JB Hi-Fi Has No Issue With The Xbox One's Used Game Policy

When Microsoft announced its used game policy for the Xbox One it felt like the end result of some sort of retailer/publisher tug of war — a compromise. Microsoft needs retail to get the box in stores, but publishers must also be on board if the console is to ultimately succeed. But EA has already denied it had any part in pushing an anti-used games agenda to Microsoft and JB Hi-Fi? It doesn't expect the restrictions around used games to have any impact on its business.

EB Games declined to comment on the Xbox One's used game policy but after getting in contact with JB Hi-Fi locally, Marketing Manager Scott Browning claimed he expected great things from the Xbox One.

"The latest gen console release from Microsoft is very impressive and we are very excited by the impending launch," he said. "We anticipate sales of the Xbox One to be bigger than Xbox 360 and given the continuation of Xbox 360 as well, we see the potential of both ecosystems in the market. We do not perceive any impact to the existing prevalence of the preowned market."

Some speculated that the Xbox One's used game policy might push retailers into some sort of silent boycott. Consoles themselves are typically a zero margin product and retailers are usually reluctant to sell products they can't see some sort of return on in the future. The used games market, by far, has the highest margins in the retail space and Microsoft's policy has the potential to harm this market. Retailers still have bargaining power in this department. The only question is: will they exercise it?

No, says Scott Browning.

"Licensing rules are a matter for the copyright owners themselves," he said, "however if they choose to restrict the reuse of the product that would not affect any purchasing behaviour by us."

It's an interesting position. When Sony released the PSP-Go — a download only handheld with zero potential for future revenue through game sales — retailers responded negatively. It seems that JB Hi-Fi still has belief in the potential of the Xbox One despite its intention to limit a major part of its retail business.

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Comments

    PSP-Go was pretty stupid though, just an iteration of an existing platform with removal of the media. It's unlikely that a new release of an XBox 360 or PS3 without support for disc media would sell any considerable number of units.

      Not only that, but the online versions of the games cost more than the physical media versions.

        at the moment. Maybe with the extra drm they can make it cheaper. Wishful thinking I know.

        Don't know if this is true but apparently they're not allowed to sell it for less than retail (sound ridiculous so I don't entirely believe it)

    Cutting used games wont impact JBs business significantly. Whatever games business problems they are having will always be propped up by their dvd/bluray/music/tv sales/mp3 player/tablet/laptop sales. Having this diversity of products means they can keep selling games without the profit of selling used games.

    EB games and gamestop on the other hand are almost exclusively game based and the loss of used games sales will be a massive impact to them.

      Considering they created the used games market and keep all the profits to themselves leading to higher game prices (see Steam for comparison), those companies are the problem.

        I don't think that is entirely accurate to be honest. I don't believe the used game market has a substanstial impact on game prices. Steam games are cheaper due to lower distribution and manufacturing costs, not the fact you can't re-sell the games.

          And the XBone seems to be shifting to the same model as Steam. If they can emulate Steam's pricing model as well (big discounts on older titles), then they could be onto a good thing.

          The impact it has on prices is that places like EB keep the new prices high as a way of diverting people towards used game sales where they make more money off the sale. When the new copy costs $80 the used copy will look cheap at $70. They can also use it to negotiate better trade in deals. Trade in two games you don't want and get half off a $110 game, that's a great deal.
          It's not the only thing keeping games high but it's a factor. So many places do this to sell their used games that it creates an artificially inflated idea of what the average new game prices is which helps keep new game prices elsewhere high.

          Not trying to hijack the thread, but I've just bought a new notebook for work purposes - but it's an i7, 8gb RAM with a 2gb graphics card. I'm thinking that that ought to be able to play most games up to a PS3 / 360 standard?

          I've revisited Steam for the first time in years and I've been a little disappointed in terms of pricing. The only sub $10 and sub $5 games I can find are mega old or clearly independent games.

          I can buy plenty of sub $10 full retail games on PSN now, not that I need to given that it's quite easy to pick up disk based PS3 games for sub $20 new or used.

