Analyst: Used Game Boom Correlates With New Sales Decline

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Analyst: Used Game Boom Correlates With New Sales Decline

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An analyst report specifically blames the used videogame market for a decline in new videogame sales, using some facts to back it up.

Analyst group Cowen and Company have put together a report that links the increase in used game sales to a decrease in overall new software sales. Comparing the current state of the industry today to a similar point in the lifespans of the PlayStation 2 and the Xbox, the difference is quite evident if the facts hold true.

Cowen notes that around 30 million people owned the PS2 and Xbox back in 2003, and around the same amount of people owned the PS3 and Xbox 360 in 2009. The difference between 2003 and 2009 is that 106.9 million new games were sold in 2003, while 85.5 million were sold in 2009. That's approximately a 20% decline.

Meanwhile, over the same time period used game sales at retailers like GameStop have increased substantially. GameStop itself sold $403 million of used games in 2003, and $2.39 billion in 2009. That's roughly a 600% increase and GameStop is said to account for about 85% of the used games market. Further, Cowen analysts present that average second month sales of new games have fallen by 62% since 2001, sometimes reaching a 90% drop-off even for popular titles.

This is far from definitive proof but the report does name second-hand sales as a key reason for the decline in software sales. Other factors include "stubbornly high hardware price points," which probably refers to the PlayStation 3 launch price of $599 for the 60GB model. Cowen names initiatives such as EA's Online Pass and Project Ten Dollar as a way to negate the decline in new sales due to used sales, and says that eventually consumers will accept these types of programs as the norm.

Source: Games Industry

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It is a sign of the times. My local gamestop only stocks copies of new releases for the people who pre-order it, yet they're full to bursting with used games. The stores carry what is profitable.

Scratched disks aside, there is no difference between being the first person to play a game and the 4th.

it also corresponds with the rise and fall in GDP and employment levels, jolly gee wiz!

LOL, or maybe "modern" games have regressed/stagnated in their gameplay mechanics, and are primitive in comparison to somewhat older, last-gen titles. In other words, the new games may look nice, but they play like crap for the most part (exaggeration, sure, but there's truth to it). maybe, MAYBE that has something to do with people not wanting to shell out the cash for a new game?

I've said it before on similar threads:

'Good Lord! It's almost as if there is some kind of recession on and people are trying to save money'

Wait, we really needed an analyst to tell us that because games are so expensive, people are turning to the cheaper alternative of used games?

Say hello to a nation that actually doesn't provide an acceptable income to support the actual industry directly but instead making a generation of consumers a penny wise pound foolish consumer.

Pinstar:
Scratched disks aside, there is no difference between being the first person to play a game and the 4th.

Just like the only difference between driving a first generation Hummer and a battery powered vehicle is the price.

I've always been buying used games, this isn't anything new for me. Why the heck should I pay more just for some annoying plastic wrap that you need a knife to get through? I also wait several months before I buy a new game. Do I look like I have 50 bucks for "Super Mario Galaxy 2"? The game will be just as good at Christmas as it is now.

Quesa:

Pinstar:
Scratched disks aside, there is no difference between being the first person to play a game and the 4th.

Just like the only difference between driving a first generation Hummer and a battery powered vehicle is the price.

I'm not sure I get your analogy.

I buy new, it supports the devs that I like.

I'm also not afraid to start saving up months in advance for a new title. It took me three months to pinch the pennies to get RDR, but I walked out with a fresh new copy just two weeks after it came out. I've almost got all the money together for the new Madden and Kingdom Hearts titles, and once those are purchased I'll start saving for New Vegas and FF versus XIII.

Once Twisted Metal has a concrete release date, I'll be saving for that one as well.

That is so painfully, ridiculously obvious that it makes me wonder why these guys are getting paid to be analysts.

It's a bit like saying "Unemployment correlates with recession" - all you're doing is stating something that everyone on earth knows.

Fine, but did he take into account first hand prices of games going from $30-40 to $50-60+ in that same period of time?

I bet that's fueled the second hand boom more than any other factor.

The original Xbox had 30mil users in 2003 when the PS2 had 30mil users?

That's very, very surprising to me.

50-60 dollars is still quite a lot to pay for a new game. It makes perfect sense that people would want to buy a used copy for cheap. Especially in a generation where plenty of games are rehashes of the same gameplay with prettier graphics and one tacked on gimmick.

Maybe if games weren't so god damn expensive it wouldn't be an issue, but of course you need all that money to make up for the super amazing awesome graphics that you spent all your time on instead of making your game good.

You always find the best stuff to write about Goldman.

