The Death Of Used Games - Why You Should Not Be Surprised (Or Scared) At What's Coming

The Good Ol' Days

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In the early days of cartridge based gaming nothing was more quintessentially "the game" than the giant hunk of plastic that you pulled out of a flimsy cardboard game box. You could turn it over in your hands, carefully clean the electronic contacts that connected it to the console, stack it up on a special game shelf, loan it to friends, or even trade it in to a game store for in-store game credit. In short, you could do whatever you wanted with it, because you owned it. And there was absolutely nothing game companies could do to stop you from doing whatever you wanted to do with it.

Until CD based gaming came along with the advent of the PS1, there was very little console piracy. Even after console piracy became more popular it was still relatively difficult for the average gamer and was never really a major concern (except for maybe the GameBoy and the PSP). The used market, on the other hand, is a billion dollar market, with almost none of those billions going to the people that made or published the game. Every game someone buys used is another time a person might have (we'll never know of course) bought the game new, robbing the publisher of a chance to add to the bottom line of the game's total profits (or a reduction in losses).

Over the years these profits have become more elusive and the stakes have become higher than ever as game production costs have soared. Failure of just one major game (despite other successes) can be enough to tank a game production company (just look at the number of major game studios that exist today compared to just a few years ago). Throughout this time period the name of the game has remained the same: getting a new (physical) copy of a game into the hands of users.

Those days are over. And you should have seen this coming.

Lessons From The Glorious PC Gaming Master Race

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Before we discuss exactly where the Xbox One and likely the PS4 as well are headed (and why), it is time to examine the lessons taught to us by the glorious PC Gaming Master Race.

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PC gaming has always been more troubled than its console brethren. For the last 30 years, critics have been yelling "PC GAMING IS DEAD" like it was about to suffer a fate as inevitable as how bad the Star Wars prequels were going to be for anyone who knew George Lucas.

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"Please Identify This Class Of Ship" - Crap, where did I put that manual?

Uniformity problems aside, the main problem plaguing PC gaming was rampant piracy. Or looked at another way, plenty of people enjoyed playing PC games, but only a relatively small fraction of people were paying for them. The dark era of PC gaming for me was the beginning of the 360/PS3 era. It was during this time that we saw games that were originally developed exclusively for the PC shift to "multi-platform" before finally going "console only" upon release. The PC might have completely died as a major gaming platform for AAA titles during this era as a result of continually declining "returns on investment," but it had one huge arrow in its quiver: PC gaming is an open platform and the best ideas will always rise to the top. There is no committee of out of touch bigwigs who don't know any better or who are too scared to try the grand ideas that will seem almost idiotically great later on.

PC Gaming Roars Back

PC Gaming is back. There is no question there. The recent resurgence of PC gaming has seen some publishers like From Software go from no support for the PC (Demon Souls) to limited support (Dark Souls) to full support (the upcoming Dark Souls 2).

Major publishers that were previously abandoning the PC platform like rats from a sinking ship are now returning in full force, with titles that look and play significantly better on the PC than on either the 360 or the PS3. I mean these games have better art assets and possibly better models and animations and are optimized to run on the PC. They don't just run at a higher framerate and they are not a sloppy port (although sometimes the best experience requires an Xbox Controller). More and more I see game reviewers state that they reviewed the PC version of the game and comment that if you have the option, that the PC game version is the one to get.

Enter the Gabe

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If you are wondering what happened to turn around the dire situation PC gaming had found itself in look no further than Gabe Newell. He without a doubt has single-handidly saved PC gaming as a major platform. Even if it ultimately would have survived without him, he cut years of languish and despair in the PC gaming world by introducing a model that (after a few years of absolute dominance) is being adopted by every single major publisher as a viable way to sell and distribute games on the PC. That model is known and loved as Steam.

The Steam Way

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Under the Steam model, users buy intellectual property once and it is delivered digitally to their computers. Games are not tied to machines, but rather to user accounts and there is no ability to sell games you have purchased to another user (although I suppose you could try to sell your entire Steam account at some point). Physical media is effectively dead. Even PC games bought as boxed copies sometimes contain nothing more than a redemption code inside that unlocks the game and makes it available for download on a certain account.

