Used Video Games: The New Software Piracy: Part One

Part One: Introduction
Part Two: Becoming the Stop For Games
Part Three: The Feeling of Being Used
Part Four: A Programmed Response
Part Five: A Conclusion on Distribution; Corrections

Synopsis: The history of used video games and retail in the United States began in 1988 when Minnesota resident David Pomije started selling used Nintendo cartridges through both his house and mail order. Funco Inc. would spawn Funcoland, which would become one of the largest video game retail chains of the nineties, both Funco and its competitors relying heavily on used game sales. In 2000, Funcoland would be merged and assimilated into Barnes and Noble subsidiary GameStop. By 2005, GameStop held a near-monopoly on video game retail in the United States, challenged only by American megamarket Wal-Mart. GameStop would become one of the hottest companies in the country thanks to its lucrative sales of used video games. The video game industry would ignore this resale market, the “parasites” of American video game resale, until it became a gold mine. At which point, the video game industry decided resale threatened their existence.

In June of 2010, long departed from his co-founding of Westwood Studios and his influence on the Command & Conquer series, Louis Castle sat down for an interview with game journalism web site Eurogamer. He was prepared to discuss his keynote address at the 2010 Develop Conference in Brighton England and other topics. Roughly a year after becoming the C.E.O. of the browser-based game distributor and developer InstantAction, Castle talked the news of the day as the head of a self-publishing browser-based game developer would: Consoles on the decline, rampant software piracy, browser-based video game development up to quality with consoles and computers, and other marketing flubbo. The usual stuff. Curious to many was another comment. On the matter of the “brick-and-mortar” retailers, Castle took a stoic but affirmed offensive.

Where I have an issue with the retailers is when they do the resale of a game because the law allows them to do it. By doing so they don’t pay the publisher anything. They promote that as strongly, or even more strongly than the actual full sale game.

Essentially what they’re doing is they’re just quickening the death of the retail space for the publishers. The publishers have to spend more and more on games. They’re not getting any cheaper to build. The big ones are getting a big audience, true enough. But the vast majority of games don’t make money any more because your sales have been so badly chopped out by these retailers that are reselling.

Louis Castle, speaking in an interview with Eurogamer, “InstantAction’s Louis Castle”; published July 13, 2010*

He was civil about the whole shebang, and when you’re civil on the internet, people don’t tend to care much about what you have to say. You have to say it louder and meaner. The following month, Castle discussed the issue with the long-running game publication Edge Magazine, and in conjunction with a perfectly inflammatory headline, Castle let the world know that “Retailers are ‘Parasites and Thieves'”. People noticed.

[Retailers are] parasites and thieves. Because they don’t let the publisher participate in the used games business. They take all the money. They take a game from somebody for ten bucks and then turn around and sell it for $30, and they don’t give any of that $20 back to the original copyright holder. Something would be OK, but zero is not OK.

I’m not saying they’re doing anything illegal. But just because you can legally steal doesn’t mean it’s not stealing. Gambling is statistically theft – people know they’re going to be stolen from.

Louis Castle, speaking in an interview with Edge Magazine, “Louis Castle: Retailers Are ‘Parasites and Thieves'”; published August 16, 2010*

You can’t blame Louis Castle for drowning retailers in his vitriol. He’s a businessman, and the art of video games has been a commercial endeavor for most of its shelf life. Game development and game marketing go hand-in-hand. Castle was looking to protect both his business and his intellectual property. The same day that Castle swore a pox upon the brick-and-mortar retail outlets (chiefly Wal-Mart and American retailer GameStop), he announced the beginning of a closed beta for the rhythm game Instant Jam. The browser-based Guitar Hero knock-off was designed to circumvent the traditional music licensing process for video games by using the music stored on the player’s hard drive, functioning much in the same way emulators violate no laws, as they merely emulate the copyrighted code. This way, “even artists that have refused to [license their music for] Guitar Hero and Rock Band, such as Led Zeppelin, are represented among the initial 2,000 songs.”*

“[J]ust because you can legally steal doesn’t mean it’s not stealing”.

Castle isn’t merely endemic of the problems with big business in America, where there is not only little repercussion for bullshitting the public, but you are actively encouraged to do it. (It’s worth noting that Castle’s own efforts failed, with InstantAction closing their doors three months after the Instant Jam announcement.*) Castle and others represent a game industry that has been lying to itself. Or, at the least, bending the truth in order to get the situation to suit their own ends. 2006 to 2008 marked three years of unprecedented growth in the traditional video game industry (the sector comprising consoles, computers, and arcades) and nobody could do anything wrong. Products such as Carnival Games and Game Party, some of the most abhorrent pieces of programming in the history of the medium, sold millions. Then, in 2009 and 2010, the United States retail video game market contracted two years in a row.** It shared little in common with stagnation in previous years, where 2000 and 2005 capped the end of console life cycles en route to stagnant growth. It was, quite simply, bad years for the traditional video game industry.

Numerous issues caused the slump, with the Great Recession ruining a lot of things for a lot of people. That aside, all the other problems were brought on by the video game industry against themselves. But see, anyone who has worked in a public or private institution knows that when times are bad, someone has to take the blame. Someone or something has to be a scapegoat. Just like Louis Castle, the video game industry is a giant fucking asshole. This collective cabal of smaller developers, medium-sized publishers, and giant industry figures (collectively known as “console video game developers”) has adopted Castle’s narrative. To explain why their business model is on the decline, they have decided that used video games are the problem. To convince the public, used video games will become the new software piracy.

What does that mean, anyway? It means that this shades-of-grey debate will become a form of black-and-white bloodsport. The game devs? The game publishers? They’re just looking to provide a service and please their shareholders. Their grandest fanboys? They’ll feel empathy for these billion-dollar entities. As for you? For speaking out against these people? You will be called a thief. And if the game industry cannot cast a brew and convince society that second-hand sales are a sin, then they will either use the courts to eliminate the first sale doctrine, or program the games and hardware to make that doctrine irrelevant.

See, software piracy is the father figure of dead horses. It’s been responsible for the impending death of the software industry since 1980. Unless someone can find a way to control and monopolize software distribution (and also convince governments to begin shooting suspected software pirates), software piracy will exist on some level. (Hell, even as the client-server game model grows in popularity, a game model that makes piracy and emulation of software exceptionally difficult, people still have full faith in their overlords to get them their unlicensed software. It may take some time, but they can do it.) In a universe where your mom can visit ThePirateBay and watch her favorite shows for free, a lot of people don’t believe her downloading habits constitute a lost sale. Even those that think it does cannot agree on a price tag, so software creators have mostly lost the debate. What about used video game sales? That has a value, and from February 2009 to January 2010, GameStop sold 2.4 billion dollars worth.* The video game industry has one thought on their mind: “That could be our money!” And hey, what’s some bad publicity at the chance to either pilfer that lucrative side-market or eliminate it, leaving consumers to spend that money on new games?

So anyway, how did used games steal software piracy’s crown as king of the bogeymen? All you need to do is follow the history of the medium. Follow the twenty-plus-year history of second-hand retail. Follow the integration of used game sales into the strategy of the de-facto choice for American video game retail. Follow the game industry’s talking heads as they scrambled to profit from the dirty secret. Follow where it could (and probably will) lead. Let’s talk story time.

Continue to Part Two: Becoming the Stop For Games