Used Games Are Not Piracy, Just Make your Games Better (google plus reupload from 2013)

Originally uploaded September 15th 2013. For context, this is a time when there was a big discussion over xbox one DRM and many discussions over why used games are killing the market, and DLC was the big thing people were angry about. Now adays it's all about microtransactions.

I really hate it when people compare used games to piracy. Their argument, "developers don't make money on used sales just like how they don't make money on pirated games."

OK, piracy and used games are not on the same level. The main reason is because, unlike piracy where an infinite amount of people can enjoy 1 once legal copy at 1 time, only 1 person can enjoy a used game at 1 time, up to 4 if it has split screen multi-player. The person who sold the used copy forfeited his rights to play that copy. He can no longer play the game he sold to someone else. If a pirate seeds his torrent, an unlimited number of people can enjoy that copy while the seeder also enjoys his copy. Even if he doesn't seed, the original torrent is still up for an unlimited number of people to get.

Another reason used games are not on the same level is because, unlike seeding a torrent, a fair amount of weighing of positives and negatives must happen before a consumer sells his copy of a game. As mentioned earlier, the first owner loses his ability to play the game once it's sold, therefor, he must be sure he doesn't want this game anymore or that the positives of selling the game outweigh the potential future enjoyment. I assume most people don't seed their torrents because they're lazy or don't like the thought of people getting stuff off their computer, or something like that, but it doesn't have the same choices that must be made like with selling a used game.

Now to address the lack of developer compensation. It is true that developers don't make money off of the sales of used games and they don't make money off of the download of pirated games, and as such it does make sense that developers would want to lower the instance of both. I don't know how to curb piracy. People seem to like steam sales and apparently that significantly lowered piracy in Russia, but I'm not going to try to come up with ideas on how to lower that; I have no ideas how to lower piracy, and since this rant isn't about ethics of piracy, I'll just stop it here.

WARNING: Explanation of basic economic concepts ahead. Please proceed to the next paragraph if you already understand the basics of free market capitalism and new game prices.

The main difference between the new and used game market is the new game market operates on a fixed price model with the price set by the developers and the used game market operates at fair market price as dictated by the consumer, aka, free market forces. In a capitalist economic society, consumers as a whole decide what they are willing to pay for a product which matches what sellers as a whole decide they wish to sell the product for. For a used game, there is a set supply as determined by the number of people wishing to sell their game and a set demand as determined by the number of people wishing to buy that game. Then based on supply and demand, the price for that game is determined by how much the seller is willing to accept based on how badly they wish to sell the game and how much the buyer is willing to depart with in order to get that game. It's basic econ. Now with the new game market, there is theoretically an unlimited supply because the production companies can print off as many copies as they want. To keep these games from being sold for nothing as would be dictated by a free market system for an item with an unlimited supply, the publishers specify what the price is going to be. There will be people willing to pay that price if they see that as being a fair price, but it's not always the same as there would be if an equilibrium supply and demand was found.
ECONOMICS OVER NOW.

Here's a way to lower used game sales though. It's a really simple concept, make games that people won't want to sell. If a game is really good and offers great gameplay and replay value, people won't be so quick to sell. This then lowers the supply in the used game market. Also if the game is really good and offers great gameplay and replay value, that increases the demand for the game. In a free market system such as the used game market, the price is directly related to supply and demand, and if you can get the price of a used game higher than a new game, people will buy the new game over the used game, because people generally go with the cheapest version. If the difference is $5-$10 dollars, it could go either way. The ability to have a game that's never been touched by anyone is worth $5-$10 to some people, others it's not. However, when the difference is $40, the consumer will go with the much cheaper version almost all of the time. Games such as the EA sports titles come to mind when thinking about the price difference between new and used. Stores might still have copies of Madden 2k-whatever, and as required by their agreement with EA, they must still sell that at whatever the standard retail price is, let's say $40. However, when everyone is selling last year's edition, the fair market price for the used game goes down to $1 because everyone wants to sell it and no one wants to buy it.

Now lets look at another game, Xenoblade Chronicles for the Wii. This game also has a $40 price difference between the new and used copy. Now what sets this apart from madden? It's quite simple, the used version is $40 more expensive than the used version. You heard me right, developer required retail price for a new copy is $40 cheaper than a used copy. If you find a new copy at gamestop, walmart, or anyone else that gets their games from the developers, they have to sell it for $50. If you find a used copy at gamestop or ebay, it's gonna cost you around $90. Gamestop was even involved in a scandal where they got shipments of new copies and they opened them up to call them used so they could sell them for more money. It's not ethical, and I'm not entirely sure if it's legal, but they were just playing to the free market.

