Solutions Oriented

With Amazon and Toys R Us muscling in on GameStop’s almost monopoly of buying back videogames, and selling used copies, the discussion of used games has popped up in a lot of the podcasts I listen to again. Now I’m not going to say that it’s not fair that video game developers/publishers don’t get a cut from these sales, because it is fair. Which is to say this is not a industry vs. retailer issue, but rather a secondary market/right of first sale issue for consumers.

By which I mean that as consumers we have the right to resell books, movies, CDs, video games, and the like that we had bought previously. It’s a surprisingly important, and little known right that everyone in the US has (outside the US I’m pretty sure it’s not always the case.)

Even so there is something of a unique problem (of sorts) with the video game after market that doesn’t exist for any other kind of media. Now when you are looking to sell a used book you go to a used book store, maybe a pawn shop, eBay, or maybe you sell it at a yard sale. Same goes for music or movies, you would go to a used music store, or used movie store, pawn shop, eBay, yard sale, etc. With these forms of media there exist stores specifically designed to buy back your books, or music, or movies, and sell only these used ones. You don’t see a Tower Records store selling used CDs, or a Barnes & Noble selling used books. Yet for video games we have a big retailer in GameStop that not only sells new games, but used as well.

I’m not saying it’s something they shouldn’t be doing, but rather it was a rather ingenious business plan. The problem with this though from the stand point of the industry is that GameStop looks to sell you used before new, and when people are not buying new games they are not able to accurately count what games sell, but it also takes money out of their pockets when you make it so easy for consumers to purchase a cheaper used version over a new more expensive copy.

But the industry can’t do anything about it really, because they don’t hold enough power over GameStop to make them stop selling used games. And of course GameStop has no real reason to stop doing something that is so profitable for them.

So what’s the solution to this? Well the solution has to do a few things: 1) it has to allow GameStop (or any other secondary market retailer) to continue to sell used games, 2) it has to give the games industry some money for the used games that are sold, 3) it has to not violate consumers’ right of first sale. This seems to be like a pretty tricky set of guidelines to slip a solution into, but I think I have determined something that does.

Basically it is this, the industry writes up an agreement with GameStop and other used game sellers that give the industry a cut every time a used game is sold (some percentage of the sale price.) In order to get these stores to agree to this the industry agrees to sell games to these stores at a discounted cost, so that the new retail copy of a game would drop from $60 to $50.

So why would this deal work? Well the game industry gets what it wants, and starts to pull in some money off these used sales, but in doing so it also is good for the consumer because it will give them better metrics for tracking these sales. Which means that games that maybe did poorly new, but do much better as used titles might see sequels or their development teams might see more financing for other projects. The benefit to GameStop for this concession is that the lower cost of new games at their stores means that they are likely to pull consumers away from their other competitors that are forced to charge the higher price for the games. This is of course a boon to consumers (especially in the tough economic times we have now,) by making gaming a cheaper cost. And the game’s industry should be able to make up what money they lose on selling the games at a cheaper cost, through the money they get from the percentage they get from the used games sales.

Also the prices of used games should stay generally about the same as they are now since there would be a slight increase in their cost due to the industry taking a percent, but then because the cost of the new copy is also decreased the cost of the used should as decrease and cancel out the rise in cost from the industry’s percent.