Second-hand game sales are "a huge issue" - Epic

Dr Michael Capps, the president of Epic Games, has told GamesIndustry.biz that the secondary market is a "huge issue" for the industry, and that companies are increasingly needing to look for new solutions to protect their revenues.

"The secondary market is a huge issue in the United States," he said. "Our primary retailer makes the majority of its money off of secondary sales, and so you're starting to see games taking proactive steps toward that by... if you buy the retail version you get the unlock code.

"I've talked to some developers who are saying 'If you want to fight the final boss you go online and pay USD 20, but if you bought the retail version you got it for free'. We don't make any money when someone rents it, and we don't make any money when someone buys it used - way more than twice as many people played Gears than bought it..."

But when asked if the player or the retailer was to blame for the second-hand games market, Capps refused to criticise the gamers.

"I'd hate to say my players are my enemies - that doesn't make any sense! But we certainly have a rule at Epic that we don't buy any used games - sure as hell you're not going to be recognised as an Epic artist going in and buying used videogames - because this is how we make our money and how all our friends in the industry make money."

He went on to cite evidence from Crytek that the ratio for pirated to non-pirated versions of Crysis was 20:1 - precisely the reason why Epic has no plans to release Gears of War 2 on the PC.

"That's gruesome to a company like ours that's been in the PC market for so long," he said. "We're trying to fix it, there's a new alliance of companies trying to make PC gaming work again. But if people are playing games without buying them, then the games aren't going to keep coming."

Meanwhile he did point out some of the other benefits of digital distribution, particularly the speed and quality of sales feedback.

"I think we're a long way from losing the impulse buy when you walk into the mall or the game store and decide to pick something up," he said. "That's going to be there for a long time.

"But we love Steam. I know that day… not only do I get the cheque that day for all the games that sold, but I also know, we sold 28 copies of UT in Poland yesterday, and here's the money!

"We're able to respond immediately. That model's so wonderful from a developer perspective, not just making money, but knowing where my customers are and being able to make them happy. With retail, I just don't have that - I get 'Oh Europe came back with this many numbers,' and I get that 60 days after we ship.

"And I think DLC will be increasing in scope just because in the US we really need to make strides against the second-hand market," he added.

The full interview with Michael Capps is available now.