'Project Ten Dollar' will alienate consumers, warns retail
EA, Sony measures to restrict pre-owned market by charging for access to content will damage sales
Retailers have spoken out on recent incentives by Electronic Arts and Sony to deter pre-owned sales by including content vouchers with new games that can only be redeemed once.
In the case of EA, it has begun offering downloadable content to users buying a new copy of a game, which those with a second-hand copy will need to buy separately - a move it has labelled "Project Ten Dollar". Mass Effect 2 was the first game to include a DLC code, and the company has said all of its games released in fiscal 2011 will follow suit.
However, Sony appears to be going one step further with reports stating that online play in the latest SOCOM game for PSP will be locked until users redeem a code online. Players with a second-hand copy will need to purchase a new code at a cost of $20.
According to Chipsworld MD Don McCabe, the only people that will be affected directly by these moves will be consumers, who will find the resale value of their games is suddenly much lower than they're used to.
"The person you're pissing off the most is the consumer," McCabe told GamesIndustry.biz. "This affects [them] directly - they pay the same amount of money and yet the resale value is much reduced. From a retailer's point of view, they'll just readjust [the price] bearing in mind you have to buy the voucher."
Furthermore, he said that EA is one of the publishers most likely to be benefiting at the moment from pre-owned sales, as consumers trade in their older instalments of franchises for the new, most current ones.
"They are effectively what I call a franchise software house in that they upgrade their titles; FIFA, Madden all of these are effectively the same title upgraded each year. And people trade in last year's for this year's. You go anywhere and you'll always find second hand copies of FIFA 07, 08, 09 - it's one of the ones we get the most of."
It's an opinion backed up by Marc Day, CEO of SwapGame, a site which offer new and pre-owned games, as well as rentals.
"EA's Project Ten Dollar move is aiming to stifle pre-owned games sales, but what they don't factor in is the damage this could have for them in relation to new sales," said Day.
"At SwapGame, the majority of customers who trade in for cash or credit do so to acquire new games they could otherwise not afford. Through trading in, we aim to help the customer make gaming more affordable, providing them with a way to buy new games.
"The move to DLC exclusive content is an interesting step, and this obviously provides the publisher with another revenue stream. This move will definitely make the game less valuable on the pre-owned market, so it will be sold cheaper, meaning customers will get less value when trading in."
Another downside is that retailers will become more wary of publishers using these methods and more reticent about stocking their products, said McCabe, since consumers will need to register their details with the publisher after buying a game from their shop.
"You've got to bear in mind that when you sell this product, if they insist on online registration, what they're doing is collecting your customer data.
"On one hand they might be trying to reduce pre-owned sales, on the other hand they might be collecting data so they can email that customer directly.
"From a retailer's point of view, you're always going to have that in mind. Why should you give your customers over to an organisation that's going to compete with you? You're going to be less likely to want to promote that game."
A more positive viewpoint on the move comes from Igor Cipolletta, MD of online retailer ShopTo.net - a site that doesn't offer trade-ins.
He points out that if publishers are unable to make sufficient profit from the current retail model they will, for their survival, look at alternatives.
"We as retailers have to convince the publishers that the retail sector is still a viable marketplace for them," he said.
"I think that us retailers have a duty to ensure that publishers can get back their development costs and a profit that can in part be ploughed into future projects, and obviously the second hand market is not one which directly appears to benefit the IP owners and publishers, who are therefore trialling new ways to secure profit.
"I suspect that many users will be averse to some of the current and future methods," he added. "But at some stage in the not-too-distant future, many publishers may have been forced out of business and with it [goes] the level and quality of releases.
"Gamers would still certainly rather have the physical product to show for their money, so if we are to avoid going down a download only method of software delivery, we all have our part to play to ensure the market flourishes.
"EA's fairly strong message seems to be, stop selling second hand games or soon we will be looking at a download-only selling methodology and therefore the retail sector will have little to no physical product to actually sell.
"Only time will tell how this is received by the gaming public, but I can guarantee that certain key retailers will have a lot to say over this proposal from EA."
McCabe insists EA is responding to a perceived threat rather than a real one, adding that the catalyst for this new trial has probably been GAME and GameStop's decision to start segregating new and pre-owned sales in their financials. "They've perceived they're losing a lot of money," he said.
"It's fine it they want to try it - they might get it out of their system. People want a system that's as simple as possible - if companies start going down a variety of different routes to block second hand sales, online access - the thing Ubisoft are doing where you have to be online to verify the game - it's just going to turn people off. If they try to block pre-owned sales, they will see a reduction in those titles.
"Pre-owned is an integral part of the gaming landscape and if you try and block it then the person you're pissing off the most is the consumer."
"It will be interesting to see how this plays out," said Day. "Will customers simply cough up the full retail price to get the exclusive content and online play on day one, or will they wait to buy it pre-owned at a low enough price, then pay the additional $10 for the same content?
"If so the publisher could well shoot themselves in the foot. It is the publisher who is giving the customer the short straw."