must mean the battle isnt worth it to them (Hruska) Its a capitalistic feature of the industry Also, the argument of the used market taking from the new market is hardly applicable You can see in the graph on The Real Numbers slide to see what the height of Gamestop was doing to the industry The issue is not as devastating as some make it out to be It does impact the middle of the industrys developers, so I implore you, if you want more of those games, buy new from mid-level developers If you dont know which ones those are, do a little research Im not talking Mario and Call of Duty, Im talking Harvest Moon and Metro 2033.Mario Call of DutyHarvest Moon Metro 2033 I know its hard to buy $60.00 games whenever you want. Enough people agree with that sentiment and have discovered and even created ways around it pirating, used, digital download, indie support... Thanks to the free market, we arent stuck with what has become the norm of generations past. Whats the point of an art if its bound by a market too focused on squeezing a profit from it? Thankfully we have a voice, and because of it we can take this medium to new heights, making it more accessible and humane than before [1]

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Works Cited 1.Boesky, Keith. "Gamestop: Used Games, We Just Can't Quit You Edition." A Tree Falling in the Forest. Blogspot, 23 Aug. 2011. Web. 16 June 2012. 2.Binken, Jeroen L.G, and Stefan Stremersch. "The Effect Of Superstar Software On Hardware Sales In System Markets." Journal Of Marketing 73.2 (2009): 88-104. Business Source Premier. Web. 14 June 2012. 3.Brightman, James. Pre-owned increases cost of games, cannibalizes industry, says Dyack. Gamesindustry International. Eurogamer Network Ltd. 27 March 2012. Web. 13 June 2012. 4.Caoili, Eric. "Core Gamers to Grow Game Industry Revenues to $70B by 2017 - Analyst." Gamasutra. UBM TechWeb, 8 June 2012. Web. 16 June 2012. 5.DeCarlo, Matthew. "Dead or Alive? PC Gaming Generates a Record $18.6 Billion in 2011." TechSpot. N.p., 7 Mar. 2012. Web. 16 June 2012. 6.GameStop. Advertisement 1. Web. 09/18/09. 7.GameStop. Advertisement 2. Web. 2009. 8. GameStop Corp. (GME). Digital image. Google Finance. Google, 16 June 2012. Web. 16 June 2012. 9.Hruska, Joel. "If You Resell Your Used Games, The Terrorists Win." Hot Hardware. HotHardware.com, LLC, 18 Apr. 2012. Web. 16 June 2012. 10.LeClair, Dave. "4 Reasons The Digital Distribution Of Video Games Will Make Your Life Better [MUO Gaming]." MakeUseOf. N.p., 3 Apr. 2012. Web. 16 June 2012. 11.Lloyd, Mary Ellen. "Best Buy Tests Waters for Used Videogames." Wall Street Journal - Eastern Edition 24 June 2009: B3A. Newspaper Source. Web. 14 June 2012. 12.Mihulec, Frances. Used Video Games: Good or Bad for Video Game Industry? The Other Gamer. WordPress. 18 Feb. 2012. Web. 13 June 2012. 13.Miller, Corinne L. "The Video Game Industry and Video Game Culture Dichotomy: Reconciling Gaming Culture Norms With the Anti-Circumvention Measures of the DMCA." Texas Intellectual Property Law Journal 2008th ser. 16.3 (2008): 453-81. Academic Search Premier. EBSCOhost, Spring 2008. Web. 16 June 2012.

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Works Cited (Continued) 14.Moriarty, Colin. The Used Games Debate. Podcast: Beyond. 02 Feb. 2012. IGN Entertainment. 13 June 2012. 15.Narc_Cop33. I am a game developer, and Im going to explain to the mass of /gaming/ why the state of gaming is as such. Reddit. Reddit Inc. Web. 13 June 2012. 16.Orland, Kyle. "Report: Used, Digital Sales Make Up 35% Of U.S. Console Spending." Gamasutra. UBM TechWeb, 7 Nov. 2011. Web. 16 June 2012. 17.Pearson, Dan. "GameStop: Used Sales Benefit the Whole Industry." GamesIndustry International. Eurogamer Network, Ltd., 23 Aug. 2011. Web. 16 June 2012. 18.Pereira, Chris. "Used Games Market Is Defrauding the Industry, Claims Developer." 1Up.com. 1UP Network, 30 Oct. 2008. Web. 16 June 2012. 19.Reisinger, Don. "Should We Stop the Sale of Used Video Games?" CNET News. CBS Interactive, 04 Dec. 2008. Web. 16 June 2012. 20.Skerritt, Peter. "Consoleation: War on Used Games- A New Slippery Slope." GameCritics.com. N.p., 20 Aug. 2011. Web. 16 June 2012. 21.Snider, Mike. The Changing State of Gaming. USA Today 04 Jun 2012. Print. 22.Sterling, Jim. Jimquisition: Used Games Have A Right To Exist. 26 March 2012. Online video clip. YouTube. 13 June 2012. 23."Supreme Court Poised To Rule On Important First Sale Case." GamePolitics News. Entertainment Consumers Association, 15 June 2012. Web. 16 June 2012. 24. Used Video Game Market Inforgraphic. Digital image. JJGAMES.com. N.p., 9 Feb. 2011. Web. 16 June 2012. 25.Usher, William. Top Misconceptions About The Gaming Industry. Cinema Blend LLC. 18 March 2012. Web. 13 June 2012. 26.Video Game Industry Statistics. Digital image. Entertainment Software Ratings Board. Entertainment Software Association, 2010. Web. 16 June 2012.