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Why the death of pre-owned will be a disaster for traditional publishers

By on February 29, 2012

It looks today as if the writing is on the wall for UK specialist retailer GAME, which is unable to stock forthcoming games from EA or Nintendo, presumably because its suppliers can’t secure appropriate credit insurance.

I was interviewed for Eurogamer’s excellent piece on what the world would look like without GAME. In it, I suggested that pre-owned was good for publishers. Here’s why.

Pre-owned is key to initial sales

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GAME and HMV would be in far more trouble were it not for the booming pre-owned/trade-in/second-hand business, however much it antagonises potential publisher allies. But losing so much of this prospering pre-owned business could have undesirable ramifications, as Nicholas Lovell explains.

“Pre-owned says to punters that when you pay for this piece of content you will be able to sell it again. Therefore, your average purchase price is not £40 – it’s £40 minus the trade-in price. It’s not a £40 investment, it’s a £10 investment. And a bunch of people then don’t return it, they hold onto it.

“If you took away the opportunity to say ‘it’s only a tenner’,” he adds, “it’s entirely possible that the new-sales market would be much smaller than it would with pre-owned. People umming and ahhhing about whether or not to fork out are far worse than people who splash the cash because they know they can either take it back or get a return on their money.”

For the full article, head over to Eurogamer.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com
  • Anonymous

    As I mentioned before, I’ve been arguing for over a decade that publishers fail to understand the importance of resale to the market for games. A rather large number of consumers – particularly children – have to liquidate vast quantities of their game library (often, the whole thing!) in order to buy new titles at full price. Remove the opportunity to do so and sales of new titles will necessarily fall – and potentially by quite a large margin.

    Publishers don’t want anybody to be buying their game at less than RRP, but removing pre-owned will, ironically, force many consumers to wait until the stock is discounted before buying.

  • http://twitter.com/UnSubject UnknownSubject

    The issue isn’t pre-owned in and of itself, it’s that pre-owned is often pushed to consumers in front of “original” stock. 

    So it becomes a matter for publishers to get all the cash they can up front, since the longtail revenue potential is eroded through secondhand game sales in the same stores where the titles launch.