backtop


Print 99 comment(s) - last by MrBlastman.. on May 12 at 11:37 AM


EA Sports, the hottest sports gamemaker around, is setting a new trend, saying you'll have to pay double to play your used games fully. You'll first have to buy the game at the store, and you'll then have to pay EA $10 to reactivate multiplayer services.  (Source: Daily Radar)
GameStop will be helping Electronic Arts implement its scheme

Electronic Arts is the king of the sports game market with hot upcoming titles including NCAA Football 11, NHL 11, Madden NFL 11, NBA 11, FIFA 11, and EA Sports MMA.  Now it has made a controversial decision concerning all of those titles -- it will lock players who buy used copies out of online multiplayer.

When it comes to sports games, a multiplayer mode is one of the chief draws.  And now that the internet allows playing with fans all over the world, online multiplayer provides massive amounts of fun.

Purchasers of a used game get locked out of that goodness.  "Online services, features and bonus content" will all be covered by a one time code, that won't work for the new purchaser.  EA describes, "You will be unable to play multiplayer online game modes or use your downloaded content in online game modes."

Used purchasers do gain access to a 7 day trial, but they will have to purchase a $10 pass if they want to continue to play online.

EA claims its all about offering its customers more, "This is an important inflection point in our business because it allows us to accelerate our commitment to enhance premium online services to the entire robust EA SPORTS online community."

Ultimately, the slick move is likely designed to help it rake in bigger profits, though.  Many purchasers will likely pay the $10 fee to renew their online access.

Retailer GameStop is partnering with EA to implement the plan.  States GameStop Corp. Chief Executive Officer, Dan DeMatteo, "GameStop is excited to partner with such a forward-thinking publisher as Electronic Arts.  This relationship allows us to capitalize on our investments to market and sell downloadable content online, as well as through our network of stores worldwide."

GameStop recent landed itself in a bit of trouble when it was caught selling used games which it claimed they were new.  Hopefully it doesn't try that again, this time around.



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

Why?
By Brandon Hill (blog) on 5/11/2010 9:35:47 AM , Rating: 5
My question is, once they sell the game ONCE, why should they feel entitled to any more profits from the game? Is $60 per new game not enough?

It's not like someone buying a used copy of Madden is going to increase their server load -- it's already been accounted for with the original purchase.

And remember, this ten dollar fee is in addition to the yearly Xbox Live charge that Xbox 360 users already pay.




RE: Why?
By Anoxanmore on 5/11/2010 9:45:14 AM , Rating: 2
They used one of my Princess Bride quotes, so they need to pay the settlement.

;)


RE: Why?
By Abrahmm on 5/11/2010 9:48:17 AM , Rating: 5
I completely agree. While the BS public relations response about how this will help them deliver blah blah blah was expected, its easy to see through the smoke. Once the game is sold, it makes absolutely no difference on their end whether the original buyer or someone new is playing it. This is simply a ploy to milk more money out of their customers. It's a disturbing trend that helped push me away from the MMORPG genre too. If these companies think I will be shelling out more money for the same amount of product, they are greatly mistaken. There really hasn't been many great games lately as it is, charging more for them won't make me want them more.


RE: Why?
By mcnabney on 5/11/2010 9:49:32 AM , Rating: 5
What, you didn't think there would be any manipulative downside to console dominance?


RE: Why?
By JediJeb on 5/11/2010 9:50:08 AM , Rating: 2
Exactly! I guess next Ford and Toyota will be asking for cuts of the sales of used cars.

If you make something and sell it, then you should no longer have a say in what is done with it. If you want to keep control of it you rent or lease it, not sell it. If I rent a house I am limited as to what I can do to it, if I buy a house I can do what I want to it when I want.

Making a copy and selling that would be illegal, making a copy as a backup you keep control of should be acceptable, unless the software company wants to give you free or very low cost replacement media for life. That is the only control they should have over the product because of copyright, transferring the ownership in its entirety should be legal and unhindered.


RE: Why?
By kattanna on 5/11/2010 11:10:08 AM , Rating: 3
i was actually reading not too long back about some home builder groups that are actually going after people who bought their homes and then sold them for profit and now they want a % of that profit, and amazingly, it was even in their original sales contract they could do so.


RE: Why?
By JediJeb on 5/11/10, Rating: 0
RE: Why?
By omnicronx on 5/11/2010 4:15:36 PM , Rating: 2
Oh the irony..

quote:
it was even in their original sales contract they could do so


RE: Why?
By porkpie on 5/11/2010 12:37:32 PM , Rating: 2
I'd like to see that story. At a guess, I would imagine it didn't cover ordinary buyers, but speculators would buy, then turn around and immediately try to resell for a profit, thus putting them into competition with the original seller's other units in the development. And at another guess, I'd imagine it would be justified by those first buyers being given a better sale price, on the grounds that it would help the sale of subsequent units if the development were already partially occupied.


RE: Why?
By monomer on 5/11/2010 12:40:44 PM , Rating: 2
I was actually just talking to a builder last week, and they now require their customers to sign a contract that they won't sell their house in the first year after ownership, otherwise the builder has the right to buy the house back at the original purchase price.

I don't really understand why they do this, though, since they make the same amount whether they sell a house to an investor, or to a family looking for a home.


RE: Why?
By porkpie on 5/11/2010 12:47:24 PM , Rating: 2
See my post above for why.


RE: Why?
By gamerk2 on 5/11/2010 1:40:01 PM , Rating: 2
Because the people would then spin off the house they brought themselves, usually with a cheaper price but longer term, to make more money at a more attractive market price. This was happening all the time right before the bubble burst, and was squeezing new home sales.


RE: Why?
By Cullinaire on 5/12/2010 4:47:46 AM , Rating: 2
I had a similar contract when I bought about 3 years ago. Not only could I not sell the home within 1 yr of closing, but I could not rent it out either. I signed since I didn't plan on doing either, and it does make sense since rentals could drive down property values if too prevalent in a neighborhood (and it was a part of town where rentals are common).


