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.

0 thoughts on “Wallets Shrink, Used Game Market Grows”

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Post

Episode 256: AAAA ExperienceEpisode 256: AAAA Experience

This week’s Gaming Podcast gets down and dirty, with plenty of AAAA goodness. The Darkness II contest is still going on this week, and winners will be announced next week.

In the meantime:

  • Analyst predicts 66M iPad sales in 2012
  • Diablo III gets May 15 release date
  • Epic: Next gen console launch titles will probably use Unreal Engine 3
  • Microsoft looking for executive producer to work on an “AAAA” Xbox title
  • Wasteland 2 aiming for October 2013 release date

All that, plus Reader Feedback.

Episode 589: Waiting for 2100Episode 589: Waiting for 2100

Nintendo has finally given a launch window for their next console, while TJ is slightly distracted by the Chiefs.

This week’s news includes:

  • Titanfall 3 is in development at Respawn
  • As 2020 ends, so does FarmVille
  • Among Us 2 cancelled in favor of ongoing work on the current game
  • Amazon is also warning Xbox Series X preorder customers that their consoles might show up late
  • Spider-Man PS4 owners can’t upgrade to the PS5 version for free
  • Nintendo’s Switch successor will release before 2100

Let us know what you think.

ESRB Plugs The LeaksESRB Plugs The Leaks

One of the great places to find news on upcoming games is the ESRB‘s website. They typically rate their games and post the ratings on their site to be helpful to concerned citizens looking to purchase upcoming titles.

Of course, the ESRB gets their titles prior to the game release so posting the rating on their website gives away the names and potential timing for soon-to-be game releases. Dates aren’t required for blogs and news sites to glean an idea of a release and the official title name.

Now, the ESRB might be under the same embargo restrictions game review/preview sites are held to, by not posting game ratings until 30 days after it has been rated, says 1up.com.

What’s this mean for bloggers? You’ll need to look harder for dark corners of the Internet to get your rumors and “official” statements.