Used Games: A Devil's Bargain?

Seth Schiesel has a good article in the NYTimes about used video games. The gist is that used video games are a huge business (GameStop shares are up 89 percent since the beginning of 2005), but that video game companies aren't seeing any of that business. This is part of the biggest problem facing game companies. Most of them have a single revenue stream: the sales of new video games. Coupled with rising development costs, this is not a good thing. I'll have more thoughts later on this and how the recent discussions of advertising in/around games fits in, and offer a possible scenario of how we got to this point.