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[Trup1aya]

Because I don't believe that's how it works. MS has an agreement with the publisher that they can issue infinite licenses at set prices and give a portion to the publisher. That's why digital copies don't run out. At launch that price might be $60, then it goes to $50, $40 and so forth over time.

So even in year 8 MS can still sell you a license to Forza 2, for $10 or whatnot, and the publisher still gets a cut of that $10.

The fact that MS is paying you in MS dollars to revoke your license does not mean they re-buy it from you, it simply means that your license is gone. The next person buying one is still getting it under the publisher terms.

I was responding to a comment about MS selling used licenses for profit.

Either they'd be undercutting publishers. Or publishers , if involved in the buyback, would be diminishing their own returns.

 

[nib95]

Also, I absolutely agree with other posters that a 10% discount to say, Gold users for all Digital purchases, is a far better and more positive policy and incentive, than 10% trade in value on previously purchased games. The latter sets a dangerous precedent and low ball point of competitive reference for all other publishers and vendors to follow on from, whereas the former sets a positive and consumer friendly one, with no possible negative implications. If Microsoft really wants to be seen as forgoing their own margins with no ill intent, greedy motive or potentially dangerous precedence in mind, an across the board discount is the way to do it.

 

[Trup1aya]

If what you say were actually true, then no digital storefronts would ever offer sales. Lower prices attract more purchases, and more customers. There's a reason Gamestop has been the #1 new game retailer for so long, and that reason is their trade-in program. You seem to think that you can just force people who use that model to stop, and just pay full price. That's naive. It's a big market, and without effort to serve it on the digital side, it's only going to be lost. Serving it on the digital side is a good idea, though admittedly much trickier. Maybe trade-ins is not the best way; it may be that timely sales would work better. But it's good that it's being explored.

About the publishers: yes, I said it depends on the implementation. Big publishers who release many games would obviously have different preferences than small ones. Maybe the best model wouldn't involve any; the Gamestop model doesn't (which they whined about for years).

I think your struggling with the drastically different value proposition between digital and physical.

There's a reason digital prices stay higher than physical for so long. Because the increased margins are making them a ton of profit, so much so that they don't need higher volumes.

I don't think they can force people to use any model. I think some existing digital customers would use it and others won't. Those that do will have found a use for their unused games. Those that don't can play them later if that's what they want to do. I don't think there's any forcing involved.

I agree, Sales are generally better than any trade in program that could be logically implemented. That's why we see sales all the time, and have yet to see a trade-in programBut why not both? I don't think anyone proposed having trade-ins instead of sales...

Nibs' idea that a 10% buyback would set a bad precedent, ignores the back that a bad precedent has already been set, and adopted by all publishers: we can't currently do anything with our unwanted digital games.

 

[gus-gus]

It's not so simple as that. Any good retailer knows that volume can be more important than margin. That's doubly true for a product with no manufacturing, shipping, storage or breakage cost.

It's also not as simple as you claim there is a price to be paid for high volume. Somewhere in the mix you start to destroy it's value. I know I've done it in the industry I work in.

 

[gus-gus]

Also, I absolutely agree with other posters that a 10% discount to say, Gold users for all Digital purchases, is a far better and more positive policy and incentive, than 10% trade in value on previously purchased games. The latter sets a dangerous precedent and low ball point of competitive reference for all other publishers and vendors to follow on from, whereas the former sets a positive and consumer friendly one, with no possible negative implications. If Microsoft really wants to be seen as forgoing their own margins with no ill intent, greedy motive or potentially dangerous precedence in mind, an across the board discount is the way to do it.

I would like that too, but it wouldn't encourage spending more which is what they want. And yes it does set a dangerous precedent. Our product is struggling to sell so let's lower it's value.

 

[cakely]

Also, I absolutely agree with other posters that a 10% discount to say, Gold users for all Digital purchases, is a far better and more positive policy and incentive, than 10% trade in value on previously purchased games. The latter sets a dangerous precedent and low ball point of competitive reference for all other publishers and vendors to follow on from, whereas the former sets a positive and consumer friendly one, with no possible negative implications. If Microsoft really wants to be seen as forgoing their own margins with no ill intent, greedy motive or potentially dangerous precedence in mind, an across the board discount is the way to do it.

I completely agree with this.

 

[jony_m]

Forget trade-ins, they are never going to be fair.

Let's start with -2 hour of playtime returns like Steam offers. Even -1 hour would still be useful. Same for PSN.

 

[Mr. Giggles]

Would be nice if we could set the margin.. That way the market decides the prices much like we do now with physical

 

[LegendofLex]

It really isn't. I don't know why you can't understand such a simple concept. It's baffling. Why do you think Microsoft would even be offering this 10% back? Not to line your pockets, but in the hopes that you'd spend it on more digital games!

Now that I think about it, wouldn't this be a benefit of Microsoft introducing a system where they act as a middleman between private sellers and people looking to by resold licenses? 100% of the transaction amount would remain right there in XBL to be spent on other content.

 

[Bgamer90]

Also, I absolutely agree with other posters that a 10% discount to say, Gold users for all Digital purchases, is a far better and more positive policy and incentive, than 10% trade in value on previously purchased games.

I can definitely agree with this.

It would be very interesting if MS made online play free alongside their cross play push while at the same time saying that Xbox Live Gold is for digital perks like 20% off all titles. That would be great. Doubt it would ever happen though (haha).

 

[Cth]

The biggest reason why a marketplace wouldn't work?

The thread already shows people are OK with 10%. Now multiply that by potential millions (or thousands if you want to be less generous) ALSO selling their copies at 10%

Of that group there's going to be people who accept even less money for their trade.

People who REALLY hate the game and will accept anything in trade.

People who are desperate to buy a new game they'll accept even less.

The only way around that would be to do individual trades instead of a marketplace. Which opens the door to scams and people splitting the costs of a game which publishers wouldn't be crazy about.

