Wednesday, 4 July 2012

The Return of the Used Game

So you thought with the advent of digital distribution that second-hand sales would go the way of the dodo? Well think again ­– as yesterday the European Court of Justice ruled that publishers can not prevent their customers from reselling games they have bought digitally. This means that consumers within the European Union are now free to sell any games they have purchased from sites such as Origin, Steam and Gamersgate, regardless of any End User Legal Agreement they might have signed when they downloaded. This is bad news for publishers as they were hopeful that digital distribution would slay the dragon of used games sales.

Right now, of all the major digital distribution sites out there, only Green Man Gaming allows customers to trade some of their games back in and it is unclear whether the rest will look to incorporate this feature into their sites, or whether it will take a customer to enforce this right before there are any changes. Whatever the reaction, I am sure it is a major blow to publishers.
It is a well-known fact that second-hand sales are a major problem for companies like EA and Activision. Indeed in the past few years they have tried to come up with a variety of schemes to limit used copies of games and entice people to buy a new copy, such as EA’s Project Ten Dollar. The reason for this is because they do not receive any money from the resale and it also counts as a lost sale because the customer has not bought a new copy of the game. It was always believed that digital distribution would expunge this’ annoying’ feature of the market as it is not as easy to trade-in downloadable games and currently there is no real way to do so. However this ruling changes all that and will require publishers and content providers to provide a way for customers to be able to sell on any games they download.

I wonder whether this ruling will change minds and put a break on the current rush to a digital world. On the same day as the ruling was announced, our old friend EA Labels boss, Frank Gibeau, told Gamesindustry International that “...we're going to be a 100 per cent digital company, period. It's going to be there some day. It's inevitable." He went on to say that this change will take place in the not too distant future. Will this new development push their plans back a bit, or will they carry on regardless? Whatever publishers such as EA choose to do, there is no doubt that this ruling will eat into their profits, much like pre-owned sales at retail are currently doing.

However, with publishers now having a more direct route to customers through digital distribution and knowing about this development, ahead of it becoming a widespread practice, they can move to lessen the impact. Green Man Gaming shows the road forward in the way they currently deal with trade-ins. They have setup deals with various publishers where they receive a payment every time their game is sold, thus making them a bit of money from trade-ins. However, the boss of Green Man Gaming, Paul Sulyok, sees another issue that may arise now that people can resell digital games.

"The classic technique of deep discount, short time limited discounts, all of that will be slightly skewed now, because you don't want to have a deep discounted game that can then be sold on elsewhere. The secondary market then cuts in and then what will happen is the same sort of thing as you've seen in the high street whereby a supermarket chain puts a fantastic discount on a product for consumers and all the other high street retailers trot down to the supermarket to buy them to stop them." (Quote courtesy of Eurogamer

So you could see one company going to say, Steam, buying up a load of copies of the game at a cheap price and then selling them on at a slightly higher price, thus making a nice profit. This would be fairly easy to solve by preventing people from buying numerous copies of the same game, but it is still a headache for publishers and digital distribution companies to have to deal with.

I think the way forward is for publishers to follow Green Man Gaming’s example. They know about this ruling now so they should be proactive. Setup deals with all the major digital distributors that allow them to see a bit of the money from any resale of a product. However with publishers more concerned about the bottom line, any loss of money will most probably be seen as heresy and so instead they will no doubt try to fight against any digital distribution platform offering any kind of trade-in or resale scheme.

As it stands this is a good deal for consumers and helps to reaffirm a right that many feared may disappear with the move to a digital world; namely that when you buy a product, whether it is physical or digital, you own the rights to do with that product what you wish. This ruling strengthens that right and puts it down in law.

I look forward to seeing what the industries’ reaction to this is and in particular how the ‘darling’ of the digital distribution world, Steam, deals with it. But for now I’ll finish by quoting the prescient part of the ruling.

"Where the copyright holder makes available to his customer a copy - tangible or intangible - and at the same time concludes, in return form payment of a fee, a licence agreement granting the customer the right to use that copy for an unlimited period, that rightholder sells the copy to the customer and thus exhausts his exclusive distribution right. Such a transaction involves a transfer of the right of ownership of the copy. Therefore, even if the licence prohibits a further transfer, the rightholder can no longer oppose the resale of that copy." (Eurogamer)

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