Now as a developer, ask yourself, why was the game selling for $90 used when a new copy was cheaper? Well part of that is it was a limited release game with far fewer copies on the market. However there are probably a couple games that had the same number of sales new but now go for $10, so don't think that limited release is the answer. The primary reason, is that supply and demand dictated that $90 price tag. People were not so quick to sell their game because they really liked it, thus there was very little supply. Also, many people wanted to play it, thus there was high demand. Mixing the low supply and high demand gave that game a high price, one larger than that of the new price as dictated by the developer. If this game had a much larger release, the used price would probably be around the new price with that $5-$10 price difference, maybe less.

Now what sets a pirate apart from a buyer of used games? Simple, a pirate is not willing to pay for the content, but a used buyer willing to pay for it so long as the price matches what they are willing to pay for it. If they don't think the game is worth $50 but it is worth $20 and lower, and they can get it for $20 or lower, they will buy it for $20 or lower, compensating the developer or not so long as it was once bought legally and the previous owner can't use it anymore. Now you can remedy this by dropping the price to fair market value or lower and get some money for it, like the steam sales, or you could keep it at $50 and wonder why people would sell their games for $20; 5% of that $20 if they use a middleman like gamestop. But price drops might not seem like a good idea the year it was released because then the guys who already bought it feel like chumps and won't buy early again. So what's a developer to do?

I already said it, make games people aren't so willing to resell. If someone buys a $50 game and finds out it's only $20 worth of fun, there's a good chance they will cut their losses and sell for $20, probably then buying a better game with that money. Make a game that's $90 worth of fun and charge $50, people won't be so quick to resell for anything under original purchase price; maybe even a little over original purchase price. If you want to undercut used games, sell at or under fair market value.
Yes, it typically takes thousands if not millions of dollars to develop and make a game. Video games are a form of art, but not all art is created equal. I know I'm terrible at drawing and painting. I could spend the same amount of time and money on resources as Da Vinci did when painting the Mona Lisa. Thing is, if I managed to sell it, I would be lucky if I recouped the money I spent on paint. What makes my work of art worth $1 but Da Vinci's worth billions? They both took the same amount of time resources and there's the same number of copies in the world. Well his looks great and defines a generation of artistic creation, whereas mine is probably a lopsided circle that no one cares about. Don't invest millions of dollars in lopsided circles and expect to make a lot of money. Make the games that define a generation of games, and see how many used copies are out on the market. Just look at Earthbound. That game defined RPGs on the SNES, and loose carts are going for $150. When a virtual console release for the Wii U was produced, it was the top selling virtual console game, and it wouldn't surprise me if it outsells games like Mario U. It was that good. Now if you look at a game like NCAA Basketball, fair market value is under $1, and if a virtual console game was released, it probably wouldn't sell at all, because it's a lopsided circle. It probably cost a couple thousand dollars to make, but it's not worth the $2 of silicone, plastic, and other guts within it. Why, because it's a lopsided circle.

What's the moral of this story? Pirates are not the same as people who buy used games. Pirates aren't going to pay fair market value, new or used, because they would rather get it for free. Used game buyers will pay what they deem to be a fair price. If they feel a game is worth the $50 price tag for a new game, they will pay that $50. If not, they will wait until they can get it for the price they feel is fair, new or used. If you want to compete with the used game market, drop the price to used fair market value price, or make a game that is worth the $50, or make it worth more than $50 but charge that, that'll really screw the used game market.

Now don't get me wrong, I despise piracy. Arguments such as "avoiding DRM and the company sucks" I call Bull. Everyone who uses those arguments that I've met ultimately does it because they want free stuff. The only time I can understand piracy is if there's no legal way to get the content, like with Star Fox 2 for the SNES. Unlike the used game market that shows what fair market value is, piracy is just free stuff from an unlimited source. Piracy is bad, don't do it.

Why Physical Games are Hear to Stay (for the forseeable future)

"Physical media is dying, eventually everything will be digital; it happened with music, it's happening with movies, and it'll happen to games."

As a game collector, how many times have you heard that? Happy Gamer here and I hear that all the time. Personally, I think physical games are here to stay, and the arguments for movies and music are apples and oranges when compared to games.