RE: Why?
By porkpie on 5/11/2010 10:22:19 AM , Rating: 2
quote:
It's not like someone buying a used copy of Madden is going to increase their server load -- it's already been accounted for with the original purchase
Come now, surely you see the fallacy in this. Their server load is *not* calculated on the basis that each and every player will continually play the game daily and forever, as often as they did when they first bought it. Selling the game to new users does increase the server load.

Personally, I think a $10 transfer fee is a bit steep, but the market sets the price, not us. If EA is charging too much, competitors will step in with better values. If they are charging too little, they'll lose money and stop offering the service.


RE: Why?
By Kurz on 5/11/2010 10:54:41 AM , Rating: 2
The Funny thing is its accepted that used games can play online for years. Now EA wants to start a new pricing mechanic.

Though you forget the popularity of playing the game online goes down with time. As more interesting/modern games come out, the amount of time spent on the older games goes down. So their server load continues to decrease even though people are buying the used game and playing it online.

From what I see in the market is that this seems like an excellent way to acquire another revenue stream. Still they'll see a decrease in Used game sales since you'll have to factor in the 10 dollar extra fee. I honestly don't think other competitors are going to go about this.


RE: Why?
By porkpie on 5/11/2010 12:30:03 PM , Rating: 2
"Though you forget the popularity of playing the game online goes down with time"

Yes it does. But by definition, a person doesn't buy a used game unless he wants to play it. And a person usually doesn't sell a game unless he has little or no interest in continuing to play it. So the transaction itself works to counter that declining popularity.

Does it counter by ten bucks worth, though? Probably not.


RE: Why?
By Pneumothorax on 5/11/2010 11:27:05 AM , Rating: 4
quote:

Personally, I think a $10 transfer fee is a bit steep, but the market sets the price, not us. If EA is charging too much, competitors will step in with better values. If they are charging too little, they'll lose money and stop offering the service.


That's the problem. EA has a Monopoly on officially licensed sports games.. They've either driven out or sued the competition out of the business.


RE: Why?
By porkpie on 5/11/2010 12:34:56 PM , Rating: 2
I've never played one of these games, but its my impression that the only difference between "officially licensed" sports games and their competitors is the names and images of the players and teams involved. In other words, cosmetic differences, not substantive ones dealing with gameplay.

Define any market narrow enough and you'll eventually wind up with a monopoly.


RE: Why?
By The0ne on 5/11/2010 1:32:36 PM , Rating: 2
When consumers buy the game because of the names and EA is, have actually, putting other companies out then it's a monopoly. When EA realizes this and purposely goes out to essentially eliminate the competition for these very names then it's a monopoly. I don't see how it can be any other way.


RE: Why?
By jeff834 on 5/11/2010 7:47:36 PM , Rating: 2
What competition? What other football games have come out in the last 2 years? Blitz? That's a completely different type of game. Frankly if someone else made a football game that was similar in gameplay to Madden but had made up players and names I would be happy to play it. This is just a ploy to get the less dumb people who would be happy with Madden 09 or Madden 10 to buy Madden 11 instead, perpetuating the ridiculous yearly game conveyor belt that is EA. This is very similar to what's going on with the PS3 recently. They used a software update to disable a feature that wasn't absolutely necessary but was used by a decent amount of people for no apparent reason. How can it be legal to remove or charge more for features that are listed on the box as included for free? Come on lawyers EA is a multibillion dollar company let's get going on a class action lawsuit here.


RE: Why?
By SeeManRun on 5/11/10, Rating: -1
RE: Why?
By quiksilvr on 5/11/2010 10:57:04 AM , Rating: 5
Come off it. The only reason they are doing this is so that people are discouraged to buy used games and go for the new one. The sad part: it will work for a minority of people, but that minority is JUST enough to keep this BS tactic in place.


RE: Why?
By MrBlastman on 5/11/2010 11:55:30 AM , Rating: 2
What is the point in paying 55.00 for a used game? Heck, even 45.00... There's no point. I know I won't nor have paid it. The most I will pay for an older game is 10 - 20 bucks and that is all. By your accounts, there must be quite a few suckers who are buying used games at absurd prices.

Then there is the premise of resale revenue, EA obviously wants a cut of it. The thing is, when you sell anything else secondhand, be it a car, knife, furniture, television etc., the manufacturer never sees a dime of the secondhand purchase. This is how buying and selling on the secondhand market works. What EA is doing is filthy and going against how the world works. When you sell something, you are not entitled to all transactions involving that one single item, in this case an individual game, in perpetuity.

EA needs to drop their primary game prices if they want to compete. If they drop them to a less sensitive level, they may actually see more firsthand sales revenue.


RE: Why?
By SeeManRun on 5/11/2010 12:30:24 PM , Rating: 2
Because when you normally buy a used good it is a used good. Think a car, a lawn mower, anything that is not a set of digital bits. Digital bits are exactly the same good as the new purchase. If your CD sounded worse on the second purchase, then there is a loss of quality associated with a used purchase, driving new sales. For games and digital media this does not exist, which is why the sale of used games approaches price for new games, it is the same good.

EA is just making the sale of used games depreciate like all other goods. I think you can do this with some cars now. Buy a used Toyota, give Toyota some money and they will give you a bit of a warranty.


RE: Why?
By JediJeb on 5/11/2010 12:39:57 PM , Rating: 2
Not entirely true. If the game is a year old, then it is not the new and exciting product of a year ago. Would you give the same price for Windows Vista, or Windows XP now that you would give for Windows7? They are exactly the same product they were when new. Games are really no different, especially online games since it becomes harder to find people to play online with than when the game is new. I purchased Star Wars Battlefront when it dropped to $15, but could only play it as single player since most of the servers had already shutdown by then.


RE: Why?
By porkpie on 5/11/2010 12:47:06 PM , Rating: 2
Faulty logic. It's still the exact same game, regardless of how your perception of it has changed.

In fact, there are (a few admittedly, but some) games that actually appreciate in value after they've been out of print a certain period ... a situation analogous to a antique piece of furniture or a painting by an old master.

Why should a game be any different? Most games exhaust their playability in a few days. If a game is good enough that it still has playability value years later, why shouldn't EA be able to collect a small surcharge to ensure you can still use its servers for it?

