Nintendo: Used games aren't in the consumers best interests

"We just think it's a bad idea," insists NoA president Reggie Fils-Aime

Nintendo of America's Reggie Fils-Aime has said the company does not believe second hand game sales are in the best interest of consumers.

He said that consumers prefer brand new products, and claimed that sales of second hand goods in other entertainment mediums has not been successful.

"We don’t believe used games are in the best interest of the consumer" Fils-Aime told Venture Beat.

"We have products that consumers want to hold onto. They want to play all of the levels of a Zelda game and unlock all of the levels. A game like Personal Trainer Cooking has a long life."

He continued: "Describe another form of entertainment that has a vibrant used goods market. Used books have never taken off. You don’t see businesses selling used music CDs or used DVDs. Why? The consumer likes having a brand-new experience and reliving it over and over again. If you create the right type of experience, that also happens in videogames."

Fils-Aime suggested that some retailers can't make the second hand business model work, despite trying to copy competitors who have made it successful.

"We just think it’s a bad idea," he insisted. "The one retailer that has a substantial business in this has figured out a way that is effective for the consumer.

"That’s tough for other retailers experimenting with this, in part because their employees don’t have the expertise in this market."

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Latest comments (18)

Fran Mulhern , Recruit3D13 years ago
See, I dislike the second hand games market because it's bad for development - they should really be paying royalties to publishers (which will then obviously filter through).

But what a total load of rubbish - you can't say it's bad for the consumer, it's patently not. If you're going to use an argument, at least make it stand up.
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David Underwood Interactive Director, Hoo-Ha Ltd13 years ago
The argument that publishers should get royalties from 2nd hand sales is just stupid. No-one pays any manufacturer of a product royalties or copyright on a second hand product. That's the way it always has been and always will be. Once you have a sold a product it is no longer YOUR product so you can't demand royalties on it. Even film and music companies don't demand royalites on 2nd hand cds and dvds. Do you think you should pay a car manufacturer a percentage when you trade in your car? Exactly. Besides which how would you make it work? Can you see a bloke at a car boot sale keeping track of his inventory and calculating the percentage of his sale to send to each individual publisher? No? Didn't think so.

As for the comment by Fils Aime some people are always going to want to own that shiny new box and some people just simply can't afford the shiny new box. The reason there is any sort of 2nd hand market is that there is a demand for it, so it clearly suits some consumers. Whether or not retailers can make money out of something that has traditionally been a private sale market is another issue altogether.
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Al Bickham13 years ago
I find the comment about second-hand books never taking off utterly baffling. Who's up for taking Reggie to Hay-On-Wye?
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Show all comments (18)
Dave Herod Senior Programmer, Codemasters13 years ago
@David Underwood:

When you buy a game, it's not supposed to be the physical media you're paying for, it's effectively a licence to use the software. The disc and the box itself are just a means of distribution, they are not the product itself. Film companies make loads of money out of rental copies of DVDs so second hand DVDs aren't really a big deal to them. Used cars have degraded in quality since manufacture so aren't the same product once they're sold second hand, and the product literally is the car. Software doesn't "wear out" so it's exactly the same as if you bought it brand new.
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Fran Mulhern , Recruit3D13 years ago
Dave Herod has hit it on the head.

Whether you buy (say) Viva Pinata (I'll use that Dave, since it's my wife's favourite game;)) new or secondhand doesn't matter to the experience - provided the disk works then it's exactly the same. Ok, so the box isn't completely new, but you'd not buying it for the box.

I guess it depends on the end user licence and, to be honest, I've never read one on a game I've played (who has?). I've no idea what the rules are on assigning your licence - but if you're not allowed to according to the EULA then, actually, retail is profiting from a breach of contract on the part of the user.

Whether you think it's right or wrong, it IS costing the industry. Someone else mentioned a while ago that it seemed that retail knew they were on borrowed time and so are trying to make as much as possible before digital distribution becomes mainstream. I suspect that's the truth of it.