OT: Maybe if new games didn't cost $60+ I would buy them. I'm not in a hurry to buy new games. I don't play online, I only play when I have time, and I don't always need to be the first one to try something that just came out, so I'm fine waiting a console generation to purchase my games.

I own an XBOX 360 but have only bought the Orange Box, precisely because it was only $20.
I can't justify spending $60 on one 360 game when I can get 3 PS2 or GC games for the same price. Last week I got Timesplitters 2 and God of War for $30 total. I've gotten a ton of play out of them too. I understand dev's have to make money, but I would rather support my local gaming store than go to EB games or Future Shop. I would use Steam more if I didn't run a mac, but devs need to cut out the middleman. The economy sucks and I can save almost 40% on games when I don't buy them new.

Even having only bought one 360 game, I have bought over a dozen on XBL because they were a great deal. I think in such a crappy economy people want more bang for their buck, and when one can get 3 games for the price of 1 why wouldn't they do just that?

Well actually there are a lot of factors. Despite claims that the recession is done, I really don't think that we've fully recovered from it. People are not exactly overflowing with disposable income.

Consider the price hike, when the actual usage you get out of a game (the amount of playtime) has decreased, and developers are actually sort of admitting they can't do half the stuff with this generation of tech that they could with previous ones (Squeenix claiming they couldn't make Final Fantasy VII... ). I mean honestly I haven't seen as many "wow, that's really awesome and revolutionary" titles like I did during the previous generation of consoles. I mean I can look at games and go "Oh it's a JRPG/WRPG/Sandbox/3PS/1PS/etc...". I mean I haven't seen anything as impressive as say when "Grand Theft Auto III" first appeared and you could go on criminal rampages in fully animated 3D in real time.... oh sure it's dated now, but we have not seen an evolution like that. It's pretty much more money for the same stuff, just a little prettier... A lot of people still spend it, but to most people 12 hours of third person shooter action, is 12 hours of first person shooter action.

On top of this, I think they might not be considering the fact that consumers don't want to embrace things like "Project $10" and similar things. It's not a matter of "coming around to the value" as much as maybe people aren't quite as dumb as the industry thinks, and it's beginning to sink in beyond the video-game fanatic crowd that call sites like this.

See, project $10 doesn't mean your getting $10 worth of free content you wouldn't be getting otherwise if you bought used. In a practical sense it means that once you redeem the code once, the game will thereafter be missing an integral piece. That means you can't lend it, and of course you can't get much value out of trading it in (which is the idea). So basically if some dude buys a game for $60 to kill a weekend (blowing through the 12 hours of content) he can't expect to get much value off of the trade in towards a game for the next weekend.

While I am not among them, a lot of guys I've known in college and stuff don't want to keep a lot of property like games and stuff around to be stolen. A game deck can be relatively difficult to steal, and is one thing to lock up in a closet or whatever, games on the other hand are something else entirely. Through trade ins, some guys can get whatever the new game for the weekend is for like $30 (half price) just by trading in constantly. It's been a while, but you put an end to things like that and I don't think these guys are going to keep game libraries all of a sudden and pay effectively twice as much every single weekend they want to game... their just going to stop buying the product.

That, and other reasons (most of which have been mentioned) probably contribute to the loss of sales, assuming of course you even believe that it's true. I mean the people compiling those statistics were probably hired to do so by those with a vested interest in seeing things turn out that way.

Quesa:
Just like the only difference between driving a first generation Hummer and a battery powered vehicle is the price.

... what? It's the same exact game. I buy all of my games used if I can and when I have a problem I take it back and they replace it. It's not like I'm buying a worse version of the game.

I can't wait until they start airing PSAs proclaiming that "buying a game used is the same as murder."

I can get that I mostly buy used games cause they are cheaper and am a cheap bastard

fix-the-spade:
Fine, but did he take into account first hand prices of games going from $30-40 to $50-60+ in that same period of time?

... what? As long as I can remember, new games have always been $50-$60. From the n64 carts, to high profile disc games.

Which means, if anything, games have actually gotten cheaper due to inflation...

So... seriously, what?

I really can't disagree with this since used games are a hot seller on Amazon & eBay.

Cynical skeptic:

fix-the-spade:
Fine, but did he take into account first hand prices of games going from $30-40 to $50-60+ in that same period of time?

... what? As long as I can remember, new games have always been $50-$60. From the n64 carts, to high profile disc games.

Which means, if anything, games have actually gotten cheaper due to inflation...

So... seriously, what?

