Video Game Execs Freak Out Over Used Game Sales

from the try-learning-some-economics dept

You would think that after years and years of evidence that a second-hand, "used" market for products increases the value of the original products that executives who create the original products would know better than to complain about resales or demand a cut of the profits -- but apparently you'd be wrong. Reader Lucretious writes in to let us know that the audio director of Bungie Studios, a Microsoft subsidiary and the makers of Halo among other things, is out complaining about how the second-hand market for video games has a huge detrimental effect on the industry, claiming that the game makers deserve a cut of all of those sales.

Except that's not just wrong, from a common sense standpoint, it's wrong from an economic stand point and a legal standpoint. It's almost impossible to come up with a rationale where it actually does make sense. First, on the legal front, the first sale doctrine is well established. When it comes to copyright products, once you've sold something, you really have sold it, and the buyer has every right to resell it -- just as they do with things like a chair or a house -- without owing the original creator another dime. Second, from an economic standpoint, plenty of studies have shown the importance of an active second-hand market. First, for buyers of the initial product, the fact that they can resell it is part of the value they put in the price. Wipe out (or heavily tax) the second-hand market, and you decrease the amount people are willing to pay for the initial product. Thus, you actually shrink the market for your product. There's also a lot more research in terms of signalling and market adoption that show that a second-hand market is important. Finally, from a common sense standpoint: you sold the game, you no longer have control over what people do with it. That's how transactions work. Would the folks at Bungie like it if we suddenly started telling them how they could spend the money we gave them for games? No? Then they shouldn't complain about what people do with their games.

Filed Under: economics, secondary markets, video games
Companies: bungie studios, microsoft

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  1. identicon
    Buzz, 30 Sep 2008 @ 1:19pm


    This continues to sicken me. The hypocrisy of the software/game industry blows me away.

    On one hand, the industry fights sooo hard to equate digital goods to physical goods. They call copyright infringement "theft" (even though a copy is made). They insist that individual copies be made distinct/unique for each customer (hence the absurd amounts of DRM). RIAA/MPAA fight to have these civil matters changed to criminal matters with financial damages that make no sense whatsoever.

    On the OTHER hand, they try to hold onto the digital benefits without relinquishing any of their "tangible item" arguments. They offer direct download but still charge $60; I guess the retailers and publishers cost $0 , eh? Now they demand a cut of resale. If I buy a chair, use it for a year, and then pass it onto my friend, only one of us can use it at a time; that is why the creator of the chair gets no cut of the sale. The same goes for video games. As long as each license is only in use by one person, it is perfectly legit to sell it to another person.

    It's disgusting to hear these executives complain, "Well, because of used game sales, one person can play it and then just pass it on to someone else!" Well, I guess we should just buy one chair and let everyone take turns using it. Why bother purchasing other chairs when we can just use the same one? Maybe, there are inherent BENEFITS to owning multiple chairs.

    Sorry, Bungie, but the answer is no: you do not deserve a cut of all sales. If your game is so shallow that people buy it and immediately turn around to sell it to someone else, maybe you ought to make your games better. If your game is NOT that shallow, then, I don't know what you are complaining about. >_>

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