          Is Steam all that good at the moment? Or is it mainly when they have bundles and key sales that things get exciting?

            Depends on the graphics card. 2GB of VRAM realistacally means jack all if the cpu clock/memory clock, bus width, etc are crap. Going off of the other specs though, I'm going to assume the graphics card is relatively decent, to which case, of course. PS3/360 standard were succeeded quite a while ago as the hardware they run themselves are really not very flash (inb4 gaming OS runs games better on less hardware).

            To answer your question, Steam is generally cheaper on the whole for a majority of games, Steam daily deals and Steam sales are definitely where it gets interesting, new release titles often get below half of what you'd pay in a retail store.

            You won't see brand new games that are $50 on the shelves selling for $5 or $10. The games in that price bracket are almost always indie efforts or else at least a couple of years old.

            However...

            Sometimes games that are not brand new, but less than a year old, will see pretty healthy discounts even outside of sales. I can see LEGO Lord of the Rings up for US$12.50 at the moment, and Dishonoured for US$30. Keep an eye on the daily sale offers.

            You will sometimes find games that are a bit older (2 years plus) at fairly large discounts. The games where the publishers have explicitly applied the Australia Tax (such as most of the Call of Duty games) won't see this, but most games will gradually reduce in price over the years.

            Of course, the sales are where it's really "at" with Steam; typically most of their catalogue sees at least a 25% discount, with selected titles discounted by anything from 50-90%. Some publishers offer most of their catalogue, tens of games, for under a hundred or even under fifty dollars. There's usually a mid-year Steam sale - keep an eye out for it in the next couple of weeks.

            I would add two observations:
            (1) Two year old games are still in most cases eminently playable.
            (2) Don't knock indie games. There are some great ones out there.

            and one final point... your laptop is a great gaming platform - for a laptop. However, the graphics chipset won't come near to matching the modern behemoths designed for desktop gaming stations. It's much better than a PS3 or XBox 360 - but be glad you have some 2 year old games available for cheap that will run very nicely on it.

              Thanks for your reply.

              I have a lot of games on my PS3 so a lot of the cheaper games on Steam aren't of interest to me as I already own many. Also, some of the games I'd prefer to buy on PS3 as a disk based game so that I can play it and then sell it. I definitely want to get a few games though for my PC to give it a bit of a whirl.

              I think I have a PC code for Portal 2 when I bought Portal 2 for the PS3 (and have since sold it), might have to give that a go.

        Right...

        Just like books, furniture, cars, etc. prices have sky rocketed thanks to the insidious efforts of Cash Converters right? =P

      Yeah that's the salient point here.

      Yes, JB HiFi sell used games. But unlike someone like EB Games, they don't base their business model around it. Used games are just another avenue for making a profit. For the most part JB are able to sell their games cheaper than the competition (brand new and used) because they have their consumer electronics and DVD/CD's etc to make that money back.

      You'll notice that in most JB stores, the games section is tucked away in a back corner somewhere. It's not near the front of the store, so to get to the games you need to walk past all of their laptops, tablets, mp3 players, cameras, maybe some TV's and car stereos. They get you in the door with the cheaper game prices and hope to keep you there to buy some of their other stuff.

      I have no problems with that.

        I happen to be writing this while at the counter of a JB Games desk and we are located right near the entrance of our store. It was the same for the store that I did my training at. So there you go.

          I did say "most JB stores" :)

          Certainly 90% of the ones I've been in have their games section either towards the back or at the very least in the middle of the store somewhere.

            I would not say, its tucked away, not in any of the JB stores I have been to (and thats a fair number). Its usually sitting right in the center of the main entry way (whatever its called). However the significance of used games to JB is definitely marginal, as you wrote. Frankly, I doubt that the typical customer at JB is paying much attention to it, as they make their way to the LED TVs, tablets or even the greatly advertised new releases in games and other stuff.

            Whether used games stay or go, JB will barely notice either way.

