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Why Games Will Only Get Cheaper

Chris Rio | 2 Aug 2013 13:00
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There's an important legal term called the "first-sale doctrine." This piece of trademark law guarantees that a consumer who buys a physical product has the legal right to resell that product, and that the act of doing so doesn't violate copyright. So you are allowed to sell your vintage Power Rangers VHS collection on eBay if you want, and no one but Rita Repulsa can stop you. The negative side to this doctrine is that it hurts the consumers who only buy things new and keep them forever. The prices for them are artificially high because there is an inherent resale value included in the price. Imagine if the first-sale doctrine didn't exist, like if reselling any of your possessions was illegal. Wouldn't things be cheaper? We pay up front for the right to resell our stuff, in a way. It's like a refundable tax. When you count something as an asset, it's because you know that at any time you can exchange that thing for money.

What if we go all digital?

For example, it's assumed that when you buy a brand new car, you will be able to recoup some of that money later when you sell it used, unless you're the type to buy a new car and then drive it until it melts into a pile of rusty goo. Because of that understanding, the dealership is able to charge you more without ripping you off. Well, they probably still rip you off, but you get what I mean. A used game is an asset the same as a used car.

So think about it this way: If you didn't care about keeping a collection and had the spare time, you could easily play brand new games for a fraction of the cost. Buy it new for $60, sell it used for $30 in a couple weeks. Even Gamestop will pay you that much, or more, soon after release, and they once offered me a quarter for the one sports game I ever bought. As the "new" price of the game goes down, so does the proportional "used" price, because the used amount is always included in the price. There's an assumed value that's getting tacked on.

So we have no more used games, and the prices go down. What if we go all digital? Well, we can look at the PC market to see that this has already resulted in huge price cuts. Without boxes and shipping, publishers have the freedom to cut out a lot of the middleman costs and provide the savings to you. Obviously, Steam represents the epitome of the "I'll just buy this because it's so cheap, even though I'll never play it" style of marketing. But we are starting to see the fruition of new download services like Gamefly and Origin, whose competition will further reduce prices. Since you can't really resell digital games, the resale value is also eliminated from the price (extension of the first-sale doctrine to digital goods is still a significantly debated area). Just look at the music market to see this transition in action. iTunes has made music so much cheaper by going all-digital. No longer are you forced to buy entire N'SYNC albums just for Dirty Pop. You have much more freedom to spend the money on what you want, in case tracks 2-12 are all trash.

Now, this style of discounting has yet to come to fruition on the console side (Seriously Microsoft? Red Dead came out like three years ago and you're selling it On Demand for double the boxed price at Amazon), but I'm pretty confident that it's due to the fact that physical games are still much more common on those platforms.

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