Is the Used Game Market Damaging the Industry?

New software generates most of GameStop revenue. Even if publishers were to sale at higher wholesale prices to cut into the profit generated off that revenue, GameStop wouldn't stop selling new game software. MSRP and other retailers adherence to it, would gaurantee that GameStop wouldn't sell at high retail prices.

Huh? If publishers raise their wholesale prices, GameStop (and everyone else) raises the retail price. Most likely this would only serve to increase the used market.

They key is for publishers to act in agreement and as one when dealing with the retailers. Its no wonder that publishers are having these problems, they should have formed a trade group a long time ago and dealt with manufacturers and retailers as a whole. The same goes for devs as they could create a more stable enviroment if they worked in tandem when dealing with publishers.

Well things like price fixing are a bit of a sticky issue. Most publishers, aren't having these problems. Revenue for EA, Ubi and Activision are all well up this year, I don't really see why they would be eager to change what they've been doing this last year.
 
But that is under the assumption that the traded games will automatically become a new game sale.

the traded games are also used in getting a different used game(s). Specially if the person in the counter is instructed to push for the used version of the game instead.



on a side note...

It just feels like everytime I go to one of their stores, I see some guy or kid being coerced into getting the used version instead even though they initially wanted to get the new version instead. I can't really get mad at the counter person since they are just doing their job... sometimes I even feel sorry for them coz they looked really butt-hurt if they couldnt make that used sale. It's one of the reasons why I mostly buy my games online or do a store pick-up if available :)

Sure, but if only half, or a quarter of the traded in value goes to a new game - and at EB at least, you get more value for spending on games than you do for money - that's still an increase. Hell, even if it was only 10% being applied to new games, that's still 10% of increased sales for new games, which any publisher should be appreciating.

As for in store pressure.... sure, most game stores are manned by jerks. But you say "no thank you" nicely but firmly and buy your new game. Problem solved.
 
Huh? If publishers raise their wholesale prices, GameStop (and everyone else) raises the retail price. Most likely this would only serve to increase the used market.

Im not talking about raising wholesale prices across the board just for GameStop. GameStop purchases its software directly from publishers, so publishers could offer them prices above what they usually give retailers who don't engage in used game sales. If BB, Walmart and other big retailers stood at the MSRP, GameSpot would be forced to maintain the status quo or lose software sales to other retailers and thus effecting their used game business in the process.


Well things like price fixing are a bit of a sticky issue. Most publishers, aren't having these problems. Revenue for EA, Ubi and Activision are all well up this year, I don't really see why they would be eager to change what they've been doing this last year.

If you can call this pricing fixing you would have to append the same label to current retail pricing, which is set by MS.
 
Im not talking about raising wholesale prices across the board just for GameStop. GameStop purchases its software directly from publishers, so publishers could offer them prices above what they usually give retailers who don't engage in used game sales. If BB, Walmart and other big retailers stood at the MSRP, GameSpot would be forced to maintain the status quo or lose software sales to other retailers and thus effecting their used game business in the process.




If you can call this pricing fixing you would have to append the same label to current retail pricing, which is set by MS.

Well it is price fixing, but no one seems to have sued over it yet. But I'm pretty sure GameStop would sue if publishers tried to charge them more then they charge everyone else for the same product.

GameStop offers a service which they make money off of, quick we need to find a way to stop this heinous activity! :)
 
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the Ninja Theory people have a right to say 'hey! If you're not paying us any money for the game we made, you shouldn't be playing it at all!' Then again, that same argument goes for any product.

They have the right to say whatever they want. However, in reality, once the product is finished, all they have the right to do is sell the product for less money, or offer incentives to not sell or buy used copies. Perhaps they should have cut the price when the bad reviews came out. Games are no less "products" than books or CDs. Or board games, for that matter. Being fun or entertaining doesn't make them sacred, although people currently believe that being digital does.

As for failing developers and publishers, if you can't make money without begging the government to take away people's rights, it is your business model that has failed, not the market.

The thread title thus should read: "Are boneheaded business models damaging the industry?"
 
