Tuesday, April 17, 2012

GameStop, Used Games, and Understanding Pricing

I just finished reading this interesting (yet totally expected) piece at GiantBomb: The Past, Present, And Future of GameStop's California Used Games Settlement.  The short of it is that publishers have realized that FREE day 1 DLC that's linked to a serial number that's shipped with new copies of a game let them in on the re-sale market.

And I'm totally okay with this, but it has to be done right.

For anyone unfamiliar with how relevant used games are priced at GameStop,  you're going to save about $5 buying any game people are talking about used.  When you sell a game back I believe you get $20 to $40 on brand new, relevant, AAA titles... but I'm not sure.  I've never sold a game back because I'm a hoarder in training, but it's what I've heard from friends.  I could probably do my research before I post things, but I'm not slamming the business model.  I think it's fine.  I just want people who make great stuff to get paid for it alongside people who have great business savvy.

This is where the FREE day 1 DLC comes in.  I buy a copy of Battlefield: Bad Company 2 new from Amazon and it's shipped to my house with a card inside that has a "VIP number" that allows me to play on a bunch of maps for free plus gives me access to a ton of new maps as they are released.  In my head I'm going "Okay... why?  I heart free stuff and I like knowing I'm going to get more of what I like, but why?"  Then I look at the in game store and see that there is a "VIP number" for sale for something like $10.  Suddenly it hit me... if I sold my game back to GameStop it would be worth $10 less to them, and they'd have to sell it for $10 less to the next guy, but it's going to earn EA another $10 as a used title.  I've never sat and broken down the earnings per disc of physical media vs the earnings for digitally distributing titles, but I know that $10 is more than $0.  That gives publishers less of a reason to hate GameStop, gives the new game buyer the feeling they are being "thanked" for buying it new, and takes away the "used games are killing the developers" sentiment a lot of gamers have been shouldering for a while.

So... how did this end up in a law suit?

A gentleman bought a copy of a game that employed this strategy used for a $5 discount and ended up going after GameStop for not making it clear that he was going to have to pay $15 at some point to play the "full" game.

I was a financial consultant at one point in my life, so hearing that someone "didn't make it clear what I was buying" kind of hurts for many reasons I'm not going to go into here, but the consequences of someone saying "they don't understand what they bought" is one of those things that can ruin people... anyways...

I hope this is where GameStop, and all other resellers, realize that they are going to have to drop the prices of their used games that come with "FREE day 1 DLC" in order to sell these games at a fair price to the people who want to play them.  On one hand I get what they are doing... they are saying "we're selling this game to you for this price and you should know what you're getting into" vs the customer saying "the publisher has added $15 to the cost of this used game and you didn't tell me that so I paid more than new for a title for nothing."  It's one of those caveat emptor vs the customer needs to be protected from misleading business practices situations and depending on how you view the "FREE day 1 DLC" in regards to the complete game being offered is going to determine where you stand on the issue as far as I can see.

I was confident when I put in my VIP code for Battlefield: Bad Company 2 that nobody would be silly enough to charge $55 for a used copy of the same game without the DLC... but I guess they were just going to keep doing it until someone took them to court.  Now that it's happened, let's see how things go.  They settled and made it clear they are not admitting wrongdoing, but I almost feel like they were waiting for this to happen.  I still see the most likely scenario being a case of stickers showing up at every GameStop with "ATTENTION THIS GAME HAS DLC."  But, if they really want to keep the used game market relevant they are going to have to do more.  Dropping the price by the amount of the "required" DLC (and by required I mean my friend who bought Battlefield: BC2 used would join us, we'd opti-match into a game and he'd be dropped because he didn't have the map, so we'd have to select a map he had, then join in and hope we're on the same team/squad.  Then the round would end and he'd be dropped again.  Sure, he could have played alone, but he bought the game to play with my cousin and I and ended up buying the DLC the first day he owned the game because it was simply too annoying without it.) would only make sense.

The used game vs required DLC war is going to be an arms race.  It's going to be interesting to see how this plays out.  If publishers get greedy and start charging $50 for "FREE day 1 DLC" to kill the re-sale market will GameStop drop the price even further?  How will this affect the youngest gamers who don't have the disposable income to play a few games a year without trading in the games they are done with?  Will we start seeing deals between publishers and re-sellers where they get discounts on the DLC required?  Aka buy Generic Shooter used at GameStop and get the Generic Shooter DLC for half price?

I think we all knew the publishers were going to get a piece of the secondary market, but only time will tell how hard they are going to push or what tricks the re-sellers have up their sleeves.  One thing is for sure, gamers love getting a discount on their games and are willing to spend if they believe they are getting a good deal (see: Steam).

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