Edited 1 times. Last edit by Fran Mulhern on 1st April 2009 11:13am

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Chris Hunter-Brown IT / Games specialist, BBFC13 years ago
I don't think it's the fact that there is both a demand for and an existence of the second hand market that is the problem. Its more the extent to which it is exploited at retail. As a developer it must be very disheartening to walk into a game store the week after your title shipped to see a raft of pre-owned copies of your limited edition you allowed that chain to sell exclusively sitting there at a 5 discount next to the new ones. Especially knowing there's been a 20 markup applied to each one. As far as the retailer is concerned though, it's a complete non-brainer.

I'd very much prefer to trade in games I've finished with the original publishers for a discount off another of their titles. If the publisher issued a voucher I could take down to retail, surely that keeps everyone happy?
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Craig Oman Producer, Climax Group13 years ago
Chris is right. The big problem here is that publishers spend millions on marketing games only to have their retail partners try to screw them out of every sale. How many times have you had a GAME employee try to sell you a preowned game when you walk up to the counter and ask for a brand new one.
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Stephen Triche , Yatec13 years ago
2nd hand books never took off? I can't count the number of $40 books I get for $3 on Amazon.
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I'm not sure it's relevant to compare a product worth less than 15 on average to one costing usually more than 40.

The more expensive the product the more likely the second hand market is to flourish. Especially when there isn't any difference between the second hand product and the new one, outside of a worn out packaging.

The only people it's not in the best interest of are obviously the publishers and Nintendo. Although as explained a few months ago in this website, it's a very short term view, the second hand market being essential to the new products sales.
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Craig Oman Producer, Climax Group13 years ago
@Andreas I've had it happen to me many times and when I used to work for GAME several years ago we were told to push the preowned and to offer it any time someone tried to buy a new game.
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David Mullins Joint Managing Director, Cex Ltd13 years ago
I believe this issue was analysed and expressed correctly in a recent Gamesindusrty article. Essentially there are many families and users that cannot afford to sustain a gaming habit by buying brand new titles. They are priced out of this market.

2nd hand retailers offer a way in for these customers, and as a result expose more customers to the market, and they will buy brand new titles when they really need them, such as latest must have titles. Old, deleted and generally poor quality games disappear quickly from GAMEs shelves, whereas they remain available in the 2nd hand market.

Also, and more importantly to people in Nintendo and the like, the 2nd hand market provides very real feedback about public tastes with regards to quality and value, something the marketeers should really take more notice of.

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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.13 years ago
Craig is correct regarding the push for pre-owned products at Game and GameStop. It's been stated by former, and current, employees for years now. I no longer shop at GameStop directly because of the new/used car salesman approach they have. Last generation I was pushed by associates to buy games (used by the way) for consoles I didn't even own.

Now with that out of the way, Reggie's comments do seem off.

David, your last paragraph is very valid though in what capacity could publishers track second hand sales?

Edited 1 times. Last edit by Jim Webb on 1st April 2009 5:19pm

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Mat Bettinson Business Development Manager, Tantalus Media13 years ago
The Fils-Amin comments are pretty astounding really. Amazon I think we can all agree, qualifies as a retailer of some import. Amazon got into second hand sales because they were happening anyway. That market would have walked to Ebay. Their competitor would have offered new and used in the same place, and they would have only offered new.

I guess Fils-Aime is talking about bricks and mortar. Books is just too broad a medium (too many titles) with too small a margin to justify a shop and if there isn't that much in it, we'd like new right? New books in mint condition is quite a nice thing.

Bricks and Mortar has to pay the high-street rent and it's only really games that make a solid business case because there's limited SKUs, high density product and the margins are great. Unfortunately for us they simply make more money than selling a new game. We've discussed that to death haven't we?