 

[Trup1aya]

It's not so simple as that. Any good retailer knows that volume can be more important than margin. That's doubly true for a product with no manufacturing, shipping, storage or breakage cost.

It's not that simple at all... The idea is to optimize the two concepts.

Store Credit = less money made therefore losing profit. Let's say this program started Tomorrow for every X1 owner. Millions of people clear out Digital games They don't play. That's could equal millions of dollars lost in end profits. So I ask what would be the point for MS, what would they gain?

I just don't believe corporations do things to be nice. It's always about the Money/profits.

Store credit is lowering margins. But people will then use the store credit, in conjunction with real cash, to buy more games. Which increase volume. This is exactly why the used game market hasn't destroyed the industry. The difference with the digital space, is we are talking about publishers buying licenses without an ability to profit further after the buyback (unlike GameStop). Because of this they can't offer as much as gamestop would for physical..

It really isn't. I don't know why you can't understand such a simple concept. It's baffling. Why do you think Microsoft would even be offering this 10% back? Not to line your pockets, but in the hopes that you'd spend it on more digital games!

The margins wouldn't be in line with retail if they brought in a resale/trade in option, because the margins on digital sales are by virtue greater. Publishers make greater margins on digital sales than they do retail sales, as there's less revenue lost on tertiary elements like distribution, cost of manufacture, cost of returns etc.

If Publishers adopted the trade in voucher option that I spoke about a few pages ago, all they're doing is offering people a small portion of the money back to go towards the purchase of more digital games, enabling a greater number of purchases than otherwise would have been made.

Basically, without resale or trade in options, many people buy far less games than they otherwise would. It's really as simple as that. Obviously it makes sense that publishers would be willing to give back a portion of their profits on a persons last purchase, if it guarantee's them a full profit on that person's next purchase, a purchase which might not have even taken place were it not for the trade in value on the last. That's why such a system for digital is in the best interests of Publishers. They stand to make far more revenue as a result, instead of currently losing it to the retail used game market.

Smh man. I'm aware that MS would only offer this to get you to buy more digital games. What you don't seem to understand is that If MS offers too large a portion of what they make, they reduce there margins so low that the volume increase doesn't make up for it.

Yes publishers make more money on digital than physical. But what you are suggesting, bring the margins closer together, which nullifies the benefit of having higher margins. A $60 digital game nets the publisher $42. The same game in physical nets them $25.

Let's say a publisher gave the user back 25% of what they paid as store credit. The margin on that game drops from $42 to $27... Then the user buys another game from the same publisher using the store credit. A loss of $15 in potential profit,They'd need to increase digital sales more than 25% in order to offset the reduction in margin, and still would have to contend with the fact that physical sales still over better resale value to consumers... So this likely wouldn't provide the increased adoption of digital neccisary.

Now that I think about it, wouldn't this be a benefit of Microsoft introducing a system where they act as a middleman between private sellers and people looking to by resold licenses? 100% of the transaction amount would remain right there in XBL to be spent on other content.

You keep implying that what works in the physical space would work in the digital space. In physical, publishers aren't buying back their own games, so trade-ins aren't directly hurting their margins. Instead used customers are, in effect, subsidizing each other's new purchases.

The whole reason publishers want digital is so that there are fewer middle men. Why would they want to operate in a yet another market that allows this, with no way to differentiate their new products from the used products people are selling.

 

[Version 3.0]

It's also not as simple as you claim there is a price to be paid for high volume. Somewhere in the mix you start to destroy it's value. I know I've done it in the industry I work in.

Yes, of course. Nobody wants to see the console game market turn into the mobile game market (as an extreme example), where anything over a dollar doesn't sell. But a loyalty program or trade-in model is actually a great way of preventing devaluation. It's one advantage it has over just having discounts via sales. If you put a continually refreshing product on sale too often, you risk "training" your customers to wait for the sale. With a trade-in or loyalty program, only some customers are eligible, and it doesn't devalue the product. The game is still "worth" full price and displayed at that price in the store, but some customers get it for less because of their past purchases.

 

[Version 3.0]

It's not that simple at all... The idea is to optimize. Maximize volume and margins. To hit the proverbial sweet spot. the idea of essentially paying customers 30% to switch to digital, is not conducive to generating more profit because digital sales are 60% more profitable. Not only are you losing 30% of you margin on the game that is sold back, but you are losing 30% on the next game that is bough. Doing so, would bring your margins exactly in line with physical.

You're the one who said it was "simple math". Now you're saying it's not. Obviously I agree, since that's what I said.

Where we disagree, clearly, is whether there's money to be made. I say there is. But yes, certainly it becomes a tricky proposition if publishers are involved, because in the (insanely profitable) Gamestop model, they are not. We seem to be assuming they would be in a digital resale model, but that's not necessarily true. But even if they are, the very fact that margins are higher in the digital world means there is more price flexibility to work with.

You are entirely too fixated on margins, and missing the whole point. That point being that the "next game that is bought" is a sale that would not have occurred at all without the discount. You're stuck thinking of that as a loss of 30%, but in fact, it's a gain of the value of that sale.

 

[nib95]

Let's say a publisher gave the user back 25% of what they paid as store credit. The margin on that game drops from $42 to $27... Then the user buys another game from the same publisher using the store credit, the margin on that second game is again just $27
In the process, the publisher has reduced their earning potential from $84 to $54. A loss of $30 in potential profit, which is a greater than their margins. They'd need to double their digital sales in order to offset the reduction in margin, and still would have to contend with the fact that physical sales still over better resale value to consumers... So this likely wouldn't provide the increased adoption of digital neccisary.


The whole reason publishers want digital is so that there are fewer middle men. Why would they want to operate in a yet another market that allows this, with no way to differentiate their new products from the used products people are selling.

That's not how it works.