Personally, rather than a "transfer fee", I think a much more consistent option would be to simply sell the same with, say, one year of unlimited online time. Sell additional year's for a flat rate, whether you still have the game, or you've sold it to another person.


RE: Why?
By SeeManRun on 5/11/2010 12:59:48 PM , Rating: 2
Well said. As a sidebar to this, once the servers are sunset by EA and online play is no longer supported, the 10 dollar fee will cease to be a factor.

The problem may be buying Fifa 08 right now, having to pay 10 dollars to play online (which doesn't apply for Fifa 08 because it didn't have this feature, just using as an example) and then the servers are sunset in 30 days due to lack of users. That would be a bad deal for the consumer, that hopefully EA is addressing.


RE: Why?
By The0ne on 5/11/2010 1:47:27 PM , Rating: 4
lol no, what Porkpie said is poorly thought out.

If companies has the free will to charge for their goods that is now considered "used" all hell will break loose with other companies possibly following suit.

The REPLAY, not playability, value of the game does not give the company the right to go ahead and charge the consumer. Seriously, if this was the case the market would/could be manipulated so the product would do well, thus allowing them to charge. I can even go as far as saying the company can blankly state that above 50k copies sold the game is considered popular and they have the right to charge additional fees for the use of the game.

There are plenty of games out there that don't require any fee's to play on the company servers. How long has battlenet been going on for free? How long has Guildwars been going on?

If this was allowed, I would probably invest heavily in Nintendo and Sega :) Those damn pokemon gameboy games alone can make me rich.


RE: Why?
By porkpie on 5/11/10, Rating: 0
RE: Why?
By seamonkey79 on 5/11/2010 4:18:21 PM , Rating: 2
battle.net also has a World of Warcraft pimp keeping it up and running...


RE: Why?
By jeff834 on 5/11/2010 7:56:12 PM , Rating: 2
Do the sports games have dedicated servers? CoD and Halo use a matchmaking system but the multiplayer games are actually played on one of the player's 360 or PS3. I was under the impression that was the same for pretty much all console games nowadays, but I didn't bother looking it up so I'm not 100% on that. As for how long battlenet has been free it was not long before the used game market was big as a matter of fact the used game market has been at least somewhat big business since the early 90s. Granted back then you had options, since then Gamestop has purchased every single one of those options out from under you.


RE: Why?
By zxern on 5/11/2010 2:11:47 PM , Rating: 2
Would you be willing to pay an extra 10 dollars when you buy a used blu-ray movie just to use the bd-live features?


RE: Why?
By SeeManRun on 5/11/2010 3:33:12 PM , Rating: 2
For me that is a bad example. I don't buy anything used. And those blu-ray live add ons so far seem like gimmicks to me to make you shell out a large amount of money for what is essentially a nice DVD.

There is very little to compare the used game market to, because 99% of goods are self contained. If the blu-ray had to download new dynamic data off the server, and i felt it was a value, i might pay. But I would expect a discount if i didn't get that content when buying used.


RE: Why?
By BailoutBenny on 5/11/2010 4:29:49 PM , Rating: 4
Most games distributed over physical medium will lose value due to wear and tear on the media, regardless of the fact that the "bits" remain the same. Physical media deterioration actually does changes the "bits" anyway.

As for charging for the use of their servers, I'd have to say that the cost for using the server was included in the original sale. When ownership is transferred, the cost of using the server had already been covered by the original purchase. If the seller buys a new game, their new purchase pays for their renewed use of the server. If the seller doesn't buy another EA game, they can no longer log in, and the net load on the server hasn't increased. Support and lifespan aren't guaranteed, so maintaining the servers is a moot point anyway.

This is a move purely based on the desire to stifle the secondary market to make more first party sales. That is where all the profit lies for EA. Many people will look at Madden for $60 brand new, or Madden for $50 used but with a $10 activation fee and just buy it brand new. Besides, EA's lack of competition in licensed teams mean that they are the only company with "official" sports products, which will also make it easier for them to crush the secondary market.


RE: Why?
By sprockkets on 5/11/2010 5:54:33 PM , Rating: 2
quote:
Faulty logic. It's still the exact same game, regardless of how your perception of it has changed.


Human perception sets the value of all things. Where have you been?

Try getting $300 for a retail copy of Windows XP Pro, even when new on ebay.


RE: Why?
By Motoman on 5/11/2010 1:31:56 PM , Rating: 2
You're retarded.

This is about one thing - EA finding an underhanded way to make money of it's fans.

It's a surefire way to drive consumers away from their products.


RE: Why?
By Schrag4 on 5/11/2010 12:58:12 PM , Rating: 2
quote:
My question is, once they sell the game ONCE, why should they feel entitled to any more profits from the game? Is $60 per new game not enough?


They're not any more entitled to your 10 bucks than you are entitled to play on their servers.

I know I'm going to get flamed for saying this, but EA can charge whatever they want, and you can decide not to buy EA if you want. Nobody's forcing anyone to buy new OR used EA games.


RE: Why?
By Motoman on 5/11/2010 2:26:23 PM , Rating: 2
The first statement you made is what is in question. Whether or not a purchaser of a second-hand product actually has a reasonable expectation that said second-hand product will work as advertised.

Obviously, no one is forcing you to buy any particular game or use any particular game service. And I encourage anyone who is dismayed by this to write to EA and inform them that you will not be buying any NEW EA games because of this policy...and then you actually have to not buy new EA games.

But on the flipside, I think there's an important legal question to be answered here - whether or not EA can really do this. Interesting questions about property rights, rights of use, rights of resale, etc. This isn't cut-and-dried.


RE: Why?
By Schrag4 on 5/11/2010 3:28:40 PM , Rating: 2
quote:
But on the flipside, I think there's an important legal question to be answered here - whether or not EA can really do this.


I suppose if those purchasing used (or heck, even new) games and EA entered into some sort of contract that holds EA to provide their online services at no charge then there would be a legal question. However, I think maybe customers should just shift their expectations about what they should be entitled to (hint: it's less than something).

