Around the 12 minute mark he makes the argument that used games would somehow increase costs. I disagree with that point. Simply put:
- A game must be sold at such a price to pay for it's share of the expected lifetime costs that the unit will incur on the developer/publisher on the first sale of said unit. If not, then they would not make a profit on any one sale regardless of the influence of the second hand market and as such shouldn't be selling it in the first place.
- In order for there to exist a used unit, a first sale has to have been made.
- Therefore, when a used game is bought the first sale would've already paid for all the costs this unit would've incurred. The number of units in the system hasn't changed, so no extra costs have been incurred. The only thing that has changed is the owner of the unit.
In fact, the only way his argument would somehow make sense is if the developers/publishers severely underestimate the expected lifetime costs when shipping the units (and that's stretching it). However, this is the cause of a bad financial model or financial incompetence and not the second hand market because the underestimated costs would've showed up even in the absence of the second hand market. So even then, he's using a very poor argument.
The only real noticeable impact used games has is the time it takes to break even. However, is this purely the cause of the second hand market? No, it isn't. Ask yourself, why would one want to sell a game in the second hand market?
- Not enough replay value/loss of interest
- Quality doesn't reflect the price point
- Subsidy of further purchase
- Environmental
Let's go through the list:
Not enough replay value/loss of interestBig, self-explanatory. You've played through the game but it didn't keep you interested. Why would you keep it. Maybe you didn't even finish because it was so dull. A game is meant to be replayed, it's not a one-time experience. If it doesn't meet that requirement then it's a bad game so why would you keep it? The Homo Economicus would've sold it to recoup their losses. This is the equivalent of a software developer who fails to make a product meet the requirement of a contract. What does the contractor do? Keep the contract? Unlikely. Time is expensive to them. Maybe he can afford a bit more time but not always. Instead, maybe he tries to find a different contract signer or simply cut their losses, cease the contract and sell whatever they can of the product they have.
Why should it be any more different for the buyer of a video game? After all, a sale is a contract no matter how you twist and turn it. So whose at fault really? Is the contractor or the contract signer? The developer/publisher or the buyer? The latter can't affect the replay value, so clearly it's the former!
Quality doesn't reflect the price pointSo you've bought a game but found it was buggy, didn't do what was advertised or the price simply doesn't match the final quality of the product. The developer bought a nice new program to provide modeling tools but it crashes constantly, lacks features that should've come with it and the price point certainly didn't match the expectations. Does the developer keep using this program? Of course not, it's only going to keep costing them more money in the long run. What if this program was commissioned? They'd demand a refund immediately. Or sell it to someone else, it wouldn't make a difference for them. It would probably be faster too. So why shouldn't the buyer of a video game be able to do the same? They're not at fault for the product not being what was advertised or in a non-working condition. That's the fault of the developer.
Subsidy of further purchaseThis is pretty common and was discussed in the video. Not everyone does it but usually people with less disposable income do it. And why not? It wouldn't make a damn difference in the eyes of the developers/publishers. If the consumer can't buy at full price, then he won't buy it period. However, by buying used games he can save money and that money can then be used actually buy that full-priced game. Is this the consumer's fault? Partially, I suppose, but it's also partially the developer's/publisher's fault as well since they're the ones setting the price point.
EnvironmentalLet's put it straight first that this one only holds while we still use physical storage devices to sell games on and I hope it's obvious enough as to why it helps. However, even if we did go digital, we would then run the risk of losing access to games if the publisher/developers goes under and the game wasn't installed at the time. Physical backups would prevent this but the systems currently planned to prevent used games would prevent this if the consumer didn't have the publisher's/developer's blessing to do so.
It's becoming more apparent that this is more than just about used games. This is also about hypocrisy by the developer/publisher. Hypocrisy and greed.
Finally, let it also be said that the one of the paramount duties of the second hand market is to serve as a safeguard for the consumer and act as competition in a market already dominated by monopolies since two saws can be functionally identical but still be allowed to be sold while two games need to be functionally different to avoid plagiarism. What drives prices down in a free market? Competition. So this second hand market is necessary to drive the prices down. As previously said, if a game doesn't reflect the price point, one would sell it necessarily at a lower price and as such create competition. So if you really want to minimize the effect of the second hand market, don't force consumers to keep your games. Make them want to keep them by giving them replay value, make them interesting and most importantly of all: Make the quality reflect the price point.