Wallets Shrink, Used Game Market Grows

Over the last year we’ve seen developers scrambling to find “value add” features to new game purchases. Their goal is to convince the customer to buy new instead of used because developers don’t see a penny from a used game sale. While GameStop sees 48% profit margins from the used game market developers struggle to stay floating in the industry.

for-saleThis is not the fault of GameStop and their 48% profit margins because they’re only getting 7% to 20% profit margins (say analysts) on new game sales. As someone that’s run a game store online, if you’re getting 15%+ on a new game you’ve got some great hookups in the distribution channel or are buying in huge quantities.

Buying games in huge quantities to build profit margins can be a huge mistake in this industry. Gamers are fickle little creatures and they’re going to buy their top tier games for a few weeks and then sales will drop significantly. No retail chain wants to purchase a thousand copies of GTA IV (only as an example) and sell seven hundred over the first few week to be stuck holding onto a few hundred copies when the dust settles. Now you’ll have to put them on sale to get them out of the store because the hardcore gamer have already done their shopping and you’re not going to get any price protection if you’re not a major player in the industry.

Why take 7% profit margins when you can get 48% on a used game? The gamers don’t seem to mind because they’ll trade in a used copy of a sports title like Madden to save $5.00 on the latest franchise release. Gamers will buy Fable 2, beat it in a week and rush to the store to get the “most for their dollar” before the game gets stale and buy-back prices drop like a stone. Why not rent Fable 2 and save yourself $50.00? Of course, renting pisses off developers as well because they see no additional revenue.

While the economy struggles and consumers fight for their jobs, the entertainment side of life continues to grow. People would rather “cocoon” in their homes playing video games and watching movies on their brand new HD television because it takes them away from the low points of the economy if only for a few hours. History has shown us trends in entertainment during the down points of economies, it’s natural to want to get away for a bit.

But, consumers want to play these games on the cheap because their job may not be there tomorrow. Saving $5.00 knowing the store just took the title in for half the price doesn’t bother you; $5.00 in your pocket is better than in their pocket right? The fact that they just pocketed upward of 40% on the game doesn’t matter to you — it’s all about your bottom line!

While we’re bargain hunting during the recession developers are going to try and up sell you to a new copy of the game. If that means giving you special game items and features with a “one time code” upon purchase, it will be up to you to decide if it’s valuable. All the while GameStop will lock out the game industry from selling used games because 42% of their overall gross profit is from used game sales.

You, the consumer, benefits from a slightly cheaper game, bargain bin fire sales and additional game features if you do choose to buy new. The economic down turn is a great time to be a gamer, as long as you remain employed.

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Evolution of RPG’s – Gamers Don’t Want an End?Evolution of RPG’s – Gamers Don’t Want an End?

I remember a day when old RPG games had either a level cap or a definite ending. From Pool of Radiance to Secrets of the Silver Blades to Final Fantasy the game had a final boss or stage and often had some type of level cap. Today, gamers don’t want it to end, they’d rather have the option to wonder around aimlessly or completing minor quests in order to soak up every ounce of money they spent on the title.

linkNow even Bethesda is saying “we’ve learned our lesson” from the whiplash of ending their game title and capping levels. Gamers want to go back and re-try content they missed, they want to run side quests and talk to everyone in the world they want to grind themselves to über powerful levels and become a god in their fantasy world. Can you blame them?

You can’t really blame them for wanting to maximize the content, although it’s slightly more evolved than RPG’s of old. Perhaps it was World of Warcraft and other MMORPG’s that brought us to the stage in life where we all want to squeeze every last RPG dime out of the title. As a kid I wondered the world of Hyrule and covered every tile of graphical color, burned every bush, bombed every stone looking for all the content. However, even Zelda had an end with scrolling credits – you didn’t just land on a platform with your master sword and a dream.

Other titles have used level caps to limit you and draw you into the next release of the game. This was popular in the D&D world because the game is designed to target specific levels of difficulty. They may only allow you to gain level 10 because the enemies are no tougher than level 13, allowing the challenge to be good but not overwhelming. If they allow you to get to level 50 they’d have to design the game so all the enemies grow powerful along with you — that’s not always a desired result.

Final Fantasy is a popular franchise that typically allows you to grow infinitely powerful depending on how much time you want to spend repeat killing the same enemies. Gamers aren’t always into the grind, they just want to grind “enough” to make the challenges a little more do-able.

Today, however, with larger storage capacity, larger development teams and the desire to build more value into your gameplay experience titles have dozens of side quests and sub-plots that are totally optional. The result of so many sub-quests results in a player who is much more powerful at the end of those quests compared to a player who sticks to the narrow path of the main plot. So, games much grow dynamically challenging to keep the fun per dollar high.

Do you like your RPG’s to have a definite end and a high but capped level?

Episode 246: Computer SpecsEpisode 246: Computer Specs

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