Video game retailer GameStop relies on used games sales for nearly half of its profits. Game makers by and large rely on GameStop to sell their wares in the U.S. There have been rumors though that the next round of consoles from Microsoft, Sony, and Nintendo will block used games from running. During his company’s Thursday earnings call though, GameStop CEO Paul Raines said that he doesn’t believe the Xbox 720, PlayStation 4, or Wii U will block used games. GameStop wants to make sure that you keep paying $55 for a used copy of Assassin’s Creed 9 when a brand new copy runs just $60, and it’s fully confident that this future will come to pass.
“We think it’s unlikely that there would be that next-gen console because the model simply hasn’t been proven to work. Remember that used video games have a residual value. Remember that GameStop generates $1.2 billion of trade credits around the world with out used games model,” said Raines. “So consider taking used games out of that, you’d have to find new ways to sell the games, and our partners at the console companies have great relationships with us.” Translation: We’ve got game makers precisely where we want them and they don’t dare change that.
Raines is right, game makers do rely on the company. As of 2010, GameStop controlled between 60% and 70% of first week game sales, and more than 21% of the total game retail market in the U.S. When games first release (i.e. when they’re most profitable) people are buying them at GameStop.
When GameStop sells used games though, publishers and studios don’t see a dime. This is why games like Mass Effect 3, SSX, Mortal Kombat, and many others started using online passes in the past two years. An online pass comes with newly purchased games, but must be purchased separately if a game is purchased second hand, usually for a fee of around $10 or $15. GameStop’s already started working around these passes though. When Batman: Arkham City released last fall, GameStop gave away free online passes to the locked Catwoman content with used copies of the game.
It’s no wonder then that console makers are rumored to be experimenting with their new machines to try and block used games. No matter what GameStop says about their healthy relationships with publishers and console holders, it will be better business for game makers if the used market is diminished.
It was Kotaku that first reported in January that the next Xbox, codenamed Durango, will block used games somehow. How it will do this remains a mystery. It’s possible that it will be done entirely through online passes, with all games requiring a pass to activate. Even that would be difficult to enforce though.
Until games are distributed solely over digital channels, used games likely won’t disappear from the market. That means GameStop will be sticking around for some time to come.