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.
@PS4 did have always on DRM, camera, but Sony changed it at E3
😀 If this is true, then damn it, the customer still has some power. I guess not being the first to present the product is not entirely bad.
@ Xbox One’s capabilities
It’s easy to mess up specs. I mean the sales guy don’t know tech mumbo jumbo. So yeah …
Now, I’d go and say that even at the initial estimated bandwidth the difference should not be that big.
Read – write simultaneously? That’s a pretty good thing. In theory that can double the effectiveness of the hardware (at least in some instances), as opposed when having to do them sequentially.
Still … PS4 looks a bit more attractive. Dunno why, maybe because of the initial fiasco of the XBox one.
Now, on compatibility: wasn’t supposed Win 8 to play also XBox 360 games? Does this mean that XBOne will play 360 games?
@Xbox One getting Unity support to aid indie developers
Hmm … interesting. Still, XBLA was not all sunshine and rainbows:
http://www.xblafans.com/jon-blow-and-team-meat-done-with-xbox-64672.html
So what gives? Ok, the link above is from March, but still. If this isn’t confusing, I don’t know what is. Team Meat? Your reply on this recent development?
@Star Citizen asset cost for ships “anywhere from $35,000 to $150,000”
Holly f*ckin’ shit! No, just … no. Jonah has a very good point, it could be that those polygons won’t be visible at lower settings.
Further more, I think that in the heat of the action, you probably won’t notice the extra details anyway.
Hey! I missed last week’s episode so let’s get going now!
First of all, Insomniac did not develop Infamous. It was Sucker Punch and they’re also doing Infamous: Second Son now. They’re still with Sony.
@PS4 DRM – This is highly doubtful to me. Am I supposed to believe that a multi-billion dollar company changes their policy and the entire E3 presentation within a couple of hours because of what the competitor did? No way. Jack Tretton of Sony was a guest on Up At Noon on IGN this week and that’s basically what he said. That the presentation we saw at E3 was what it was always supposed to be. There were no changes made after Microsoft’s conference. The game sharing Youtube video, that’s a different story 😉
@XBone capabilities – that’s a funny mistake to made but still might have happened. I don’t think all the technical stuff really matters to an ordinary customer. I still believe that the price and the unfavorable media coverage that Microsoft got after E3 will be the deciding factor. Those people who show more interest, like you and me, already decided which console they will go with. I’m not starting my Xbox adventure with this one.
@XBone running Win8 apps – I wonder how long this will hold up. I can see people developing apps that somehow hack the console the way people accessed the OS on PS3 in the early days. The more closed the system is, the safer it is. That’s why I’m not a huge fan of all the social interaction that the new generation brings. We’ll see how this develops.
@QWOP – Jonah! Play QWOP now! This game is what hell is all about. This could be an instrument of torture – “if you don’t run at least 10 meters you’re not getting your food!”. Parenting tip #436
@E3 impressions – I’ve been going through the list of games and it’s really hard to choose. I’m going to focus on Sony games, since that’s the console I’m going for. Can I still say The Last of Us? 🙂 Technically, it was release AFTER E3 so it should count. I love this game and I’m afraid to read Jordan’s review… You OBVIOUSLY don’t get it 😛
If I have to choose something in the future, I’m still very intrigued by Beyond: Two Souls. They showed some new stuff about this game and now I have no idea how it will pan out. I’m a little worried that Mr. Cage & co. want to do too much with this title. I loved Heavy Rain and I want to go back to this game some day and if the storytelling is as good in Beyond, it will be amazing.
Most intriguing next-gen game? I think I’ll go for Infamous: Second Son. I really enjoyed the first two games, I platinumed both of them and it’s going to be interesting do see what they do with the franchise post-Cole.
And also, in case you missed it, Jordan especially, since he has a Vita, Dead Nation is coming to the handheld! The game was an amazing PSN title. Sure, it’s another zombie apocalypse game, but it was so much fun. It had a co-op mode and you could go through the whole game in 2-3 hours if you made a speed run. I recommend it wholeheartedly.
Now I’m wondering whether I should cash in my Bioshock Infinite contest victory to get a T-shirt or should I wait for some next-gen games since they will be region-free… 😉