      I think you're right, but this doesn't quite explain Brownings comments - " “however if they choose to restrict the reuse of the product that would not affect any purchasing behaviour by us.”"

      If they're buying new games because used games are no longer sold, that is a change of purchasing behaviour.

        It doesn't change JB's purchasing behaviour. They buy those new games anyway. The only thing it changes is that customers can't trade in their used Xbone games anymore.

        Browning is talking about JB purchasing games from the oublishers/suppliers. So he is saying that if publishers make it so a game can't become pre-owned, it's not going to stop JB from buying games from them.

        They are stating that JB are not going to change their purchasing behavious based on Microsoft's policies. The consumer is not JB HiFi

          @Whitepointer @drewmosabi @zac

          Yes, you're right, I must have mis-read Brownings comments.

          So yeah I guess it won't change JBs buying habits - they're still going to buy new games from distributors in order to sell at their stores at a profit, why wouldn't that change.

          I guess the key points are that a the used game revenue stream has been hampered for all retailers in relation to Xbox One, so I can only imagine that they limp on as best they can in regards to PS4 used games.

          I agree that JB are well priced to shrug off that loss of income as they do have other revenue streams (dvd, electronics, computing, new games, PS4 used games) but that it will make things much more difficult for the likes of EB games and the independent stores.

          Is Microsoft jumping on a grenade? Sacrificing customer loyalty in order to seriously weaken the used game market. Could be. Brave move. Commendable even.

            My bad, didn't realise you'd been corrected before me.
            It might have changed if JB relied on the Used Game market like EB. EB might decide against buying from publishers that don't support used games as a message. In this market thought, that could be suicide.

            Stores that rely on used game sales will soldier on, they might have to expand their catalogue to include other niche products or they might even start to carry more movies again.

            As to Microsoft jumping on a grenade, I doubt it. They are making a calculated decision to keep publishers happy over consumers. Publishers that opt in will see money from something the retailers already offer and has become commonplace. As opposed to the current strategy of 100% retail profit.
            The publishers being happy is far more important than consumers. Consumers can complain about policies all they want, the loss of a few thousand Xbox ones isn't going to phase them. If a publisher doesn't produce for Microsoft, that will cause issues, consumers might be turned off the Xbox if a cross platform game (CoD) suddenly isn't available.
            These policies might even get some exclusives (mostly from EA). By locking up the publisher into an exclusive Microsoft might even convert some of those complaining consumers since there is no way to play the game otherwise.

              That's true, but keeping publishers alive and profitable helps consumers - they do after all fund the production of the games we purchase. Sony might have impressed the crowd at E3 and many others but I'm not sure that, in the long run, they can continue that attitude forever. Microsoft believes that eventually everyone will have to adopt a model similar to theirs (in terms of DRM) and if they're right, Sony is going to look like the biggest hypocrites of all time.

              Last edited 13/06/13 9:21 pm

      Here's how I work:
      * Get consoles from Big W/EB (via a bundle) or online, then
      * Get kick-ass surround system from JB HiFi so I can gloat to the whole neighbourhood.

      BTW: I am kidding with this. I'm not that mean.

      Last edited 13/06/13 11:14 am

    The only impact this has is on the few independent retailers left, who will be unable to function on the margins available on the XBone 2nd hand games.... And pawn shops.

    Smart comments. It makes good business sense not to antagonise Microsoft, or customers who support them, regardless of what they actually believe will happen (especially so far ahead of time, when nothing is set in stone).

    In some ways MS new system is advatageous for larger retailers: as near as I can tell, you have to have an arrangement with MS to 'reactivate' a new game. Consequently, it'll kill used game sales on Ebay (which was always a better deal).

    Important to remember that JB have a pretty big trade in computers as well - getting on Microsoft's bad side is bad for them, from a business standpoint. They've also still got the opportunity to make money on the sales of consoles and new games (unlike the PSP-Go, where they can't make any money on games at all).

    It's companies like EB/Gamespot that will take this badly, because they don't have the other streams to make up for losses in used game sales.

      so they will have to focus more on good game merch not just skylanders and nintendo... They want the gamer market? Then freaking win them!

    Consoles themselves are typically a zero margin product and retailers are usually reluctant to sell products they can’t see some sort of return on in the future. The used games market, by far, has the highest margins in the retail space

    So does that mean that because you cannot trade in a used Xbox One game so then for JB Hi-Fi to recuperate that loss, then wouldn't it mean that they would have to raise the prices of Xbox One games?

    Retailers still have bargaining power in this department. The only question is: will they exercise it?

    How to they still have power in this department? I thought that all Xbox One games come with a code to install on the disc, once the code has been used that's it, if people want the game, they have to pay another fee on top of what they paid for the game itself. I could be wrong here but that's the way i see it.

      No. On the consumer end, used games will work as they always have (in relation to retailers like EB/JB).

      You trade your game in, get nothing for it, done, just like now.

      It's the private selling and eBay selling that is effectively cut out. Unless of course Microsoft gives a web based portal for us to use to unlock a serial key. Would it be an extr ahassle? Yeah, but would it make things exactly as they are now? Yeah.

        Hopefully if there is activation they'll have a QR code in the box or something you can scan with Kinect.

    It's also probably worth noting that since it's up to publishers to restrict or block used games, and since so far it seems no publisher wants to do that, that used game sales won't actually be affected for the vast majority (if not all) games on Xbox One. At worst retailers will have to cough up a few bucks from used game sales to publishers, which seems fair enough to me.

      THANK YOU no one under stands that microsoft won't see a dollar from used games the publishers and dev's will

        I'm sure Microsoft will get a fee for administrating the transaction. Even if it's tiny percentage they worked out how to make money off this before they implemented it.

        Consoles get a fee for every game released on them, that's why they can sell the hardware at a loss if necessary to get an install base to get more people to make games on their systems.

          I thought they specifically stated that they would not receive any benefit from a used game sale and they would not charge retailers/publishers a fee when a game is re-licensed.

            Note my wording, they don't benefit from the used game sale, they benefit from the administration of it. That's the kind of legal double talk they use to get around things like that.

              The official word is: "We designed Xbox One so game publishers can enable you to trade in your games at participating retailers. Microsoft does not charge a platform fee to retailers, publishers, or consumers for enabling transfer of these games."

                I stand corrected.

                  I'm none the less surprised though. I fully expected MS to dip their finger into this pie, they aren't shy in asking for money.

                In response to your message about fingers in pies.

                Perhaps they think they will get more exclusives and more games if Developers can get in on this used market. Of course Microsoft are asking us to buy a bottle of wine from a guy with purple feet. So there's no telling if there will be a used XBone market at all.

                The only points in it's favour so far is the XBone is only screwing us $100 extra rather than PS4s $150 extra. And the XBone may be cheaper than a PS4 and Eye toy. I also think MS will do their best not to let the XBone flop, and if that means radical price drops and dropping restrictions they'll do it.

                  Yeah I think they wanna schmooze the publishers and become a favoured platform. It remains to be seen if it will work. The future of gaming is digital distribution and MS are taking a risk by throwing all thee gags into that market before the consumers are ready. It could end up being a really smart decision or a blunder. Either way there'll be a day in the future where'll we'll tell our kids about this concept of buying a game in disc form from a store

    Does everyone know that people will still buy discs? Also, that discs still have margin too?

    PSP Go was 100% digital only so how is that even a comparison? Also, there will STILL BE USED GAMES.

    At worst, their margins will drop a bit. That's all. Christ almighty, you'd think all this drama would be over something more relevant in the scheme of things as opposed to some luxury item no one is being forced to buy.

    the one thing i love about JB is they don't try to pressure me into buying a used copy of a game, a few times i have been asked if i would rather a 2nd hand copy for like 15 dollars cheaper and after saying no asking me if i'm sure.

    Some speculated that the Xbox One’s used game policy might push retailers into some sort of silent boycott.

    Hang on. Didn't Microsoft say the control of used game sales were in the publisher's hands? AND used games would be able to be sold by certain approved retailers? I'd assume by this that EB Games, JB Hifi etc would all be included. If this is the case, who is actually going to boycott the Xbox One? The tiny independent games retailers that don't want to officially participate? I think everyone will participate or am I missing something here?

    Not only that, I'd see publishers controlling used game sales using registration key based systems with uPlay, Origin etc. If this is the case, how is this going to be ANY different from any games that are released on the PS4 if the publisher still has the same registration key based systems -> See Battlefield 3 multiplayer and Diablo III. If it is a registration key that is needed, I'd see these being supplied to retailers like EB Games and JB Hifi to include with used game sales.

    I'm only playing devils advocate here, but I think it's far too soon to make any assumptions about how used games sales will work and who is going to miss out. I still think we are going to get pineappled by publishers regardless of which next gen console we own or if we choose to play on PC. Seeing this as an Xbox One only problem is naive.

    I remember working at Game when the EA online passes came through. It caused a shit load of headaches, but the people buying them didn't dry up. We really thought it would. It would be silly to suggest it didn't have a impact, but it didn't stop people from buying EA titles. We used to tell people you may need to pay $15 to play this online, it made some people twinge, but most people shrugged and bought it anyway. Not sure if these people don't play online, or were happy to pay the extra charge. I don't think it will change that much from that situation with the Xbone games. You will still be able to buy them 2nd hand, you will just have to pay MS/Publisher to use them.

    That makes sense, from JB's point of view. The only change to their retail practice would be the small addition of fine print to their pre-owned price sticker that says something like "Warning: the publisher of this title may require you to pay a fee in order to play this game. See xbox.com/en-AU/license for more details".

    Used games doesn't seem to be a massive feature of JB Hi-fi's games section, though. They certainly don't push them (or push you to trade in) nearly as hard as EB Games does, and the shelf space they take up has been pretty small in most stores. And considering you can buy games new from them at the same price you would buy used from EB... not really surprised that they're unbothered. Probably won't even register on their bottom-line.

    More interested in what EB games has to say since 90% of their stock is pre owned and they're focus is on games alone.. sort of.

      Why would EB have a problem. Basically if a publisher choose to enact the policy then EB are likely to pick up many more sales. The intention is to block the eBay type sale.

      From my recall people on your friends list, that have been there for over thirty days can use your copies of games. If this is the case then an eBay purchaser would have to wait 30 days to play it assuming you become their friend. If the DRM closes down that hole then sellers are more likely to use EB and co. more for trade ins which in turn leads to greater turnover. Publisher gets a lick and all happy days.

      If MS take market share as it looks like they will, they are more likely to snag game exclusives from publishers.

      BTW, Xbox live mp kicks ass. Sony are already 7 years behind, just now copying ms by allowing headset into their controller. And as for matchmaking if Sony control it they are light years behind in a model, much like apple with its maps, and if you are used to Xbox live, psn is going to make you cry and wonder why oh why oh why.......

    I wonder if the smaller more indie game stores will stock Xbox 1 games?

    I preordered my XB1 @ JB today. They are taking $10 preorders.

      $10 deposit for a limited time I believe

    I've ordered both consoles, but without a doubt I prefer the less Japanese style and more western games of the Xbox exclusives. Only exclusive games I liked on the ps3 were Uncharted series and Heavy Rain.

    I find myself downloading some of the free PSN games, but get bored of them very quickly.

    Also as I've posted earlier, PSN is too far behind in matchmaking, MP is my preference when gaming, and so far MS have not only proven they are the best they are taking it to the next level.

    The idea of being able to watch a movie and have a notification pop up and say Fifa matchmade game available, "Xbox play FIFA", straight into the game plus it pauses my movie is just.......,, well....... a mp gamers wet dream. No more having to wait at a screen playing on my mobile because I'm bored so I don't miss a possible matchmade opponent.

    The reason I still get Sony is for the media capabilities like Music Unlimited.

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