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.
There has been many debates on the graphic level of Diablo 3 and how it should be different. Finally a developer comes out and says “um, no.” Their reasoning is fairly simple, it’s one thing to photoshop up a screenshot with some filters but it’s another to get the texture and lighting to run at that detail on a standard computer.
@Exbox One and Paystation 4
The Chinese have a very different understanding of what copyright infringement is. At university I was genuinely laughed at for having physical UMD disk games for the PSP by my Chinese course mates. Apparently in Hong Kong you can purchase an already cracked system and download the games online. As lucrative as the Chinese industry is, I don’t think Sony and Microsoft can ever crack it, regardless of the legal status of gaming in the country. Piracy will kill any profits they hope to make. The only games that can survive in China are Freemium games, which offer online transactions for additional content.
@Street Fighter 5 BETA be worth it (sorry my pun game is so weak)
I was never really a fan of the Street Fighter series. Like Jonah, I found it too technical. My biggest problem with the series was its poor storytelling. That’s why I grew up playing Mortal Kombat, with its accessible lore and buckets of ketchup. I was surprised to hear that SFV will be exclusive to PS4. Sony must be paying Capcom a lot of money to keep it that way. Ironically, while skipping Microsoft Xbox One, Capcom is bringing SFV to Microsoft PC,meaning that I can still enjoy the series as long as I overclock my system and get a diamond fiber connection.
@Pee-sports
I still can’t believe that e-sports actually exists. At least don’t call it sport. Comparing Usain Bolt to some spotty snotty teen who calls himself DeathLordOverkill745 is just laughable. Nonetheless, e-sports is difficult to ignore. Its raising the profile of gaming, and often in a negative way. Maybe some proper regulation will do it some good.
@QOTW
I can’t think of an expansion pack that I actually enjoyed. I don’t tend to buy expansion packs on their own. I get them with GOTY edition or in a bundle, so for me they become just a part of the game. The only recent ones I can think of were Dawnguard and Dragonborn for TES5, but all they did was throw extra content at my already overpowered Dark Elf.
I believe that a good expansion pack must provide you with a new gameplay mechanic, that lets you enjoy the game in a new way. Its what distinguishes an expansion pack from DLC. Throwing more of the same at you after you already completed 10 hours of a game is not worth the money. The expansion must also feel like an addition to the game; not something that was supposed to be there in the first place.