Developer Labels Used Games Worse than Piracy

May 11, 2010 -

The co-founder of Blitz Games Studios believes that pre-owned games are a bigger threat to developers than piracy.

Andrew Oliver told Develop that the “damage done” by used games sales would push publishers even more towards digital downloads. Oliver cited a figure that original copies of games are traded in up to four times to claim that such a practice effectively cuts publisher and developer royalties to such an extent that “the money going back up the chain is a fraction of what it was only a few years ago.”

Oliver added, “I understand why players do this, games are expensive and after a few weeks of playing you’ve either beaten it, or got bored of it so trading it back in to help pay for the next seems sensible when people are short of cash.”

Obviously Oliver is not alone in his thinking, especially following in the wake of EA’s plan to effectively charge $10 for online play with its used games. EA’s plan follows a similar initiative introduced by Sony earlier this year, in which online play in its latest SOCOM release for the PSP was tied to a redeemable code included with the game.


Comments

Re: Developer Labels Used Games Worse than Piracy

I find it funny that Blitz Games is trying to tell us what to do. Look at their developer history, has anyone actually bought one of their games?

The one claim to fame they have right now is the Karaoke Revolution series and that was created by Harmonix.

Re: Developer Labels Used Games Worse than Piracy

Oliver added, “I understand why players do this, games are expensive and after a few weeks of playing you’ve either beaten it, or got bored of it so trading it back in to help pay for the next seems sensible when people are short of cash.”

No I don't want to pay for a high priced game, when I have other obligations to fulfill w/my money. I will wait to get used games instead of paying the full price. Now I will pay in advance for an upcoming game to come out like right now: Halo: Reach. & I'm buying the Legendary edition. W/the cool figurine. The game industry is starting to become greedy making this statement, if not greedy already.

 

 

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Re: Developer Labels Used Games Worse than Piracy

I hate to be so crude, but these guys can go eat a dick.

Re: Developer Labels Used Games Worse than Piracy

I don't think used game sales are hurting Blitz games nearly as much as I can't think of a single damn title they've released, just like Edge

Re: Developer Labels Used Games Worse than Piracy

Okay, let's go through the numbers and refute this notion that used games are bad for the industry ONE. MORE. TIME.

A few quick metrics, first:  Gamestop in recent filings (I think FY 08, but may have the year wrong; I'm certain it's within a back-of-envelope calculation) made a gross margin of about 27%.  That is, For every dollar of revenue they take in through the till, they paid about $0.73 to whomever sold them the game.  For a new game like Final Fantasy XIII, that's about 15%; for a used copy of the same game, they paid somewhere in the $25-30 range to sell at $54, and they bought back enough copies of Barbie Horse Adventures (that never sold) to reduce the total take from the used profits down a few points.  If I were to show my work, the record would show that about half the chain's profits come from used games, but only one fourth of the chain's SALES come from used games.  For every used game sold at the standard new game pricing point, THREE new games are sold at a figure 10% north of that mark.

All of this means that if used games went away, the new games market would, in a vacuum, gain no more than about 30-35% in sales.  It simply CAN'T gain more from the market share of used games because, well, that pretty much reduces market share in used games to zero.

But there's more to it than that.  When Gamestop or rivals give a gamer $25-30 in credit for their game, what does he do with that money?  That's right, he BUYS MORE GAMES.  And as we've seen, 75% of the time, those will be new games.  Get rid of the used game market, and those sales are, at best, cut in half - because game churn lowered the cost of entry on new games to a used game plus $30, and not having the credit means that the gamer has to save up twice the cash to get his new game.

So now we're down to an upper bound of 15-18% gain in sales from the elimination of used product from the chain, and we haven't even touched on the most obvious problem from a developer's standpoint: the killing of the game store.  Used sales keep game stores afloat.  They provide half the revenue for a chain like Gamestop; get rid of it and they can keep the lights on or they can staff the store, but they can't do both.  Before used games flooded the market, retailers enjoyed margins of 30% or more from distributors, but margins for retailers dropped as the pressure to hold the line on end pricing met higher costs from the studios.  If gross margin drops to 15-18%, Gamestop will either diversify in a hurry or hemorrage.

Of course, XBox Live and PSN Store will help pick up the slack in game sales to a degree, but if Gamestop sees its margins cut in half and folds or even cuts back its videogaming profile in favor of a more meaty lineup of product, you're still going to see lessened visibility in thousands of locations translate into massive drops in sales.  If Retailer A sells 5000 copies of a game and Retailer B sells 5000 copies of the same game, and Retailer B closes shop, Retailer A isn't going to sell 10000 copies of the game.  They'll sell 8000 or fewer.  I've opened stores; I've closed competitors.  Eyeballs still move product.  Especially yours, Andrew Oliver.  Ain't nobody picking up ARE YOU SMARTER THAN A FIFTH GRADER at midnight release parties.

