David Braben, founder of Frontier Developments, says retail outlets that buy and sell pre-owned games are “essentially defrauding the industry.” Although multiplayer gaming might not be a huge threat, the single player experience in games may die out because gamers play the game quickly and resell it back to places like GameStop for others to buy.

Developers don’t get a dime when a game goes traded, many gamers will “share” the single player experience with a single copy of the game by reselling it over and over. The end result, retail outlets make a good penny for marking up old games while developers see nothing. This is really how game retail outlets survive because the margins on video games is so damn low.

The story has been heard before, developers want a piece of the action so they’re taking steps to entice people to keep the game with renewed downloadable content on old games; you can’t experience the new content without keeping the game around longer. In the world of low margin games, high cost development and short-lived story lines the solutions to this problem aren’t exactly obvious.

Braben’s idea of a solution is to offer two versions of the game, a not for resale/rental version at a high price, say $160, and a low priced version that cannot be shared (heavily DRM’ed?) for $50. In essence, gamers would no longer be able to trade in games because the idea of spending double for a game so you can resell it makes no sense to most gamers (including myself.)

Imagine, spending double for a game to be stabbed in the back at a GameStop for getting a quarter of its worth to be resold for almost MSRP again. Sounds like a great time. Not really. Although rental stores may be the exception to the rule, as it’s not a standard gamer, having them pay more for the title isn’t in their best interest as things are going fine for them now.

One major reason rental stores exist is because gamers cannot afford to buy every game they want to play. If rental stores were gone, gamers wouldn’t go out and buy ten games a quarter because they have no choice… they’ll just play less games. If gamers play less games there is a great chance they won’t experience your cool games, like Frontier Development’s Lost Winds, at all.

If a gamer never gets the chance to experience your game because they can’t rent them, you’ll find them less loyal and less likely to purchase your games in the future. As a gamer, I may rent a game because I’m not going to risk buying a product I can’t return and don’t like. However, if I do indeed love the game I may go out and purchase it for real or consider a buy on the sequel. Remember, most retail stores have a exchange-only policy once you’ve unwrapped the title (exchange for the SAME title that is.)

Rental outlets exist because they arrived to fill a demand to experience games, movies and entertainment on the cheap. The entertainment industry is full of great products and experiences but the wallet is limited in its ability to pay for said entertainment. Consider it a way to market your games to the masses and find more creative ways to draw them in and want to own it.

Market your potential sequels in the initial title, make gamers fall in love with the single player story and add a desire to purchase future titles. Give the gamer a behind-the-scenes movie in the game box or on the disc so they can feel a personal tie with the makers of the game and show them your crew is more than a simple logo; make gamers want to like your studio and share in the experience that went into making it. DVD’s have been doing this for years, what about games?

Don’t expect retail outlets and game players to feel bad for your inability to make money on your games. You made the decision to get into development so lie in the bed you made. It’s not fraud, it’s reality and consumers have been trading products for thousands of years, Craig’s List wouldn’t be where it is today if there wasn’t a constant demand for trading products to save a little cash.

(Thanks, 1up)

Microsoft recently announced their price cuts on the Xbox 360, effective today, but what is motivating them? Microsoft’s not going to make much additional money by passing off the savings to the customer but they will, more than likely, sell a bunch of great new Xbox 360‘s to a new crowd of gamer.

Motivation? Sony.

“I’m not at a point where I can say we’re going to beat Nintendo,” says Don Mattrick, senior vice-president of Microsoft’s Interactive Entertainment Business. Indeed, Nintendo is likely to run away with the lead in the current generation of console gaming, leaving Microsoft and Sony to battle for second place. (businessweek)

Who would have thought Sony and Microsoft would be battling out this generation for second place while Nintendo breezes through with their Wii console and a handful of games with mediocre game reviews? Don’t answer that, it’s a rhetorical question. If you saw this coming and you’re not on the marketing or project planning for one of these console makers you better prep your resume!

The battle isn’t cooling, Microsoft drops their price to compete with their big competitor Sony which also brings it closer to the price tag on the Wii getting two bird with one stone. The reason Wii is winning is clearly due to its broad demographic of grandpa and grandma non-gamers along with hardcore gamers who have to collect all the consoles and younger gamers that want to fit the trend.

Microsoft’s clearly shooting for second place by installing more units into the consumers home as possible. They’ve got a great library of first person shooter titles, a few RPG’s and RTS titles and the typical contraversial titles like GTA and Saints Row with more hot blockbusters (read: Gears of War 2) arriving soon.

I see this as a great opportunity for casual game developers to get into the Xbox Live Arcade market and start making themselves (and Microsoft) some money off the new gamers that will buy their first Xbox 360 for $199 and up. Microsoft’s getting closer to the low-budget gamer crowd with their price cuts so it would be great if they can take advantage of that market with lower cost titles as well.

If you’re a game developer looking for console stick time and you want to grab the attention of a large pool of gamers, the Xbox 360 isn’t a bad start!

While Microsoft isn’t aiming at Nintendo just yet, there is no doubt Nintendo will be in their sights if they can smoke the pants off Sony in the near future (by this holiday).

UK developer David Braben from Frontier Developments believes smaller development studios are in the worse position when it comes to re-sale of “pre-owned” video games. Since a developer only gets their cut of the profits when a game is sold new, pre-owned titles allow gamers to play games without paying the developer for the effort.

This also hurts larger publishers, but they’re able to recover because of the sheer volume of games and game titles. One idea David had, was to code each game with a unique license key like a PC game that gamers must enter before playing. This would kill the ability to re-sell video games back to the market for others to buy at a cheaper price (translation: better value).

The future shows a higher degree of downloadable games, which cannot be re-used or sold back to the market, but for now, developers have to deal with pre-owned video games cutting into their profit. Presumably you could have a great game with smaller sales and a high degree of resale in the pre-owned market.

Problem with this take on development? Besides large scale video game sellers like GameStop making 80% profit margins on resold games (rather than a 10-15% on new), gamers want a way to make back some of their money on expensive titles. When you’re paying $60 for a game and you beat it in a week or two, you want to resell it so you can invest in a future title.

My theory… make games more affordable so we don’t feel gouged on the price. We may decide to hold on to it longer and tell our friends about it. A good game reference and a reasonable price will increase sales every time. Don’t try to solve pre-owned problems when the problem is the publisher and the industry making huge game prices.

(Thanks, Kotaku)