The margin on the first game drops with the returned revenue with the trade in, but that lost revenue is simply transferred to another game that might not have even been purchased were the first game not traded in, in the first place. This is the point of the equation you don't seem to get.

The entire incentive behind a resale or trade in option is to enable gamers to buy more games than they ordinarily would, and make more impulse purchases too. The situation doesn't usually adhere to games which might be regarded as keepers, e.g. games that users may want to keep in the long run, in-case they ever want to replay them. Rather it usually incentivises the trade in or resale of games they only intend to play through in the short term, and whose value they want to put towards another likely temporary or impulse purchase.

However, to be more viable to publishers, this is why I mentioned that a digital trade in voucher could adopt a similar depreciation of value that retail trade in does, that is the older a title is, the less trade in value it holds, and the less of a contribution it pays towards a newer purchase.

It is a lack of a proper trade in option of digital that is one of the key reasons there aren't more digital sales, especially comparative to retail, and more so the opposite. As I mentioned many times, it's resale options on retail games that enables gamers like me, to buy far more games than we would without such options. Were digital to adopt a similar trade in option, it would be the exact same thing, only with greater margins to the publisher.

----

You don't look at it as lost revenue, but gained revenue, which again, is the reason Microsoft are even offering this 10% return. They are not looking at it as lost revenue, but rather revenue that will be put towards games that the customer may not have otherwise made.

In other words, customer Y might purchase only 3-5 full priced digital games a year without a resale or trade in option (situation A), but 10-12 full priced digital games a year were there to be a digital resale or trade in option (situation B).

So in situation A, with your figures, the publisher makes $126-$210 in the year from customer Y.
In situation B, say the gamer keeps 3 of those 10-12 games and never trade's them in, but trades the rest in towards the others, the publisher makes $315-$369 in the year from customer Y.

In other words, because of the trade in option, they have net revenue gain. More so considering they are not losing revenue to the retail used game market, where they make no profit.

This is the point of my posts you are continually disregarding. Don't look at it as revenue on like for like sales, the whole point of a resale or trade in economy is that enables more sales than would ordinarily take place.

 

[Trup1aya]

You're the one who said it was "simple math". Now you're saying it's not. Obviously I agree, since that's what I said.

Where we disagree, clearly, is whether there's money to be made. I say there is. But yes, certainly it becomes a tricky proposition if publishers are involved, because in the (insanely profitable) Gamestop model, they are not. We seem to be assuming they would be in a digital resale model, but that's not necessarily true. But even if they are, the very fact that margins are higher in the digital world means there is more price flexibility to work with.

You are entirely too fixated on margins, and missing the whole point. That point being that the "next game that is bought" is a sale that would not have occurred at all without the discount. You're stuck thinking of that as a loss of 30%, but in fact, it's a gain of the value of that sale.

And you are not realizing that if you aren't careful, the value of the sale is offset by the amount you paid to get the sale.

Optimization is not complicated math. The relationship between margin and volume isn't as simple as one being better than the other.

The idea that the next sale would not have occurred is false. People buy digital games currently, with no buyback option. The questions are how much should a publisher spend to get this extra sale and when and how (physical/digital) would the next purchase occur and whether or not they'd make the same money without extra involvement .

With the type of rebates people expect in this thread, the publishers would be better off having 80% of their customers stick with physical.

 

[DeCreeperHater]

Digital distribution (on closed-environment monopolies, not Steam etc) doesn't respect the concept of supply/demand.
Forza Horizon, a 4 year old game, that you can get everywhere used for €5 and new for €12-20, is still €50 on the Xbox Store.
The change to digital distribution brings no positives, except some convenience, to the consumers, and it takes basic customer rights, such as resale and sometimes even refunds.
It also is really bad for smaller retail stores.
Please, do not buy digital versions of games if there is a cheaper and more value-for-money physical version available

Spoiler

Unless you want to see the world burn, in which case go ahead.

 

[LegendofLex]

You keep implying that what works in the physical space would work in the digital space. In physical, publishers aren't buying back their own games, so trade-ins aren't directly hurting their margins. Instead used customers are, in effect, subsidizing each other's new purchases.

The whole reason publishers want digital is so that there are fewer middle men. Why would they want to operate in a yet another market that allows this, with no way to differentiate their new products from the used products people are selling.

Isn't the bold what I'm saying? I'm actually suggesting that pubs/Microsoft not buy back their own games, and that instead they facilitate the transfer of licenses, skimming a little off transactions between private sellers. In the end, all the money that changes hands between private sellers stays in the Xbox Live marketplace and will be spent on more content.

The pubs get their money from the initial transaction, plus a little from every transaction between private sellers, and then all the money gets spent on more games from pubs because it's all being handled in the same Xbox Live marketplace where those digital games were bought in the first place.

The store owner and publishers themselves doesn't really put any money into this system; it's only private individuals who are doing that. They just get to benefit from facilitating the exchanges, and eventually from the money involved in the exchange being spent on more content.

The main risk is, as you say, that used prices will undercut new prices, and with no material difference between a new and used digital game there will never be a reason to buy new if there's a cheaper used option. But then this is entirely a factor of people's willingness to pay; the same force eventually drives down new prices anyway, which is how I was able to get BioShock for like $5 (it might have even been $3, I can't remember). This of course makes the whole idea a non-starter.

The other risk is that the money someone gets for selling a Ubisoft game doesn't have to go to another Ubisoft game.

 

[Trup1aya]

That's not how it works.

The margin on the first game drops with the returned revenue with the trade in, but that lost revenue is simply transferred to another game that might not have even been purchased were the first game not traded in, in the first place. This is the point of the equation you don't seem to get.

The entire incentive behind a resale or trade in option is to enable gamers to buy more games than they ordinarily would, and make more impulse purchases too. The situation doesn't usually adhere to games which might be regarded as keepers, e.g. games that users may want to keep in the long run, in-case they ever want to replay them. Rather it usually incentivises the trade in or resale of games they only intend to play through in the short term, and whose value they want to put towards another likely temporary or impulse purchase.

