The New Face of the Used Game Industry: An Interview with Goozex.com's Co-Founder Mark Nebesky

RetroVertigo

September 01, 2010

ecently, there has been a lot of discussion on the Internet about how video game developers don't profit from the preowned video game market. For resellers like GameStop, the preowned industry has been extremely lucrative for them.

Goozex (106K) In what appears to be an effort to encourage gamers to buy brand new video games rather than preowned copies, there is a new trend to include "free" downloadable content, in the form of a one-time redeemable code, with brand new boxed copies. Gamers who choose to purchase a preowned copy will either have to do without this content, or pay an additional cost to access it.

Some of this exclusive downloadable content comes in the form of bonus in-game items, usually only diminishing the gaming experience from a cosmetic standpoint rather than restricting game's functionality. However, this is not always the case. Electronic Arts has begun "removing" the multiplayer components from their new and upcoming EA Sports games. Gamers who acquire preowned copies of games like Tiger Woods PGA Tour 11 or Madden NFL 11, can access a free 7-day trial, but will need to purchase an online pass for $10 if they want to continue playing online. This also creates an additional step for those who purchase a new copy, requiring them to activate their game before playing online.

On Wednesday Penny Arcade, an influential video game industry web site, announced their stance, in this controversial argument, siding with the interests of the development studios rather than preowned resellers. This caused quite a frenzy within the video game community.

I contacted Mark Nebesky, Co-Founder of Goozex.com, to get his thoughts on the whole situation and how this may affect Goozex's game-trading community.

GoozerNation.com's Troy Benedict (TB): Goozex is not a used game reseller per se, like GameStop, but because a majority of the games traded on Goozex.com are preowned, this new face of the used games market will likely affect the functionality of some game trades. What is Goozex's response to this situation?

Goozex.com's Mark Nebesky (MN): Let me start by saying that we, as a company, are only as healthy as the new game sales of the video game industry. Goozex is a gaming community that is seeking to find the best value in their home entertainment libraries and save money. The home libraries that are traded on Goozex started out as new purchases somewhere. If your game sells well, then it trades well on Goozex.

At Goozex, we have a lot of good economic data that comes in from our users. In particular we can gauge the popularity of a new release by the demand data we have. And what the demand data often suggests is that publishers have a lot of control on the how a game sells at retail.

Games with high demand often correlate to those that we see marketed heavily, have great previews, and some kind of unique buzz associated with them. We also see that games vary in speed to which they access the secondary market. Some games, like Modern Warfare 2, are quick to enter the used market. Other games, such as Super Mario Galaxy 2, are very slow. And of course, content is king (think Rogue Warrior versus Red Dead Redemption). So if I was a publisher, I'd focus on making a superb video game, market it to the best of my resources and support the community that grows around my IP (intellectual property). I will also want to make sure my price point accurately reflects what I'm putting out there. At what point do more sales at a lower price point outweigh lower sales at a higher price tag?

Focusing on making used games a public enemy seems to be a red herring. The argument comes close to attacking the very consumer that purchases your games new and that can't be good for business.

TB: Do you have any suggestions as to how the gamer/reseller and the developer can both profit from preowned sales without gamers having to spend more money to access exclusive content that would otherwise "cripple" their preowned copy of a game?

MN: Sure, developers can benefit in the used game market. It already happens in the form of good DLC. Once a game enters the secondary market the developer can generate revenue and extend the IP's life cycle with great DLC that a gamer wants to get. Red Dead Redemption, Dragon's Age and Borderlands DLC comes to mind.

Additionally, the focus should be on how to make the most immediate impact on new sales right out of the gate. And along those lines, why shouldn't the developers/publishers reach out to used game consumers and pitch to them as to why they need to play their game now and why it is the best product out there. There are lots of opportunities to do this and grow the IP's brand.

TB: In the automobile market, preowned automobiles are generally sold alongside brand new automobiles of the same make. Do you think production/development studios like EA should offer to buy back their games, in exchange for online store credit, and offer preowned copies of their games at a discounted price?

MN: I don't think the production/development studios should do anything that they don't want to do or doesn't give a good return on their investors. If it makes good business sense, then sure it sounds like an interesting idea. I think an important part missing in this debate is if the consumer's needs are being met. Will I, a gamer with a tight wallet, be satisfied with this solution? It depends on what that store credit gets me, what type of conversion friction exists and so on.

It is in the publisher's best interest to find ways to be proactive and supportive of the used game business. There is a lot of untapped potential there to grow the industry out in different directions.

TB: In order for a preowned copy of a game to exist, it once had to be a brand new copy that somebody likely paid the suggested retail price for. Aren't video game companies already making a profit by charging $60 for a brand new copy? Why do they need to charge extra to those who choose to go with preowned over brand new games?

MN: I agree to the first point. Profit, however, depends on sales volume. If I were to make a prediction on how the bonus DLC content for new sales will shape up I think it will have little impact on the growth of new sales and diminish their IP brands overall. By that I mean most gamers will probably be satisfied with the basic gameplay. And because they can't access certain things without spending more, the consumer will have an overall negative experience with a brand. Part of the future of gaming is supporting your core online gaming community. Does that community only belong to retail paying customers, or to all gamers? To me it almost sounds like they are trying to shrink the market size.

TB: Thank you for giving us your industry insight! For those who may not be familiar with Goozex.com, could you give us some background information about the company and web site? How did it get started?

MN: Jon Dugan originally came up with the idea of Goozex as a way to stop getting ripped off at the used game store with his trade-ins. Jon was a cash-starved college student that couldn't afford purchasing every game he wanted to play new. The idea is simple -- get the fair value for the games you purchased so that you can play other similar value games at a great savings.

Jon worked on the idea and brought the business plan to our current CEO, Valerio Zanini, who then formed the founding team with me and our web developer. Goozex is literally a site for gamers, made by gamers. I'm happy to say that four years later we are the best at what we do and we have built the most awesome online community of gamers anywhere. As an example of this, you need not look further than Goozernation!

TB: Congratulations! Are there any new enhancements or improvements coming to Goozex.com?

MN: We have a lot of new exciting features in the pipeline. One of the new initiatives in the near future will be to reach out to the independent game developer and offer them free advertising to our members. So while the big publishers focus on restricting their customers, we'll be looking to empower those that have a great product and need help spreading the word.

TB: Thanks for taking time to give Goozex's point of view on what is becoming a controversial subject amongst gamers, and filling our readers in on what Goozex is all about and what's to come!