Thats really the problem here, for some reason you try to look at this product as something wierd.
It's called philosophy. It's trying to look at things from different perspectives and ask questions and see what comes up. It's following different lines and schools of thought to (re)evaluate (standard accepted) opinions. The idea of whole ownership of a product isn't a mystery to me and I can accept that POV - it makes sense. But I can also see another side from a different perspective, one that doesn't place emphasis on the medium the creators have to use to distribute their creations that happens to be persistent and durable, and that doesn't accept the fact that we can and do sell second hand items has to be the only way we do or things, or the best way to do things. Yes, we can sell books and CDs on. So does that prove games must be treated the same way, or does the situation with games being sold second hand highlight the same problem with books and CDs and there should be resell restrictions placed on all creative media?
 
It's called philosophy. It's trying to look at things from different perspectives and ask questions and see what comes up. It's following different lines and schools of thought to (re)evaluate (standard accepted) opinions.

Yes, but in order for your theorem to work, you somehow want to differensiate games from every other product in the world, and give the game makers future income on something they have allready sold. Which to me is just you really really liking games, not so much having any understanding of economics, and how this stuff would impact markets.

Your biggest argument for this was because companies are going under, if you cannot accept that companies going under is completely natural and even NEEDED in order to have a stable and good economy, it obvious you have little understanding of this, and thus your theorem isn't worth much more than a 6 year old boy dreaming up stuff.

Your simply spitting out thoughts here, that suggest one line of business should get a completely different threated than anybody else and earn much much much more money than they are entitled to.

The real solution here is simple, its called reducing your price quicker. Thats the real solution to this problem, it lowers the % of used sales, and it increases your own sales volume.

If you really think this theorem is a proper solution, i want a % of all future income on all stocks i have owned at some point or another (which would be a lot of stocks, because of the same theorem.

I sold something just like the game creators, somebody else applied work and labor in order to earn something on the sold product later, and game creators get the money, then i should get the money on all profits coming from all stocks i have ever had in my portfolio.

I also want future profits on all the houses i have owned and build....

Unless you can say im entitled to what i demanded, then your theorem doesn't work, i dont care what you personally think a game is, i know what a game is IRL, its no more of a product than a DVD with a movie on or a book, or whatever product thats sold, so if you say developers and publishers should earn money on a % of used game sales, then i want a percentage of all earnings on all products i have ever owned and sold, its only fair.

I understand you have this theory, and all people do is have to look at games as something deeper than your normal wares, but fact is, that its just as much of a product like any other ware, and thus your theorems are IMO irrelevant, as they arent build on anything else than your personal dreamworld inside your head.
 
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They have the right to say whatever they want. However, in reality, once the product is finished, all they have the right to do is sell the product for less money, or offer incentives to not sell or buy used copies. Perhaps they should have cut the price when the bad reviews came out. Games are no less "products" than books or CDs. Or board games, for that matter. Being fun or entertaining doesn't make them sacred, although people currently believe that being digital does.

As for failing developers and publishers, if you can't make money without begging the government to take away people's rights, it is your business model that has failed, not the market.

The thread title thus should read: "Are boneheaded business models damaging the industry?"

Absolutely agreed.

Anybody who says otherwise, either doesn't understand economics, or are fanboys for the industry.
 
Essentially what they are complaining about are extended rentals with no royalties. If the same thing happened with movies im sure something would be done about it. The product can be used almost endlessly and generally is used once and disposed of. This is like textbooks; only textbooks get new editions every 1-3 years to prevent the 2nd hand market for the expensive books. Most people here arguing against the 2nd hand market, are arguing against the rental type arrangements of gamestop. They have no interest in ebay or even your rights to sell back games at gamestop. They are just saying that maybe 5-10% of the used game price at gamestop (profit margin 50%) should be paid out to the publishers/developers. Given the nature of the market this is unlikely to effect end users of the service much if at all and in fact benifits them by putting some money back into the hands of the people that made your games.

Xbox 360 rulz ----> Love the controller! Halo3 FTW makes killzone feel like wading through mud.
 
Why do some people here find it so hard to differentiate between the rights of an individual and the rights of an organisation?

I don't think anyone disagrees that no rights should be taking away from consumers.. That would cause a bigger problem then it would solve.. however I think it's a completely different arguement when we consider the rights (if you could even call it that) of a retail organisation like GameStop..

Like someone already suggested, the issue is not to try to change consumer rights but to try to encourage further profit sharing between retailers & publishers on used game sales..

