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.
This 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.
XBLA offers great opportunities for the indy developer but everything comes at a price. Over the last three years Braid‘s developer
@Dead Island – wrong version on Steam:
Since its a digital distribution channel, it is easy to fix …
@Lord British wants to make another Ultima:
I said it in another post: as a developer, either you sell the IP to the publisher and enjoy the money, or keep the IP and retain control. You can’t do both, have the cookie and eat it.
@Crytek rebukes “unlawful layoff” claims
Europe labor laws (Germany included) are a bit more weird. They would send labor inspectors to check how many extra hours you’re pushing etc. etc.
That’s one extreme.
The other extreme is bad planning that leads to all-development-crunch-time.
There has to be a middle ground.
@ Steam on Xbox Live Marketplace:
Newell wants EA to start selling their titles on Steam again. The way he goes about it is by trying to squeeze market space away from Origin; if EA would like to make more money, they would have to go through Valve’s Steam.
@console “limitations” in Battlefield 3:
PC rulez 😀 !!
Now, while 30 fps in a shooter is fluid, at 60 fps you do get better reaction time from the game. And for online shooters, this matters.
There is a reason why competitive shooter games run at a simulation tick rate at 60 ticks per second, 90 ticks per second and even 120 ticks per second.
Question is, for the fps count to matter, will Battlefield 3 be a competitive online multiplayer? Something tells me that it aims to be one.
@Black Ops map packs hit 18 million sold
What pisses me off is that modders can’t sell the maps they make, but developers can. And nowadays (case for Battlefield 3) there won’t be any modding tools. Way to go to maintain a community …
@PSP:
This will come as a shocker: I like Jonah’s idea about a simple handheld console, that does only gaming.
In terms of gadgets, I don’t like multipurpose ones. My phone only does calls and text messages (and live for 5 days from one recharge), so from a portable handheld I only expect it to play games.
@QOTW:
In the second STALKER game, Clear Sky, they changed the damage mechanics and the weapon accuracy (nerfed it).
Now, while I loved the fact that you could customize your gun in Clear Sky, changing the base accuracy AND making enemies die only from headshots caused a lot of frustrations.
This was somewhat exacerbated by the fact that the first game had decent guns and enemies would die also from body shots.
Thankfully they reverted a good deal of it in the third game.
@Steam on XBL – That would be great but, as Jonah said, Microsoft would be putting out Arcade Games for 15 dollars while Steam is having a sale, selling the same game for 5 bucks. I wish it were so, but I understand why is isn’t.
@Black Ops Map Packs – I have purchased all four map packs (the last one was free due to the fact that I had the Hardened edition of the game), and I, like many, only purchased them for the Zombies maps. The problem with that is I have to pay for the four crappy multiplayer maps instead of them offering the Zombies maps as separate content.
@QOTW – Bioshock is easily one of my favorite games of all time, but the hacking in that game annoyed me horribly. Thankfully, they changed the hacking mechanic in the sequel, so at least they learned from their mistakes.
I enjoyed hacking in Bioshock. Deus Ex: Human Revolution does it better, though.
I found the hacking to be more tedious than enjoyable. But, to each their own.
guys,jonah ,just to let ya all know that im still listening and i observed that the podcast is getting better,i didnt have time to comment coz i was playing minecraft and studying, and guys if you have a minecraft account but you dont play anymore plzzzz message me and try to give it to me because im stuck with a cracked account and im really broke so plzz i beg you all @qotw i never encounterd those things because i enjoy all of my games ,ps dont stop the podcast keep it going
edit you could message me on Facebook ,name; oliver lance de leon