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.
You remember when Wii games were $49.99 and everyone made titles that hit this price point or lower? MTV isn’t going to stick to this standard, regardless of “last gen graphics” because you’ll buy it anyway, right? Rock Band is one of those games that has hit huge strides in the market over the last few years as people buy big plastic instruments to rock their house.
If youtube would have an easy way to get to the mp4 file they host, I could whip out some hosting/customized audio player/podcast feed thingies.
I mean they [youtube] do provide a good API for their player, I can do an app that you’d just right click on an MP3 and say “Publish”. But when it comes to doing a podcast feed, I’d need to link to the mp4 file, and that is not yet allowed by them.
@Yoshida: PlayStation Vita sales are below expectations
Erm, did you really expect something else? Not enough devs, you say? Really? Here’s my thought:
“And what do we have here? A PS Vita? It has a game pad, a back touch screen and a price that is too damn high”
http://www.youtube.com/watch?v=zqHZWdFVyyQ
Yessir …
@DICE giving away Battlefield 1942 for free on Origin
I did play BF1942.
Funny how a simple thing, such as password recovery page can have quite an impact on the number of customers. So yeah, bad web programmer, no twinkie.
— edited —
Their password recovery system is working ok now. He he he, forget what I said.
—————
Jordan, you do recall it right, but I think it was 1943, for BF3 (thanks Jonah for confirming).
@“lower-case aaa” games where the industry should be heading
You know, I am starting to hate the use of financial rating system with games. What would be rated as a Baa game?
As for ‘async MP as a core component’ … I think the writer went a bit outside of what was sane advice: “cut the costs and make good games”. Leave the game design decision to the game makers, please.
@Microsoft and 343 Industries taking hard stance on sexism
Really? Ban players for sexism? And you think that THAT will stop it? Really? On planet Earth?
Oh, and did I mention about this automatic censoring system that censored “glass” because of the “ass” part?
The same person who’s a sexist is not sexist just in Halo 4. Fix the bigger problem, with the real world, and the little one will not exist.
@QOTW:
Plenty of SP games that can be played. Plenty of software development that can be done without Internet. Most likely pull apart my for-repairing-and experimenting-with binoculars, see if I can’t do anything to improve it.
Just an update on my offer to help out moving the podcast to youtube:
If a feed like this is OK for an iPod, then I can implement the thing during the winter holiday:
http://feeds.feedburner.com/UploadsByClarkeanddawe
@Yoshida: PlayStation Vita sales are below expectations:
orly? is that so? perhaps one of the main reasons is, i dont know, YOU ARE STILL GIVING FULL SUPPORT FOR THE PSP?
seriously?
@DICE giving away Battlefield 1942 for free on Origin:
seen it, got it, played it, AWESOME.
even for 2002 graphics, the intro still gives me the chills. the gameplay is fantastic, simpler and still giver dozens of ways to play the game your way (i know it is a slower paced than now-a-days shooters, but who cares?) the sad thing is, in the first day there were thousands of players. today there were only about 300. the game is good, it was a great deal by EA, but unfortunatelly, is dying soon.
@Microsoft and 343 Industries taking hard stance on sexism:
sexism, racism, and anti-gay…ism are very real issues and deserve to be treated like so. i’m glad she (whoose name had escaped my mind right now) is taking the 1st strike against such issues online game wise, even if it is, officially, only on sexism.
@QOTW:
when the power is out i spend most of my hours trying the lights on my house *click* *click* *click* *click* until the power comes back, and when i have no connection i do what any sane person would do: SPAM F5
so, seriously, out of power, i TRY to do something productive, always fail. always end up on some kind of deppressive state of “what should i do now”?
no internetzz: i play single player games, or campaign mode or watch some series/movies i have on my external HD, while spamming F5 each 5 or 10 minuter appart.
@Asian Civilizations
Haven’t played Civ since 3 so this won’t affect me. It makes sense to release games aimed at the eastern audience. The East has a very different culture from the West. If something gets popular, pretty much everyone gets involved. Lots of dosh to be made there. But it doesn’t make sense to bar the rest of the world from it. I hate it when I can’t play a game cause my eyes are too big.
@DICE free Battlefield
Got it. Played it. Dated but still fun.
@Microsoft, 343 Industries and all that
The man behind Halo 4 was a woman?!!! Despicable!!! I will take out my frustration by traveling to the Large Hardon Collider to smash my copy of Halo 4 into a copy of Call of Duty to merge them. Oh no. Wait. 343 Industries already done that for me. Still can’t believe that the assault rifle I used for the past 10 years now sounds like an M60 machine gun. And “press B to crouch”. Seriously? This is why we can’t have women do man things.
On a more serious note, I tend to play on-line games with my friends in a private party chat. I dislike joining game chat parties because I hate trash talk. And singing 10 year olds. That’s my advice to anyone. You don’t want to be subject to abuse – don’t expose yourself to the low intelligent common rabble. If you find yourself forced to mingle with the simpletons (i.e. no party chat in Counter Strike: GO), just ignore them. Remember: Sticks and stones may break my bones but words will never hurt me.
@QOTW
I read books. A book is an object which is imprinted with letters that form words that form sentences which form Harry Potter. It causes no strain on your eyes and has a positive side effect of raising your intelligence, granted you are not reading Twilight (in which case you are a lost cause and should DIE). I always have a book around. It’s a great way to pass time while my brain is rebooting for some more gaming action.