Take-Two Looks To 'Participate' More In Used Games

Take-Two CEO Ben Feder said his outfit is looking at the used game market, saying at a recent investor event, "we do believe that developers should participate in the product that they create."
As other publishers look to grab a piece of the billions of dollars of sales generated from the used game market every year, Grand Theft Auto publisher Take-Two said that it hopes to participate more in the preowned sector. Speaking at the G7: ThinkEquity conference last week, CEO Ben Feder answered an investor who inquired about the used game market's impact on the publisher. "The used game market is protected by U.S. law under the first sale doctrine, and we do believe that developers should participate in the product that they create. But it's a protected environment," said Feder, without going into further detail. Other publishers, such as Electronic Arts, Microsoft and THQ, have applied the practice of including one-time use codes in new games. These codes allow their initial users to download extra content without paying more than the initial price tag. But once that code is used, someone buying the game off the second hand market will have to pay extra for that content. "For sure, we think the used game market is large, we think it's an interesting market, I think it's something we should participate in. But beyond that I don't have much more to comment," said Feder. He briefly noted the U.S. Court of Appeals ruling that could potentially threaten the sale of used video games, but said "it's really too early to tell ... what kind of impact that would have." Another investor asked if broadband and wi-fi could become so ubiquitous as to completely eliminate the used game market. Feder was doubtful of such a scenario, stating "I wouldn't want to speculate, I think there are all sorts of technology schemes. I don't think you need ubiquitous wi-fi to be able to [eliminate the used game market], and I don't think the technology is very difficult." He added, "There's industrial logic that you have to deal with, industrial players that you have to deal with. I think we're all working together to find a workable solution for everyone." Even with the used game market, Feder said that sales contributions from Take-Two's catalog titles are still strong. "Our triple-A titles over time become catalog titles, and catalog is the backbone for visibility and profitability going forward," especially at the backend of a console cycle. "Catalog is a key success factor for anybody in the business." Take-Two is working on expanding non-retail businesses such as DLC and with the upcoming Civilization Network, social gaming. The publisher is also bringing an online-only version of its NBA sports games to China. Feder said that in the first nine months of Take-Two's current fiscal year, the publisher generated $61 million in digital revenues. "We think downloadable content is a terrific value add for the consumer, we do it mostly in response to demand ... and expand our margin," he said. The exec noted that the Gearbox-developed Borderlands and its multiple expansions as a prime example of a solid DLC strategy at the publisher.

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