Before I start with why physical is here to stay, let me explain why it's important to me. I am a collector. I have SHELVES of games from pretty much every generation. I have 2nd gen, 3rd, 4th, 5th, 6th, 7th, and some 8th. I display my collection proudly. Given the choice between physical and digital, I will almost always chose physical because a full hard drive is nothing to look at, but a wall full of games is. I love physical.

OK, so why is physical media for games here to stay when music went digital years ago and I guess movies are currently too? I mean physical collectors will always be there but the vast majority of people just want the best experience for their dollar. And that's the reason right there, people want the best experience for their dollar. In general, you get more value from owning a physical disc than downloading a file, at least with gaming.

Here's the deal; before the digital revolution in music distribution, you had to buy an entire $20 15 track album if you wanted 1 song. It didn't matter if you wanted all 15 tracks or even cared about them, you had to pay $20. You might get lucky and they would release a single, but it would still set you back $3, and it would probably come with a remixed version or some "side b" you didn't care about. With the digital revolution of music distribution, you could buy individual songs for $1. It didn't matter if it was released as a single or an entire album, you could get that 1 song on it's own and not have to worry about unwanted songs. That is why digital distribution became the de facto way to buy music.

So what about games. Right now (and probably forever), you have to buy the full game regardless of physical or digital. You can't say "I only want this level, so I will only buy this level" when buying games, you have to buy "the full album." Additionally, it's the same price physical or digital. I know steam and GOG have sales where the games are significantly cheaper digital than with physical, but any game on PSN, XBLA, or eShop are all the same price. In fact, I frequently see games CHEAPER physical than digital in terms of consoles. At the time of writing this, I'm in the market for Smash 4 on Wii U. If I buy the game physically through BestBuy.com, it will cost me $50. If I buy the game digitally, it will cost me $60. That's not the only example. I see games on sale all the time physically but their digital counterpart is still full retail price all the time. It's typically around $5, but the fact that the version with all the production, transportation, and overhead cost is the same price or LESS THAN the version that is just a copy-paste of digital bits from a server is the primary reason that physical games are here to stay.

OK, lets say that the reverse is true. It rarely is, but lets say that the digital version is a couple bucks cheaper. I mean, when you buy a digital album it's typically a little cheaper than a physical album. Well...there's the second hand and sharing market. As I said, I am a collector. Even if I'm done with a game, I will not sell it, but many people do sell their games when they're done. I also hang out with my friends IRL and we play videogames and I bring the disc with me or they bring it with them, and so do many other people. It's currently impossible to sell stand alone digital games second hand without selling the entire console (the only time I know of that happening is with Silent Hill PT where people sold their PS4's with PT on it for like $1000). Similarly, it's very impractical to bring digital games with you to a friend's house, having to either bring your console with you or signing in and downloading it to their console. It was a little easy with the 360's removable hard drive, but that isn't true for the ps3, ps4, XBOXONE, Wii, or Wii U. However, with physical media you can sell your games once you're done and it's really easy to bring them with you to a friend's house or let your friend borrow it. With music you generally didn't sell your vinyl, cassettes, or CDs, so the second hand market wasn't really a thing. As for bringing it with you, it became much easier to transport digital because 1000 songs could be loaded onto and played off of a pocket MP3 player whereas 1000 songs on CD or cassette would take up like like 4 shoe boxes, even more if you're talking vinyl. With sharing, well legality comes into question, but lets just say it's very easy to "share" digital songs, and it's much more difficult to "share" digital games that way.

One aspect that can be cited with handhelds are portability, and that might be why digital is a little more attractive on 3DS and Vita, but not by much. Yeah, I remember the GameBoy days and having the carrying case with all my cartridges in it, and I still kind of do that with my 3DS on occasions, but most of the time I have the game I'm working on at the moment and I leave the rest at home. I don't really need to have all my games at my finger tips because I'm just playing short bursts. Most people I talk to are the same way; they have the 1 game in their game slot and that's all they're interested in playing at the moment. They might have some download only titles like Pokemon Shuffle, but most of the time it's physical. (This argument falls flat with consoles because they aren't supposed to be portable. If you're in your living room, chances are you have the space for physical games and space is not a concern).