As for consumers. The argument I would make is that if more games made more money, we'd have a more vibrant industry of games. I actually fear for what videogames will look like in a year to 18 months given the publisher contractions we've seen.

We really don't want this industry to be like films do we? Where only the big studio releases makes any money and everything else is art-house pulling in spare change. That's a bleak future. Course... the Wii looks a bit like that already...
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Fran Mulhern , Recruit3D13 years ago
Well, that's the thing. If he'd said "look, used games aren't in your best interests because the studios that make them aren't seeing any return on those sales and so are struggling to make follow ups/new titles" then perhaps he'd have had a point.

Instead, he babbles on about how all games should be great (and surely they can't ALL be brilliant) so that consumers want to keep there games - but even if that's true, it still doesn't address the question of why the used market isn't in the consumer's best interests.

Personal Trainer Cooking. Don't make me laugh - that's not a game, it's an electronic interactive manual.
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Alex Wright-Manning Head of Recruitment, Splash Damage Ltd13 years ago
Hmmm. This has certainly put the cat amongst the pigeons. It seems like Nintendo are attempting to challenge Sony for the 'most out of touch with today's consumer' award.

The second hand market sustains the industry by fueling consumers gaming habits, keeping them active in their hobby, as well as introducing the next generation of gamers with nothing more than pocket money to spend, to the joys of video games. Cigarette companies have a history of attempting to capture the very young, and loathe as I am to compare gaming to the tobacco industry - it's the same principle. Get them young and you'll have them for life. I do accept that most of today's young consumers will probably be involved in gaming in some way, but that habit is becoming more difficult for them to sustain due to the economic climate.

As for the consumer enjoying the 'brand new experience', if you purchase a game you've never played before - it is brand new! As Fran and Dave commented - software doesn't wear out, merely the packaging.

I'm expecting dark suited men from BAT at my door any moment now.
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Chris Hunter-Brown IT / Games specialist, BBFC13 years ago
I have two friends who are ex-GAME managers, the importance of key performance indicators related to pre-owned sales was always impressed on them. I've been offered the 'opportunity' to purchase a pre-owned copy at the counter maybe once or twice. I think it would be wrong to over-egg that scenario but if you put your shoes in the manager of a store which is down on pre-owned targets for the month you can see how it happens.

As David from Cex states though, there are certainly benefits for everyone in having a viable second hand market. The problem with the "used" debate is that it is all too often polarised. One common response I see to publishers is "Cry less, make more replayable games" as if the creation of a good single player game that can be experienced once is a bad thing. I wonder how much poorer Bioshock might have been if 2K had felt compelled to tack on a multiplayer mode or if might have been better if they didn't have to worry about making it X hours long.

Who knows? In five years time it might be the retailers upset about how much publishers are making from DLC despite them selling all of the initial software at reduced margins, which would be an interesting switch-a-roo. I would venture right now the publishers & developers are struggling with coming to terms with this generation's costs whilst retail is making hay whilst the sun shines, meaning the balance is probably tipped too much in favour of the latter. There is probably some middle ground but as others have stated, the short term view prevails and it's turned "us" vs "them" and consumers (who?)
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It doesn't matter, because the retailers have signed their own death warrants with used games - digital is coming, and its coming for good.

Retail will remain for hardware and peripheral products - but the number of boxed software titles will eventually shrink to just about nothing.

As a consumer, I love 2nd-hand games: you get the same game for a fraction of the price. My buying habits have changed - except for a few special titles, I just won't pay full price anymore (not even close).

Same applies to movies: 90% of my movie collection are either 2nd-hand, or "budget" titles (around $10AU each). The days where I will pay $30 (or more) for a movie is long gone.
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David Mullins Joint Managing Director, Cex Ltd13 years ago

I wouldn't release detailed sales data, but you can look at our prices and our stock levels, and from just those 2 numbers you can actually draw a lot of conclusions.


You're absolutely right, which is why we have diversified. Software is just that, soft.
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