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.
@Iphone: I’m with Paul, I got and have had a Iphone 4 for about 2 years now, I don’t like the idea of rushing to get things when they are first released, I take a while getting new consoles and phones.
@Wasteland 2: I am surprised Jonah didn’t mention more of the Kickstarter games that have been successfully released when Paul said he knew of only one (Wasteland 2). There is also FTL, Broken Age, Shadowgate, & Shadowrun Returns. Pillar’s of Eternity is coming out and I’m sure can be added to this list soon as well. If you only focus on the ones that fail you’re going to miss the ones that are succeeding.
Wasteland 2 has been fun so far, I like being able to create a party unlike in Fallout where it’s just you and some NPC’s. I also suggest trying to use energy weapons, they seem to be very powerful to me.
@Zelda rumors: I don’t recall or remember any of these but I do agree with Paul on the whole feeling something is there if you could just jump one more block or open a locked door. You want to know what’s there, humans love mysteries.
I do remember the stories about trying to find the lost level of Super Mario, which was actually true.
There are a slew of crazy Harry Potter theories and I do remember the “Weasley is our King”
@QotW: As for falling for any game Rumors I don’t think I really did, most of the time I had sources to validate if it was true or not. If I couldn’t do it or seemed astronomicaly impossible I figured it was fake. However the closest would be when Areis died in FF7 (I’d say spoiler warning but if you haven’t played it yet your’re probably never going to). I wanted there to be a way to save her since you could actually save Gremio in Suikoden, you can’t fault the logic of a angsty teenager.
The more I thought about it though the more I realized she had to die for the story, it was her death that brings about the Holy spell to save the world from Sephiroths Meteo. So yes listen to Paul if it doesn’t make sense in the story narrative, it probably isn’t true and if it is the game isn’t worth your time.
@iPhone yoga
It seems that someone did not pay attention during their physics lessons on the property of metals. I am sticking to my iPhone 4S. Last thing I need is my phone going all Beyoncé on me. But I am sure Apple will fix it. When they had problems with cracking screens, someone released a screen protector which was used for attack helicopter wind shields. You know, just in case you want to check your Facebook in a middle of a war zone.
@Windows NEIN!
Oh Lord, another Windows edition. When will Microsoft understand that the best way to fix a mistake is to never make it in the first place. I just hope that they were reading their feedback and will make a definitive windows experience. Considering that there is no alternative on the market, a good new windows is a necessity.
@QOTW
I don’t browse the net that much, so I avoid most of the rumours. If I do hear something, I triple check it for confirmation. I think my favourite rumour was the Halo 2 Scarab Gun. It was a plasma rifle that shot massive blasts of energy akin to the gigantic Scarab walking tank. It sounded like a hoax, until people proved that it actually exists. This set of a chain of rumours of other hidden weapons all across the game. Countless hours were spent in chasing ghosts in that game. A good marketing ploy if I ever saw one. My second favourite Bungie rumour is that Destiny has a storyline. Apparently it’s hidden somewhere deep deep within the game’s code and only the most dedicated players can find it.