I don't think this is unfair & i'm pretty sure that, considering IP rights are different for games & general software, if GameStop began selling used copies of Windows XP & generating massive revenues from it, MS wouldn't sit on it's arse & do nothing about it..

EDIT:

I found an interesting article which might be worth a read..

Also here's another one..
 
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Yep. You have a point. It wouldn't be good for Gamestop if the industry were to crash in part because of it. They should settle on a percentage from each sale. Probably would make used games a bit more expensive but at least every time that product is resold the publisher gets a piece.
 
This discussion reminded me of the time Garth Brooks spoke out against used CDs. I found this on his wikipedia page:

In 1993, Garth Brooks, who had criticized music stores which sold used CDs since it led to a loss in royalty payments, persuaded Capitol Records not to ship his August 1993 album In Pieces to stores which engaged in such practices. This led to several anti-trust lawsuits against the record label and ended with Capitol shipping the CDs to the stores after all.

And more info in this article.

That didn't turn out too well. I don't know the basis for anti-trust lawsuits but there is at least one precedent here where this didn't work for the publisher. I don't see why games would be too different. Even trying to strike a deal with Gamestop would likely lead to negative press and a backlash from the gaming community.
 
Gamestop is a private entity. As a private entity, it has the right to buy and sell goods to and from consumers, as much as any local pawn shop, antique shop, used car dealer, record store, auction house, flea market, etc without trying to track down some "original" owner and beg them for permission. Furthermore, by that argument, we should be paying the original sources of raw materials and labor every time a product changes hands, because neither the publisher nor the developer are the last stop if you're going backward through the product chain. Does the product have a plastic package? Then Exxon and Berry Plastics need to collect royalties. So does everyone who worked on the assembly line or in product development. I guess we should also pay royalties to whoever designed the factory machinery, and of course MS should collect royalties for the development tools, IBM should collect royalties for the processors in the devkits, and don't forget the ink manufacturer whose chemical IP is all over that product manual, or the diesel engine manufacturer whose IP brought it to the store! Of course, an economy can't even function if we're going to kick back royalties all the way up the supply chain every single time a good changes hands, but there's really no reason the publishers or the developers should be the last stop. All though the rest of the chain is invisible to most consumers, that doesn't mean they don't exist or don't have IP involved in bringing you the product that gets sold and resold once it is fully assembled. The model of "when you sell something, it's not yours anymore" makes far more sense and is far more consistent with everything else in the markets. It's just that software companies think they're magical and special and should get an exemption from the whole "buy/sell" mechanic because they sell goods that have to be read with lasers by high-tech silicon-powered machines.

If Capcom or whoever doesn't like people trading used games back and forth like crazy, they should do the same thing every other business in the world has to do: Stop making overpriced crap no one wants to own for more than 3 days.

"Gamestop is a corporation, so it's just as evil as a publisher, so we should take away its right to do business in the free market" is just as worthless an argument as "Games are fun, therefore they are fundamentally different from other products, therefore we should take away consumers' rights to actually own them."

if GameStop began selling used copies of Windows XP & generating massive revenues from it, MS wouldn't sit on it's arse & do nothing about it.

I'd like to see a class-action suit against MS for requiring you to pay for Windows before you can read or sign the license agreement.
 
Why do some people here find it so hard to differentiate between the rights of an individual and the rights of an organisation?

I don't think anyone disagrees that no rights should be taking away from consumers.. That would cause a bigger problem then it would solve.. however I think it's a completely different arguement when we consider the rights (if you could even call it that) of a retail organisation like GameStop..

Like someone already suggested, the issue is not to try to change consumer rights but to try to encourage further profit sharing between retailers & publishers on used game sales..

I don't think this is unfair & i'm pretty sure that, considering IP rights are different for games & general software, if GameStop began selling used copies of Windows XP & generating massive revenues from it, MS wouldn't sit on it's arse & do nothing about it..

What?

Gamespot is a legal entity, meaning it can buy and sell whatever it wants as long as they are not braking laws. As a legal entity, a firm has all the right as a normal consumer, except for voting.

What you are suggesting is not fair. Fair for whom? Is it fair that publishers should be held above the law, are their products somehow godlike?