So if you gain 15% of customers from killing used sales, but you hurt your distribution network to the degree that 20% fewer people purchase your product, what the hell have you accomplished?

 

Re: Developer Labels Used Games Worse than Piracy

Not to mention the negative impact this will have on sales as a whole because your math here is assuming that the gamer in question buying new games, trading them in, and then buying more new games would continue to spend the same amount of money, should resale be eliminated. The problem is that that assumption is a logical fallacy: With this gamer's cycle of purchase, return, and purchase, new games don't cost him or her $69.99 plus tax. They might come out to a total of thirty bucks, which is a much more reasonable cost for someone who's buying a game they're not sure they're going to like. As the actual cost a consumer pays for a product increases, the actual number sold decreases exponentially: While 50,000 gamers might be willing to trade in a game they're finished with to buy the next newest game for thirty bucks, it might only be 10,000 who'll pay another $69.99 for the next newest game while having to hang on to the game they've finished.

Not to mention the negative publicity that some of the more draconian measures might take, let alone the ramifications on pricing for players. Sure, a game like Modern Warfare 2 could reasonably expect to limit their "activation code" to the online portion of the game, but what of the people who only WANT to play single player? They might see it as unreasonable to have paid for a section of the game they'll never use and demand that companies start putting out a new version of the game which is cheaper and forgoes the online content, which would split the production (raising costs) or be ignored (and potentially lose sales).

Where this "activation code" issue would get murky is games which are primarily single player to begin with, meaning that consoles might soon be required to be online in order for a game to function. Activate your game using the card in the case, and you'll be allowed to play through the final dungeon of Final Fantasy XV! Enter your code now to fight Bowser! Ending Unlocked, please pay with your credit card in order to view! Even if one were to set aside the issue that not every console is online, such a system would be a marketing nightmare. Gamers have, for decades, been able to share and trade games with friends. Swapping games has been a tradition since cartridges were invented. Convincing consumers that this loss is somehow for the better is going to be, at best, a very difficult sell.

Re: Developer Labels Used Games Worse than Piracy

So, by math we come to the conclusion that fighting piracy, especially to the extreme, makes it worse and not better for profit. You have now added the proof for resale. WTF are they doing??!

Re: Developer Labels Used Games Worse than Piracy

No one wants to off used sale rather they would like to gain a small percentage of it to trickle back to the copyright owner. Which IMO is no more unreasonable than making it so copyright can not claim infringement over things traded in a environment where profit or monetary gain of any kind is not even attempted.


Until lobbying is a hanging offense I choose anarchy! CP/IP laws should not effect the daily life of common people! http://zippydsmlee.wordpress.com/


Copyright infringement is nothing more than civil disobedience to a bad set of laws. Let's renegotiate them.

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Re: Developer Labels Used Games Worse than Piracy

I own copies of Chrono Trigger and Suikoden 2, complete with packaging.  These games have appreciated in value since their original release.  If I decided to sell them on eBay, I would be under no obligation to give money to Sony, Nintendo, Square Enix, Konami, et al.

Among other reasons, this is because it's not the games themselves that have that value -- you can buy Chrono Trigger on the DS, or Suikoden 2 as a download on the PS3.  The value is because I have these games in their original format and took good care of them.

If the publishers and rights holders want to make money selling those games, they can (and do) in selling them for current systems.  If they want to make money from ME selling MY games, however, they can go to hell, because those games are mine, not theirs.

Re: Developer Labels Used Games Worse than Piracy

Copyright is exactly that, a right to make copies.  No new copy means they are due $0.  It is absolutely unreasonable to expect copyright holders to be due a fee on resale because the buyer has rights too.

my vanity is justified

my vanity is justified

Re: Developer Labels Used Games Worse than Piracy

If the game developers want to make more money off of their games, they should try selling more merchidise.  I'd gladly buy a T-shirt of a game I bought used and enjoyed.  Plus, they'd probably make more money from me than if I had just bought a new copy. 

Re: Developer Labels Used Games Worse than Piracy

But then people could buy used CLOTHES without giving them money!  It would be an OUTRAGE!


Re: Developer Labels Used Games Worse than Piracy

I dunno one could stretch copyright to patents(I'd rather have it the the way around) but media is a different beast unlike a patent that may degrade into public use rather easily a copyright is protected by the license and as per sale of that license there is nothing inherently wrong with wanting a cut from its for profit distribution.


