To pre- or not to pre-own, that is the question

by Paul on Feb 19th, 2012

Whispers swirl around Microsoft’s next console, the oft-rumoured Xbox 720, and the possibility that it will be programmed from the get-go to refuse to play pre-owned games. Such a feat would cause massive shock waves across the industry. Shops on the high street have made a real killing from selling pre-owned games over the last five years or so, to the great anger of the publishers and developers who do not see a penny of these transactions, and for some gamers pre-owned games at the cheaper end of the spectrum are the only way they can realistically keep up with the sheer number of releases. It’s clear that such a move from Microsoft would annoy a lot of people.

If it turns out to be true, and whatever your feelings about the issue may be, you can at least understand the logic behind the decision. If I were a games developer I would hate to work out just how much money I’d have missed out on because of pre-owned sales. If I’m honest the games stores have no one to blame but themselves for the stance Microsoft are supposedly taking. As soon as the big stores on the market cottoned on to the sheer potential for an easy buck via pre-owned sales they’ve been pushing pre-owned titles at the expense of new ones far too hard and for too long. These days it is getting increasingly difficult to walk in and actually browse new titles. You have a small area of wall-space devoted to the top ten in the chart and then it’s just racks and racks of pre-owned stuff. It’s all about the short-term profit for these game stores rather than ensuring that the cash gets passed back to the people keeping them in business for the long term; the developers. If the guys making the product can no longer afford to do so then what is left for the store that sells said product? Answer? A lot of closed stores.

I would argue that the dedicated games stores are on a downwards spiral anyway and it is just a matter of time before we see the likes of GAME and Gamestation disappear forever from our high street. They cannot compete with the online stores because of the cost and convenience those sites offer. Who wants to make the trip into town on the off-chance GAME might have what you’re after, when a quick search online shows that ShopTo.net can have it with you brand new in the morning for substantially less than what GAME are charging for it pre-owned? While pre-owned has always been a part of our high street games stores, it was the emergence of the onsite stores as a viable alternative for games buyers that led to pre-owned dominating the shop floor. In doing so the high street stores have only hastened their demise.

I have always endeavoured to buy new games, whether it’s from the high street or from online stores. Any used games I do buy are via eBay where my cash goes to another gamer. I do not like buying used games from the high street games stores because it is a road to nowhere. By buying new I can at least can sit back safe in the knowledge that the money is winding its merry way back to the games industry in some shape or form. Of course, the idea that “by buying new I’m ensuring the developer gets their fair share” isn’t true. There are different deals and clauses within the myriad of contracts out there between the platform holder, the publisher and the developer. What one developer may achieve in financial return per title does not reflect evenly across the industry. Sometimes it is the publisher who does best out of the deal, with the title having to shift millions of copies before the developer starts to see any substantial result in profit. Ultimately though it doesn’t matter how the profit from new titles is shared out. At least it is going back into the industry to allow more games to be made, rather than propping up a failing store.

The best thing that GAME, Gamestation, HMV etc. could do is scale back their used games section considerably and focus on sales of a much greater selection of new titles and other game-related merchandise. If they bought their stock in greater numbers to enable them to get their prices down those savings could be passed on to us. Of course, that’ll never happen because they are too short-sighted to tolerate that sudden cut in profits, but if their investors can stick with them and give them the benefit of the doubt to hang on in there for the long term while they shift their strategy back to cheaper new games then they could yet have a resurgence.

But how is this pre-owned lockout actually going to operate? Now that the majority of consoles are connected to the web in some shape or form, the tools to provide this pre-owned lock-out would be fairly easy to implement but Microsoft must get this right. If they are too stringent in applying this then all they are going to do annoy customers. If it were me sitting in Microsoft’s gleaming towers, tasked with how to make this operate, I’d put this scenario up for consideration;

All games will come with something similar to DRM; a unique code embedded within the software that would then be logged in some Big Brother-style server room in Microsoft’s HQ the first time it is played. The code acts as a licence that allows a total of three different gamertags to play the game with no additional charge. This takes into account the families who share multiple accounts on one Xbox in the family room.

Once the game has found its way into the hands of a fourth owner, playing the game will result in a “this disc is not authorised to play on this console. Please purchase a licence in order to play with this gamertag”. You’d then have the option to purchase the licence, just as you would buy points on XBLA, and the game is unlocked to play. That will then repeat each time a new gamertag tries to play it. What this licence should cost is up for debate but 500 points seems like a good figure to plump for. I for one am very much on the side of giving those who buy pre-owned the opportunity to unlock their game rather than there being a flat-out ban on it. It just comes down to how this is achieved with a decent amount of fairness for all parties and with the right fee applied to it. While my suggestion isn’t ideal, it does at least try and address the issue in a manner that tries to be fair to all. However, If something like this were to be in place then the only way it’s going to work is if the high street stores reduced their pre-owned prices drastically. They could not justify the prices they’re currently charging when the customer is also greeted with a request for more cash from Microsoft once they get home and play the game, no matter how small it is.

The method I’ve suggested would also lend itself well to the rental market, which is something that doesn’t seem to have been taken into account in all of this. Rentals help to persuade a lot of potential buyers to make a purchase that they wouldn’t have if they had not played the game beforehand. Microsoft must consider this in their plans, working with the rental companies so that the rental company is paid by Microsoft for each rental and all you’d pay is for a time-limited licence.

When all is said and done it isn’t as simple as saying “pre-owned games are blocked on Xbox 720”. Microsoft will alienate too many customers and traders if they do that. There has to be a middle ground where their legitimate concerns over lost revenue are balanced out with the high street stores’ need to turn a profit. As always though, it would seem that the real big loser in all this is going to be the customer.

Categories: Features