Sorry Arron, but your point is even more short-sighted than you're accusing the games industry of being, and it only stands up if you assume used games exist in a bubble, which they don't- that if all second hand games disappeared tomorrow, nothing else in the world at all would change.

We all know that argument that the trade-in of recent games helps to subsidize the cost of new games for some savvy and perhaps cash strapped gamers. [...] new games if bought new are often closer to £45

New games would be significantly lower than £45 if there was no second hand market.

New prices are kept broadly high by the second hand market as they cannibalise unit sales- while it might not be the case that every consumer that enters a branch of Game and leaves with a used title would have otherwise purchased a new one had there been no used one there to buy, it is the case that when Game comes to make an order from the wholesaler, they are going to take potential used sales into account and reduce the amount they purchase - why should a branch order 100 copies when they can order sixty or seventy and wait for some to come back?

This means that the main expense in game production (development) has to be spread out over fewer copies, pushing up the wholesale price for everyone, and as the store are buying fewer units, they're unable to negotiate the same bulk discount they otherwise might (supermarkets pay a lower wholesale price than specialist stores as they purchase a greater number of units), squeezing their margin and pushing up the retail price for that store.

On a more narrow scale, they're also kept high by the simple presence of the second-hand market in the same store- for the market to work, the price of a used game needs to be noticably lower than the price of the same game new to make it worthwhile for the buying customer. This price then has to be so much higher than the price the retailer paid for it to make it worthwhile for the retailer. The price the retailer pays has to be high enough to make it worthwhile for the selling customer to bring the game to that retailer, and not a competitor or eBay (or if they even bother to trade it in at all).

If new prices come down, then all that collapses- a pound off the new price means that the used price has to come down by at least a pound, otherwise the used title might not be at an attractive price any more. If the used price comes down by that much, then the price the retailer buys has to come down by at least the same amount to maintain the (generally obscene) margins the retailer takes from such sales. And if the buy price comes down too much, then either people will stop trading in at that store, or will have to trade so many games in to get a decent amount of money that the retailer risks being sat on loads of used stock it can't sell.

If a retailer is dealing in both new and used titles (especially on the 50/50 scale that Game, Gamestation and increasingly HMV do) then it's in their best interest to keep new prices artificially high to save their used game margins. Now, I'm not going to accuse anyone of anything, but if a CEX exec told a Game exec to keep their prices up to save CEX' margins, it'd be called "Price Fixing", be massively anti-consumer and most importantly, illegal.

Yet if it's kept within the same store, it's aparrently OK?

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This still only treats the effects of the used market as being localised to the one title you've bought, however, which still understates its effect.

Branches of Game tend to be split about 50/50ish new/used in terms of shelf space, and as shelf space is finite, this means Game can only stock a certain number of unique titles, and has to be selective about what games they sell.

Now, they can either stock a niche or unproven title (such as, say, Muramasa: The Demon Blade) that might not sell very many units, or for the same amount of shelf space, they can stock a used copy of Modern Warfare 2 which they can sell at a high margin, on the shelf opposite another, artificially expensive new copy of the exact same game.

The prominence of the second-hand market (that sentence again, with the important word highlighted: The prominence of the second-hand market) is pushing entire games out of the market. While it's probably fair to say that this might not be immediately problematic for the big publishers like EA, it is going to trouble smaller ones, and it might make smaller games in EA's portfolio a tougher sell to retail.

You bring up sequels a lot in your post, and I'm sure there's a good few games you've played the first one of and want a sequel to, but never got one- the reason it never got one is because retail chose to turn it down altogether in favour of selling second-hand games again. (Which, of course, means the "I bought the sequel new because I bought the first game used" argument doesn't work- you can't buy a sequel new if there isn't one available.)

Although the good news is that in Muramasa's case, this had absolutely no detrimental effect whatsoever on its Japanese publisher, Marvelous Entertainment.

This is a big reason why I don't buy the easy "Games stores couldn't afford to be on the high street if they didn't sell used" defence- while something like a Muramasa wouldn't have set the charts alight even if it was available in more stores, there are a lot of markets not being catered for by videogames at all at the moment, and these markets would easily fill the financial hole left over after the current markets, keeping game stores on the high street, if only there was room at retail for their games. And you never know, these new customers might pick up an existing game as well, if only they'd had a reason to go into the game shop and find it there in the first place. (And, of course, there'll be better margins on games selling more units)

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At the end of the day we certainly need to stop the emotive way in which pre-owned is discussed

I'm afraid you've done a terrible, terrible job. :)

Firstly, I don't see the difference between games execs saying "Lots of people are buying used games, instead of new games- what can we do about this?" and them saying "Lots of people are buying DVDs, instead of games- what can we do about this?", and secondly, as you say it's become a little too emotive- whenever anyone does say that, everyone starts screaming about how TEH EVIL GAMES INDUSTRY wants to TAKE AWAY ALL SECOND HAND SALES AND BAN THEM!!1!!1.

Really, the problem is that most people on the pro-used games side not only think far too simplistically, but also overblow the views of the industry- by and large, the industry has no real problems with the concept of second hand, accepting that it is something that exists in other industries as well, but the scale on which it exists is sacred to the games industry- second hand DVDs and CDs are nowhere to be seen in HMV, and Waterstone's doesn't sell second-hand books, you have to go to indie back-street retailers or eBay for those.
Yet about half of the big games retailers stock is used product, and this is what needs to be tackled- but there's not really any way they can do this without bludgeoning indies and the likes of CEX as well.

You need to trade in because games are so expensive. Games are so expensive, because you keep trading games in. It's a vicious cycle, I know. There is only one way to break it, and that's to take second-hand out of the Games, Gamestations and HMVs, and force them into selling their games new, which will have the positive effects on games prices I mentioned earlier, and if you're going to trade in, use something like CEX, or better yet support your local indie retailer and do both your trade ins and your used purchases there.

The irony is that the thing that's going to make this happen is how supermarkets are currently getting in on the action- while this will lead to new people using the used market that wouldn't have done before, there's no getting around that it is going to divert some users away from Game, and they'll have to do something with that leftover shelf space, most likely order more copies of new releases and hold onto them for longer, or stock more different kinds of games than they would have done before, which will pull prices down and undermine the used market altogether.

What I'd like to know is have any of the publishers, either on their own or as an industry, done any serious research into what their actual losses due to second hand games sales are, or is this all just based on guesswork and assumption?

To me it seems that, when you add up all the people who buy second hand games - i.e. those who buy second hand games instead of new games, those who buy second hand games that they wouldn't have bought new anyway, those who buy a second hand game and then make a new purchase based on that game etc etc - then when all this is averaged out, they are probably making money out of second hand game sales, and I would be very surprised if it turned out that they actually lost that much because of them.

Of course, unless someone does some reliable research on this then we don't know, but I would have thought that the games industry, and publishers in particular, ought to do this first rather than risk alienating their consumers, and potentially losing money, by trying to prevent a problem that may not actually exist.

Here is a scenario for the game devs that they either don't see or want to admit to because it would make their case for attacking the pre-owned/online codes redundant.

I go into game and buy Title xyz pre-owned for £20, which incidentally the game devs see this as them loosing £20 even though they had the £40 previously, I think the game is absolutely brilliant and eagerly wait Title xyz Part 2 which I buy brand new. There we have the game dev making an additional £40 that they might not have otherwise made.

I'd be interested to hear what people think of the points I've made.