I suppose if EA customers (even second-hand ones) are entitled to online services then the government should step in and fund these servers. After all, EA could fail financially. What, then, of those entiteled customers? *rolls eyes*


RE: Why?
By Hiawa23 on 5/11/2010 1:25:01 PM , Rating: 2
If I actually bought many EA games, I would care about this. I don't like any of their sports games, other than NCAA FB, of which I just bought from Gamefly for $12, NCAA FB 10. I wouldn't pay $60 for their games but I do buy some from gamefly on the cheap. It's a tough economy & companies are trying to find ways to increase revenue wherever they can get it.

Seems greedy to me, as they get the 1st sale, but they want their cut from the 2nd 3rd 4th sale too. It's like Honda wanting a cut from your Civic that you just sold to your friend. I don't agree with what EA is going to do, but I understand why they would attempt this. It's like they say, when you become the big fish, or too big to fail, you piss on whomever you want, your userbase included.


RE: Why?
By satveeraj on 5/11/2010 9:00:34 PM , Rating: 2
Ok, then what about renting games from gamefly??? Will there be a convienience charge as well???

I bought something in good faith, its mine, I sell it to someone for a fraction, that person buys it in good faith, he/she has the right to it. Why more charges to feed the hungry giants?? I am sure EA is hoping traditional media becomes absolete quicker so they can shaft the whole gaming community with their version of DRM....blah blah


EA Sports...
By MrBlastman on 5/11/2010 9:36:20 AM , Rating: 2
It's in the bank.

What a bunch of puerile nincompoops. "You bought our game but neener neener your code doesn't work! Gimme your lunch money so you can play online."

This is pretty low. Many gamers have figured out that buying games new just isn't worth it half the time. Why pay extra when you can buy them used? Perhaps... game companies such as EA should take note rather than whining about it and instead of resorting to abusive tactics like pounding your customers to dust in a quest to raid their wallets--lower their prices a bit so more people are enticed to buy the games new.

It is simple economics really. At some price point a huge majority will buy, usually a low one. Raise prices a bit and many will back out but profits will increase. Raise prices a bit further than that and you will see a big exodus and profits will drop. I believe EA has gone too far, along with many other game companies, especially on consoles.

Right now, the economy stinks (though it is recovering), perhaps the average consumer is more price conscious than ever before. EA could recognize this and take a few easy steps to increase their revenues and profits without berating their clients, but instead, they choose to become draconian with their policies.

This is ludicrous.




RE: EA Sports...
By SeeManRun on 5/11/2010 10:56:41 AM , Rating: 2
Every single company that makes online games will be doing this depending how it works out for EA. They are all watching to see how it plays out, and if it works well, they will all do it. This is not speculation.

Once again, you are all seeing a price increase, when there has been no increase in price. It is up to Gamestop to drop their price, otherwise people will just buy new copies.


RE: EA Sports...
By porkpie on 5/11/10, Rating: 0
RE: EA Sports...
By SeeManRun on 5/11/2010 1:07:23 PM , Rating: 2
I am using logic. EA does not dictate what Gamestop sells it's games for. If EA drops the price to 50, then Gamestop can just drop their price to 45 and will still make tons of money because people will see the exact same good for 5 dollars less. The online pass changes that, and makes a used game worth less, so Gamestop has to charge less for that game because it is not the same good any longer.

This tactic will not force EA to sell their new games for any cheaper, but only to get a cut of the continued service they have to provide for buyers of the game for which EA received nothing for.

And for the other readers of this, they can say the first buyer paid the price so EA should not be getting anything after first sale, as they already got their money. The problem with that is online gaming is a service that costs thousands a month to maintain. Take the example to the extreme. EA sells 1 million copies of a game, and then after 2 months every player sells his copy. Then 2 months later they all sell their copy. EA has to continue to fund the servers indefinitely all while receiving no money. There is no incentive for them to continue hosting the servers, because every month they have those servers up they just spend money with no income generated. Obviously this is a contrived example, but it should be enough to illustrate the point that servers cost money, and EA needs some income to support a good online experience.

Microsoft discontinued support for Windows XP for the same reason, they weren't making enough money to keep it going any more, so there is no incentive to keep supporting customers.


RE: EA Sports...
By porkpie on 5/11/2010 1:17:17 PM , Rating: 2
Hello, I was replying to BlastMan, not you. Had you read my post, you would see I was agreeing with you.


RE: EA Sports...
By Reclaimer77 on 5/11/2010 1:15:07 PM , Rating: 3
quote:
I think EA lost what, $600M+ last year? That can't continue forever.


Clearly that was because of the dreaded used games market. *rolls eyes*


RE: EA Sports...
By porkpie on 5/11/2010 1:39:05 PM , Rating: 1
Companies like Gamestop are now seeing 40% of their profits from used games and, since used games are only slightly less expensive than new, each used sale is potentially the loss of a new sale, then yes, its obvious.

Gamestop alone is making $2B a year in used games. What sort of ignorant buffoon fails to realize that's eating severely into sales of new games?


RE: EA Sports...
By Anoxanmore on 5/11/2010 2:01:56 PM , Rating: 2
Well his name is Reclaimer, that would be what sort of buffoon. :)


RE: EA Sports...
By MrBlastman on 5/11/2010 4:47:11 PM , Rating: 2
You're failing to take into account one important thing:

For there to be used games, there first have to be new games that were bought and traded in. It isn't like there is an infinite supply of used games, it is a finite supply proportional to the amount that are traded in versus being kept of the original supply.

The other thing to consider is you will never have 100% of the games sold traded back in, there will always be a slight chance that at least one game out there stays in the possession of the original owner, thus the secondary supply will always remain less than the original supply. Compound this with the fact that the remaining supply will decrease as the churn continues over time and you definitely have a finite supply over time at this point. At some point in the future, the supply of used games will be decreasing towards that of a very small number.
Mathematically it can be expressed as follows:

x = new games
b = games kept
t = % games traded in
T = number of resales
G(T) = Probability of a subsequent resale (or games remaining in the wild from initial sale)

x-b
--- = t
x

thus

t^(T+1)
---------- = G(T)
2^(T+1)

So as you see, G(T) will always approach zero over time, constantly reducing in probability with each subsequent resale, T. Also, with each subsequent resale, the quality of x will degrade, thus leading to a further price reduction.