Another possible argument is "it's more convenient to download a game than drive to the store to buy it." OK, lets be honest here. Unless you have google fiber, it's going to take an hour or more to download a full 20 gig game. It's going to take you less time to drive to the store, buy it, and drive back home. I live about 10 minutes from a gamestop. Round trip it'll take me about half an hour to get a game. Compare that to 1 and a half hours to download a game, and it's more convenient to get physical. I know that not everyone lives so close to a gamestore, but chances are the further you live from somewhere that sells videogames, the slower your internet speed is, so it typically will be more convenient to buy physical than digital (plus you get all the other benefits of physical listed above sooooo......)

So there you have it, physical media is here to stay with videogames. Maybe if all game manufacturers adopted the Steam and GOG mentality of "there's no overhead cost to digital, so lets pass that savings onto the consumer and sell even more games," digital would take off. I'm not saying digital is bad; it really opened the door to indi developers. However, I just don't see it going away any time soon, or in the near future. Will games go 100% digital, maybe 1 day, but I sure can't see it. Well this has been Happy Gamer, signing off, and physical ain't going anywhere.

PS: because it's always cited as an example of digital taking over, I want to address the whole "movies are going digital as well" argument. Personally I don't see that at all. People are still buying Blu-Ray movies, and I don't know anyone who actively chooses to buy movies digitally. This is mainly because digital movies are distributed through heavy DRM. Amazon Instant Video, Vudu, UltraViolet, flixter, etc. all "you must have this distribution app and it's locked to your account and out can only stream it or whatever." However, with a Blu-Ray or DVD you just put the disc in your player, whatever player it is, and play it. Maybe they're referring to rental. That's true, digital has replaced physical with rental since it's more convenient to say "Netflix I want to watch this with my $8/month subscription" than to drive to the video store, pay $1 for a movie, drive home, watch it, drive back, return it, and drive home. Sometimes I might find someone who has a season pass on iTunes for a TV series where they get the TV show a day after it airs, but that's more the exception than the norm. I'd say physical is still very relevant in terms of movies as well as games.

GameStop to Accept PS2's again! Thoughts, Opinions, Ramblings

The greatest console of all time is making it's way back on big-box retailer shelves. Happy Days Happy Days.

OK, so what am I talking about? Well according to some reputable news outlets, the mega game retailer, GameStop, is going to stock PS2's again. As of right now, the news stories only mention accepting consoles; $25 for a complete console and $20 without cords. Nothing about games, but it only makes sense that they sell games as well. I mean, if someone is looking to buy a videogame console of any kind, they most likely want games to play on it. Sure, there are the guys who's console crapped out on them and they need to replace it, or they want a variant, or some other situation, but I'm going to guess that that makes up less than 10% of the population.

Anyways, this is great news for me. I LOVE the PS2. I have both the fat and slim version, I have about 1000 games for it with plans of having a complete North American collection, the sheer variety of games that were on it made it popular with every demographic, the component cables are relatively cheap because they're the same as the PS3 component cables, and just love every aspect of it. If I'm lucky, I can still find a PS2 game on the shelves of Walmart. That happened to me this last summer. Even though it's 2 generations old, it was supported up until the release of the PS4, and with the 7th generation lasting so long, that's a major testament. To see that it's still relevant makes me so happy.

I'm happy that GameStop is accepting PS2s once again. When I buy PS2 games, I typically have to buy them online, and while it's great to have a box of 20 games show up on my door step, there's something special about going into a store and picking up the game. I could always go to a small time independent store, but there aren't really any around me, but GameStops are everywhere. That makes it all the easier to get access to them. But I do take this as a blessing and a curse. As we know, GameStop is a little cruel to it's used games. They don't really care about "complete in package" and damage the cases with their stickers. I enjoy getting stickers from the small time guys because it's like history and the story of that copy, and they tend to come off easy. GameStop on the other hand is just common and don't come off easily. Also, they throw out the inventory they can't move. It's not like food that expires, they're plastic and it can theoretically sit forever. If you can't sell it, then drop the price. Do a steam sale of "was $10, now it's $1, but while supplies last." I'm thinking I might have to give my local GameStops my contact info and say "hey, if you plan on throwing it out, I'll buy it off you for 90% off the original asking price." If it doesn't become part of my collection, I'll do "rescue game adoption," or something. I have an eBay store, I'll sell game lots to collectors like me. lol

I really hope this works out. The PS2 is my favorite videogame console of all time. GameStop, please respect the PS2. Well, this has been Happy Gamer, signing off, and heroes get remembered, but legends never die. The PS2 is a legend.