This is from late May, so I apologize if it's a repost. I haven't seen it around here, though, so I thought it would be interesting. [url=http://www.wired.com/gamelife/2013/05/nyu-used-games-study/]Linky.[/url] [quote]Titled “Dynamic Demand for New and Used Durable Goods without Physical Depreciation: The Case of Japanese Video Games,” the paper uses data collected from the Japanese gaming market to simulate the effect that the removal of used videogames would have on consumer behavior and the resultant sales of new products. “The used goods market has been viewed as a threat by producers,” write Ishihara and Ching. “However, it is not clear if this view is justified because the used goods market also provides owners with an opportunity to sell their products.” Consumers, the study finds, are “forward-looking”: They take the eventual resale value of their games into account when purchasing them. The study found that if the used game market were to be eliminated and nothing else changed, game publishers’ profits per game would drop by about 10 percent. However, it found that if game publishers were to adjust the prices of new games to optimal levels, they could expect profits per game to rise by about 19 percent. “We find that the optimal price would be on average about 33% lower than the current price level, if the used game market were eliminated,” said Ishihara in an email. “So roughly speaking, in the US, game prices should go down to about $40.” “The reduction in price is partly driven by the fact that if the used game market were eliminated, gamers would no longer be able to sell their games and get back some money (so they need to be compensated),” he said.[/quote] Wired points out some issues: [quote]And the study doesn’t even begin to address other factors that could change if the used game market was eliminated: Publisher’s profits might go up by 19 percent, but what would happen to the profits of retailers that are driven largely by the sale of high-margin used games? If those retailers were to disappear or shrink, how would that affect the sales of new games, hardware, accessories and digital point cards? How does this impact the platform: How many purchasers of the Xbox 360, for example, bought the machine in whole or in part because of the cheap and wide availability of pre-owned software? Moreover, the study examines two equally unlikely scenarios: The used game market goes on as is, or it disappears completely. We can assume that neither of those scenarios is what Microsoft is proposing for its new Xbox One game console... ...Which brings us back to the consumer behaviors simulated in Ishihara and Ching’s study. If GameStop begins to pay out lower trade-in rates for games because of the costs associated with buying a new license, consumers would thus derive less value from their game purchases, have less incentive to trade games in and less store credit in their accounts with which to purchase new games. What, then, would happen? Would prices of new games decrease to more optimal levels? Would GameStop close up shop? All we know is that it’s a very complicated system — and one that Microsoft, and maybe Sony, are likely to fundamentally alter later this year.[/quote] Thoughts?