However, to be more viable to publishers, this is why I mentioned that a digital trade in voucher could adopt a similar depreciation of value that retail trade in does, that is the older a title is, the less trade in value it holds, and the less of a contribution it pays towards a newer purchase.

It is a lack of a proper trade in option of digital that is one of the key reasons there aren't more digital sales, especially comparative to retail, and more so the opposite. As I mentioned many times, it's resale options on retail games that enables gamers like me, to buy far more games than we would without such options. Were digital to adopt a similar trade in option, it would be the exact same thing, only with greater margins to the publisher.

----

You don't look at it as lost revenue, but gained revenue, which again, is the reason Microsoft are even offering this 10% return. They are not looking at it as lost revenue, but rather revenue that will be put towards games that the customer may not have otherwise made.

In other words, customer Y might purchase only 3-5 full priced digital games a year without a resale or trade in option (situation A), but 10-12 full priced digital games a year were there to be a digital resale or trade in option (situation B).

So in situation A, with your figures, the publisher makes $126-$210 in the year from customer Y.
In situation B, say the gamer keeps 3 of those 10-12 games and never trade's them in, the publisher makes $315-$369 in the year from customer Y.

In other words, because of the trade in option, they have net revenue gain.

This is the point of my posts you are continually disregarding. Don't look at it as revenue on like for like sales, the whole point of a resale or trade in economy is that enables more sales than would ordinarily take place.

Ok. there are quite a few variables.... But if we look at a typical gamer, this person is going to buy games regardless of whether or not digital buyback exists.

Let's say a gamer budgets $600 a year on a publisher.

A) If I buy exclusivly buy digital games, and there is no buyback option, and I buy Game 1for $60, and a second game for $60. The publisher gets $420 from me annually...

B) If I buy a digital game A, for $60 play it to completion, and then sell it back to the publisher for $15 bucks (25%)Then use that $15 to buy another $60 game, the publisher takes home $69 in revenue. I sell game 2 for $11.25 (25% of my out of pocket)... So forth and so on. If that's how it would work, then after my it would cost me $545 for 10 games. The publisher netted $381.5. IF that person desides they want to spend there $55 savings on another game from that publisher, (they'd be over budget), the publisher would pull in $423.50, after selling 11 games.

Or they could say 'I only have time for 10 games a year, thanks for the savings, sorry for your loss. Oh yeah, and I'll only need to pay for 9 games next year, thanks again'

If the rebate doesn't consider out of pocket expense then the situation is even worse for publishers. If it was just a flat 25%, publisher margin would drop from $42 to $27... After 10 games, the user would have saved enough for 2.5 games, after spending just $450 of his own. Would he use his savings to buy more game this year? Maybe, maybe not. The publisher at this point netted just $270 from this customer. Who will likely spends $150 less next year.

The idea that a person who doesn't have an option to sell back games won't make a subsequent purchase is false. the question is whether or not the increased rate of sale encouraged by a rebate is offset by the reduced margins. The numbers people are suggesting are not reasonable given what we know about buying habits.

Is this the kind of of risk that publishers would take? Would it encourage enough people to go digital to be worthwhile? Signs point to no, because physical still would offer much better resale deals. People who are looking for resale value would likely stay with physical.

The point that you are missing is that the dynamics of a trade in are much less beneficial to publishers when they are the ones buying the licenses. You can't just plug in the physical model and expect it to work out.
You are reducing the margins without increasing the volume significantly...

There is no economically feasible, publisher funded, trade in percentage that could drive up interest in digital enough to offset the lower margin. Publishers are better of sticking with the status quo, and letting digital gain popularity without intervention.

That's why you need to look at this offer for what it would be realistically: A deal that would instantly benefit those who are already all in on digital, whilst increasing the volume of sales to that particular demographic. It's clearly not aimed at converting physical buyers to digital.

Microsofts offer would allow publishers to maintain their margins, helps them (slightly) increase their sales volume, while allowing digital customers to exact a little value from their unwanted games.

PS: the idea that getting rebates would jump the number of full priced purchases someone makes from (3-5) to (10-12) is clearly pulled from ones ass... It takes no actual buying practices or cost analysis into account. The type of rebate it would take to justify that kind of buying behavior would completely wipe away the profit margins.

Isn't the bold what I'm saying? I'm actually suggesting that pubs/Microsoft not buy back their own games, and that instead they facilitate the transfer of licenses, skimming a little off transactions between private sellers. In the end, all the money that changes hands between private sellers stays in the Xbox Live marketplace and will be spent on more content.

The pubs get their money from the initial transaction, plus a little from every transaction between private sellers, and then all the money gets spent on more games from pubs because it's all being handled in the same Xbox Live marketplace where those digital games were bought in the first place.

The store owner and publishers themselves doesn't really put any money into this system; it's only private individuals who are doing that. They just get to benefit from facilitating the exchanges, and eventually from the money involved in the exchange being spent on more content.

The main risk is, as you say, that used prices will undercut new prices, and with no material difference between a new and used digital game there will never be a reason to buy new if there's a cheaper used option. But then this is entirely a factor of people's willingness to pay; the same force eventually drives down new prices anyway, which is how I was able to get BioShock for like $5 (it might have even been $3, I can't remember). This of course makes the whole idea a non-starter.

The other risk is that the money someone gets for selling a Ubisoft game doesn't have to go to another Ubisoft game.

The problem is, currently the MS/Publisher duopoly has the market cornered. So any one that wants the game has to go through them.

With gamer to gamer sales, we know that the owner would sell the title for less than $60, so the only way that the publisher would be happy is if they got a cut larger than 70% to make up for the fact that that user wasn't forced to by the game full price from the store.

The user would want as much back as possible. They can sell a physical game on Craigslist shortly after release and get 90% or better. They can sell it to gamestop and get 40%.

