Used may be a four letter word among publishers and developers due to the constraints preowned games and a hits-driven market has put on the industry. But despite risk aversion and other drawbacks, have gamers benefitted more than they have lost by the resulting ecosystem that the used game market has created?

Used games are evil. That is the common belief amongst the developers and publishers of the game industry. Retail stores make a huge chunk of profit that the actual game creators don't get a piece of. And many point to this lost revenue as the reason publishers have been forced to become more hits-driven and more risk averse.

"It's killing single player games in particular, because they will get preowned, and it means your day one sales are it, making them super high risk," David Braben, the developer behind Elite and Kinectimals, said in an interview with Gamasutra earlier this year.

The sales data supports Braben. If one examines data on the top ten selling games in the U.S. of each year, supplied by the NPD Group -- in particular this generation's life cycle of 2005 to 2011 -- the signs of successful risks are minimal.

The top 10 for 2011 were all sequels. If you argue Red Dead Redemption as a relaunch, it's the only thing close to new IP 2010.

In 2009 and 2008, Wii Fit and Wii Play were the only non-sequels. In 2007, we see Wii Play again, and the first Assassin's Creed; in 2006, we find Gears of War, as well as a game for Pixar's Cars; and both 2006 and 2005 featured Lego Star Wars as the only non-sequel.

If we consider film tie-ins like Cars and Lego Star Wars as not being truly original, that means in seven top 10 lists, the only non-sequel original games were Creed, Gears, Wii Fit, and Wii Play, which included a spare Wii Remote. That's four games out of 57, or a mere 7 percent.

This climate of sequel success does limit developers. "It’s much harder to introduce a new IP to the market," says Adam Badowski, managing director of CD Projekt RED, the developers behind The Witcher and its sequel. "And when you look at costs of developing a triple-A title, this is an important factor when deciding what games to develop."

And like CD Projekt RED, other small developers feel that limitation. "You want to do whatever you want -- some art game -- but we are a business," says Jeremiah Slaczka, the creative director and cofounder of Scribblenauts developer 5th Cell. "We have 65 people right now and growing, so every month we have to be making money. We have to make games that we know are going to make money."

But this aversion to risk and the resulting hits-driven industry has also contributed to a complex ecosystem involving digital content -- an ecosystem that saw explosive growth in response to the used game market. And while less originality in games does not benefit developers or players, if you break down what other contributions used games have made to the industry, you find an ecosystem that may be more of a boon to the game industry and to the gamers that keep it all going.

The concept of the used games market has become synonymous with Texas-based retailer GameStop. The company has 6,700 stores worldwide, with 4,500 of those in the U.S. "We are leading the industry. There's no one else who's doing a better job of discovery, in both the physical realm and the digital realm," says Tony Bartel, GameStop's president.

Used product was $2.6 billion of GameStop's revenue in fiscal 2011 (February 2011 to January 2012), which is 27.4 percent of the company's $9.5 billion in sales. And though new games sales brought in more revenue, $4 billion, used products provide the largest chunk of their profit, 46.6 percent in fiscal 2011.

"I don't understand why there isn't some sort of deal in place where a game store couldn't sell a used version of a game for the first 30 days," says Slaczka. Suggestions like a waiting point or a profit share have always met with a negative response from the company. Bartel countered that only 4 percent of preowned games sold were released in the last 60 days, and that publishers are getting something from it.

According to GameStop, 17 percent of its new sales -- overall -- are funded by trade in credit. "We are giving [consumers] 17 percent toward the purchase of [publishers'] games today," says Bartel. "We have that form of unfunded discount that we give to the publishers." 

Additionally, according to GameStop, there was $1.2 billion in credit for 2011, of which 70 percent went to new game sales -- and the retailer sells 25 to 30 percent of the new games in U.S., the most of any retailer.

Bartel also pointed to the success of downloadable content at GameStop. The Mass Effect 3 launch was big at the retailer, with a 40 percent attach rate for the DLC, From Ashes, that GameStop pushed fans to buy. Says Bartel, "We are helping people to discover this great digital content, while enabling the sale of a new game through the use of our buy/sell/trade model."

But in a larger sense, GameStop contributed to the success of DLC. One only need to point to the three largest third party publishers as evidence: Ubisoft, EA, and Activision. All of their major titles get DLC after the initial release. And the business reasons for such DLC is obvious: one, the companies receive additional revenue from established fans, and two, they create a reason for the typical gamer not to sell the game back to GameStop after they beat it in a week. That gamer will hold on to it for that extra month or 10 to play new single player quests or check out successive multiplayer map pack releases. Gamers get more of their favorite franchises, and the companies get more money.

And multiplayer has gotten a boost by the used games market. Would series like Halo (with Waypoint) or Call of Duty (with Elite) have such complex multiplayer components if it wasn't for the used market? Would these companies try to build relationships that last months and even years without the business reason to combat the used game market?

Publishers say they are supporting the fans and that the developers want to provide great experiences, but there is always a business reason to back up the moves that publishers make. Fostering a multiplayer fan base that holds on to games for months, if not years, results in fewer used copies of their games competing with the new copies that will actually earn them revenue.

There is no better example of multiplayer evolving than free-to-play games. Just ask Ben Cousins, formerly the general manager of the developer behind F2P multiplayer shooter Battlefield Heroes, and currently the GM for mobile game company Ngmoco's Sweden studio.

"Doing a free-to-play version was seen as a way to avoid piracy, " says Cousins. "Both used games and piracy are caused by the same problem: that is that a lot of consumers don't feel the games are worth a high price point."

Braben agrees that the used market has resulted in higher sales prices for games. He said, "The problem is that's what's keeping the retail price up -- prices would have come down long ago if the industry was getting a share of the resells." And while the typical price of a new game jumped from $50 to $60 with the Xbox 360 and PlayStation 3, more competitive prices can be found in digital downloads.

