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Game on: Sony won't block used games -- analyst

Wedbush analyst Michael Pachter argues that the issues related to blocking used games on the PlayStation 4 far outweigh the benefits, leaving Sony with no choice but to allow them.

Sony Computer Entertainment America

Sony won't try to block used games on its PlayStation 4, despite a patent application indicating plans to the contrary, one analyst says.

Wedbush analyst Michael Pachter, who has followed the industry for years and conducts research on a wide range of game companies, said in a note to investors yesterday that any claim that Sony would try to block used games on its next console fails to realize that the company "benefits little from a unilateral decision to block games."

"Sony would be materially hurt if its console blocked used games and competitor consoles from Microsoft and Nintendo did not," Pachter wrote. "The Wii U is already on the market with no used game prohibition, and we believe that Microsoft would take advantage of Sony's prospective decision to block used games by marketing that its own next generation did NOT block used games."

Pachter went on to say that an unidentified Sony "senior official" has said that the company "has no desire to limit consumer choice."

Used games have long been a concern for developers. Though developers and publishers generate revenue off the sale of new titles, they see nothing from used games. Several prominent developers over the years have decried the practice, which benefits retailers like GameStop.

Sony's technology, which was documented in a patent application that popped up yesterday, attaches contactless RF "tags" to each game and a PlayStation 4 user's player account. As long as the tag and the player account match up, the game can be played. A used title, which would be purchased by another user, and thus would be connected to a separate player account, would not be playable.

After the patent was discovered, GameStop, which generates a large portion of business from used games, saw its shares slide nearly $1. Pachter said today that the shareholder sell-off was "overblown," and he believes the games retailer will have a strong 2013. Over the next 12 months, Pachter expects GameStop's price to hit $33. The company's shares are currently trading at $24.74.