There isn't enough pie to make this endevour worthwhile for everyone, even if MS settles for just 20%

Giving up the duopoly would minimize the publishers and MS' earning potential.

Then you gotta figure many people wouldn't even be seeking market prices. They'd be selling games to friends and family for massive discounts... Meaning that even with a cut of the exchange, publishers are losing out on potential earnings.

The whole reason publishers push digital is because they have greater margins due the to the lack of middlemen. There's no incentive for them to participate in an environment that immediately deprecates the value of their product.

 

[gus-gus]

Ok. there are quite a few variables.... But if we look at a typical gamer, this person is going to buy games regardless of whether or not digital buyback exists.

Let's say a gamer budgets $600 a year on a publisher.

A) If I buy exclusivly buy digital games, and there is no buyback option, and I buy Game 1for $60, and a second game for $60. The publisher gets $420 from me annually...

B) If I buy a digital game A, for $60 play it to completion, and then sell it back to the publisher for $15 bucks (25%)Then use that $15 to buy another $60 game, the publisher takes home $69 in revenue. I sell game 2 for $11.25 (25% of my out of pocket)... So forth and so on. If that's how it would work, then after my it would cost me $545 for 10 games. The publisher netted $381.5. IF that person desides they want to spend there $55 savings on another game from that publisher, (they'd be over budget), the publisher would pull in $423.50, after selling 11 games.

Or they could hey, I only have time for 10games a year, thanks for the savings, sorry for your loss. Oh yeah, and I'll only need to pay for 9 games next year, thanks!

If the rebate doesn't consider out of pocket expense then the situation is even worse for publishers. If it was just a flat 25%, publisher margin would drop from $42 to $27... After 10 games, the user would have saved enough for 2.5 games, after spending just $450 of his own. Would he use his savings to buy more game this year? Maybe, maybe not. The publisher at this point netted just $270 from this customer. Who will likely spends $150 less next year.

The idea that a person who doesn't have an option to sell back games won't make a subsequent purchase is false. the question is whether or not the increased rate of sale encouraged by a rebate is offset by the reduced margins. The numbers people are suggesting are not reasonable given what we know about buying habits.

Is this the kind of of risk that publishers would take? Would it encourage enough people to go digital to be worthwhile? Signs point to no, because physical still would offer much better resale deals. People who are looking for resale value would likely stay with physical.

The point that you are missing is that the dynamics of a trade in are much less beneficial to publishers when they are the ones buying the licenses. You can't just plug in the physical model and expect it to work out.
You are reducing the margins without increasing the volume significantly...

There is no economically feasible, publisher funded, trade in percentage that could drive up interest in digital enough to offset the lower margin. Publishers are better of sticking with the status quo, and letting digital gain popularity without intervention.

That's why you need to look at this offer for what it would be realistically: A deal that would instantly benefit those who are already all in on digital, whilst increasing the volume of sales to that particular demographic. It's clearly not aimed at converting physical buyers to digital.

Microsofts offer would allow publishers to maintain their margins, helps them (slightly) increase their sales volume, while allowing digital customers to exact a little value from their unwanted games.



The problem with this idea is that, with no difference between new and used prices, publishers wouldn't be able to profit from MSRP. Publisher profits are currently front loaded due to the number of people who buy their titles full price at or shortly after launch.

If people were able to sell licenses, then it would immediately put downward pressure on the price publishers sell their game at. They would be able to justify selling their title at full price for more than a few days.

Even with a cut of license sales, they wouldn't be able to make up the losses... If the system is set up to make digital as attractive to consumers as physical resale.

The whole reason publishers push digital is because they have greater margins the to the lack of middlemen. There's no incentive for them to participate in an environment that immediately deprecates the value of their product.

I stopped trying to explain it, doesn't seem to get through. All the ideas that these guys are posting has probably already been thought of ten times over by the companies. As a matter of fact some their ideas have been done in other industries and while it seems like a success up front the reality is that it's not. Just forces more and more cheap product on the market to keep pace with rising cost.

I think actually the used game market last gen help create dlc and season passes. Companies needed a new form of revenue to make up for the losses. If these ideas would brought forth expect a new form a dlc and tons more content locked.

 

[Trup1aya]

I stopped trying to explain it, doesn't seem to get through. All the ideas that these guys are posting has probably already been thought of ten times over by the companies. As a matter of fact some their ideas have been done in other industries and while it seems like a success up front the reality is that it's not. Just forces more and more cheap product on the market to keep pace with rising cost.

I think actually the used game market last gen help create dlc and season passes. Companies needed a new form of revenue to make up for the losses. If these ideas would brought forth expect a new form a dlc and tons more content locked.

Yeah. More like people should take the 10% or expect to stick with 0%... Because no company is going to willing reduce their earning potential, which is what all of these alternate suggestions amount to. Any way one could try to make the digital market mimic the physical, The numbers wont add up. There's more money to be made keeping things as they are.

 

[LegendofLex]

Then you gotta figure many people wouldn't even be seeking market prices. They'd be selling games to friends and family for massive discounts... Meaning that even with a cut of the exchange, publishers are losing out on potential earnings.

The whole reason publishers push digital is because they have greater margins due the to the lack of middlemen. There's no incentive for them to participate in an environment that immediately deprecates the value of their product.

Yeah, I agree with this. There's no incentive for publishers to participate since this market would compete with theirs.

But there's also barely an incentive for people to participate in buying games digitally and then reselling them at 10% of the purchase price, compared to simply buying them on the physical market and reselling them for whatever rate they deem acceptable.

I don't think the proposed system offers anywhere close to an acceptable level of benefit to the customer. There are people who would be okay offloading games they don't play anymore, but in general I don't think this becomes a worthwhile alternative to the existing used games marketplace for most people who'd be the most likely to want this kind of scheme.

 

[Trup1aya]

Yeah, I agree with this.

