EA Project Ten Dollar

EA has come up with a new plan to regain profits from used game sales. Essentially, new games will come with a voucher code that will unlock a subset of content from the game. This code is good only once for one account. Should the game be re-sold, the new user will need to pay $10 to the publisher to unlock this content for their account. Considering the fact that about a third of all games sold are secondhand, this could mean serious recouping of profits for publishers.

There are a couple of small problems I see with this plan.

1. What happens if the original buyers lose their codes or somehow get locked out of their accounts? This is a common issue coming up lately, especially as gaming continues to shift from the physical, disc-based space to the online world. Information stored online can be corrupted, and codes written on physical paper can be lost. EA will need to address this, perhaps by having users register their games so that codes can be reset and re-sent. This would however add extra time and annoyance to the process of playing a game; what gamer is going to want to have to fill out forms before being able to access a game when the current model requires only sticking the disc in the system?

2. What about if there are multiple players in the same household sharing the game - will one of them need to shell out an extra $10 to have access to content that should be included with the purchase? My guess is that EA will need to implement a sharing system similar to that of iTunes home network sharing, enabling a small number of authorized accounts to access the full game.

Despite these two issues, I think Project Ten Dollar is a smart move on EA's part, and I expect other publishers to announce similar plans once it has proven successful. This could mean trouble for major game retailers who rely heavily on the secondhand market for profits. For example, Gamestop's used game sales represent 23% of their total revenues, and used games have a much higher profit margin than new games (50% for used games vs. 21% for new). With Project Ten Dollar and other similar programs in effect, buyers may become more likely to just buy new if buying used would mean they have to pay for both the game and the added extra content fee on top of it. To combat this, retailers would be forced to reduce their pricing on used games (on average, Gamestop sells used copies of new releases at $5 less than the new price), cutting into their profit margins, unless of course they start paying out less for trade-ins (right now, Gamestop typically pays 30% of the title's worth). It is likely that lower trade-in values would affect the volume of trade-ins as gamers may instead look to alternative, more lucrative methods of reselling their games, such as eBay or craigslist, so used game retailers may not have much wiggle room for decreasing trade-in value.

tl;dr Project Ten Dollar and similar plans are likely to cut into game retailers' profit margins on used games. Producers will reap the benefits.