This model has been made possible by the ubiquity of the x86 architecture that all Steam clients run on. PCs can play games that are decades old and the expectation is that the games you buy today will be available for you to play for years to come. There is no question of "backwards compatibility."

This model has been made successful by an extremely elastic pricing model that has given Valve (and game publishers) tremendous amounts of power to do all kinds of wacky pricing systems that were never possible under the old retail system. This in turn has given them a MASSIVE amount of data that have helped them tease out exactly how to price their software to maximize their revenue. Anyone who has felt their wallets cry out in pain during one of the many "Steam Sales" knows just how well this pricing model has worked.

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PC users are not complaining. If you want to pay full price at launch you can, but even a tiny amount of effort rewards one with a myriad of gaming deals on digital content that result in decent savings even on launch day. Miss those deals and you don't have to wait long for 20% off, 30% off, 50% off, even 75% off. When is the last time you got 75% off a console exclusive game? It might happen, but it usually takes a lot longer.

These discounts are not random, but steady and regular. When a PC game comes out at $60 that I have some interest in (say, Far Cry 3) I literally go through the mental process of deciding which discount level I am going to wait for. I might really want to play it now and decide to pick it up with a 15% launch day discount from Green Man Gaming. Or I may decide to wait for the 50% discount that is coming from Steam (or perhaps Amazon). Sure, I don't know the exact date that this discount is going to hit, but it is coming, and it always feels like it comes very fast to me. If it is low on my list I might sit around until 75% or even 90% discounts finally come down the pipeline.

GameStop - Ugh

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Walk into a GameStop with me. Pick up a popular console game that is six months old. Note the meager 10% savings. Be sad about the junky, scratched disk you get when you hand over your $54 dollars (or maybe $45 dollars thanks to that $9 dollars in credit you got for trading in that game you gave them that they are going to sell for $40). Ask me if I would give up the system currently set up by Steam so we could all buy and sell our PC games at GameStop again and I (and millions of other PC gamers) would scream: HELL NO! The fact is that patient PC gamer pays far less in the long run than someone who uses GameStop. A frequent eBayer might come out slightly ahead, but even then, you have to put a decent amount of work into posting and shipping games.

Console Brethren, Welcome To The Future Of Gaming

Sony and Microsoft have seen the light. They have a close relationship with major publishers and these publishers have seen the light as well. Digital distribution is here to stay. I'm glad the Xbox One has a blu-ray drive, but I GUARANTEE you that by the end of this console cycle the vast majority of all games played on both the PS4 and the Xbox One will have been purchased and obtained digitally. Physical media is dead, it has just taken a bit longer for the console world to catch up to the PC world. What does this all mean? Don't be scared console brethren, when the transition is all over, you'll wonder why you were so worried. Let's explore the new world you are about to enter.

The Disk Is No Longer The Game

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I cannot emphasize this enough. THE DISK IS NO LONGER THE GAME. PC gamers have understood this for years now, but soon you'll come to understand that you are no longer buying a piece of plastic with data on it, you are buying the right to play a game. This has some inherent advantages I've been enjoying for years with Steam. One, I no longer have to worry about scratching a DVD/Blu Ray, or losing it. Every time I build a new PC or reformat my current one Steam remembers everything I've done, with cloud saves and a list of everything I've ever purchased waiting for me to re-download it if I so choose. Console gamers have had a taste of this with games purchased via Xbox Live and PSN. I do not see widespread complaints that they can't sell these digitally purchased titles back to GameStop or on eBay. What makes getting a game via a plastic disk any different? Well, previously you needed a disk present in the system to verify you had the right to play a game purchased as a disk. That model is now completely gone.