But there's also barely an incentive for people to participate in buying games digitally and then reselling them at 10% of the purchase price, compared to simply buying them on the physical market and reselling them for whatever rate they deem acceptable.

Right, but this offer wouldn't be designed to draw people away from physical. It's designed to get people who already buy digital to sell their old, unused games, and buy more digital...

That's what people aren't getting... I think most people are completely missing the who the target it...

It's not intended to be an alternative to the physical used game market. There's no need to try to replicate that market. The digital market already brings in a ton of revenue, despite being less popular than physical. There's no financial incentive to alter the status quo...

 

[LegendofLex]

Right, but this offer wouldn't be designed to draw people away from physical. It's designed to get people who already buy digital to sell their old, unused games, and buy more digital...

That's what people aren't getting... I think most people are completely missing the who the target it...

I know what the point of the scheme would be from Microsoft's perspective.

I just don't really see much value for consumers. But then I'm the kind of guy who vets all the games I even consider purchasing digitally pretty heavily, and rarely purchases anything digitally for more than $20 anyway and doesn't need to offload licenses to support my purchasing habits.

 

[Gren]

I'd take the 10% for digital-only titles; it's better than nothing.

Would still buy physical where applicable though.

 

[Trup1aya]

I know what the point of the scheme would be from Microsoft's perspective.

I just don't really see much value for consumers. But then I'm the kind of guy who vets all the games I even consider purchasing digitally pretty heavily, and rarely purchases anything for more than $20.

Are you looking at it from your point of view, or the the POV of the general public. People buy things all the time and use them to the point they know they won't use them anymore. So they sell them at yard sales or pawn shops, just to get SOMETHING back. When something is deemed useless, for many, There is value in getting something for it, instead of hording it.

 

[LegendofLex]

Are you looking at it from your point of view, or the the POV of the general public. People buy things all the time and use them to the point they know they won't use them anymore. So they sell them at yard sales or pawn shops, just to get SOMETHING back. When something is deemed useless, for many, There is value in getting something for it, instead of hording it.

Why not implement a loyalty rewards program that gives people credit based on their digital spending?

With this scheme, you're only rewarding the people who want to offload games they never play; why not also reward people who are more than happy with their purchases and also would have no problem making more purchases with a little extra credit on their account?

 

[Trup1aya]

Why not implement a loyalty rewards program that gives people credit based on their digital spending?

With this scheme, you're only rewarding the people who want to offload games they never play; why not also reward people who are more than happy with their purchases and also would have no problem making more purchases with a little extra credit on their account?

There is something like that in place on Xbox live right now...

I'm assuming this offer would have been in addition to that.

Why not both?

 

[Bgamer90]

Why not implement a loyalty rewards program that gives people credit based on their digital spending?

This already exists. I've bought about 7-8 games for free from it.

https://rewards.xbox.com

 

[T.O.P]

20% and i'd be so IN

 

[Naudi]

Digital distribution (on closed-environment monopolies, not Steam etc) doesn't respect the concept of supply/demand.
Forza Horizon, a 4 year old game, that you can get everywhere used for €5 and new for €12-20, is still €50 on the Xbox Store.
The change to digital distribution brings no positives, except some convenience, to the consumers, and it takes basic customer rights, such as resale and sometimes even refunds.
It also is really bad for smaller retail stores.
Please, do not buy digital versions of games if there is a cheaper and more value-for-money physical version available

Spoiler

Unless you want to see the world burn, in which case go ahead.

There is other benefits to digital. Like game sharing, and that is a huge one especially for me.

 

[Bgamer90]

There is other benefits to digital. Like game sharing, and that is a huge one especially for me.

Big for me too -- I share all of my digital games with my brother. Being able to play the same game at the same time on our respective consoles as if we have two copies (even though we paid $60 instead of $120 combined) is really nice. Seems like some don't know about it.

 

[TheBeast]

Would be nice if they could let us trade and gift digital licenses as well. And while your at it why not bring back the family plan and let people in my family have access to all of my MS digital goods like Apple and Amazon have right now.

Wow, given the full content of the survey (see post 29) I'm amazed it took fully 22 pages for someone to mention this huge part of MS's infamous pre-launch PR shit storm - formerly known as the Xbox family plan.

Does no one else remember 2013?

http://kotaku.com/xbox-one-lets-you-share-your-games-with-up-to-10-famil-511767763
http://kotaku.com/rumor-about-xbox-one-family-sharings-downsides-has-fla-534484570
http://kotaku.com/microsoft-is-removing-xbox-one-drm-514390310

I welcome more options concerning digital ownership and flexibility... but given their history I'd take anything MS promises with a huge bucket of extra cautious salt.

Before anyone says "But Phil Spencer...", just remember he was the guy in 2014 who was still (essentially) blaming the lack of implementation as a result of putting DRM on discs. An action MS were essentially forced to do after their 'anti-consumer', 'always online', #dealwithit strategy was thwarted by outraged consumers. The family plan was never properly explained by MS before it was axed in DRM-gate 2013, so we don't know on which end of the altruism/exploitation spectrum it actually lay.

 

[Version 3.0]

The idea that the next sale would not have occurred is false.

Well, if that's your view, of course you think this is a bad idea. But you're at odds with every purchase incentive program out there. There are a lot of them, and they exist for good reasons.

But I guess you must be one of those people who think every pirated game would have been purchased if DRM was better, every used game sale is a "lost" new game sale, and every discounted game sale is "lost" money.

Suffice it to say I disagree.

 

[Trup1aya]

Well, if that's your view, of course you think this is a bad idea. But you're at odds with every purchase incentive program out there. There are a lot of them, and they exist for good reasons.

But I guess you must be one of those people who think every pirated game would have been purchased if DRM was better, every used game sale is a "lost" new game sale, and every discounted game sale is "lost" money.

Suffice it to say I disagree.

First of
No. I don't count every pirates game as a loss sale.