It is absolutely beneficial to EA to maximize the number of initial sales and far more beneficial to do this than to focus on trying to capture repeated resales. If they maximize the initial purchase plus focus on churning out _additional_ content, in the end they will have a better perceived image in the eye of their consumer and--they will not be chasing a perpetually dwindling number.

My equations aren't perfect(they probably stink), but, you get the idea.


RE: EA Sports...
By porkpie on 5/11/2010 5:32:55 PM , Rating: 2
Err, people who don't understand algebra shouldn't play with figures. I won't even go into the many other problems with your magic formula, but not only is the result itself wildly incorrect, but you're also raising your numerator and denominator to the same power -- which means the exponent drops entirely out the equation.

Furthermore, you have many base misconceptions outside the math alone. First is that the value of a used game depreciates substantially on subsequent tradeins. It does not. Given a high enough velocity, a single copy could service 20+ buyers in a single year, with each subsequent sale at the same price as the first resale (excluding the
"new" purchase).

The much larger misconception, however, is the belief that you can substantially eliminate the used game market simply by slightly reducing the price of new games. Would a drop from $60 to $40 do this? No, of course not. Most people would still rather pay $30 for a used copy than $40 for new. To eliminate the market entirely, you'd have to take the price down to a trivial level, would would of course decimate revenues.

Oops. Do you really think the MBA graduates at EA don't have a clue about maximizing a price/profit curve? That's only one of the very first things you're taught in business school. EA has pricing vs. sales data, and I'm sure they've done extensive analysis on it and their market position.

Still more problems. You're forgetting that the demand curve for games has a substantial measure of inelasticity to it. To illustrate, if we cut the price of toothbrushes in half, would people suddenly buy twice as many? If we did the same with cars, would demand double? There's only a certain amount of tooth-brusing and transportation people need. You'd see a small rise in total widgets sold in either case, but much less than you might think.

There's a similar inelasticity to game sales (though not as strong). A gamer only has so many hours to devote to playing. Halving the price of games doesn't mean most people will buy twice as many. Further, for EA at least, there is a certain component of Veblen behavior to their pricing. Reducing their price can reduce the status of the game, and hence the perceived value.


RE: EA Sports...
By MrTeal on 5/11/2010 7:47:18 PM , Rating: 2
quote:
Err, people who don't understand algebra shouldn't play with figures. I won't even go into the many other problems with your magic formula, but not only is the result itself wildly incorrect, but you're also raising your numerator and denominator to the same power -- which means the exponent drops entirely out the equation.


Really? So 5^10/2^10 is the same as 5^5/2^5?

quote:
Err, people who don't understand algebra shouldn't play with figures


RE: EA Sports...
By porkpie on 5/11/2010 8:09:11 PM , Rating: 2
No, I wasn't clear. They have the same exponent, so it should drop out of the numerator and denominator as such:

(t/2)^(T+1)

In that form, its easy to see it doesn't work. If 100% of the games are resold, the chance of resell becomes:

(1/2)^2 = 1/22 = 25%. QED

The proper way to solve something like this is with a differential equation of the form

dx/dt
----- = K
x

Where the k constant is based on the exchange velocity and the probability of a resale. That gives you pretty much the standard exponential decay law.


RE: EA Sports...
By MrBlastman on 5/12/2010 9:21:20 AM , Rating: 2
I had a swell reply but DT ate it. Thus, this one is a condensed reply.

quote:
You're forgetting that the demand curve for games has a substantial measure of inelasticity to it.


Not completely true. For the fanboi's, this _is_ true, for the second portion of the market--the average consumer, this is not. You forget one pinnacle economic concept:

Substitute goods.

Price it too high and the consumer _will_ find other games to play. There is a glut of good games out there. Maximize your price to attract both fanboi's and the average consumer and you win. For the average consumer, it is an elastic demand curve with games unless they are vehement fans.

quote:
Halving the price of games doesn't mean most people will buy twice as many.


Correct, I never suggested this. I suggested finding a point somewhere between 45.00 and 65.00, probably around 52.00-58.00 that will be the sweet spot towards increasing _new_ game sales.

EA charging money for a used game just rubs customers wrong. Rub enough of them wrong and they'll go elsewhere. Find the optimal price to attract both fanboi's and non, while maximizing your revenue and profits.

If you want to make a revenue stream out of the secondhand market, make your games consumables rather than content delivery vehicles--aka a bottle of scotch or a can of coke. You play it once or twice, you have to insert more money to refill it. They do this already, it is called an MMO which is a niche market that many gamers refuse to pay for.


RE: EA Sports...
By porkpie on 5/12/2010 9:48:48 AM , Rating: 3
" You forget one pinnacle economic concept: Substitute goods"

Irrelevant, as EA games are not priced substantively above those substitutes. Further, if EA did as you desired and lowered prices, the substitutes would then be higher in price, not lower. And, if the entire market lowered prices in lockstep (as unlikely as that is), there still wouldn't be a significantly cheaper option to EA.

"I suggested finding a point somewhere between 45.00 and 65.00, probably around 52.00-58.00 "

Are you seriously suggesting that a $10 price drop in new games is going to seriously dent the used market? Anyone willing to buy used is still going to prefer $45 to $55. This transfer charge will be far more effective.

"Rub enough of them wrong and they'll go elsewhere."

I'm willing to bet hard cash that EA's sales data will show otherwise.

You forget that this charge doesn't hit EA's actual customers (those who actually buy new) directly at all. It hits them slightly indirectly (by making any subsequent sale of the used game less valuable) but most consumers will vent their rage at that on Gamestop for offering them less, and not EA for instituting the gap.


RE: EA Sports...
By MrBlastman on 5/12/2010 11:37:35 AM , Rating: 2
quote:
This transfer charge will be far more effective.


Far more effective in pissing off their customers. I don't play sports games at all so I could give a crap about whether I have to pay more or not. What I _am_ worried about is the hostility of this action and how it presents itself to future used game sales.

Actually, I'm primarily a PC gamer so it won't effect me one bit. Steam routinely has weekend deals where games go on sale, brand new (if you can call a digital copy that) at deep discounts. Steam makes their customers happy, they spend money on Steam. Simple concept, right? I know a guy who blows hundreds of bucks on games simply because they are on sale (I doubt he'll ever be able to play them all).

