Used Games vs. New Games: How They Interact

Used Games vs. New Games: How They Interact

Here at Game Theory, we’ve already discussed the topic of used games and their effect on the industry several times. But with a recent Penny Arcade cartoon and news post bringing the issue to the forefront of discussion yet again, we felt it was worth exploring some of the misconceptions about the market effects of used game sales.

Wednesday’s Penny Arcade comic refers to the used game market as “a kind of parallel economy.” This implies that the used game market and the new game market operate completely independently of each other, never crossing paths. In reality, the two markets are closely tied. In fact, the mere presence of the used game market can help prop up game prices in the new game market.

To illustrate, imagine a world in which used game sales are outlawed. In this world, a person that buys a hot new game for $60 on its release day isn’t allowed sell that game back for $25 after beating it a week later. Is this person still going to spend $60 on that new game, or will they only be willing to spend the $35 in real money they would end up paying in our world?

Where Penny Arcade really shows a misunderstanding of the used market is when Jerry Holkins wrote that he “honestly can’t figure out how buying a used game was any better than piracy. From the the perspective of a developer, they are almost certainly synonymous.” While it’s true that a publisher doesn’t see any direct revenue from either a pirate or a used game buyer, the latter at least affects the value of a game through the subtle interplay of supply and demand.

Think about it: Every used game a person buys means one fewer used copy of that game is available for other consumers to purchase. This purchase then drives up the asking price of the used game, reducing its relative value against a new copy. This relative value can be important if used game purchasers are expected to pay to access online or DLC content that is provided free to new game purchasers.

What’s more, when the supply of used games is completely dried up, consumers are once again forced to seek out new copies. While this might be a rare occurrence for the biggest titles (which see a glut of used copies available often within days of release), finding any used copies of lower-to-mid-range titles can indeed be difficult (ask anybody who tried to find a copy of Katamari Damacy, new or used, just after its release).

I’m not saying the used game market isn’t an issue for developers and publishers, or that they shouldn’t seek to mitigate its effects on their bottom lines through any means they can (day one DLC, digital distribution, etc.). But to liken the used game market to some shadow economy that is no different from piracy is to fundamentally misunderstand how the two markets push and pull each other towards equilibrium.

About Kyle Orland
Kyle Orland is a freelance video game journalist with over a decade of experience writing for dozens of mainstream and specialist outlets. He’s the author of Wii for Dummies and the co-author of The Video Game Style Guide and Reference Manual.

4 Comments

  1. Great article. The used game market should only really concern publishers when it comes to big releases or older titles. If every game were treated more as a risk with limited quantities, it would not be an issue.

    Then again, there would be fewer used games if each and every game were deemed good enough for the consumer to never part with it, or at least not so soon.

    Katamari Damacy may not have been the best example for a game that had such small quantities that the used market did not matter. Katamari, when I purchased it new, was only about $20. I think it might have been a second printing of the game, but that was still a good price for a PS2 game at the time. When everything else runs $50, a new game at $20 is negligible.

  2. My thought is whether this has all happened before, in other commodities. Did authors and publishers freak out once used bookstores came around? Were musicians and labels outraged to find used albums at the record store? If they did, they obviously have since worked it out (as they must do with their work as digital media).

  3. Download it as abandonware or used first there and forget about paying for it even used. 60 dollars for just one game is a bit too high and excessive. I personally got CivIII for not even 10 dollars and it’s more interesting than Halo the Max coming from Microsoft as an example. Same technically with windows system upgrades without linux that is more affordable and theortically compatible like sony playstations and windows emulators included.

  4. Excellent article. Let us not forget to mention that the ability to trade in that game for 20-30 bucks means they will end up using that credit to get other games. Quite often it will be used towards pre-orders of new games or to purchase a new game that just came out. Just the act of being able to trade in stirs the new game economy. Every publisher and developer always seem to forget that fact nine out of ten times.

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