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.
This week on the TD Gaming Podcast we explore four exciting news stories:
are u guys aware that I’m from philippines coz people in the philippines are stupid coz they don’t know whats the difference between a stupid warcraft 3 mod dota which I call poor man’s game and the difference between world of warcraft . People here stupid they brag about their dota skills .how bout they play wow and get their ass kicked
Yay, 2 hours!
Oliver, please calm down and discuss the podcast in the comments, also AFTER listening to it.
Anyway, Paul, get ready to be disappointed by the final dungeon and the final boss in Skyward Sword. And I don’t think that the open world in Arkham City takes anything away from the game. We probably have different tastes, but I love searching for all the Riddler Trophies and sidequests in the city, it makes it come alive.
Best games: Arkham City, Portal 2, Skyward Sword
Most surprisingly fun games: Rayman Origins, Bulletstorm, Bastion
@Microsoft, Nintendo, Sony all pull support from SOPA – sort of: At least we now know that the SOPA bill is only getting weaker, because it is an absolute disaster in its current form.
@QOTW: I think I would prefer playing on a handheld console, because there aren’t many mobile games that I would want to play.
@Full games vs smaller games on handhelds, I agree with Jonah.
The reason why the DS was so successful was that it appealed to people who werent necessarily gamers before. People who got attracted to playing Brain Training and Professor Layton’s games. While the PSP kept on pushing games like God of War Chains of Olympus and what not. And while you can’t say PSP failed in sales, it was pretty well beaten up by DS world wide.
@Game I played the most
Hard one.. Either Darkfall Online, or TES Oblivion (I keep revisiting this game, one of my favourites of all times)
@Game that disappointed me the most
I havent tried that many new games this year, so even though I’m loving it, Ill have to go with TES Skyrim. Don’t get me wrong, it is a brilliant game, but the series have indeed been dumbed down a lot in this one. It lost complexity to get more action. Don’t think Skyrim will be as epic as Oblivion or Morrowind, but it is still a great game.
@SOPA backlash
This is something that concerns me as a web developer. The problem with SOPA is that it was not only created by lobbies to protect their interests but its an overzealous measure that will affect content broadcasting authors more than pirates. You share a movie of yourself singing Sinatra on Youtube and someone will tell you to take it down or you ISP might cut your service.
This cripples what the Internet is all about, sharing content! As for companies that are now withdrawing their support, I am not a customer of neither Sony, MS or Apple, I do have Nintendo consoles and my business with them will be reviewed. All my domains WILL be taken out of Godaddy as they had no excuse to support something like this in the first place, if they understood the media where they work in, they would be expecting this reaction from the comunity. Note that I am not a USA citizen, but what people tend to forget is that the lobbies only need to open a precedent to move to Europe.
As Jordan said: “The Internet would not be able to function under this law” so its clear that people who back it do not understand the Internet or do not understand SOPA.
@QOTW
Mobile device, specifically an Android Tablet.
I guess I need to start doing smaller comments here in order to have them read on the Podcast :p
BTW one thing I’m really excited about, although I’m not sure it is for 2012
The remake of XCom – Enemy Unknown, which was one of the best games I’ve ever played.
@Console/Handhelds: I have an original PSP, regular DS (the red Mario Kart edition) and all three current consoles, but I still prefer to do my gaming on consoles. When I lived in Tokyo and New York, where I did have a 20 – 40 minute commute, depending on the time of day, I played my hand helds a bit more. But, in the end, I got the PSP because it could not only game, but also access the Internet and play movies and music. Since getting Kojima to sign my copy of Peace Walker in summer 2010, I haven’t touched my PSP. And the only time I use my DS is for the Japanese dictionary software I bought in Japan. When I was a kid in the countryside, hand helds were great platforms because they didn’t vie for TV access and let me be more independent, so to speak. Now that I have 20 magazine subscriptions, the Internet (in general) and other consoles, hand helds don’t appeal to me as much, although I do still salivate at their shiny.
@sony microsoft nintendo pulls support on sopa
Basically what they are doing here is protecting their company coz I think most of the gamers out there are downloading stuff on the internet and most of the downloads out there are not obeying sopa .as for me I only download I don’t spend for games
@ wiiu as I said waste of money.im not a sony fan but I do like psps but I still hate the ps3
@ qotw
I would more likely play a handheld console coz there are better games on portable consoles . I’d play on a mobile device if they have a working monster hunter in it
The best game I played in 2011 is minecraft and monster hunter series since these are the only games I even play lol .can u guys tell your computer specs coz I’m really curious about it
guys Can u answer my question.is tf2 a mod for halflife 2 or is it a stand alone or could it be both.
Team Fortress 1 was a mod. Team Fortress 2 is not.