Last June, Microsoft, which so often features land mines in its games, learned how it feels to step on one. The company’s gaming division announced that a game’s license could be transferred from one owner to another only once: each copy of a game would be associated with its owner’s individual username and console, unplayable by others. The news so angered gamers, who had never encountered such a restriction and consider the freedom to sell used games to be an inalienable right, that Microsoft quickly backed down.
Secondhand games are a lucrative, two-billion-dollar market, and this week the market got even bigger: on Wednesday, Walmart launched a new video-game trade-in program. Bring in your old games in exchange for a Walmart gift card; Walmart will send the games out to be refurbished, and then resell them.
Retailers like Target, Toys R Us, and Amazon already buy and sell used games, but the practice is especially associated with GameStop, a specialty retailer known for its seven-million-dollar private refurbishment center, in Grapevine, Texas, which has a staff of more than a thousand. It’s not uncommon for GameStop to sell a new game for sixty dollars, buy it back a few weeks later for thirty, and sell it again for fifty-five. On the first sale, the game’s publisher collects a healthy portion of the retail price, but on a resale GameStop keeps all of whatever it charges. Although used games make up only twenty-five per cent of GameStop’s sales, they account for a full forty-four per cent of its gross profits.
According to Walmart, there are nearly a billion games gathering dust in American homes, and last year eight out of every ten games went unplayed. The games won’t wear out as long as they’re treated properly. CDs, DVDs, and audiobooks hold up pretty well, too, but they have largely given way to digital streaming and downloads, which are drastically cheaper than their physical equivalents. (For that, the music and publishing industries have Apple and Amazon to blame.) This isn’t the case with console gaming. The online gaming stores run by Nintendo, Microsoft, and Sony, which might like to lower prices and thereby expand their distribution, have not done so, for fear of alienating brick-and-mortar outlets, which are still responsible for the majority of sales and insist that the downloadable version of a game carry the same price tag as its disk equivalent. So physical games still rule.
The used-game market influences how much people are willing to pay for a game: gamers know that a sixty-dollar item, for instance, will actually wind up costing them only about thirty dollars once they have finished playing it and have sold it back to a store. In 2012, an economic analysis by Masakazu Ishihara, of New York University, and Andrew Ching, of the University of Toronto, found that if used games were to disappear from the market and new games stayed at current prices—which would effectively make the games more expensive for the buyer—the average profits per game would fall by ten per cent. But, if publishers in a world without used games lowered the price of new games to about forty dollars, average profits per game would actually rise, by nineteen per cent. This outcome could be palatable to both game makers and players: get rid of used games, but drop the prices of new ones. Meanwhile, there’s always Walmart.
Photograph by Daniel Acker/Bloomberg via Getty.
