Used games don't cheat publishers

Some executive for THQ apparently said, "I don't think we really care whether used game buyers are upset because new game buyers get everything. So if used game buyers are upset they don't get the online feature set I don't really have much sympathy for them." The thinking here seems to be that consumers who see a used copy on a retailer's shelf or on eBay will buy it, take it home, discover they only received half a game and conclude they should swear off buying used games. A tiny bit of analysis of human psychology reveals that most consumers will instead blame THQ who is holding the other half ransom. Most people won't feel shamed or chastised, but cheated.

Speaking of which, he also stated, "That's a little blunt but we hope it doesn't disappoint people. We hope people understand that when the game's bought used we get cheated." Now this is a bold claim that can be evaluated on strictly objective standards. I believe the publisher feels cheated because a used sale represents a customer who does not directly provide income to the publisher. The retailer makes 100% of the profit, so the publisher gets nothing from that sale. Seems pretty straightforward.

Unfortunately, the reality is often more complicated. Publishers, especially large publisher who handle their own distribution like THQ, have lots of options when it comes to selling games. There are dozens of huge retail channels that a publisher can choose from including selling from their own online store, as THQ does. Direct online sales allows publishers to pocket the share that retailers normally extract from each sale. That means publishers are in direct competition with the handful of retailers who sell used games. As it turns out, the retailers who offer used games are among the heavyweights of the industry: GameStop, Amazon and now Toys R Us. Other large retailers who have dabbled in the used market are Best Buy and Walmart. Retailers are attracted to the business since they avoid paying publishers their pound of flesh which, despite the added cost of managing inventory, results in good profits.

So this is actually a squabble between publishers and retailers with consumers caught in the middle. If publishers really wanted to end used game sales, they have a number of tools to make it happen including refusing to sell physical copies of games. But most big-name publishers can't afford to give up physical-media sales because they represent too much of their sales and profit. While times are changing, consumers still see disk-based games as a good value in part because they can be resold on the used market. So in a slightly round-about way THQ and other publishers benefit from the used market.

Contrary to intentions, this whole "new game buyers get everything" probably hurts new game buyers as much as it helps. For instance, eventually used game buyers will catch on to the scheme and refuse to pay the usual discount for games which means new games will have a smaller resale value than usual. Also, problems with the one-time-use DLC will hurt new game buyers disproportionally as they will be the prime users. If by chance the online mode fails, tech support will naturally assume the problem is that the game was bought secondhand. If your gaming machine gets stolen, can you be sure that you'll recover your DLC without a hassle? Meanwhile, used game buyers get access to the core game for an even cheaper price than normal.

As usual, I think the best advice from developers who think they are getting cheated is to go out of their way to treat the customer well. Sure it's counterintuitive, but look how the strategy pays off for Nintendo. They have games that remain in the best-seller lists for months because customers feel they are getting exceptional value. There's no need to worry about a few used game sales when new games are selling as fast as you get them to the store.