One of the easiest ways for consumers to save is to buy used instead of new. But while that strategy is great for customers and bargain-hunters, can the people who make products survive when no one buys new anymore?
To find the answer, look no further than the video game market, where resale has been around for a while. For many in the gaming industry, it's hard to remember a time game developers and the resale market weren't at odds.
Ben Noel, executive director of the Florida Interactive Entertainment Academy at the University of Central Florida, worked as a vice president at Electronic Arts(ERTS) in the late 90s and early 2000s, a time "video games were just becoming a real market," he says. "There was legislation that worked in the favor of the 'Blockbusters' of the world for leasing products, and then the aftermarket became an issue for the publishers, starting about 10 or 15 years ago," Noel says. "It was tough to negotiate with those specialty stores, but obviously publishers would like to have value in their property that gets resold."
The price of resold video games, while great for consumers, is costing game developers billions of dollars each year, according to Scott Steinberg, CEO and lead analyst for the video game consulting firm Tech Savvy Global. "The bulk of the dollars go for the retailer's pocket," Steinberg says, and "the developer is not seeing a penny from that second transaction."
Like Hollywood films, video games cost money. Beyond the fees paid to top-notch designers and artists for concepts, publishers such as EA also have marketing, distribution, stocking and shipping fees to worry about -- not to mention the bulk of revenue national distributors such as Wal-Mart (WMT) get at the point of sale.
"Games cost as much to make as independent films," says Steinberg, and gamers' demand for visually rich, high-tech content is making "the bets higher and everything riskier" for developers. ...more at TheStreet.com