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Are used video games going away?

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(Credit: Joe Raedley/Getty Images)

If you play lots of video games, it’s a safe bet you’re pretty familiar with the delights of the used games market -- and if for some reason you’re not, you should be. It’s the perfect way to turn games you’re no longer playing into fresh, shiny new ones, and a handy method of getting some payback from your habit. What’s not to like?

Plenty, if you’re a game publisher or developer. They only make money from a game’s original purchaser, so as far as they’re concerned, used buyers are getting the game for free. And the amount of money on the table is considerable; used game products account for more than half of retail giant GameStop’s not-insignificant profits.

It’s hardly surprising, then, that publishers are fighting back -- and their tactics could spell the end of the used games market for good.

The Online Pass

If you’ve cracked open a new, triple-A console game over the past couple of years, you’ll already be familiar with this practice. The game ships with some of its features disabled, such as multiplayer, online social functions, or extra character customization. In the box is a one-use code that enables those features. But if you’re not the game’s first owner, chances are the code is used already, and you’ll have to pay $10-$15 to unlock the content the first buyer got for free.

Top publisher EA is particularly fond of the practice, bundling many of its games with an 'Online Pass' that unlocks multiplayer or other key features for the game’s first owner. Although they’re one of the key advocates, they’re by no means the only ones: Sony, Activision, Warner Bros., and Ubisoft have all released games featuring similar systems. In other words, it’s here to stay.

One-use codes don’t prevent used sales, but they do drive down prices, making games less desirable for buyers and chipping away at the profits resellers can make on them. Plus they provide a convenient way for publishers to get a slice of the used-game pie, as second (and third, and fourth) owners must each shell out if they want to get their hands on the locked content. Good for them, bad for you -- and not great for the overall health of the market.

Distribution is going online

Rather than have you buy their games in a traditional retail store, an increasing number of publishers are launching their own digital-distribution systems. These days, numerous full games are available for download on consoles, and on the PC a plethora of online distribution systems -- Steam, Amazon, Blizzard, EA’s Origin -- mean gamers don’t need to leave their house to get their hands on the latest release.

But when you buy a game like that, it’s inseparably tied to your account with that distribution service. You can’t sell it without giving up the whole account, and that’s a far less manageable process for both buyer and seller than just dropping a disc off at GameStop. In essence, it kills the used games market dead, and because game companies no longer have to give retailers a cut of the original purchase price or bother with physical packaging, it’s nothing but gravy for them.

That’s on the PC, though. And while consoles are being slower to switch to online distribution -- no doubt with their eyes on the 20% of U.S. households who don’t have broadband Internet connections -- change is coming here, too. Nintendo's Wii U features downloadable versions of new games on the same day and date of the retail release, as does Sony's PlayStation Vita.

Publishers aren’t going to ditch physical games any time soon -- not in the next generation of consoles, at minimum -- but digital distribution offers so many advantages to game publishers (and, often, to consumers, too) that it’s bound to happen one day. When it does, it’ll mean the end not only of used game sales, but of traditional game retail altogether.

The enemy within

As if that wasn’t bad enough news for the used games market, both Microsoft and Sony are rumored to be working on technology that could pit consoles themselves against the second-hand market. How’s that? By imprinting game discs with codes that’ll lock them to one particular user account or console, shutting down the used market in one fell swoop.

Unlikely? In technical terms, it’s apparently quite feasible. Sony recently filed a patent application on a technique for achieving it just a few months ago, and scuttlebutt circulating in early 2012 indicated Microsoft was planning to do likewise with its next Xbox.

If that’s got you widening your eyes in horror, don’t worry too much just yet. Rumors and patents notwithstanding, analysts widely believe it's highly unlikely any console maker will actually want to pull the trigger on such a draconian measure; it’d go down like a ham sandwich at a Bar Mitzvah with consumers, retailers, investors and...well, just about everyone, really. Foolproof, yes, final, yes, but not something we’re likely to see for the time being.

What’s the bottom line?

All the same, the prognosis isn't good. One way or another, it’s hard to be optimistic about the future of today’s used games market. Online passes continue to be commonplace, the next generation of consoles will have a greater focus on downloadable games, and the only reason we haven’t seen publishers implementing technological safeguards against the practice is because they haven’t figured out how to do it without touching off a public-relations nuke. Make the most of today’s cheap used games, because their days are numbered.

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