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.
The success of the Nintendo console, the Wii, has proven to change the industry in many new and creative ways including reinvigorating slow product sales at Toys R Us. “The company went from a loss of $42 million at the same time last year to a profit of $13 million for the three months ended August 2nd,” says 
Guitar Hero III hits
Going for the sex sells eh? Not that anyone would know the difference either way.
“Companies spend money like fish” Doesn’t sound like any company I’ve been at. I have at two work places that had several computers still on XP, they take a long time to upgrade anything. I’ve seen old plotters still be used from decades ago. I think companies tend to the if it ain’t broke don’t fix it.
Paul if you have a spare Windows 7 computer why don’t you see if Grim Fandango works on it? Or have you already tried?
@Windows 10: Yeah it feels like a real desperate attempt at good will for the Windows OS in general. I think giving it away free for a year they feel will garner some slack. Though if you upgrade I don’t know if you can go back to Windows 7 or 8.
@Kojima: I think Metal Gear is becoming one of those games that need to be retired now.
@Tempest Debacle: Looking at the screen shots I feel like I have seen this game mechanic before in other games. Having never played these two I can see it’s a ship that spins around a “pit” shooting at things in the center. I feel that that was a very old Atari game at some point. However he’ll probably have to pay a settlement for this as it does look like he is trying to remake the game that belongs to Atari now. There’s making a game that uses certain mechanics and then there’s just making what looks to be a clone of what they did previously. If I made a game where you jump up and down a large block pyramid with a little orange dude named Q’bort I’m sure Atari would see through that as well.
@Xbox for sale: If it’s for sale maybe a former console company could buy it to bring its self back like Sega or Atari. Though I don’t know if anyone would want to buy it. With the way they’ve been talking about integrating Xbox and Windows gaming I don’t think they would sell that then.
@Nintendo’s NX Gen: I’m intrigued what they will do, if nothing else we’ll have a new name to have fun with the NX Gen.
Since there was no QotW, I thought I’d ask something: “What do you think is the future of Old Games?” To give more context anyone who wants to read an old book, see an old movie or listen to an old song can easily do so. However with Games that will become difficult, especially in cases of games that are Online only and once servers are gone so too is the game. Later generations of people may have a hard time playing games that are no longer workable on current gen consoles or even computers. I wanted to know what your guys thoughts are on this.