Just like a person who pirates a game wouldn't neccisarily have purchased the game if piracy wasn't an option, Someone who gets a rebate on game wouldn't neccisarily spend more money, annually on games.

There's also no guaruntee to publishers that the allure of rebates would increase the volume of digital sales so much that it offsets the the lost revenues. Infact, I've don't the math, and posted it this thread.

You can't just throw out a randoms number and assume it will work just because sales volumes would go up.

If they went to a 25% rebate, They would need to sell 64% more digital games to make up for the reduced margin. That's massive. That would mean the rebate would have to shift the digitalhysical ratio from 20:80 to 33:67

There's no reason to to believe that so many people would leave physical for digital when physical still would offer twice the resale rate for used games....

These suggestions are madness. It would amount to publishers throwing money away.

PS, there is already has a purchase incentive program. It's called Xbox Live rewards, which gives credits towards new games with every purchase.

This 10% offer would be something totally different .

 

[joecanada]

First of
No. I don't count every pirates game as a loss sale.

Just like a person who pirates a game wouldn't neccisarily have purchased the game if piracy wasn't an option, Someone who gets a rebate on game wouldn't neccisarily spend more money, annually on games.

There's also no guaruntee to publishers that the allure of rebates would increase the volume of digital sales so much that it offsets the the lost revenues. Infact, I've don't the math, and posted it this thread.

You can't just throw out a randoms number and assume it will work just because sales volumes would go up.

If they went to a 25% rebate, They would need to sell 64% more digital games to make up for the reduced margin. That's massive. That would mean the rebate would have to shift the digitalhysical ratio from 20:80 to 33:67

There's no reason to to believe that so many people would leave physical for digital when physical still would offer twice the resale rate for used games....

These suggestions are madness. It would amount to publishers throwing money away.

PS, there is already has a purchase incentive program. It's called Xbox Live rewards, which gives credits towards new games with every purchase.

This 10% offer would be something totally different .

but if there's already a rewards program why not just add to it? add another? make it better?
I still don't see what is the point of this proposal from MS camp. you aren't fostering goodwill as you are making people give something up. You aren't getting money, (are they?) as you aren't reselling the license ?

so what is the point then?

 

[IcyRhythms]

I do think Valve needs to consider upping the time to 4-6hrs. 2hrs isn't always enough to find out whether a game sucks/is poorly optimized.

 

[Trup1aya]

but if there's already a rewards program why not just add to it? add another? make it better?
I still don't see what is the point of this proposal from MS camp. you aren't fostering goodwill as you are making people give something up. You aren't getting money, (are they?) as you aren't reselling the license ?

so what is the point then?

How is having the option to 10% back for something you don't use (instead of 0% while I sits uselessly on your HDD) IN ADDITION TO having a rewards program for your purchases not 'better'?

They are essentially letting you recycle games you don't want, so you can have credit towards new games. The credit would go towards more game sales. Gamers have more games, devs move more units, How is that not better than what we have today?

I guess people are struggling with the idea that not everyone sees value in hording licenses for games they have no interest in, which is currently our only option. My madden 25, NBA 2k14, Black Flag, Dead Rising 3 and Ryse licenses are useless to me as are the countless 360 licenses I have. Can't do shit with them now. If I could get $6 in store credit for each game just by relinquishing those licenses, I'd do it in a heart beat.

 

[joecanada]

How is having the option to 10% back for something you don't use (instead of 0% while I sits uselessly on your HDD) IN ADDITION TO having a rewards program for your purchases not 'better'?

They are essentially letting you recycle your games, so you can have cash towards new games. How is that not better than what we have today?

It's not better because I don't get why MS is bothering... It's like they are offering an olive branch but not really because people might resent it later or resent the price so it's not really a "good guy" move.
Why not just add "buy 10 get 1 free" or "additional 10% off for gold members" or something. What can MS possibly do with your revoked License?

I never once argued that it was a bad deal in this thread so your argument about 10 vs 0 is not useful on me... I get why consumers could use the program, I just don't get the point of it. Why not just add a straight discount?

 

[Trup1aya]

It's not better because I don't get why MS is bothering... It's like they are offering an olive branch but not really because people might resent it later or resent the price so it's not really a "good guy" move.
Why not just add "buy 10 get 1 free" or "additional 10% off for gold members" or something. What can MS possibly do with your revoked License?

I never once argued that it was a bad deal in this thread so your argument about 10 vs 0 is not useful on me... I get why consumers could use the program, I just don't get the point of it. Why not just add a straight discount?

Just because you don't understand MS' motives doesn't mean that this wouldn't instantly be better for consumers than the current situation.

Who says they shouldn't do the bolded?
They already give gold members discounts, they already have a rewards program that gives you free games after a certain number of purchases...

The extra 10% would be an additional way for customers to extract value. Why should anyone care what ms does with the license to a game they don't even want?

 

[Navy Bean]

Not interested in 10%, but I would love a rental option - say $10 for a week with the option to buy, etc.

 

[cakely]

Not interested in 10%, but I would love a rental option - say $10 for a week with the option to buy, etc.

The posters that really like the 10% buyback have referred to their installed digital games as "nothing", "trash", "valueless", and "junk".

It really sounds like they'd be better off with an option to rent the games.

 

[LoveCake]

10% lol

It should be on a sliding scale, you should get 90% back if traded in within one month from release & then so on.

one month 90%
two months 80%
three months 70%
four months 60%
five months 50%
six months 40%
seven months 30%
eight months 20%
nine months 10%
ten months 0%

 

[blakep267]

10% lol

It should be on a sliding scale, you should get 90% back if traded in within one month from release & then so on.

one month 90%
two months 80%
three months 70%
four months 60%
five months 50%
six months 40%
seven months 30%
eight months 20%
nine months 10%
ten months 0%

That's not realistic at all though. MS would make no money at all with that. You can beat most games in a few weeks so your only paying $6 per new release. Ms is actually losing money by doing that since they don't get anywhere close to 90% for a digital game.

