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Retail

EA: Second-hand sales are a "critical situation"

Thu 28 Aug 2008 3:30pm GMT / 11:30am EDT / 8:30am PDT
Retail

Publisher hopes online content and services can stop consumers trading in games to the second-hand market

Publishing giant Electronic Arts has said that it's currently trying multiple new business models to help battle the critical problem of second-hand videogame sales.

While retailers reap the benefits of selling the same product multiple times, publishers and developers don't see any income once a title hits the second-hand market. But realising it's powerless to stop retail from selling second-hand goods, EA is looking to combat the problem by capturing the consumer with online content and services.

"I'd actually make the point that for us second-hand sales is a very critical situation, because people are selling multiple times intellectual property," said Jens Uwe Intat, senior VP and general manager for European publishing at EA, speaking exclusively to GamesIndustry.biz.

"What we're trying to do is build business models that are more and more online-supported with additional services and additional content that you get online. So people will see the value in not just getting that physical disc to play at home alone, but actually playing those games online and paying for them."

The argument that the second hand business model exists in other industries isn't comparable, says the senior VP, as videogames don't wear and tear and become an inferior product as they are passed from consumer to consumer.

"In our understanding of the business model we are actually giving away the rights to play, and if you just pass it on, pass it on, pass it on, that is not comparable to second-hand sales in the normal physical goods area where you have physical wear-out - second-hand cars, second-hand clothes, second-hand books... they're all physically wearing out, so you have an inferior quality product."

"But digital goods is not actually becoming inferior in quality, so people passing that on is actually very challenging for us," he added.

EA isn't planning any confrontational tactics with the retail community, with Intat suggesting that stores should ask themselves whether they are eating into their own market by stocking so many pre-owned titles.

"It's actually also a very interesting discussion to ask how much cannibalisation do you really have on second-hand sales?

"That's such a complex subject, we're not going to be overly confrontational, we're going to solve it with better, more interesting and online offering going forward - and that should actually solve the whole current dilemma," concluded Intat.

A full interview with Jens Uwe Intat will be published on GamesIndustry.biz tomorrow.

3 Comments

There is no VAT payable on second hand goods in the UK.

Because game SRP's are heavily discounted at launch retailers can often make much more (even double) margin on selling second hand copies of the same game.

The only way the situation will change on physical goods is if the government closes the VAT loophole. They are more likely to do this because of vast Ebay revenues than the hard line games retailers though.

Differentiating the digital version is going to become much more common and something that we are very happy to help with.

Posted:5 years ago

#1

Jim Webb
Executive Editor/Community Director

2,210 2,049 0.9
GameStop makes more profit on second hand sales than new titles. They aren't going to cut back on their second hand shelf space anytime soon nor are they going to expand their stores footprint to accommodate more space for new titles (thus giving them longer shelf life).

Posted:5 years ago

#2
That will not happen.
I remember that, when switching from cartridges to optical media, publishers promise one advantage of it was going to be lower prices for games.
Well, they are still around $50 or for new games.
The games industry is no exception to the second hand rule: used CD-DVDs normally come scratched, or lacking boxes or user manuals.

The industry will need to accept this situation, until prices get low or cheap Broadband Internet becomes a reality worldwide.

Edited 1 times. Last edit by Francisco Montero on 28th August 2008 10:55pm

Posted:5 years ago

#3

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