Until lobbying is a hanging offense I choose anarchy! CP/IP laws should not effect the daily life of common people! http://zippydsmlee.wordpress.com/


Copyright infringement is nothing more than civil disobedience to a bad set of laws. Let's renegotiate them.

---

http://zippydsm.deviantart.com/

Re: Developer Labels Used Games Worse than Piracy

Nobody's talking about buying and selling copyrights, we're talking about buying PRODUCTS that are COVERED by copyright.

Products are covered by first sale doctrine.  Once I buy a product (or it is given to me), it's mine and I have the right to resell it.

UMG v Augusto was a music industry case that reinforced this notion.  A DJ resold promotional CD's that had been given to him by publishers; UMG tried to claim this was a copyright violation.  It wasn't; they gave him the CD's and, therefore, the right to resell them.

If you buy a game, you have the right to resell it.  And yes, there absolutely IS something wrong with the publisher wanting to be paid when you sell something that belongs to you.

Re: Developer Labels Used Games Worse than Piracy

Thats not quite how licensing works, yes first sale protects the consumer and even the retailer for resale of the work in question. That's not my point look at today's world in the digital age the movement of X for profit should trickle back into the licensed stream. There is nothing internally wrong with the ideal. Its when you start trying to split pennies people get their nose out of joint.


Until lobbying is a hanging offense I choose anarchy! CP/IP laws should not effect the daily life of common people! http://zippydsmlee.wordpress.com/


Copyright infringement is nothing more than civil disobedience to a bad set of laws. Let's renegotiate them.

---

http://zippydsm.deviantart.com/

Re: Developer Labels Used Games Worse than Piracy

Even if I agreed with the premise (and I acknowledge that restricting first sale for digital goods is legal, I just don't think it's ethical), we're still talking about physical goods here.  These aren't digital downloads, they're carts and discs.

Re: Developer Labels Used Games Worse than Piracy

Used item sales are an integral part of the economy, and have been since the first used item was sold umpteen thousand years ago.

Used items satisfy multiple parties: The buyer: getting the item they want for less, the seller: getting money for their unneeded item and finally: the party that the seller uses the money to purchase from.

Without the used sale there would be significantly less money circulating and far less new purchases. If I can't ever get rid of an item, why should I buy it in the first place?

Re: Developer Labels Used Games Worse than Piracy

It often even helps the publisher -- if I buy a game used and I like it, I'm more likely to buy a game from that publisher new in the future.

Of course, that assumes the publisher makes good games, so it wouldn't be much help for Blitz.

Re: Developer Labels Used Games Worse than Piracy

That, and selling a game you're done with gives you money you can use to buy more games. I'm not sure publishers realize that consumers have a limited amount of cash, and they can't spend that cash if it's locked in un-sellable old games.

Re: Developer Labels Used Games Worse than Piracy

 In musing about how we as a society should look to how profit is derived from distribution and not distribution,copies,ect itself. Its the flow of distribution where a profit is attempted that should be locked down and be made into licensed only, if it is not licensed then it can not generate money.

 

This dose not jsut mean websites that take donations or ad rev this also means the sale of used media as its no different IMO(something copyrighted is moved for money).

Of coarse the most the CP owners should get is 5-10% off the sale, and frankly we could use a simple net/digital storage tax as well so put that 5-10% on ISPs and digital storage devices and discs.

 

It would not be to hard for publishers to ban togather offer insentives and insted of making this part of it law that might fail aginst doctrine of frist sale make it supplemental to the the tax and something retialers of all sizes can ge onbaord with to save money on new items to give alil profit off thier used item sale.


Until lobbying is a hanging offense I choose anarchy! CP/IP laws should not effect the daily life of common people! http://zippydsmlee.wordpress.com/


Copyright infringement is nothing more than civil disobedience to a bad set of laws. Let's renegotiate them.

---

http://zippydsm.deviantart.com/

Re: Developer Labels Used Games Worse than Piracy

Mm-hm, of course used games are a threat to Blitz Games, and not the fact that they don't make good games. Seriously, look them up on Wikipedia. They've only made one retail game that wasn't a licensed product, and that game was Fuzion Frenzy. [shivers]

Representin' starmen.net

Representin' starmen.net

Re: Developer Labels Used Games Worse than Piracy

Hardly shocking to hear they don't like used games... but I mostly stopped buying used games.  Not because I was feeling altruistic but because Gamestop et al offer such a pathetic discount off the new price that I figured I should just get the new game.  It's ridiculous to buy a used game for a little as $5 off the list price and someone traded it in for probably as much as the "discount".

