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EA Forms Business Model To Combat Second-Hand Sales

The digital entertainment industry is unique for retailers, and extra lucrative in that they can sell the same product multiple times for only slightly less money. Just about every gamer has traded in games in the past, and they know they can't do the same with CDs, books or movies (although GameStop did take DVDs in trade for a while). This situation is "critical" according to Electronic Arts.

Thing is, while retailers just keep raking in the profits from selling the same game a bunch of times, the publishers and developers responsible for the product don't see an extra dime. EA doesn't particularly like this - and we imagine other major publishers aren't too happy about it, either - but they realize there's nothing they can do to stop it. Therefore, according to an interview with GamesIndustry.biz, senior VP and general manager for EA's European publishing branch, Jens Uwe Intat, EA is taking the following approach:

"I'd actually make the point that for us second-hand sales is a very critical situation, because people are selling multiple times intellectual property. What we're trying to do is build business models that are more and more online-supported with additional services and additional content that you get online. So people will see the value in not just getting that physical disc to play at home alone, but actually playing those games online and paying for them."

Well, that makes sense. Give the consumer more reasons to hold on to the game rather than take the trade-in money and put it towards something else. As Intat pointed out, the gaming industry is very unique simply because the second-hand product in question isn't exactly "second-hand."

"In our understanding of the business model we are actually giving away the rights to play, and if you just pass it on, pass it on, pass it on, that is not comparable to second-hand sales in the normal physical goods area where you have physical wear-out - second-hand cars, second-hand clothes, second-hand books... they're all physically wearing out, so you have an inferior quality product. But digital goods is not actually becoming inferior in quality, so people passing that on is actually very challenging for us."

Hence, EA plans to battle this challenge simply by producing games that are definite keepers. In other words, when you're scanning through your current collection, looking for games you may want to trade in, EA wants you to pass over their titles. They want you to say to yourself, "nah, I'll still play that." And if you hadn't noticed, things like online play and downloadable content are already in play throughout the industry, which should help to combat the trade-in phenomenon. And guys, PLEASE don't fill the Comments with a bunch of EA slamming; they're only saying what every other publisher on earth would say. Think reasonably. :)

8/28/2008 Ben Dutka

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Comments (22 posts)

Tim
Thursday, August 28, 2008 @ 1:36:55 PM
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Here is another tactic: Put in bonus content in, say Madden 09 that can only be unlocked by the purchase of Madden 2010. It'd be interesting to see.

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Tim Speed24
Thursday, August 28, 2008 @ 2:09:01 PM
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Some of this makes sense. I was about to trade in Burnout Paradise but then I heard they were going to add another island and motorcycles and Trophies, so I kept it.

It has now been 3 months I've been waiting for the DLC which is almost here. So the tactic worked on me....a game that would have been re-sold used is now still in my stable.

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nremdn
Friday, August 29, 2008 @ 8:59:08 AM

timster makes a great point. Incognito and Sony have this model down perfectly with Warhawk. Warhawk is one game I am starting to wonder if I'll ever part with, it is a much better game now than when it was released and the majority of those improvements were free and the expansion packs that required you to pay seemed to be well worth the money for what you get. Additionally, they didn't leave behind the rest of the community that didn't decide to upgrade or had no credit card access, etc. They have plenty of servers for people with or without the expansion packs. Now that is the kind of support gamers appreciate and will remember. Well, I for one will.

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ThePoetRazel
Thursday, August 28, 2008 @ 2:48:30 PM
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It's starting to sound like EA is turning over a new leaf. But will they really deliver?
In my opinion, second hand sales can be a good thing as it puts more units in the hands of consumers. This means a greater chance for online add-on sales and a larger fan base for game series.
I think EA should stop seeing this industry as a war to be won with enemies to be conquered and just concentrate on producing good product.

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Ben Dutka PSXE [Administrator]
Thursday, August 28, 2008 @ 3:17:05 PM

Yeah, I do agree with the second-hand sales assessment.

...but in the universe of big business, it's ALWAYS a war. :)

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Wolfmaster
Thursday, August 28, 2008 @ 3:09:28 PM
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Looks like EA is finally figering out that if you put out an excellent product, people will keep it.

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pavlovic
Thursday, August 28, 2008 @ 3:26:12 PM
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"second hand sales can be a good thing as it puts more units in the hands of consumers"

Personally I don't agree with this, because the same unit is going trough multiple hands

And I do agree that games should have more replayable value, somo games are for just 1 time and I don't like having 60 bucks collecting dust, so please make good games and we'll sure keep them.

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JPBooch
Friday, August 29, 2008 @ 10:48:19 AM

Its not the game as the unit he is talking about. Its the console itself. Some people who shell out big bucks to get a console for 500 dollars know they can pick up some used games for cheap to play until their big release comes out they wanted.
That is how used games moves more units.

Last edited by JPBooch on 8/29/2008 10:48:36 AM

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tramp
Thursday, August 28, 2008 @ 3:31:12 PM
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why would i buy madden 07 and the next year buy madden 08 and keep my copy of madden 07?? etc.
i dont think gamespot(and others like them) should be doing it, but answer my question...........i dont see it stopping ,sadly.