The posters that really like the 10% buyback have referred to their installed digital games as "nothing", "trash", "valueless", and "junk".

It really sounds like they'd be better off with an option to rent the games.

Not really... At all. A 2 year old multiplayer shooter is junk to me now. I played it for months when it came out. A rental would do nothing for me. Why would I rent madden for 6 months?

 

[Trup1aya]

The posters that really like the 10% buyback have referred to their installed digital games as "nothing", "trash", "valueless", and "junk".

It really sounds like they'd be better off with an option to rent the games.

I'd take that option too. The more options the better. It doesn't have to be an "either/or thing". Still, some games I'd rather own then sell back, than rent.

Sports games ,for example, I'd buy, because I'd play them so long that renting would end up costing more and physical trade-ins would net me less than 10%.

Multiplayer shooters are worthless to me once the population dies... But that usually doesn't happen until after the physical resale value tanks. Again 10% would be better then renting.

Some games are only released digitally. In the case of those games you'd have to figure how much time it would take to play through them, how much the game costs, and what the cost of the rental terms are. Depending on those factors there are scenarios where 10% buyback would be better and some where rentals would make more sense. With these options on the table consumers could choose which works best for them. And developers would have more flexibility in how they monetize their products.

Some games I buy physical. For example, I now buy madden physically. When it hits EA Access, I sell it for $30+. Which means the game cost me $30 or less, then I use that $30 savings to pay for EA Access. So in essence, one purchase of Madden, annually, nets me all of the games in the EA vault and I get to play the new Madden on day 1.


It's all about increasing the number of options we have. Digital will never be able to mimic physical 1:1, the numbers just don't add up. The incentives to buy digital simply take a different form. See there really is no sense in rejecting offers that are placed on the table... Even if it is just a 10% buyback. game sharing + EA ACCESS, + GWG + Deals W/ Gold + XboxLiveRewards already allow me to play more games than ever, while reducing my annual spend. A 10% buyback option would be icing on the cake.

 

[Version 3.0]

First of
No. I don't count every pirates game as a loss sale.

Just like a person who pirates a game wouldn't neccisarily have purchased the game if piracy wasn't an option, Someone who gets a rebate on game wouldn't neccisarily spend more money, annually on games.

There's also no guaruntee to publishers that the allure of rebates would increase the volume of digital sales so much that it offsets the the lost revenues. Infact, I've don't the math, and posted it this thread.

You can't just throw out a randoms number and assume it will work just because sales volumes would go up.

If they went to a 25% rebate, They would need to sell 64% more digital games to make up for the reduced margin. That's massive. That would mean the rebate would have to shift the digitalhysical ratio from 20:80 to 33:67

There's no reason to to believe that so many people would leave physical for digital when physical still would offer twice the resale rate for used games....

These suggestions are madness. It would amount to publishers throwing money away.

PS, there is already has a purchase incentive program. It's called Xbox Live rewards, which gives credits towards new games with every purchase.

This 10% offer would be something totally different .

If you're not against a 10% trade-in (nor the existing incentive program) then I don't know what you're arguing about. I never said one word about the amount of a trade-in, only that there is opportunity with an underserved market.

 

[Trup1aya]

If you're not against a 10% trade-in (nor the existing incentive program) then I don't know what you're arguing about. I never said one word about the amount of a trade-in, only that there is opportunity with an underserved market.

I don't know where you came into the discussion. All of my comments have been about how 10% is better than what we have now... And the other, much larger, percentages people have been suggesting are economically unfeasible for companies interested in making profits...

 

[joecanada]

Just because you don't understand MS' motives doesn't mean that this wouldn't instantly be better for consumers than the current situation.

Who says they shouldn't do the bolded?
They already give gold members discounts, they already have a rewards program that gives you free games after a certain number of purchases...

The extra 10% would be an additional way for customers to extract value. Why should anyone care what ms does with the license to a game they don't even want?

yes well I want to understand their business motives. Why would a multi billion dollar company think this is a good idea? The extra 10% is meaningless if they aren't doing something with the License. So what is the point exactly?

I am no dummy but I don't feel I'm smarter than the whole of MS brass, so there has to be a reason they didn't just go "why take away peoples games, why not just give them 10% or brag about how we reduced digital titles by 10%"

if you don't care about their motives then that's fine, but I want to know why its a good business proposal.

 

[Trup1aya]

yes well I want to understand their business motives. Why would a multi billion dollar company think this is a good idea? The extra 10% is meaningless if they aren't doing something with the License. So what is the point exactly?

I am no dummy but I don't feel I'm smarter than the whole of MS brass, so there has to be a reason they didn't just go "why take away peoples games, why not just give them 10% or brag about how we reduced digital titles by 10%"

if you don't care about their motives then that's fine, but I want to know why its a good business proposal.

Their business motive is that by giving people store credit for returning the item, those people will use that store credit, along with real cash to buy more items. They'll drive up sales volume, which will drive more revenue for MS and there partners.

 

[Moonstone]

I don't like this idea - although I see where this could benefit all parties involved.

I don't sell on ebay - because I'm just to lazy for this kind of stuff.
And I don't want be bothered if I should sell some games in order to buy a new one. I'd probably sell steam games I never played - and that would feel "bad". Even more bad than having a big steam libray with unplayed games.

Know this is about xbox - but the problem is the same.

An alternative would be a timebound license. Buy game x for y% off if your license is only working for one month. But again - that is no decision I want to make and it doesn't work well for all games.

This all leads into a way of thinking I don't like. I don't buy games, because I can sell them 1 day later on ebay without a loss. I buy games that I like. And if I really want to play them on day 1 I'll pay the price. Or I just wait for a pricedrop.

On the other hand I understand that you sometimes want to gift a great movie, game, book or album to friend. Not sure what is right here.

But I don't want to be dragged into a finish and sell cycle.