From Origin, Steam, and GOG.com on the PC to Xbox Live Arcade, PlayStation Network, and the Nintendo eShop for consoles, companies find success when games are sold at a lower price point. They don't have to worry about the extra costs of physical distribution, higher prices, and the loss of sales to the used market.

"The traditional packaged goods business model grew up before we had any of these innovations like the internet, or the concepts of organized used game sales in the way GameStop does it," says Cousins. "It feels like technology is weakening the traditional packaged goods business, because they can offer things cheaply and more conveniently."

And digital distribution does more than provide games at a lower price; it provides a closer relationship between the gamer, the game, and the game developer. "Any gamer, wherever he or she is, can access tons of great games within a few clicks," says Guillaume Rambourg, the managing director of GOG.com. "Indie developers can finally talk directly to their fans and listen to their expectations to push the boundaries of creativity."

And some companies just want to simplify the business side of game creation. Says Badowski, "It makes the distribution chain shorter and eliminates many middlemen. Also digital distribution gives us more control over our products than retail."

But perhaps a mixed approach to distribution is the answer? "Many people still value boxed editions and the collector’s aspect of retail distribution," says Badowski. "In the future, we will create premium editions for brick and mortar sales and standard editions will go digital. I think this model will rule the industry."

There is no denying that there have been a rise in premium editions released this generation, a proven method for publishers to get additional revenue from their most ardent fans. And those editions with extra items and collectibles are not as frequently sold preowned -- another win for publishers.

Unfortunately, though many aspects of gaming have gotten a boost because of the used market, there has been a dark side to it as well. Many gamers have complained about expensive or frivolous DLC -- or even DLC that is on the actual game disc, yet companies make them pay for it. Slaczka says, "I can understand if it's a month out or a few weeks out, but putting it on the disc and charging the customer is completely bogus."

Such negative feelings are a concern for many. "I have this bitter feeling when I see quite a few games released with missing content or features, which are then sold separately as paid DLC," says Rambourg.

"I think this is dangerous, because while it can still satisfy some passionate fans, one should bear in mind that it is also making a lot of longtime gamers unhappy. Not only against this or that product, but against the gaming industry as a whole."

And then there are online passes, codes packed with games to play online -- forcing those who buy the game used, rent it, or even borrow from a friend to pay extra to utilize a core feature like multiplayer. "I don't know if I agree with online passes. The bigger thing is that the game stores haven't allowed any compromise," says Slaczka. "The game stores are like, 'Too bad; this is how it is.' And the publishers are like, 'Okay. Well, you're forcing our hands. We have to do something.'"

GameStop has noticed these digital trends and is preparing for the future by selling cards with codes for DLC and downloadable games, by selling Steam wallet cards, and by acquiring Steam competitor Impulse and game portal Kongregate to directly reach PC consumers. Bartel says, "As people move into all these other various forms of gaming, we are going to be the ones on the frontline saying, 'If you want to experience great gaming, we know what you like, and here's where you go find it.'"

And Bartel believes that GameStop's used game sales provide a more tangible benefit to the industry -- making the latest and greatest games affordable to more consumers. "We provide an alternative which no one else is providing, which is an opening price point for people to try some of these games and get them into the gaming ecosystem," says Bartel. "And that's why our new market share is expanding in an accelerated rate."

If the console makers push for discounted, digital versions of disc-based games, this may provide additional relief for cash-strapped players. And with rumors that future consoles will have anti-used game measures, the console makers may be out to kill the preowned market. Until then, GameStop has its advantage.

Others agree steps against the used market may be a prudent move. "I think the growth in used games sales is a mutually assured destruction kind of thing," says Cousins. "It feels like retail and publishers got themselves in to a dangerous game of Russian Roulette there, which neither of them really benefits from."

Braben also said that the used market has hurt publishers. "Pre-owned has really killed core games," said Braben. "I know publishers who have stopped games in development because most shops won't reorder stock after initial release, because they rely on the churn from the resales."

On the other hand, some think the industry's business practices have contributed. "I think it is high time our industry realized that it does have a direct influence on the emergence and regular growth of the used game market. More and more triple-A productions are released with missing features or content, which obliges gamers to download fixes and consider buying DLC," says Rambourg. "One should not work against one’s customers. Instead, we should cherish gamers and give them good reasons to buy a game upon release! This is the best answer our industry can bring in response to the used games market, and piracy too."

It may be inevitable that the used market fades away, that publishers and retailers both abandon it as the industry moves on. 5th Cell's next game is a downloadable multiplayer shooter for XBLA called Hybrid. "Going through a digital platform makes a lot of sense. I think all games will do that eventually. Maybe not this upcoming generation -- maybe the generation after that generation -- I am pretty sure we won't see packaged goods as the main staple of distribution," says Slaczka. "Nobody buys music CDs anymore. And people are buying Blu-rays and DVDs still, but streaming and Netflix is only going to get bigger. So games are obviously the next one to go digital only."

Cousins agrees that the industry needs to change. "What the traditional publishers are doing are trying to paper over the cracks in their business model, by adding all of these extras and these incentives for preordering the game, incentives for not buying it used, incentives for keeping hold of the game and not selling it, etc." Considering the problems that used sales and a hits-driven marketplace has created and the tactics companies has adopted to mitigate them, it is a fact that the used games has shaped the industry, but not just for the worse.

Your typically gamer benefits from downloads, from DLC, from well-supported multiplayer. The most fanatical players get premium editions with statues and the like. More frugal gamers get credit to spend on new games. And that accelerating transition to an all-digital distribution model may be the most lasting contribution that the used games ecosystem makes to the game industry.