If publishers are allowed to charge a percentage of future sales, then everybody has to start paying every prior owner\creator of a product if they switch hands at some point.

What you people are suggesting is braking or altering the law, so that one group gets huuuuuuge benefits they are not entitled to, you may argue all you want, but thats essentially what your asking, and if you understand that, you shouldn't be asking for it to begin with.
 
If you take away the right of Gamestop to trade used games on the open market, you take away the right of consumers to buy from whomever they want and sell to whomever they want. You can't take away a company's right to do business without taking away consumers' rights as well.
 
Gamestop is a private entity. As a private entity, it has the right to buy and sell goods to and from consumers, as much as any local pawn shop, antique shop, used car dealer, record store, auction house, flea market, etc without trying to track down some "original" owner and beg them for permission. Furthermore, by that argument, we should be paying the original sources of raw materials and labor every time a product changes hands, because neither the publisher nor the developer are the last stop if you're going backward through the product chain. Does the product have a plastic package? Then Exxon and Berry Plastics need to collect royalties. So does everyone who worked on the assembly line or in product development. I guess we should also pay royalties to whoever designed the factory machinery, and of course MS should collect royalties for the development tools, IBM should collect royalties for the processors in the devkits, and don't forget the ink manufacturer whose chemical IP is all over that product manual, or the diesel engine manufacturer whose IP brought it to the store! Of course, an economy can't even function if we're going to kick back royalties all the way up the supply chain every single time a good changes hands, but there's really no reason the publishers or the developers should be the last stop. All though the rest of the chain is invisible to most consumers, that doesn't mean they don't exist or don't have IP involved in bringing you the product that gets sold and resold once it is fully assembled. The model of "when you sell something, it's not yours anymore" makes far more sense and is far more consistent with everything else in the markets. It's just that software companies think they're magical and special and should get an exemption from the whole "buy/sell" mechanic because they sell goods that have to be read with lasers by high-tech silicon-powered machines.
It's a thoughtful arguement which has it's merits however you're assuming that every product in the world is entitled to exactly the same set of property rights as every other which just isn't true..

If it's ok for a piece of software to be sold under a specific license agreement (tieing it down to a single user, computer or company) when you download it over the internet (no physical media present) then should the rules suddenly change for video games as soon as you burn your software onto a physical media?

Most general software is sold under a specific license for a reason because the fundamental nature of what you're selling is different to say, a house or a car or a chocolate bar..

A car degrades over time & depreciates in value after use..
A house's value (mostly appreciates oer time but also) fluxuates according to enviromental factors & can be modified by the user to either add or take away from it's value..
A chocolate bar is a consumable & once used, ceases to exist..

All of the above examples are different from software (& different from each other) as software provides an experience of use that is not tied to down to a specific media (the experience of use will never degrade, only the media itself can).. Software in itself is inherently difficult to qualify in terms of value due to the nature of how you look at it..

e.g.

Perspective A
An abstract mechanism (linked to a hardware system & with or without audio/visual representation) which provides the user with a service or solution which caters to a specific need/problem.. Highly specific in it's form & function & may include a combination of further IP (trademarks, logos, art, music etc..)

Perspective B
A well defined configuration of binary pattern logic occupying some digital storage media/device which can be computed in some way.. Requires a highly complex process of creation & generation however can be replecated & re-produced very easily across media types..

This is one of the reasons why it could be considered more of a service than an actual product..

I'm not saying that video games should be though, I'm just arguing the point that you can't make the kind of inferences you did about how we should treat all forms of "property" with the same destinctions when it's pretty clear that not all forms of "property" can be viewed in the same light..

If Capcom or whoever doesn't like people trading used games back and forth like crazy, they should do the same thing every other business in the world has to do: Stop making overpriced crap no one wants to own for more than 3 days.
I agree that this is the best solution to the problem but I want to ask you this;

Do you think any games development company sets up shop with the vision of making "crap that nobody wants"?

