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Pachter believes blocking used games would destroy the industry

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Usually, when I stumble across the words “Michael Pachter from Wedbush Morgan” my mind shuts off. He probably knows and understands the gaming industry more than just about every other analyst, but too often the professional guesses he spews forth are either wholly obvious, or just flat out wrong.

Supporting my own beliefs this time (hooray for confirmation bias!), Pachter has said that should the rumours of next-gen consoles blocking out used games be true, the gaming industry would end up disintegrating.

“I think the industry will disintegrate; I think there will be no more video games if next-gen consoles don’t support used games. You hear that, Sony and Microsoft? You have to support used games,” he said in the latest episode of Pach Attack.

Pachter said that Sony for one wouldn’t benefit at all from locking used games.

“Why would the next-gen consoles not support used games? Sony doesn’t sell that much software; maybe 10% of sales are Sony products. Everything else, the other 90%, is third-party. Sony isn’t going to help its overall sales that much – let’s go with 1%, 2%,” he said.

Should it happen, Pachter believes, gamers would flock to Microsoft’s next console instead. Similarly, there are rumours that the next Xbox would also employ used-game locking features – but he believes neither coproration is stupid enough to give opposition the upper hand that way. He also doesn;t think tither company is evil enough to collude for such measures.

Pachter believes publishers over-estimate the cost of used game sales, and that the trade-in money is often (more of ten than not, really) used to fund new game purchases.

“What does it actually cost [publishers] if people trade in used games and some people buy used games instead of new games? My guess is 5% of software sales, probably,” he said.“Because most people don’t finish new games in a week. Most people take three weeks to a month to finish games. Not everybody buys a game the first day. You probably don’t get that many games traded in; in reality about 40% of games get traded back in.”

Pachter’s convinced that very few of those 2nd hand games make a dent in new game sales, the bulk of which happen during the first 3 weeks after release.

“So what’s the cannibalisation? I’d say probably 5%. I’d say about 5% of the time somebody buys a used game instead of a new game, that costs the publisher a new sale.”

I really do believe that used games largely fund new game sales, and open people up to franchises and series they’d otherwise never give a second glance. I also agree with Pachter that blocking used games would lead console gaming on a path to oblivion. funnily enough, PC gamers haven;t been able to trade in or sell their old games for, well, ever – and PC gaming is doing just fine.

Last Updated: May 21, 2012

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