Feature

Community Opinion: Why used-game DRM is a game of balance and chance

by Ryunosuke

Editor’s note: The following opinion piece is one of three community submissions up for voting in a PlayStation Network giveaway contest being held in our forums. Check out our thread for details, including your chance to vote on the winner!

There is currently 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 them. Consumers believe that either case would be 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 the consumer.

What if the publishers are wrong and used-game DRM doesn’t earn them any more 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.

A retailer offers Johnny $25 each for his used games, then reselling them for $40.

Johnny now has an additional $250 to spent towards gaming.

Johnny’s $250 buys another 4 new games at $60 each, leaving $10 left over.

Johnny can sell the 4 used games for another $100 of additional funds towards new games.

In total Johnny spends potentially $950+ (roughly $839 of which goes to the publisher) on new games instead of $600.

It can be argued that the 14 games sold to retailers means that there are 14 less new games sold later. 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 $839+ from one customer or do you gamble for the $1440 from multiple customers with $600 being from the one customer?

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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 it won’t be worth the effort and backlash.

Even once carefully balanced, cuts from the sales are not guaranteed to earn publishers as much as the system without any used-game DRM.

 

For example:

 

Johnny has $600 a year to spend on gaming.

Johnny’s $600 buys 10 games at $60 each.

Retailer offers Johnny $10 each, vs. $25 each, for his used games to resell for $40.

If Johnny accepts the lower price, he now has an additional $100 to spend 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, let’s say publishers are getting that $15 difference from each used game sale. So on top of the $660 Johnny spent on new games, the publisher is also receiving $15 for each of the 11 used games sold, totaling $165.

With publishers getting a cut of used games, they make about $53 per 11 new games from Johnny and $165 from the used games, totaling $748. With publishers not receiving any cut from used games, they made $742+ 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 who actually own the system buying new games and selling old ones.