What EA is doing is bullying their customers. I imagine quite a few who buy the used game will just forgo playing online altogether.

quote:
most consumers will vent their rage at that on Gamestop for offering them less, and not EA for instituting the gap.


I beg to differ. When they are forced to enter their credit card on an EA website, they'll clearly see it is EA that is being greedy by making them do this.

While it is a novel idea that could lead to an infintesimally small increase in revenue and profits, I think there is a much better way to go about enhancing their monetary streams.


RE: EA Sports...
By SeeManRun on 5/12/2010 10:37:10 AM , Rating: 2
quote:
If you want to make a revenue stream out of the secondhand market, make your games consumables rather than content delivery vehicles--aka a bottle of scotch or a can of coke. You play it once or twice, you have to insert more money to refill it. They do this already, it is called an MMO which is a niche market that many gamers refuse to pay for.


They are making a consumable. It is a consumable code for added content that will only be available to the first buyer. Just like the can of Coke, only the first person gets the soda, while all subsequent persons can have the can. Your recommendation is exactly what they have done!

In the future when digital distribution is more pervasive this won't be a problem. All games you buy will be tied to your credit card, or your online ID, and you won't be able to sell them.


RE: EA Sports...
By Reclaimer77 on 5/11/2010 6:12:19 PM , Rating: 2
quote:
Gamestop alone is making $2B a year in used games. What sort of ignorant buffoon fails to realize that's eating severely into sales of new games?


There have been used game shops since the freaking Nintendo. They REALLY took off during the original Playstation days. Judging by the growth of console gaming since then, or just in recent years, only an ignorant buffoon fails to realize the impact can't be THAT bad.

EA is fine. They aren't being hurt by used games, give us a break. They are simply trying to double dip into the consumer candy jar to boost profits. I'm generally all for Capitalism and business rights, but this is just over the top. They already SOLD the disk once, that should be good enough for them.


RE: EA Sports...
By MrBlastman on 5/11/2010 2:44:19 PM , Rating: 2
I am using logic, think about it for a moment:

Company sells game at 30.00/copy
Nets 1,000,000 copies sold
10.00/profit a unit (19.00 fixed costs from development, 1.00 variable production costs due to economies of scale)

Net profit, 10,000,000.00

*------------*
Company sells game at 45.00/copy
Nets 750,000 copies sold
24.50/profit a unit (19.00 fixed costs, 1.50 variable costs)

Net profit, 18,375,000.00

*------------*
Company sells game at 65.00/copy
Nets 400,000 copies sold
42.50/profit a unit (19.00 fixed costs, 3.50 variable costs)

Net profit, 17,000,000.00

*------------*
As you see above, the company is more profitable selling the game at 45.00/unit versus 65.00/unit. Now, I have simplified it to the EXTREME in that of course the 19.00 for development is assuming some form of profit to cover the basic development expenses, whereas normally this would be a floating base with a set, pre-defined sunk cost divided by copies sold, but, I'm just trying to make it digestible for the average DT reader.

At some point, you reach an optimal sales-to-profit ratio versus price, above it, you make less profit overall as well as below it. Finding that optimal point is where you want to be to maximize sales to the price sensitive consumer while taking into account your "guaranteed base" as those people who will buy regardless of the price. These gamers exist for basically every genre. It is the group that is sensitive to price versus other percieved substitute goods (i.e. other franchises that provide equivalent fun) that the game company spends quite a bit of its time chasing after. Of course, this is on the marketing front, as the development front should have addressed the built-in base from the start and these examples are assuming they did.

This is the point I'm trying to get at. The used market exists for an important reason:

People don't want to pay so much for games. They've figured out they can get the same content for less if they buy second-hand. If EA wants to increase their revenues and profits, they need to be focusing on their pricing model for the initial purchase to lure those non-fanboi's into forking over their money the first time around.


RE: EA Sports...
By SeeManRun on 5/11/2010 3:37:35 PM , Rating: 2
The way it will eventually go, and has for some, is total digital distribution, so there will be no used games. This is already the way it is for Xbox live Arcade games or Playstation network games. It will happen, and it is unfortunate in a lot of ways.

However, it could lead to new things, like a free weekend of a game that is fully functional, like Modern Warfare 2 was on Steam this weekend, or all sorts of easy ways to drop price.

Don't forget, EA can't necessarily drop the price on demand. Gamestop, or Best Buy would still have to sell all their copies they purchased for sale at 60 dollars before selling the 50 dollar games, not to mention those price guarantees many of them have.


RE: EA Sports...
By MrBlastman on 5/11/2010 4:55:18 PM , Rating: 2
quote:
EA can't necessarily drop the price on demand


You're right, they can't control the price of their games once they enter the wild in a dictator-like way.

They can control the supply of their games though via the price they charge to their retailers and via the MSRP. Of course, price-fixing is illegal and they can't dictate that the retailer has to sell it at any price, the MSRP goes a long way towards at least creating a ceiling (as EA will sell the software directly on their website at the MSRP, if a retailer charges more than the MSRP, customers will buy directly from EA instead).

The price they charge to their retailers on the initial release plus MSRP will go a long way. If they reduce their initial pricing from 60.00 to 50.00 going forward, all new games will debut at 50.00 (or less). The existing older titles in the wild will not automatically drop from 60.00 to 50.00, but, over time, as the old inventory is replaced via new inventory (and with games, it usually is LIFO versus FIFO).


Hahaha
By HDBanger on 5/11/2010 9:54:31 AM , Rating: 3
So, instead of buying an EA game used, just download it off torrents, and pay the $10 for a new cd key! All EA games now reduced to $10 dollars! Awesome! Thanks EA!




RE: Hahaha
By Smilin on 5/11/2010 10:04:06 AM , Rating: 2
Congrats. You just encouraged EA to do this (they made $10) AND you encouraged them to put some crappy anti-piracy DRM as well.

If you don't like it just don't buy it. It's the best way to send a message.


