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.
@Notch earned $101M in 2012, may buy car
Good for him.
@Sony teases “See the Future” event on 20th February
It could also be some sort of TV or virtual reality device. But again, unless the announcement includes price drops, I’m not interested.
@Rumor: PS4 hitting Europe in 2014, will have 8GB GDDR5
Hmm. Dunno. Higher end PCs run on 8GB today, and a console should aim for the future. On the other hand, there isn’t too much using up RAM on a console except the game.
I agree with Jonah though, the difference in RAM speed will produce only a small bump in performance. Common bottlenecks for games are at the CPU and GPU.
@Feedback leads Kawata to “slightly revise” opinions on Resident Evil
I say blame the movies for influencing the games.
As for changing genres, anyone remembers Command & Conquer: Renegade? I loved the strategy games, I also loved Renegade. But apparently I was part of a minority.
And if you think of it, other game featuring vehicular combat released after Renegade did enjoy success.
So it seems that switching genres will impact sales, regardless of the quality of the end product. Therefore, be careful when making drastic changes. If possible, don’t make them.
@Source Code director signs on for Legendary Pictures’ Warcraft adaptation
Moon was good. Still, I foresee an action movie. Think of Prince of Persia.
@Controversial torture interrogation from Splinter Cell: Black List removed
Dunno. If I were to make a game about war, I’d make it as gritty as possible. War is like that. You’d play the game, feel awful about it.
@Rumor: Halo 3 finally hitting PC – on Steam?
Never was a Halo fan, so you know what? I hope it doesn’t sell. When you make exclusives, there’s always a gamble. Heck, Halo 4 is out for XBox, and just now Halo 3 comes up for PC?
@QOTW
Oh … this is difficult. There are plenty of NES games that I’d like to see re-made. Dunno, “Mission Impossible” I guess.
“It could also be some sort of TV or virtual reality device.”
Not with a hashtag #PlayStation2013.
@Kick it up a Notch
Quite a success story. Contemporary Bill Gates. In my opinion he deserves it. Minecraft is possibly one of the most influential games of our time. If only the gaming industry had more people like Notch, we would have more innovative games.
@Sony’s crystal ball event
What a tempting ambitious name. Although it will probably be some fancy prototypes of some Star Trek tech that won’t see the light of day for another decade. Sony needs to grab attention. But I don’t think they have anything to back it up. Otherwise we would have heard about it already. Roll on 20th of feb and let me see Sony fail to prove me wrong.
@PS4 hitting Europe in 2014
And we get it later than anyone why? If Xbox comes out in 2013, this move will be the death of PS4 in Europe.
@GTA delayed
Nintendo does it all the time. I don’t see why someone else can’t. If it’s for the best of the game then I can wait. Besides, I am yet to play GTA4. Don’t know why everyone is bashing GTA these days. You don’t like GTA 4, you make a better game and then you can talk.
@QOTW
Too many. As long as it’s a proper remake. Not a Nintendo style remake of taking on new controls and charging full price i.e. Ocarina of Time 3DS. My pick would be Final Fantasy 7. I would go for Morrowind, but since it’s a PC game it already has fan made graphic updates which make it look like Skyrim.