It's easy to say "the best solution is to make games better so that they're worth $60" but in practise, tight production schedules, financial instabilities & cut features due to a lack of producers willing to invest in delaying a product make it increasingly difficult for that to happen.. Couple this with record high consumer demand (it's not enough that consumers *expect* us to spend millions of pounds & 100s of manhours just to make your game look pretty but somehow we're also expected to have resources left over to make it play well enough (i.e. 9.0 for Gameplay), provide enough content for a lengthy play experience (see critical hang ups about length of titles like Heavenly Sword, Uncharted & CoD4), add a significant amount of work to include new dimensions of play (network MP isn't enough, they want Co-op on & offline now too!) and polish the game to near perfection (see hang ups against titles like Mass Effect..)

& then once that's all done and dusted we're shipping a title, getting another couple of million pounds spend on marketing only for it to hit the market & see unit sales no different to when we were making (the equivalent level of quality) games on PS2 last gen, when it cost 50x less to do..

It maybe the best solution but without significantly better sales across the board then it makes it increasingly difficult for the vast majority of content creators to invest that bit of extra money to really flesh out the content more when the risk of NOT recouping that investment is going to raise practically through the roof given current market conditions..

"Gamestop is a corporation, so it's just as evil as a publisher, so we should take away its right to do business in the free market" is just as worthless an argument as "Games are fun, therefore they are fundamentally different from other products, therefore we should take away consumers' rights to actually own them."
Agreed however i'm not sure anyone here actually made any of those arguements..?

I'd like to see a class-action suit against MS for requiring you to pay for Windows before you can read or sign the license agreement.
Why don't you file one then?

No..?

Maybe because the fundamental nature of IP rights relating to software (well.. that & the fact that MS' lawyers will probably be alot better at arguing than yours) makes it difficult to do otherwise..

Also if you bought a physical copy of windows & don't agree to the license agreement then there's nothing stopping you taking it back to the store (as for digital distribution, most services I know of force you to read & agree to it before purchase & download in this respect..)
 
If you take away the right of Gamestop to trade used games on the open market, you take away the right of consumers to buy from whomever they want and sell to whomever they want. You can't take away a company's right to do business without taking away consumers' rights as well.

I'll re-iterate..

Nobody is suggesting taking away GameSpot's rights to trade used games..

We're just suggesting the games should be viewed differently when being sold by an individual & by an organization (on an enforcement level that is) to allow used game royalties to be passed back to the publishers, as a possible solution..

It maybe that this kind of conduct could break anti-trust laws..

But it sure beats a future (to me) where digital distribution reigns & NOBODY is able to share, trade or pass around their games as the IP rights would then change legally according to the difference in media and where publishers agressively push DRM as a means to counter the risk of an almost inevitable of explosion piracy (hence, the reason many were severely cautious/pessimistic about the idea of digital distribution in the first place)..

If anything anyone who clearly is so passionate about protecting the rights of the consumer & their games should WANT to do something about the used games market profits not going back into the industry as greater revenue is going to need to come from somewhere in the future (especially with the next generation of hardware, consumer expectations & publisher/developer spending comes along at a point where the cost of development will likely make content creation an entirely non-viable business)..
 
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If anything anyone who clearly is so passionate about protecting the rights of the consumer & their games should WANT to do something about the used games market profits not going back into the industry as greater revenue is going to need to come from somewhere in the future (especially with the next generation of hardware, consumer expectations & publisher/developer spending comes along at a point where the cost of development will likely make content creation an entirely non-viable business)..

Good posts from you archangelmorph, but the message probably won't get through.
These guys are too busy with their economics 101 book that they can't see the big picture, instead we get to read about houses and cars for... I lost count on how many times already...

The fact is that in the future publishers are either going to get a cut from the used games business through a deal with these stores, or they are going to fight for their revenue using other means, in essence going to digital distribution, whether that'll happen in 5 years or 15 years, I don't know, but this current situation won't go on forever.
 
We're just suggesting the games should be viewed differently when being sold by an individual & by an organization (on an enforcement level that is)

"Viewing someone differently" and passing laws against them to force them to give money to someone they don't otherwise owe a dime to under normal free market rules is pretty much the textbook definition of "taking away their rights." Besides, all that would mean is that game stores can't be incorporated. Or should we take away the rights of companies that aren't publicly traded, too? What about franchise operations? Nope, taking away rights doesn't sound like a good option at all.