Last edited by tramp on 8/28/2008 3:33:45 PM

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Ogibillm
Thursday, August 28, 2008 @ 4:50:43 PM
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unfortunately what i think we'll end up seeing is a bunch of bare-bones products being put on discs with the promise of dlc to really fill out a title.

you may be able to get the base game second hand, but if you want to play online, or get the better cars, or the best guns, well - everyone has to pay.

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fatchad420
Thursday, August 28, 2008 @ 5:26:33 PM
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I could care less about buying EA games. Their lucky i even still torrent the crap they are calling games.

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photo K
Thursday, August 28, 2008 @ 5:35:11 PM
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Well, if they just updated the my madden 07 for the ps2 with new rosters and a couple of new features, I wouldn't mind paying maybe $20 or so. But EA would lose my $60 that I spent on Madden 09 for the ps3. How much could they really make from this? How long do games last until they are considered outdated to video game players?

It just sounds like EA wants a bigger slice of the pie from their own distributors like Gamestop and BestBuy.

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djjake
Thursday, August 28, 2008 @ 5:52:10 PM
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what makes me consider trading in my EA games is the fact that they're servers are rubbish, i love battlefield but i haven't played it for a while because the online always lagged, which i only get with EA games

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Jizmack
Thursday, August 28, 2008 @ 6:11:34 PM
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Yayhoo i killed a raging raven with a dart gun!

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JPBooch
Friday, August 29, 2008 @ 10:51:34 AM

Is there a purpose to that comment? Seemed a little off topic.

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bamf
Thursday, August 28, 2008 @ 6:15:09 PM
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Mostly when I'm done with a game I don't want to keep it, especially when I can trade the game in for another used game thats different, saving me money. D/C isn't enough for me to wanting to keep the game. I'll even trade in the best games if I find that I won't play it again. The only games I own are ones that I haven't played and the triple AAA games that come in the limited edition cases.

Last edited by bamf on 8/28/2008 6:16:48 PM

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MajorDomo
Thursday, August 28, 2008 @ 11:14:26 PM
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EA1: I know let's make better games so people won't sell them.
EA2: Shouldn't we make good games any way?
EA1: Nah, we just want the money gamestop's making on used titles.


o What's stopping EA from opening up their own stores and selling the titles again?

o Why don't they try lowering their prices?

o Why don't they go all digital? Oh wait we can sell those used copies too.

o Maybe we should all just deposit our paychecks directly into their bank account.

Aren't they really saying that they are unable to compete right now in the marketplace as it is? So maybe if they made better games they would sell more and make more money. But the real problem with EA is that they can't sustain the growth their shareholders want with their current business model. It's doubtful any single game company could, except maybe a Sony or Nintendo or Microsoft. But EA's not ever going to be like one of those.

The shift from physical to digital media is slow but steady. There will always be a used market. Even for a digital copy that I buy.

But the all digital world worries the IP holders because they fear piracy and everyone's rejecting DRM tactics. What's the answer? I think lower prices would help them a lot. But greed runs deep with these people and lowering the price causes them physical pain. Price lowering wouldn't solve the piracy problem but it would make it less desirable to pirate. I don't think they view piracy as something that can be solved by a compromise, but they should.

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Gabriel013
Friday, August 29, 2008 @ 2:02:49 AM
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I traded Motorstorm and Resistance despite all the dlc. As previously stated by someone above, I would hate to see a run of bare bones releases with all the quality by download only. There are still plenty of people out there who don't have online PS3 access and it would suck for them as well as being a money drain on all gamers.

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BigT_1980
Friday, August 29, 2008 @ 2:20:47 AM
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EA must love me because I never trade in any titles unless their horrible.

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n8dogg
Friday, August 29, 2008 @ 8:12:11 AM
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NEXT TIME I SELL A CAR I NEED TO MAKE SURE I GIVE THE AUTOMAKER SOME MONEY OFF WHAT I SELL IT FOR. THEY SHOULD GET TWICE THE MONEY FOR SURE. THIS IS THE MOST REDICULOUS THING I HAVE EVER HEARD OFF. EA NEEDS TO COME BACK TO THE REAL WORLD.

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xStatiCa
Friday, August 29, 2008 @ 10:06:37 AM
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So EA... does this mean Orange Box on PS3 (Team Fortress in particular) will get updates soon? :)

This way of handling games does work. If you know games will be getting new content or updates all the time you will not want to get rid of the games makes sense. I have wondered why game companies never seemed to think about that.

One argument though about what was stated... Discs do go bad and get abused at times as well as documentation, etc so there is still some wear factor just like CDs.

Last edited by xStatiCa on 8/29/2008 10:10:12 AM

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JPBooch
Friday, August 29, 2008 @ 11:09:29 AM
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EA is just trying to get a slice of the pie. You can't blame them for that, its good business sense. Games will always be on physical media because console hdd space will always be limited.

I think EA sees that games like GTAIV and MGS4 did etremely well and made a lot of money because of their quality. and thats regardless of the dl content. I still have both my copies of it. Games like COD4 because of the map pack and its stellar on-line play. Their approach will only benefit us.

Last edited by JPBooch on 8/29/2008 11:10:13 AM

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