Microsoft has stated that a game disk is no longer a requirement to play a game, even when you purchase a game as a disk. In fact, it looks like a full install will be mandatory for all games This is a big deal and signifies that it is going all in on digital. If you don't need a disk to play a game then how do you control distribution of that media? Simple, you do exactly what Steam, Origin, and others in the PC world have done: you tie digital content to user accounts. At this point, obtaining a game on a disk is nothing more than an alternative to purchasing the title online and then downloading it. In either case you are just tying the right to play a game to a user account.

People are up in arms about the reported "fee" that will be required to play a game on someone else's system, but this outrage makes no sense under the new system. Because a "used" game has already been tied to another user and is playable without that disk, allowing infinite re-installs from the original media takes us back to the era of the early days of PC gaming, which grappled with exactly the same problem. Two installs from the same media is the same as one person stealing the game. Under this new (but yet not that new system) giving your disk to someone else now is just the same as giving them the option to purchase the game and install it locally instead of over the internet. The disk is no longer the game, it is just a distribution option. It means nothing more than the CDs you used to get from AOL for free by the bucket load.

As I see it Microsoft could enable a system where they allow the first person who bought the game to disassociate it from their account and then allow a new user to attach that copy to theirs (and they have hinted that something like this is coming). But why would they? By eliminating the used game market, as Steam has done for PCs, you allow for a system of aggressive pricing directly from the publishers.

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I have every reason to believe the Steam pricing model (i.e., the systematic and ultimately aggressive discounting of all titles) will be adopted by Xbox Live and PSN in the upcoming console cycle. Steam is not a charity where Valve forces publishers to slash pricing on games, those discounts exist because publishers let them happen. And they let them happen because they MAKE MORE MONEY. Microsoft and Sony have already started to do this with modest sales here and there. But this new generation of systems (with a diminished or eliminated used market) will no doubt embrace this model in full force. Sony has already stated they intend to support and adopt the wide spectrum of pricing made popular by the major phone app store markets (which have shown that "free to play" is where all the money is). This includes a greater variety of pricing from .99 to $60.

Buy Now, Play Forever

Another major benefit has been brought about by these new consoles joining their PC brethren. It is astonishing that they both appear to run on a seemingly identical architecture. This is the x86 architecture. Remember what I said about x86 making Steam so awesome? Well, I think we are now entering the era in which problems with backwards compatibility will be a thing of the past. It required a total break in compatibility with the IBM RISC based consoles we have now, but it means that just like your PC brethren, you future Xbox One and PS4 owners are going to be able to play titles developed for those machines for decades to come. That should take a bit of the sting out of the buy once, own forever whether you like it or not model. It certainly seems to in the Steam community. Some people have said this may be the last traditional console cycle we ever see. If we do see another console cycle it will likely look very similar to what we are about to get, an x86 PC disguised as a console. Time will tell, but even if we move to a cloud based future where you don't actually own a console, but play games streamed from a cloud based server farm, that cloud will likely also be powered by x86 servers that can easily play content you buy for these current systems as long as you live.

We All Win

The hooplah about control over what games we buy and how we buy them comes down to one simple fear: being able to continue to enjoy gaming even if you can't afford to buy new games at $60. The PC market has shown that the tent for gaming is wide enough to include a substantial number of budgets. Some of the most popular and financially successful products out right now have an entry price of $0 (I'm looking at you DOTA2 and League of Legends). We'll definitely see this model in more and more console games. But there is hope for traditional AAA game releases as well. Game publishers don't want to "diminish the perceived value of their products" by lowering the expected price of new products and I think we will continue to see $60 as the opening price for most new AAA products that fit the traditional gaming mold. But I think even if the used game market is completely obliterated (in large part because the need for physical media has gone with it) that those who love to game but are on a budget will find this brave new world one that is a lot more accommodating. You might not be enjoying games on launch day, but to be fair the price for used goods sold under the current system often takes some time to drop as well as supply catches up with demand. In the end I think you'll see that game publishers adopt the same pricing curve for new products that you see in the used game market now, just without the hassle of dealing with GameStop or eBay. And that, my friends, is something I think we can all agree is a good thing.