But it sure beats a future (to me) where digital distribution reigns & NOBODY is able to share, trade or pass around their games

I'd rather lose video games than lose rights. Taking away rights will ultimately affect all markets. Today it's video game publishers, but what about when Ford decides that the way to avoid sliding into bankruptcy is to collect royalties every time a used car dealer unloads an old Cougar? What other rights would you sacrifice to keep video games around? How about your right to free speech? Maybe video games should include a license that forbids you from writing negative reviews and opinions about the game. After all, bad press hurts sales, and poor sales result in less money. And according to you, publisher revenue trumps rights.

If anything anyone who clearly is so passionate about protecting the rights of the consumer & their games should WANT to do something about the used games market profits not going back into the industry as greater revenue

I fail to see how sacrificing our rights in the free market at the hands of the government so someone can make more money is the same thing as "protecting our rights." By that logic, maybe people who are passionate about protecting the environment should start dumping mercury in the rivers. Buying and selling is a right. Greater revenue is not. Neither is profiting on a market in which you are not selling anything (gamers and game stores are selling their property, not the publishers'). You seem to genuinely have no idea what a "right" is or what it means for it to be "taken away." Under free market principles, property ownership and transferral is a right, and the used game market is built on that right. A profitable company is not a right. Being around next year for another round of business is not a right. Staying in the black is not a right.

If it's ok for a piece of software to be sold under a specific license agreement (tieing it down to a single user, computer or company) when you download it over the internet (no physical media present)

Licenses are acceptable only when you sign the agreement prior to the commercial transaction and they include specific termination conditions. Most software licenses are violations of our rights and ought to be prosecuted, and I've said that several times in this thread already. So no, the licenses are largely not OK. Some of them are. If EA wants to station a representative in every Gamestop to explain the license agreement to me, set up some method by which their property is returned to them once my license is up, and get my John Hancock before I buy a game, more power to 'em. That's within their rights and mine. But there's a reason they don't do it like that, because they actually do want to sell the good. They just want to take away your rights when they do.

Most general software is sold under a specific license for a reason because the fundamental nature of what you're selling is different to say, a house or a car or a chocolate bar..

Yes, of course. Chocolate bars and houses have far more similarities than video games and books, or video games and board games! It's so clear now!

The fact is that what all these things--including software disks--have in common is that they are goods that can be traded. Goods that can be traded are subject to the free market (unless you are against the free market on principle, which is a different subject). Period. End.

And yes, video games do have value. Try selling that old copy of Rogue Agent for $75.

t's easy to say "the best solution is to make games better so that they're worth $60" but in practise, tight production schedules, financial instabilities & cut features...

You genuinely think software companies are unique in this regard? That in every other industry, you can just wave a magic wand and create profit, but software companies have to work and compete? "The software business is hard, therefore we should take away people's rights." :oops:

Why don't you file one then?

Because I make beans as a grad student and wouldn't know where to begin. It's unjust and anyone who understands the free market can tell you why it's unjust, but...and I know this will come as a shock...sometimes the people responsible for administering justice are more apt to listen to folks with the most money at stake. Another news flash: 75 year old judges and congressmen are actually quite prone to the "Computers are special and magical and invalidate everyone's rights" type of arguments, despite their invalidity.

Can you imagine if you were required to put the first month's rent down before you were allowed to read the lease agreement? Is that just at all?

This whole thread is characterized by the deep, deep immaturity of the video game industry. It sounds to me like the average video game company/developer/fan really has not come to grips with the fact of doing business in the free market. They think that they're the only people that work hard to get product out the door. They think they're the only people who have to deal with market fluctuations. They think they're the only people whose goods get resold. They think they're the only people who don't make as much money as they think they deserve. They think they're the only people who make a product that has some unique properties. Frankly, all these arguments boil down to one of only a few things:

1. "Making a profit on the free market is hard."
2. "We could make more money if we took away property rights."

Fact is, that's stuff every business out there has to deal with. If video game developers can't reconcile themselves to it, they should quit and go wait tables or something. It's real simple. If you want to continue to own something, don't put it on a shelf with a big orange price sticker.
 
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<< big post >>
I think you missed the point I was trying to make entirely..

Fact is, that's stuff every business out there has to deal with. If video game developers can't reconcile themselves to it, they should quit and go wait tables or something.
Then you'd have no reason at all to frequent beyond3d? is that really what you want?
(& since when has this all been about developers..??)
 
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