Clearly from the developer (and publisher) point of view, the second- hand market is a real problem.
This is not just an issue from the revenue point of view – there are other elements too. The shops are essentially defrauding the rest of the industry by this practice, whether they intend it or not.
In other fields, support and warranties only apply to new items, but with games, tech support and returns are in most cases treated as if they are new copies of the games (by the developers/publishers), largely because the mechanism to distinguish between second-hand and new games does not yet readily exist, when a game is bought through the retail channel.
This lost revenue from the new games that would otherwise have been bought is keeping the retail prices high. And the cost of making games is not coming down – and ironically this high price is itself used to justify the pre-owned market.
It also means that while newly– released games do still sell well, it is only a matter of a month or so before pre-owned stock often saturates the channel – with a single copy rumoured to go around the sale/return/sale loop ten or more times – effectively amounting to rental. I once tried to buy Call of Duty from a certain large retail chain only a month after release, and they had no new stock – only pre-owned.
Whenever you ask for a game, this retailer will always offer a pre-owned copy before a new one. This tends to damage the shelf life of software, but also lessens the benefit to the developer and publisher for producing a great title, as opposed to an okay one. It even damages their apparent performance in the charts as most of these re-sales (as I understand it) are ‘under the radar’.
Finally, the ‘jumble sale’ appearance of shops with tacky bargain bins now tarnishes the image of our industry as a whole. The trade needs to work together on this if High Street retail is to remain a viable channel in the long term.
The film industry knocked this on the head by charging retailers separate prices for rental copies of films – at a very much higher cost than normal retail copies, and this appears to work for them. The unpopular alternative is make the gamers themselves distinguish between new and used copies.
This is becoming increasingly easy with the growth in online connectivity, and is in fact the case already with some retail online games (like Guild Wars), where games can only be played by the first purchaser, or the digital distribution sites like Xbox Live or Steam, which lock the downloaded games to a particular user account.
The genuine rental approach (i.e with a higher ‘for rental’ retail price, or revenue participation by the IP owner) would be a lot better for retail, as the alternative will tend to drive the channel away from retail altogether.
For example, the current trend towards downloadable add-on packs (locked to the original disc-based game) discourages taking the disc back. It is being forced on developers and publishers by retail – in an attempt to reduce the number of players returning their completed games. It appears to be having some success, but retail needs to consider the long term effect of this – as it is encouraging people to get their content elsewhere.