Yes "what?" as in "what are you smoking?" No way new games were 50/60 in the N64 generation, I clearly recall games being in the 30-50 range at that time.

People want stuff cheaper. If I could buy a brand new game for $64.19 or the $57 or so I'd get it for used, the logical choice is to buy it used. I've been going to places like GameStop since I lived in Colorado when I was eight; I'd just look up reviews online, find something that sounds fun, and see if I could find it used. If not, it was just back to the internet again. I didn't want to spend eight weeks worth of allowance on something that would give me the same level of entertainment as a semi-old game I could get for $20. Look for Dead Rising at your local Wal-Marts and Targets. Tell me when you find it so I can make your all-spandex suit, Captain Jesus.

You know...less new games being purchased means there are less games on the used games market. I can already hear everyone saying "well duh!", but the point is people don't feel the need to go out and buy brand new games, more than likely because of the price point. Wait a few months, go and buy a game that was owned maybe once or twice before, and the price is about half of what you'd pay for a new copy.

It could also be an indication of replayability which I believe is a direct result of market over-saturation. Too many game companies trying to put out too many games every year means less good games.

fix-the-spade:
Fine, but did he take into account first hand prices of games going from $30-40 to $50-60+ in that same period of time?

I bet that's fueled the second hand boom more than any other factor.

You're damn right. I'd bet this analysis was set with controls to ignore the new release retail price increases of 66% or more

Jarrid:
Yes "what?" as in "what are you smoking?" No way new games were 50/60 in the N64 generation, I clearly recall games being in the 30-50 range at that time.

Uh, no? Multi-disc games were always upwards of $50, carts were always upwards of $50. I mean, best I can figure is you were always buying used, you just didn't know it.

Of course, the range specified was when large chains started buying out all the mom&pop game retailers.

I'm a good example of this, just now I bought Alan Wake and Red Dead Redemption off a local auctioning site, then I'm borrowing by cousins xbox 360 then when I finish playing them I'll sell em right away, the whole thing will only costs me a few euros in postage fees.

Georgie_Leech:
Wait, we really needed an analyst to tell us that because games are so expensive, people are turning to the cheaper alternative of used games?

Makes you wonder, who are they working for, and if they are working for who we suspect why should we trust them.

Brotherofwill:
The original Xbox had 30mil users in 2003 when the PS2 had 30mil users?

That's very, very surprising to me.

I know, its as if he completely ignored the fact there was still a 3rd system out at the time. Have we really forgotten that the Gamecube even existed and that it was the last system Nintendo made that was actually up to snuff for that generation's technology?

Also: No shit Sherlock, of course sales have declined; we're in a massive economic depression. People have tightened their belts all around and the first thing to go was new games. Some people (like myself) decided to be more picky about which games they bought, and bought maybe 2 or 3 new games in the last year. Others just started buying used, get rid of the used game market and I can almost guarantee that his figure for new game sales would be the same if not dangerously close to what he's already got.

Georgie_Leech:
Wait, we really needed an analyst to tell us that because games are so expensive, people are turning to the cheaper alternative of used games?

In other news, eating bacon leads to pig farming. I'd give more examples, but I got distracted by bacon...

The economy is problematic to say the least, new games are more expensive, and most of them just aren't good enough to justify the price. It's not hard to work it out.

Edit:

Cynical skeptic:

Jarrid:
Yes "what?" as in "what are you smoking?" No way new games were 50/60 in the N64 generation, I clearly recall games being in the 30-50 range at that time.

Uh, no? Multi-disc games were always upwards of $50, carts were always upwards of $50. I mean, best I can figure is you were always buying used, you just didn't know it.

Of course, the range specified was when large chains started buying out all the mom&pop game retailers.

I know that when I was buying new N64 games from places like EB Games (then Electronics Boutique) they cost $50 for high profile titles and $30-40 for smaller releases and things that had been out longer. Playstation games sometimes launched as low as $20 in the latter half of its life cycle and I never saw a multi-disc title go higher than $50 in the time I owned a Playstation. Likewise, I've never seen a PS2 or Gamecube game launch at over $50. The only current-gen system whose games comes close to its predecessors' in pricing is the DS, and even those are a bit pricier on average. For reference, this was in New England, just in case location is a factor in this.

yeah a lot people are buying used copies instead of new copies because of how expensive they are. I bought Mass effect 2 for $45 off Amazon because that was cheaper than bestbuy and gamestop.

What annoys me most is how almost all of the new games are at the 60USD price point. Not all games are deserving of such a price point, some games should still be 40-50USD. With the economy the way it is, of course people are looking for a deal.

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