[Opinion] Why used game DRM is a game of balance and chance

Ryunosuke

Elite Member
Jul 3, 2005
1,941
31
48
Oklahoma
#1
There is current a war going on between consumers and publishers over used game DRM. Publishers believe the used game market is costing them billions and they want to either outright block used games or receive a cut from it. Consumers believe that either case would be too anti-consumer; either consumers lose their right to trade/sell games or the cost for publishers receiving a cut for used games is passed on to consumer.

What if the publishers are wrong and used game DRM doesn't earn them anymore money? What if it earns them less money? This is a real possibility and why used game DRM is a game of balance and chance.

For example:
  • Johnny has $600 a year to spent on gaming.
  • Johnny's $600 buys 10 games at $60 each.
  • Retailer offers Johnny $25 each for his used games to resell for $40.
  • Johnny now has an additional $250 to spent towards gaming.
  • Johnny's $250 buys another 4 new games at $60 each with $10 left over.
  • Johnny can sell the 4 used games for another $100 of additional funds towards new games.
  • In total the Johnny spends potentially $900+ on new games instead of $600.

It is argued that the 14 games sold to retailers means that there are 14 less new games sold. There is no doubt that it would result in more money if all 14 of the games were bought new rather than used. You would have the original 10 games sold for $600 plus 14 more new games sold to other customers for an additional $840.

Unfortunately, there is no way to know if the consumers that bought the 14 games used would had bought 14 new games or any new games at all if the 14 used ones were not available. To these customers games may not have the same value as they do to customers that pay $60 each.

So it is a game of chance - Do you go with the $900+ from one customer or do you gamble for the $1440 from multiple customers with $600 being from the one customer?

You may ask, "what if publishers get a cut of used game sales?" It will require careful balancing and is still a game of chance. Publishers receiving a cut of used game sales means retailers will offer customers less for their used games. This is where careful balancing comes into play.

If publishers demand too much retailers won't be able to offer customers enough, essentially killing the used game market. If publishers demand too little they will only earn a negligible amount and not worth the effort and backlash.

Even once carefully balanced it is not guaranteed to earn publishers as much as the system without any used game DRM.

For example:
  • Johnny has $600 a year to spent on gaming.
  • Johnny's $600 buys 10 games at $60 each.
  • Retailer offers Johnny $10 each for his used games to resell for $40.
  • If Johnny accepts the lower price he now has an additional $100 to spent towards gaming.
  • Johnny's $100 only buys 1 additional new game with $40 left over.
  • Johnny can sell the game used for an additional $10 and still not have enough for another new game.
  • In total the Johnny spends potentially over $660+ on new games instead of $600.

In this scenario since Johnny is only receiving $10 for each of the used games instead of $25 as they did with the prior system lets say publishers get the $15 that customers are no longer getting. So on top of the $660 Johnny spent on new games, the publisher also receiving $15 for each of the 11 used games sold totaling $165.

With publishers getting a cut of used games they make $660+ from Johnny and $165 from the used games totaling $825. With publishers not receiving any cut from used games they made $900+ from Johnny and $0 from the used games. Not a huge difference but what happens if Johnny decides $10 is not enough and no longer sells his old games? This would mean no 10 to 11 used games on the market to take a cut from and Johnny with only his initial $600 to spent towards new games.

None of this takes into account any backlash used game DRM would have, which could result in fewer Johnny's on the system buying new games and selling old ones. There also the rumor that Microsoft will receive a cut from used game sales.
 

Sir_Scud

Super Elite
Dec 30, 2007
2,185
41
0
#2
I really like this piece, Ryu. I never really thought about the numbers like that. I would assume if MS does have such a system that they would receive a cut from the used game sale. I agree that what truly matters is what kind of backlash will used game DRM have, and if people will be willing to participate. It's hard to say if I'm willing to participate in it at all. I don't think I like the concept at all, honestly. Good work though, it's entered.
 
Nov 1, 2008
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#3
I am a bit of a collector of games. I buy a fair share of new games but I will wait for price to drop to purchase some games and on those games I simply refuse to buy for the $60 or even $30 at times; so I see where you are going with this article. I also think this: if I buy a couch and use it for a while and then decide I want a newer couch, should I not be able to sell my used couch at a cheaper price without having to share some of that cash with the original couch maker?
 
Feb 15, 2009
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#4
There was a leaked document saying MS and Sony would themselves receive a cut for re-activation of used games. Sony said they will allow used games, but never said if they will charge for them. Sneaky sneaky words. But this whole idea is another step to stomp on piracy, though I wouldn\t be surprised if people still hack it in the long run.

Here's an idea, rumors been saying that it's the publishers who are pushing for the reactivation fee for used games, and that if MS does it, so will Sony. This kind of gets backed up with EA recently eliminating online passes. But if true, Sony....do this, fully allow used games on exclusive/first party PS4 games. I think if the gaming economy calls for all that DRM stuff, this would make a lot of people happy still.