This week’s episode has no Gaming Flashback, but there is a lot of talk about how awesome the Good Old Games digital store is.
The week’s news items include:
Let us know what you think.
At E3 Reggie Fils-Aime let the world know he wasn’t satisfied with the sales progress of the Wii or DS in 2007 and hopes Nintendo can do better this year. Perhaps Nintendo is playing the humble card? No doubt they bragged about their 10 million sales of the Wii and 20 million sales of the DS but quickly followed it by saying they’re not satisfied.
Or, is this a threat?
Nintendo has built some steep competition while both Sony and Microsoft scoff at their product and tell everyone its a novelty and it doesn’t really “count” in this next-generation console battle. It doesn’t count… really?
Perhaps Microsoft and Sony are right; maybe every Wii owner that wanted a PlayStation 3 and/or an Xbox 360 purchased their console too. There may be some truth to that as hardcore gamers may purchase a Wii for many reasons:
It seems they don’t feel a threat because Wii is a non-gamer console and thus attracts a different crowd… yet they’re both mimicking some of the motion sensing in their own controllers and playing nice towards “casual games” and non-gamers of late. Maybe their not threatened, but impressed?
Fils-Aime isn’t impressed with their sales figures, perhaps because he expected a higher degree of Wii sales by now, but the fact that people cannot purchase them two years into production has hurt sales figures. Although 10 million units sold is an impressive figure, knowing you had such higher potential if the product was actually on the shelves has to hurt a bit of your pride.
The DS sales were impressive considering the product has been in the market for awhile and is easier to find (minus the holiday rush). We’re not sure why he’s not satisfied with the figures, but inspiring a higher degree of DS sales will require some work. Perhaps this is why they’ve gone with the GTA Chinatown approach; using the GTA name to grow their DS sales figures?
It will be interesting to see how Wii does through the next few quarters and if sales slow down now that we’re a few years into the product. What was the last home console Nintendo owned to get this high of a demand?
Perhaps none.
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.
Harmonix, MTV Games and Electronic Arts has announced their next block buster killer app: Rock Band 2. First, the most important feature is backwards compatible downloadable content. They’ve surpassed 15-million paid downloads, we want our content and we want to keep all the awesome songs for future games, else we might as well stop purchasing now, right?
The question remains, will we want to upgrade our instruments? They’re saying we’ll have “more variety of instrument choices than ever before with new and improved drum and guitar peripherals, enhanced functionality and innovative new designs – all fully compatible with the original Rock Band instruments.” Will the enhanced instruments really want to make us go out and buy them?
If these new instruments are highly desirable or add any new features to the game (or make newer features ‘easier’) then we may be persuaded to look into new hardware…yet with Guitar Hero World Tour we’re already pressured into considering another drum unit.
So confusing, but yet so much desired. I guess that’s the love hate relationship of a gamer with a passion and a, slight, addiction!
