Community Article : Is the 2nd hand market really that bad?

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Gaming publishers and developers love to hate the second hand market. We’ve heard some absurd comments such as Lionhead saying that second hand market is worse than piracy! It appears that publishers think that they should be earning money from the second hand market and/or that the second hand market is stealing sales away from them. Do they have a point or not?

I decided to try and do some rudimentary analysis of the effect of the second hand market. There is also a fair amount of conjecture in the article.

Firstly, let’s look at why the second hand market exists. I think there are a few possible reasons which are:

  1. Price of games. Currently most games are around the R600-700 mark. These prices could be fair enough based on the development time and costs making these games. However many people quite simply cannot afford to shell out this much money.
  2. Poor games or games with short game play with no replay value. I find that most games that are on the second hand market are the crap ones. It’s almost a waste of money when you buy a crap game and you want to get rid of it and try and recoup some of your money.
  3. Trade-ins on new games. I think a fair amount of people who trade their games in do so because they are finished with the game and want a brand new one. So they trade in their game and purchase a brand new copy.
  4. Game shops. I think the second hand market is an important part of game shops. They most likely make a fair amount of money from second hand market sales as well as sales made on brand new games from people who have traded in. This market provides a steady stream of customers who come back with trade ins or looking for a second hand game to purchase. This ensures game shops can keep running and by extension keep selling new titles.

Secondly, let’s look at why publishers and developers hate the second hand market. Basically their argument is lost profits on these second hand markets. They say when someone buys a second hand game it deprives them of profit that would have been made if the game had been sold new. They only make profits/sales on the new game sales.

So are the publishers and developers correct when they moan about the second hand market?

Last Updated: July 7, 2011

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