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GameStop Settles ‘DLC’ Lawsuit on Used Games

11 Apr, 2012 By: Erik Gruenwedel

Litigation regarding consumer access to free online content with used games could apply to UltraViolet movies and the enclosed digital copy in the cloud

GameStop Corp. has agreed to settle a class-action lawsuit pertaining to used video games sold to consumers who were unable to access certain downloadable content (DLC) unless they paid an additional $15, even though the packaging of the video games claimed that the DLC was available for free with the purchase of the game.

As part of the April 10 settlement ironed out in U.S. District Court in San Francisco, Texas-based GameStop for the next two years must post signs on the shelves of California stores and online where used games are sold warning consumers that certain downloadable content may require an additional purchase.

In addition, affected consumers who purchased qualifying used games and who are enrolled in GameStop’s “PowerUp Rewards” customer loyalty program can receive a $10 check and a $5 coupon. Consumers who purchased a qualifying game, but are not members of GameStop’s loyalty program, can receive a $5 check and a $10 coupon.

GameStop — similar to other buy, sell, trade retailers — purchases used games from consumers for a fraction of the original price, and then sells them at a marked-up price, usually around $5 less than the price of a new game, according to law firm Baron & Budd, which tried the case.
GameStop allegedly makes more than $2 billion a year on used video game sales.

The settlement is important as home entertainment studios roll out UltraViolet movies, which include special codes allowing owners to access a copy of the movie from a cloud-based digital locker. At issue is the reality that discs enabled with UltraViolet will end up as previously viewed content, like DVD and Blu-ray Discs do. Because UltraViolet codes can be accessed only once, some of the previously used UltraViolet discs will be without that digital code.

Without proper in-store signage warning that the UV title’s digital code may not be included, consumers buying a used copy of an UltraViolet title might assume it includes access to the digital copy as well.

Interestingly, a class-action lawsuit regarding digital copies included with Blu-ray releases was filed last year against 20th Century Fox Home Entertainment, Lionsgate, Warner Home Video and Universal Studios Home Entertainment. In that case — filed Oct. 24 in U.S. District Court in Los Angeles — the defendants alleged studios sold BD titles and access to separate digital copies — the latter with an expiration date.

“Consumers would not have purchased the movies had they known that the digital access code to download the digital copy of the movie had already expired or would expire in the near future,” read the complaint. “Consumers further paid a price premium for each purchase of movie packages with digital copies.”

The suit seeks unspecified compensatory and punitive damages.

Meanwhile, a store clerk at Second Spin in Costa Mesa, Calif., said the situation hasn’t come up yet since the Trans World Entertainment Corp.-owned chain only guarantees secondary buyers a physical disc and not the digital copy with a purchase.

The clerk said that often the digital copy isn’t activated but that its quality — regardless — is not guaranteed with the purchase price.

“If it’s a big issue with the consumer, our manager will take care of it,” he said.

Analyst Michael Pachter with Wedbush Securities in Los Angeles thinks the specter of invalid digital copies is moot.

“I don't think anybody really cares if they're able to get a copy in the cloud or not,” Pachter wrote in an email. “I love that Walmart's charging you extra for your cloud copy. The whole thing seems ludicrous to me.”

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