I don't trade in my games for the same reason.  I don't see why Gamestop should make so much more profit off it.  More often than not I give them to a friend or someone at work if I really don't want to play it anymore.

But if you want to buy used games (all the power to ya), I have a hard time feeling pity for the game publishers.

Re: Developer Labels Used Games Worse than Piracy

Why use gamestop when you have ebay? At least you know that the money you pay for the game is going to the guy who's selling it...

Re: Developer Labels Used Games Worse than Piracy

Agreed.  I usually buy new games mostly because used games tend to be only about $5 less.  And I never sell my used games; I keep my NES collection on display in my living room and once in awhile I'll have some friends over and break it out.

So I rarely exercise my right of first sale.  But to hell with anyone who would deny it to me.

Re: Developer Labels Used Games Worse than Piracy

In other words, you're willing to speak up for a right you will not exercise yourself. That is very, very good. :)

Re: Developer Labels Used Games Worse than Piracy

And now even buying new is punishing for the consumer with things like EA's new online plan for their games. 

I have friends that live together and just share games between themselves all of the time (why buy it twice if it's already in the house) or games that I buy my son plays on his own profile alongside me on my own...but now we have to pay MORE money just to play it online, or to be able to get updates and the downloads that actually unlock things we already bought that are locked on the disk??? 

All this is doing it endering people towards stealing the games so they work when you need them to (Assassins Creed II anyone?), or just not playing those games and looking for ones that will allow play for multiple people in a house without having to buy all of these things. When you purchase something, you have the right to resell or do whatever you want with an item within the limits of the law.  If I choose to buy a game used because someone else decided they don't want it anymore, that is both my choice as well as the choice of the individual selling the game.  The developers and publishers have no right to any of that money for that copy because it was paid for when it was purchased by the RETAILER originally...even before it was sold for the first time.  This is why a store can put items on sale at one price somewhere to compete with someone elses cost.  The store is deciding on the sale cost of the game/their percentage of profit on the game against the cost they paid to the publisher for the games themselves.  And the publishers paid the developers for the games already at this point. 

I'm a collector.  I go back thru my games all of the time with my son and let him enjoy the things I played growing up so that he can get a full history of our beloved hobby...but what happens when he tries to take this collection and show his children?  Sorry kids...I promise Mass Effect was a great game...we just can't get any of the other stuff unlocked anymore so we can never play it again unless we hack it or get a downloaded illegal copy.  Just imagine how books would be if they were like that...if someone lost the license for Shakespeare and whole sections were locked away because he's dead now and we can't update it anymore. 

Thanks for the rant!

Zen aka Jeremy Powers
www.ZensPath.com
Xbox Live Gamertag: "Zen of the Dark"
PSN Gamertag: "Zenspath"
Wii System Code: "4919 8280 4221 9114"
 

Zen aka Jeremy Powers
Editor and Host of the Zenspath Podcast (now on iTunes)
www.ZensPath.com
XBL: "PsychoticZen" PSN: "Zenspath"
Nintendo Network: "Psychoticzen", 3DS: "0860-3238-7260

Re: Developer Labels Used Games Worse than Piracy

Right. Used games "damages" developers. I suppose so does actual gameplay value. After all, the longer you spend playing the game you've already bought, chances are it will be longer before you shell out the dough for another title. So better make games super short so you'll have to buy the next one ASAP.

Re: Developer Labels Used Games Worse than Piracy

Or just make the game terrible so people won't want to play it for very long.

But better base it on a license, so people will buy it anyway!

Blitz Games appears to be way ahead of me on this.  Now they just have to work out a way to prevent people from SELLING the terrible games they don't want to play anymore.

Re: Developer Labels Used Games Worse than Piracy

don't forget the new numbers showing that the U.S. buys a TON of games each year - more than other countries. so these greedy devs are angry that they aren't breaking sales records MORE than they already are and want a cut off of trades. MPAA pulling the same crap saying pirates are ruining their sales but they break records every year. people are starving and these dbags think we owe them more swimming pools. what you're witnessing is consumer warfare being waged upon us. I rent and buy used because of this almost exclusively and guess what, as another commenter noted, I'm still contributing to their business since I play copies that were purchased (if not directly by me).

Re: Developer Labels Used Games Worse than Piracy

I don't think it's the devs who are greedy so much as the publishers.

Re: Developer Labels Used Games Worse than Piracy

legbone connected to the kneebone, etc. besides, this impotent rant was from a dev.

Re: Developer Labels Used Games Worse than Piracy

Well, yes and no; he's a dev-turned-publisher, right?

