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First Sale, Not Last

Embrace second hand sales - they could be the best thing to happen to your business

During an otherwise excellent and optimistic talk at the Develop conference in Brighton yesterday, industry stalwart David Braben embarked on a brief but heated tangent from his speech topic to attack videogames retailers - specifically, those videogames retailers who engage in the second-hand goods market.

This is, of course, a bone of long-standing contention between retailers and the rest of the industry. Braben added fuel to the fire by presenting photographs of retailers whose shop windows, he pointed out, consisted entirely of second-hand goods ("the only new thing is the A4 piece of paper advertising Wii Fit") and making the anecdotal claim that some games pass through the used re-sale process ten times or more.

I can't dispute the scale of the second-hand (or even tenth-hand) market since, like Braben, I don't actually have any figures on the size or prevalence of this market. One area where I agree with him is that more research into the scale of the market (and, crucially, into the price points at which it operates) would be extremely helpful.

So for now, let's accept his assertion that second-hand sales represent a large enough percentage of overall sales to seriously sting the industry. That's probably true, although for a proper business case to be made, real figures are needed.

The industry is, of course, within its rights if it wants to weigh down more heavily on the retailers who engage in this trade. Many of them are retailers with whom the industry does business - supplying new hardware and software, paying for point-of-sale promotions, and so on. That puts the industry in a position of some power, assuming, of course, that it's willing to risk cutting off its own nose to spite its face by further reducing the appeal of new software at these outlets.

Where the industry's rights - and more importantly, the sanity of its actions - come into question is in some of Braben's more outlandish proposals to tackle what he emotively, incorrectly and utterly unhelpfully described as retail "piracy". (He did, in fairness, subsequently soften his tone and start describing it as "rental", which is equally inaccurate but not quite so deliberately emotive.)

He talked in terms of unique codes which could be printed on discs to activate them, or even taking the step of making a DRM-protected download into the primary product, with the disc full of game data being an "optional" add-on for those who don't wish to download a DVD or Blu-Ray sized chunk of data. Essentially, Braben wants to find a way to strip consumers of their rights over the game they buy. He wants a way to ensure that you can't sell it, can't lend it, can't pass it on. And let's be clear here - there was a lot of nodding in the industry-heavy audience as he laid out this draconian stuff. He's hardly a lone, Quixotian figure bashing away at windmills in the dusk.

The rights which Braben wants to take away from his customers are called, in the United States, Right of First Sale. In Europe, it's called Exhaustion of Rights. Both describe a similar thing - the fact that once you sell a piece of media to a consumer, you automatically give up certain rights in the process. You stop being able to enforce a trademark action against the consumer for selling your product, for instance; in essence, you drop all rights which could otherwise prevent the consumer from re-selling the item they've bought. It is this right which allows the existence of second-hand book stores, second-hand record stores, and so on.

What Braben and others in the industry want to do is to usurp this right, not through legal means but through technical restrictions. There's something very questionable about the basic morality of using technical instruments unthought-of when such laws came into force to circumvent the law and rob consumers of basic rights. Exhaustion of Rights and Right of First Sale aren't some grubby legal loophole that consumers are using to rob hard-working developers of their money - they're a fundamental part of the covenant between nation and creator which gives us the copyright laws and allows creators to make money in the first place.

More important than the moral and legal arguments, however, are the practical ones. On a simple level, boiled and reduced, measures like these don't just rob consumers of their rights - they also treat paying customers like criminals. This is one of the most simple and potent arguments against DRM and the majority of "anti-piracy" measures - what they come down to is placing restrictions on legitimate customers which pirates will not face.

Legitimate customers potentially wouldn't be able to lend games to friends, bring them to someone else's house and play on their console, or perhaps even pass them on to a younger sibling or cousin when they're done. Pirates, of course, would continue to be able to do anything they bloody well liked. On the scale of business own-goals, vastly increasing the appeal of piracy to your consumers has to rate pretty highly. Just ask the music business, assuming you can get an answer in between the spluttering and wheezing as they recover from the ferocious beating they've taken in recent years due to policies such as this.

In Braben's defence, however - and I should reiterate that the vast bulk of his talk was enlightening, entertaining and wonderfully optimistic - he did also make some really positive suggestions about how the second-hand market could actually be leveraged as a force for good within the industry.

He talked about optional downloadable content, player subscriptions and in-game advertising as ways to extract revenue even from copies of games which don't return any initial revenue to your company. This is, quite obviously, the approach the industry needs to take. If a copy of a game passes through the re-sale process ten times, don't treat that as ten instances of lost revenue - treat it as ten chances to sell DLC to a consumer, or ten more sets of eyeballs looking at in-game ads.

Look at the positives of second-hand gaming, rather than grousing over retail "piracy" or other such nonsense. By providing a market-generated lower price point, it's giving more and more people access to games. Quite simply, it's a total fallacy to think that the 35 to 40 pound price point is the standard for games; if you want to know what consumers are actually paying, try adding the second-hand and discounted prices, and even the revenue returned to them for trading in old games, and then reaching an average figure.

Chances are most games are being sold for well under 15 pounds, or even under 10 pounds - around the cost of a DVD. Kick the stool out from under the retail mechanisms that provide those price points, and you'll lose thousands - possibly millions - of consumers, and risk alienating an entire generation of teenagers from the industry. Find a way to capitalise on all those extra eyeballs and players instead.

The second hand market isn't a problem for your business unless your thinking is inflexible, traditional and rapidly becoming outdated. For those with fresh ideas and the will to implement them, the second-hand market is great news - and frankly, the day is coming when we'll say the same thing about piracy and file-sharing. In the not too distant future, businesses will wake up to the idea that if a million people are downloading your game over BitTorrent, it should be the best thing that's ever happened to your company, not the worst. My fear, however, is that we're going to have to do the same agonising birthing process that the music industry just went through before this kind of thinking starts really making itself known.

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Rob Fahey avatar
Rob Fahey: Rob Fahey is a former editor of who spent several years living in Japan and probably still has a mint condition Dreamcast Samba de Amigo set.
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