I would say used market is pretty bad for suppliers. Especially in a world where power gamers exist in mass.
Say 100k people buy a game the day it's released, but 25k turn around and sell it to Gamestop or the like 2-3 days later. Suddenly that's 25k "used" games that are available at a slight price drop. They're still the exact same product in identical condition. The only difference is that you don't have to peel the plastic wrap and sticker from around the outside of the game's case. And you can get it at a slight discount at the same time? That's a potential 25k games that will be purchased as "used" even though they were only played once for a day or two, and that's cutting into the game developers revenue. Especially considering how much money games cost to produce these days, they need every bit of revenue they can get their hands on. It's logical, but the used community doesn't like it.
Every product goes through this, well, almost all of them..Books, Movies, TV Shows and durables are all as good as new for normal usage (Note: Not collecting ect--but then neither are games).
The fact is the entertainment industry is growing, rapidly. It's rising far faster in terms of market share than normal GDP growth. (So it's growing on it's own, not just because there are more people.)
Are production and marketing costs growing? Yeah, but the main culprit with this "not enough profit" isn't the fact that the profit isn't there (As seen in the picture, it is) and it's not the fact that production is exceeding profit potential (It isn't, the market would not continue to grow otherwise.)--It's that this entire market is in a really fucked up position from a capital and distribution perspective. They are using outmoded methods of capital procurement, which essentially still requires a publisher to give the okay to an investment vehicle, which rapes profits margins while giving pretty negligible benefits considering the diversity of media.
In other words, marketing has less control over media thanks to the internet, your DVR and on demand. So each dollar spent has less effect. So these guys are less effective at actually making a game successful (Due to field diversity, easy of communication thanks to places like Rerolled and facebook and other things, a game being GOOD drives the largest part of marketing--word of mouth.) However rich old guys at the banks don't know and frankly don't give a fuck what makes a game successful. They care about their money, the return, time and risk. And to assess this they rely on experts "in the industry" that have the highest reliable profit potential--and those experts are larger publishers.
Many, very well paid, analysts give this investment method the nod. Why? Because once upon a time these people (Publishers) were
neededto deliver games to you. Moving physical products without the internet tended to suck, actually. And without message boards, youtube, facebook and everything else, hearing about whether something was good or bad came only from reviews (Which could be bought and were) or from the TV. Frankly, in yesteryear a game could blow but if it was marketed right it could still be a success (Especially if it tied itself to things nerds enjoy, like Mountain Dew!) So these "middle men" are pretty entrenched and they operate as the gate keeper between the money and developers.
These gate keepers collect a pretty huge toll--spend a huge amount of less and less effective marketing (Which they combine with other products to help their buddies make money--every gamer needs Doritos!) and lastly, they give the developer (You know, the actual person making the game) small advances to deliver a product (By far the least important thing, even the name is more important). Then they take their flops, and their successes, bundle them together, and work some magic to continue convincing the banks that they are the only method with which to invest in developers that doesn't carry inordinate risk. (Love you, Hollywood.) So they can continue to get fat, while their actual job becomes less and less effective thanks to free flowing information. (Which they are desperately trying to stop with really shitty legislative practices.)
The fact is, game studios aren't heading the way of the dinosaur.
Publishersare. And they are like a cancer trying to fuck the every last dime out of the industry before they are put to rest for good. But they will continually point to production, pirating and second hand sales to detract from their continued marginalization. And the sad part is, their accounting and numbers games are very good--as good as Hollywoods and the record industry. So they can hide their inefficiency and stay in control of the only thing that's important--capital.