RE: Hahaha
By kextyn on 5/11/2010 10:18:42 AM , Rating: 3
If people don't buy (or pirate) it EA will claim they lost sales due to piracy


RE: Hahaha
By HDBanger on 5/11/2010 12:14:12 PM , Rating: 3
Personally I stopped buying and playing EA games along time ago. I could care less what they do. But what I said holds true, and the pirates will love it. I wouldn't waste my time downloading anything EAgay.


RE: Hahaha
By MonkeyPaw on 5/11/2010 12:34:05 PM , Rating: 2
Yeah, I gave up on EA too. I think it's about the only option left for the consumer. Never mind the fact that very few changes occur for each new sports title, just updated rosters and a few extras. EA makes a killing, and I bet they spend very few resources for each new edition. Keeping a server running is the least they can do for what has got to be a loyal customer base of return buyers. Everyone I know that plays sports games can't wait for the newest version. The people who buy used are probably taking a chance to give it a try. To be slapped with extra costs will just turn new fans away. Raising your prices doesn't assure you more money! It's a very short-sighted business model.


RE: Hahaha
By porkpie on 5/11/2010 1:01:18 PM , Rating: 2
"To be slapped with extra costs will just turn new fans away."

Actually, it won't work like that. Prospective buyers will factor that $10 fee into their decision, thus forcing the retail price of used games downward. The overall cost to a buyer won't change that much...the only difference is that EA will get a chunk of the money the seller otherwise would.

In my opinion, a fairly savvy move on their part ... though obviously gamers are going to scream like scalded shoats over it.


RE: Hahaha
By daveinternets on 5/11/2010 10:17:41 AM , Rating: 2
I bet you complain that the PC game market is dying while you download those torrents.


RE: Hahaha
By Anoxanmore on 5/11/2010 11:00:55 AM , Rating: 2
Actually he has a point, that would be one heck of a way to send a message to them.

Hmm... the possibilities.


RE: Hahaha
By Farfignewton on 5/11/2010 12:03:27 PM , Rating: 2
Really?

Scenario A: You buy the game used - EA makes $0.00
Scenario B: You download it then give them $10.00 - EA makes $10.

Personally, I cannot fathom giving the finger to the developers and publisher of the games I play for the sake of saving $5.00.


RE: Hahaha
By Anoxanmore on 5/11/2010 12:18:37 PM , Rating: 2
It would work, if it happened enough. One person pays full price for the game then everyone else only $10.

They'd be losing money pretty badly on that investment.


RE: Hahaha
By MadMan007 on 5/11/2010 9:42:18 PM , Rating: 2
Haha, yeah I wonder what they will do if the number of key requests is radically higher than the number of physical sales? Given pirating rates, particularly on the PC if these games come out on the PC, that could very well happen.


RE: Hahaha
By HDBanger on 5/11/10, Rating: 0
RE: Hahaha
By jeff834 on 5/11/2010 8:08:35 PM , Rating: 2
You know you can download a 360 game and play it on a modded Xbox too right? MS banned a bunch from xbox live but theres already new firmware to circumvent that.


That's the DRM's real purpose
By fleshconsumed on 5/11/2010 10:04:49 AM , Rating: 4
Is anyone surprised? That's the point behind all DRM. It's not about lost sales to pirates, it's about milking more money from already paying customers.

I'm just glad I lost most of my interest in games. I still game, but far less than I used to. I don't have to deal with DRM like this because I simply won't buy game that has this kind of DRM and I don't have to buy expensive video cards. It's great!




RE: That's the DRM's real purpose
By MadMan007 on 5/11/2010 10:38:25 AM , Rating: 1
Yes, growing out of gaming is great. It's amazing how much actual real and important stuff you can accomplish by not gaming or otherwise being a media consumption addict.


RE: That's the DRM's real purpose
By HDBanger on 5/11/2010 12:18:40 PM , Rating: 2
Amen to that brother!


bull
By zmatt on 5/11/2010 12:36:10 PM , Rating: 2
When I buy a used car I don't have to pay Honda a fee to keep driving it with other people on the road. Once they sold the game to someone that disc and all the features the software on it has is no longer their property. If they feel that they are loosing money on people buying used games and playing them online then they can just drop online support for them.




RE: bull
By porkpie on 5/11/2010 1:04:00 PM , Rating: 2
"When I buy a used car I don't have to pay Honda a fee to keep driving it with other people on the road"

But you do continue to pay a fee to maintain the roads you drive it on. Same principle.

If you want to play the game solely on your own computer, fine. No extra charge involved.


RE: bull
By Dradien on 5/11/2010 5:46:11 PM , Rating: 2
You pay that wither you buy a car new or used. This would be like you paying double gas tax for buying a used car.

Unless you buy the car to use solely on your own driveway, fine, no extra costs involved.


They're going to reduce the price right?
By nafhan on 5/11/2010 9:51:59 AM , Rating: 2
Since the resale value is lower, they'll reduce the price, right? Never mind, it's EA... Seriously, providing value by charging more money? Don't they already accomplish about the same thing by coming out with new versions on a yearly basis?
Here's my suggestion: wait until the games are a year or two old and buy them new from the value bin for $10.




By callmeroy on 5/11/2010 10:00:38 AM , Rating: 3
Oh yeah that's a whole other topic that gets me steamed these days....remember back even 20 or 30 years...if new way came along of saving the retailer money the savings was passed on to us as the consumer....is it just me or does anyone else notice that model is largely abandoned these days?

Prime example in a game buying context...New FPS Game costs $59.99 from your local game store....same time is available on a service like Direct2Drive for.....$59.99.....

WHY?

Are you really going to BS me about convenience fee (arguably the most retarded excuse for a fee in the history of business)...are you really going to tell me your costs are the SAME to do an electronic delivery of a product to me as a physical store that has overhead (utilities, rent, employees, shipping costs, insurance) not to mention shelf space is limited and valuable -- plus packaging costs...the box, the DVD, the manual, etc?


People are going to freak!
By Esquire on 5/11/2010 9:31:02 AM , Rating: 2
It is a drag to think that if you buy it used you gotta poney up the extra 10. I wonder what happens if you have 2 systems in your house = 2 $10 purchases? Or if your system brakes? This could be very lame!

My petition for Custom Button reMapping please help the cause!
http://videogames.yahoo.com/events/plugged-in/disa...




