project-ten-dollar

It’s not exactly news that John Riccietello, EA’s CEO, is fighting with used game retailers.

Recently, he implemented project “Ten Dollar” which offers free DLC for players who purchase a game new – all in an attempt to combat the increasing used game market which, as I detail further down, deprives publishers of income on used game sales while adding to costs associated with maintaing servers, providing title updates, etc that improve the long term experience offered by a game.

Essentially, project “Ten Dollar” add value to a brand new game while keeping it at $60, but at the same time devaluing a $55 used version of the same product.  In project ‘Ten Dollar’ EA includes in the packaging of new, unopened game, a redeemable code that unlocks considerable game content (such as the Cerebus Network in Mass Effect 2).

Of course, when a game is returned to the retailer and traded in, that redeemable code has already been used.  Anyone who then buys this used game will have to pay $10 for the same content, thus pushing the overall investment to $65… this serves to remind the consumer that, yes, $55 really was a terribly gratuitous price point to begin with. EA’s hope is that this will deter gamers from buying the $55 used version of thier game, and instead buy the new one, thus maintaining their revenue stream.

Now, unsurprisingly, a number of used-game retailers have fired back against EA, and Sony (they’re doing it too, albeit in a more tactless fashion, by completely locking out multiplayer without a redeemable code).

Speaking with GamesIndustry.biz, Don McCabe of Chipsworld suggests that EA is harming the most important part of the equation:

“The person you’re pissing off the most is the consumer.  This affects [them] directly – they pay the same amount of money and yet the resale value is much reduced. From a retailer’s point of view, they’ll just readjust [the price] bearing in mind you have to buy the voucher.”

Marc Day, CEO of SwapGame, brings up another good point:  What about folks that just don’t have the money to drop of $60 titles?

“EA’s Project Ten Dollar move is aiming to stifle pre-owned games sales, but what they don’t factor in is the damage this could have for them in relation to new sales.  At SwapGame, the majority of customers who trade in for cash or credit do so to acquire new games they could otherwise not afford. Through trading in, we aim to help the customer make gaming more affordable, providing them with a way to buy new games.”

This is a fair point, and yet it isn’t.  EA’s move isn’t to hamper moderately impoverished gamers’ ability to enjoy games.  These particular gamers wouldn’t be paying $55 for a game in the first place.  EA is simply trying to retain its revenue stream in a market that is being unscrupulously siphoned by somewhat unfair price-gougers.

It might not sound like a big deal to us but to EA – it represents millions in lost revenue. Not to mention, the used game model, while convenient, it’s extremely unbalanced providing massive funds to used game retailers at both the customer and publisher’s expense.

If you have either traded in or bought a used game from Gamestop over the last few years, no doubt you came away from the experience feeling somewhat violated.

Indeed, trading in games you no longer play as collateral against a game you do want seems like a prudent financial win-win for all involved. That is until you realize the game you bought for $60 from the very same store not 3 weeks ago will now net you a paltry $23.

Add to this the shock you discover upon seeing the very same game back on the shelf later that day at the bamboozling price of $55.

We’ve all been there, haven’t we?  Not one of us feels this practice is remotely fair. Furthermore, it seems to exploit the more desperate and cash-strapped of us solely in the interest of thickening the wallets of red-nosed, gin-swilling, fat cat, retail executives that light their Cuban cigars with $100 bills.

The reality is of course not as dramatic.  The used game model is neither demonic nor saintly, but somewhere in-between.

The practice of buying low and reselling high is the basic fundamental component of any money making organism.  This practice in itself is not unfair, it’s just business.  On the other hand, Gamestop’s corporate guidelines of buying unnecessarily low and reselling exceedingly high is a coup of the highest order – at least in this man’s opinion.

It isn’t just us gamers getting the business-end, either.  As I mentioned, the game developers and publishers themselves don’t see a single penny from resales. Is that fair?  You might think so, but it really isn’t.  One game owned should equal one game purchased, and that purchase must exist within the financial ecosystem that funded it, otherwise game companies go broke, and you’re back to playing with action figures.

If, for example, EA sells 2 millions units of a multiplayer game, that’s 2 million players.  Luckily, they’ve factored in a percentage of the profits from game sales to pay for and maintain online servers for players to run around in.  But since half of the players returned ther games to Gamestop, who then resold the game several times over with no kickback to EA, EA has a much larger user base to support for multiplayer, but a disproportionately low amount of money with which to do so.

Ultimately, it’s going to be awhile before the consoles move entirely to the digital download model – so we’ve got plenty of time to watch this battle rage on.

Where do you stand?  Are you a proponent of Gamestop’s used game trade-in system?  Or are you backing EA on this one?

Source: GamesIndustry.biz (registration required)

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