 

Re: Developer Labels Used Games Worse than Piracy

It's tough all over.  I have a degree in computer science and I'm working in a dead-end temp job that I could have done straight out of high school.  And I consider myself lucky to have employment at all.

Oh, but I'm sorry, the guy who became a millionare by making games was telling me how tough his life is because people don't want to pay full price for Bratz Girlz Really Rock.  Carry on.

Re: Developer Labels Used Games Worse than Piracy

The royalties were received on the sale of the product when new.  Expecting to make additional money off of it when it is used is illogical.  SOMEONE had to have bought a game new for it to be available later as used. 

A couch manufacturer doesn't receive additional money when a couch is sold at a second-hand store or a yard sale.

A DVD manufacturer doesn't receive additional money when one of their products is sold in a pawn shop or at a flea market.

A car manufacturer doesn't receive extra money when one of their cars is sold used through a private consumer newspaper ad.  How much, if anything, do they receive when sold on a used car lot?

Nightwng2000

NW2K Software

http://www.facebook.com/nightwing2000 Nightwng2000 is now admin to the group "Parents For Education, Not Legislation" on MySpace as

http://groups.myspace.com/pfenl

Nightwng2000 NW2K Software http://www.facebook.com/nightwing2000 Nightwng2000 is now admin to the group "Parents For Education, Not Legislation" on MySpace as http://groups.myspace.com/pfenl

Re: Developer Labels Used Games Worse than Piracy

Amen. The game industry seems to be the only group that complains about its used market and thinks it's entitled to have a cut of secondhand sales or find a way to destroy said sales. They've been paid for the product, and they really just need to get over it an accept that, once they've sold it, they have no say in what happens to the game.

Re: Developer Labels Used Games Worse than Piracy

EXACTLY

His analogy is absurd at best, in fact what he is saying sounds like double dipping to me. 

Re: Developer Labels Used Games Worse than Piracy

You know what pisses me off?  Libraries.  Those bastards have been getting a free ride for too long.

And eBay.  Screw all those guys for selling used stuff without giving money to the original publishers.

Now if you'll excuse me, I'm going to go to the antique store and raise some hell.  And kick over any garage sales I pass on the way.

Re: Developer Labels Used Games Worse than Piracy

Great, so if you understand why gamers do this, then you understand the problem.  New games cost $60-$70 now, and most of them are crap.  Either drop the prices to compete, or make something actually worth $60.

Re: Developer Labels Used Games Worse than Piracy

Heaven forbid they drop the price of the new game down by $10 dollars so that only the used copies are the original $60 to $70 after their little $10 dollar hissy-fit tax.  That would save someone money OTHER than themselves...can't have that.

Zen aka Jeremy Powers
www.ZensPath.com
Xbox Live Gamertag: "Zen of the Dark"
PSN Gamertag: "Zenspath"
Wii System Code: "4919 8280 4221 9114"

Zen aka Jeremy Powers
Editor and Host of the Zenspath Podcast (now on iTunes)
www.ZensPath.com
XBL: "PsychoticZen" PSN: "Zenspath"
Nintendo Network: "Psychoticzen", 3DS: "0860-3238-7260

Re: Developer Labels Used Games Worse than Piracy

Make your own shops, combining forces with other game companies to run them? That way the Used Game profit goes into your own companies, instead of the retailers.

Re: Developer Labels Used Games Worse than Piracy

That wouldn't go down well.

Movie studios tried that with theatres back in the early 1900's and the government put their foot down and forced them to seperate. Such a set up create a monopolistic environment.

Can you imagine these game publishers pricing their competition out of the market so that they can get all the sales?

E. Zachary Knight
Oklahoma City Chapter of the ECA
http://www.theeca.com/chapters_oklahoma

Re: Developer Labels Used Games Worse than Piracy

They already do that now, but you're right, newcomers would make a lesser profit and thus be forced to stick to download-play.

Re: Developer Labels Used Games Worse than Piracy

That was pretty much the argument at the time, yet the dissolution of the big studio that owned everything down was pretty much the end of an era of film quality. One of the last of said era was Hitchcock and his team.


We see something similar with Tim Burton and his actors nowaday.

Re: Developer Labels Used Games Worse than Piracy

Like they're already trying by moving towards download-only?

 

"That's not ironic. That's justice."

"That's not ironic. That's justice."

Re: Developer Labels Used Games Worse than Piracy

Great job punishing gamers for wanting save a little money on the tail end of a one of the worst f**cking recessions since the Great Depression. Stop being so greedy, game industry.

 

 

 
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