Why Xbox 720 won’t ban used games

There has been a lot of talk, rumors and fuss about the upcoming consoles from Microsoft and Sony. These “rumors” from “trusted sources” claim all sorts of things. The latest ones comes from Edge Online, which cite sources with “first hand experience” that the upcoming Xbox 720 will require an always-on connection and more shockingly, will ban used games. Which is complete and utter nonsense.

Used games won’t be banned on the Xbox 720, nor the PlayStation 4 for that matter. Here’s three reasons why:

Used game business is huge

Used games on Xbox 720Used game sales generate billions of revenue for retailers such as GameStop. Used games have become such a lucrative business for GameStop that it now accounts for nearly 40% of their revenue, and the profit margins on used games are over double that on new games.

There is no way Microsoft and Sony will go to war with GameStop over used games. GameStop is still the biggest games retailer in the world and without them, Microsoft and Sony wouldn’t nearly sell as many consoles as they do. Nor would they sell as many games as they do.

Used game sales fund sales of new games

Used games on PlayStation 4People who buy and sell used games are hardcore gamers who usually sell their old games to fund their new game purchases. The billions that used games generate for those who sell them are usually re-invested into the games business with the purchase of new games.

While console makers don’t get a cut from used games sales (and neither do the publishers), they do benefit from increased sales of new games. And to cope with the used game sales, many publishers have blocked online multiplayer for used games, which usually require a $10 “online pass”. It’s likely that this tactic will be expanded into the new generation of consoles. It’s common even today that games ship with content on the disc, only later to be offered via a “DLC”.

Gamers won’t accept it

Used game salesThis is perhaps the biggest reason why used games won’t be banned on the new consoles. The people running the console divisions at Microsoft and Sony aren’t stupid. They know how unpopular it would be if they blocked used games on their consoles.

Banning used games on the Xbox 720 will almost guarantee that the PlayStation 4 would win. And vice versa. Unless of course, the people running the console business at Sony and Microsoft actually are stupid.

  • lbd

    FACT is the price of gaming HAS fallen. FACT is the cost of Physical
    media has dropped drastically BUT due to 2nd hand markets publishers
    have found other ways of earning money due to losses Pre-Owned market
    has cost them. Collector’s Editions sell more than the standard game, (
    Which help to expand the profit margin of game sales ). One-time use codes ( And online DLC Codes for One-Time Uses ). DLC is a standard part nowadays
    JUST to earn money back, so that Pre-Owned game retailers don’t get to
    keep ALL the money.

    Pre-Owned is Killing gaming due to not returning the NEW game sales
    profits to the correct people/companies in the 1st place. Stopping the
    Pre-Owned market would help stop that problem and help gaming costs to
    be lowered for us ( look at PC game prices to console game prices )

    Look at how PC gaming is nowadays.. IF the console companies stop
    pre-owned games working on their consoles, it only what PC has been
    doing for years, and that’s why their is NO pre-owned market for PC
    games?

    Crytek has publicly supported the concept of console manufacturers
    blocking access to second-hand games / Andrew Oliver believes that
    piracy is not the biggest problem facing the
    game industry, but instead one part of a bigger, underlying issue; lost
    revenues. Arguably the bigger problem on consoles now is the trading in
    of games / Bungie’s warned studios face a difficult future due pre-owned games?

    Developers and Publishers are closing due to lack of money coming
    back. This is because of the pre-owned market. AND this is why
    developers are coming up wit ways to make back the money RETAILERS took
    from their game sales?

    People always ask…. “And what happens when people don’t want to buy
    the games because they know they can’t trade them in if they don’t
    like that game” … I reply back with this…”The same as you do with PC
    games” Fact is by trading in your games, it IS effecting the gaming
    franchise,
    and in turn prices will rise instead of lower, and companies close down, ect. ( As
    developers and publishers stated ) This is the reason why an Online Pass was created in the 1st place to get back losses.

    IF pre-owned is not stopped soon Dev’s shall start looking to find
    MORE ways to increase the revenue potential of their development
    efforts. We will see a wider variety of price points, and in-game
    purchasing, as
    well as DLC, as well as Subscription services like Call of Duty Elite as
    exampled.

    Regrading the PC…. “restriction” ….on PC games are why they cost
    less to buyers when compared to console games, and the PC restriction
    why there is no 2nd hand market for PC Games. ( IF consoles allowed the
    same thing it would only be doing what PC games have been doing for
    years ) Fact is you buy a PC game you can’t resell it in most retailer
    shops ( so why can’t console games be treated the same )

    Prices will drop ( just like PC games are lower nowadays ) as publishers
    themselves have stated.The reason games are STILL highly prices is due to the pre-owned market taking money from them.

  • Tim

    Bull, PC games have a lower threshold of buyers because of the cost of building a PC. It has little to do with buying and reselling games. Plus, you can resell PC games. The code still activate on multiple pc’s. If Xbox and PS4 try to block used and renting games, they will see a huge back clash and a drop in sales. Most people cannot afford the new systems anyways; the reason why so many are sold today at cheaper prices. This will create a powerful backlash from both the stores and customers. It will open Google up to jump in and take all the market share. They will if this happens.