RE: People are going to freak!
By SeeManRun on 5/11/2010 10:58:37 AM , Rating: 2
The unlock for the full game will be attached to your EA account. If you have multiple accounts then you will have to pay multiple times. Not sure why someone would do this, but yes, if you have 2 Xbox 360's in your home and want to play together, you'll have to pay the 10 bucks twice. Same deal as requiring two new discs.


They Better Make Customers Aware Of This Change
By wempa on 5/11/2010 12:42:26 PM , Rating: 2
I don't have a problem with this, as long as Gamestop specifically identifies which used games have degraded/missing functionality and will require an additional $10. If customers know this, it could have the opposite effect and force Gamestop to drop their used game prices a bit. However, something tells me that they aren't going to make this information obvious on the packaging.




By Smilin on 5/11/2010 2:59:13 PM , Rating: 2
They'll make it obvious.

They just got sued for this recently so they'll straighten up.

Someone bought a used copy that didn't include some free DLC. They then had to purchase the DLC making the total cost higher than a new game.


Give EA Some Credit
By DtTall on 5/11/2010 10:11:45 AM , Rating: 3
I think we should all applaud the leadership of EA. I honestly didn't think there was any way to make a 1-year old used sports game worth any less.




Used for the price of new
By rstove02 on 5/11/2010 1:14:57 PM , Rating: 3
So let me get this straight. EB notoriously sells used games for only $5-10 below retail price. Add the $10 EA online tax and the used game now costs the same or $5 more than new.

And I thought spending more than retail for stuff only happened on Ebay.




Meh
By FaceMaster on 5/11/2010 9:25:13 AM , Rating: 2
I don't like what they're doing, but if I was EA I'd be doing the same thing.

*cries as I look back at AOE2 or Unreal Tournament and remember how easy it was to set up a LAN game*




...and....
By Smilin on 5/11/2010 9:31:37 AM , Rating: 2
I'll boycott your punk asses too.

UBISoft hasn't seen a dime from me since they implemented that internet-required anti-piracy for single player games.

I hope you publishers understand: I've got a game PC and an Xbox and there is a GLUT of good games out there right now. I don't mean there are a lot of games. I mean there are a lot of GOOD games.

I don't need to put up with your crap. There are plenty of other games I can buy.




By callmeroy on 5/11/2010 9:53:50 AM , Rating: 2
My title says it all really...

I'm only surprised it took this long for them to implement it...I saw this on the horizon...

Gamestop is a huge facilitator of this too...they strongly push the buy used game thing A LOT. I have a hunch they probably make as much if not more for their used game buying/selling thing than they do for new games these days. As the majority of people I see in my local stores are normally buying used games, not new ones.

I can picture the way it played out....Gamestop tells EA "hey you know not so many people are buying your sports titles NEW these days, our sales indicate folks are waiting around to pick up your sports titles for "used" prices"....So EA execs go in the boardroom and throw a fit "Son of B*%&H! they aren't buying games at $60 any more...well quick we need to think of a scheme to cash in on this trend of buying used games!"

.....fast forward to now : The BS $10 charge policy to play a used sports title online.




How do they know it's used?
By chmilz on 5/11/2010 10:44:07 AM , Rating: 2
Anyone know? How can they tell? Will only used games at Gamestop be a part of this, with Gamestop advising EA of which copies are used?

If so, won't the entire market just say f--- Gamestop? (One can only pray the answer is yes)




Here is what I think
By cknobman on 5/11/2010 10:55:30 AM , Rating: 2
FRACK EA and FRACK GameStop!!!!!!!!!!!




In the words of Jon Stewart
By Belard on 5/11/2010 11:39:42 AM , Rating: 2
To EA... the company that thrives to Frack its customers new ways every year.

GO ****** YOURSELVES!

Complete with chorus. http://www.thedailyshow.com/watch/tue-april-20-201...

Same crap the RIAA and various musicians tried to do with used CDs! Where they wanted a sur-charge for ALL used CDs... er, wait - you already MADE your profit form the sale.

Obviously, the first owner of the xbox/PS3 game is no longer able to play the game since they SOLD the disc.

So how does EA know the game is used and not that the owner is playing it on his 2nd Xbox? (replaced or in another room?)




No brainer
By CptTripps on 5/11/2010 12:13:31 PM , Rating: 2
Imo, the people that would pay 10$ to play an older sports game online are the same that will throw $60 at the new version as soon as it hits the shelves. I don't think they will sell many of these online subs for last years NFL game. I myself have never playod madden online, local MP is much more fun imo.




By Cappadocious on 5/11/2010 12:21:45 PM , Rating: 2
From my understanding Gamestop makes most of their money from selling used games. If I were to go in and look at buying a used EA sports game for $40 but it will cost me another $10 to play online why wouldn't I just spring for the new one instead.

Sure Gamestop makes a few dollars on the new one but not as much as they make on the used game. Their margins on used games are significantly higher.




.
By StevoLincolnite on 5/11/2010 12:42:46 PM , Rating: 2
What a bunch of money hungry two-faced wankers!




...
By icanhascpu on 5/11/2010 2:50:56 PM , Rating: 2
Fuck you , EA.




By Azure Sky on 5/11/2010 3:45:18 PM , Rating: 1
Read the EULA with any game you buy, you dont own the game, you pay for the "right to play/use it" just like most other software sold today.

Now no EULA like this has ever been upheld or truely tested in court last i checked BUT if you read it, YOU DONT OWN DICK, they can cut you off at any time.

same with music and movie cd/dvd's if you read the EULA's on alot of them, you really dont own anything when you buy them, you are paying for the privilege of being able to watch/use the item/content.(same is true for some hardware like the iphone, apple can brick an iphone remotely if they really want to)

I dont like it, its bullshit but its how the world currently works, buy windows, well you dont own windows you own the right to use windows as long as MS says you can.

buy a game, you dont own that game, you just own the right to use it for as long as the publisher sees fit and how the publisher sees fit.




“And I don't know why [Apple is] acting like it’s superior. I don't even get it. What are they trying to say?” -- Bill Gates on the Mac ads

Related Articles













botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki