But not necessarily by the person doing the purchasing. That's part of his point that isn't being made clearly. In Gamestop's model, they issue you a store credit so you have to go back to Gamestop. Once there, they pressure you into "saving $5" by purchasing a used copy of another game (through low buyback amounts, Edge cards, etc.).

In Dawdle's model, you get a higher buyback amount and aren't forced to shop at Dawdle. This user can then go buy the next latest title and repeat the cycle. Dawdle is trying to show how their model is better for both consumers and producers.

Why wouldn't you be able to sell your Gamestop Game somewhere else? I suspect what is happening is that Gamestop guarantees to buy your game for a certain price, which would be great (as in being a real plus compared to ebay). For another beneficial thing about used games is this: maybe 60$ is too much for me for a game, but I know I can sell it for 20$, so it really costs me only 40$. Therefore used games are good for the industry - without used games I might not buy any games at all. With the guaranteed buyback price of GameStop, I know in advance how much a game costs me. Some people might prefer that to putting in the work to sell on ebay/Dawdle for an uncertain price.

As for the original case, it makes no difference who buys the used game, what people seem to care about is the amount of money spent for buying new games. And that is the same for GameStop and for Dawdle.

Right - you're making our point. When GS buys a used game for $20, they re-sell it for $40 (49% margins). That means the value of the used product is $40. If you can sell it for $40 on Dawdle, a new game only really costs you $20.

That means your $100 in purchasing power gets you five new games: the publishers, developers, and retailers only benefit when you buy new product. We're trying to show them how used games can work in their favor if you cut out the GameStop middleman.

Edit: as for the uncertain price, we're working on it. With our StandingOffers, we might be able to find people willing to guarantee you $30 or $35 up front.

As an example of how that works, right now, I'll pay $25 for a platinum Wavebird (http://www.dawdle.com/product.php/wavebird-wireless-controll...).

You should think about the magic net gain. You can not just buy games for 40$, there must be buyers of used games. These don't show up in your equations. There is only so much money people will spend for games, you can not create more.

I am not saying that Dawdle might not be a better deal for the end consumer. Certainly lower margins means cheaper games means more games sold. But I don't think GameStop are crooks, they simply have an alternative business model. They might be more expensive, but in exchange they offer a different service (guaranteed prices, no hassle with online selling of your game). I don't know GameStop or Dawdle, btw.

Still - either Dawdle bankrupt, or somebody is going to buy that used game from them (at least high percent of that used games).

PS. I wish them all the best, but these charts and description using words like money multiplier is just Wrong (tm) :)

I agree, the silly red box that talks about Gamestop being "incented" to push used games is meaningless. In fact you could easily argue the effect is the exact opposite of what is argued: Because Dawdle does not give "credit" it requires the sale of a used game to continue the "money multiplier" process. The purchasing power to buy these used games has to come from somewhere but in the chart as shown that is never addressed, it is just a magic net add to the system. Gamestop, by providing the credit up front at least takes the risk of having to eat some of that investment and thereby possibly subsidizing the sales of new games from reduced profit on sales of used games.

Ah, I suppose this is why we should have done a little more exposition on the note rather than just target GDC attendees who already use the same terms - nothing is sekret on the intarwebs.

GameStop's margins on used products are 49%. They're 20.9% on new software and 6.5% on new hardware. [1] They make more money - revenue is meaningless, margin is profit - selling a used title at $55 than they do selling a new title at $60. That's why they're incented/incentivized to push used games at the expense of new games: that's the part of their model that pisses off the publishers/developers/retailers.

I don't follow the "magic net add"; the idea is that you start with $100 in cash and you move to the right over time.

[1] http://idea.sec.gov/Archives/edgar/data/1326380/000095013408...

magic net add is: to give somebody $40 for used game you must take it from somebody. For example by selling a new or used game to somebody.

This is not shown in lower chart, but is shown in upper chart. So in upper chart money are circling in closed environment(GameStop even takes some money out of it), while in lower chart there is some money coming from outside.

That is why these charts are meaningless.

You said your company has incentive to sell new games, because margin is bigger. OK, but if that is case, why at all you buy used games? Are you not planning to sell them?

Exactly, Dawdle cant forever buy used games for $40 and do nothing with them, they'd bankrupt. This is not real money multiplier (like in bank), because "new" money is not created "from air" but taken from other place.

So, for each used game bought by Dawdle either: a) Dawdle lose $40 b) Dawdle sells this game to someone (in which case this is exactly the same situation like in case of GameStop)

For Dawdle to survive amount of cash lost by unsold used games must be smaller than amount of cash earned by selling new and used games (only count margins there, not full prices).

I guess you're complaining that the first chart shows a used game purchased at the end of the sequence, but the second chart doesn't. If the second chart also ended with a purchase of a used game then the charts would be more similar. Also, the consumer would still be left with $20.

...but this is marketing so...

I don't see GameStop as taking a risk by giving you $20 store credit, as someone on this thread suggested, they're just ripping you off because, iirc, you can't get the same in cash, so your only choice is to buy from them.

No I am complaining that Dawdle is creating money out of thin air. Somebody must be buying those used games for 40$, and they don't show up in the equation.

As for ripping off, who is forcing you to buy at GameStop? I don't get it (I am not associated with GameStop and I don't know them either).

Right, and if the person in the second chart had finished by buying a used game they would be part of this equation. The difference being that they would be net up $15 and an extra game to play. To me it is clearly implied that there are used games being bought by other users of Dawdle.

As for GameStop being a rip off, I realize I have a choice and I never trade games to them because I feel the prices aren't fair. I prefer to keep my games and I don't play as much anymore anyway. I don't mean that Game Stop are unethical crooks, just that I believe they don't present a good value to me or my friends.

It seems to me to add up, in the second chart a used game would have to be bought twice, because there are two infusions of 40$ through "selling a used game on Dwadle".

Naturally, if you manage to sell your games for a better price, you are left with more money to spend. I don't see anything inherently interesting in that, just two stores with different margins and different kinds of services. Why is one considered bad and the other isn't?

I've heard negative reactions from game developers before and think they should pay more for popular used games, so I'm not surprised by this. On the Dawdle blog there is this post which links to a Penny Arcade comic which shows this seems to be an on-going thing. http://blog.dawdle.com/2009/03/why-penny-arcade-is-wrong-abo...

I found this post from Dave Perry which I think sums up why the developer feel slighted by Game Stop. I sympathise with them. If Perry is right they'll begin pushing things like Steam and sharing profits directly with MS and Sony for downloads. I prefer hard copies though.

http://www.dperry.com/archives/news/dp_blog/used_game_night/

It's a short post so I won't excerpt.

I must admit that I don't understand the issue. Why is it OK if users sell games, but not OK if shops sell used games (as dperry writes). I don't get it.

I can only tell it from my perspective, that is, why I am wary of Gamestop whenever I hear a developer complain. There are two reasons.

1. As I said. I feel Gamestop should make a better offer for poplular used games that they resell, or sell them for less than they do. I have seen very popular games go for a measly $5 less. But, of course I can't do anything more than choose not to trade with them.

2. I feel a certain loyalty to developer that make games that I like. I want them to make as much of the money I spend as possible. The same as I want my favorite music artist to make as much money as possible and only want there lable to make what is absolutely necessary. The team creating the game is where everything of value comes from and if GameStop is, as Perry suggests, doing everything they can to keep used games being sold at a higher rate than new games while the developers "pay to put standees and posters everywhere" then I reason they are damaging the bottom line for the developers.

If I haven't been able to express my point of view adequately in this post then I need more practice writing and it is probably to subtle an issue to matter. Competition and technology will eventually sort things out.

Yes. The chart struck me as highly suspect, that is why.