Wallets Shrink, Used Game Market Grows

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.

for-saleThis 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.

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The news this week includes:

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Let us know what you think.

Diablo 3, Finite Health and Loving ItDiablo 3, Finite Health and Loving It

Diablo 3 Lead Designer Jay Wilson sat down with Multiplayer Blog to explain how the health system works in Diablo 3 and how it differs from Diablo 2. In short, you can’t add a new feature without removing an old one, in this case we’re talking about health potions.

The goal is to broaden the Diablo audience to more than just the hardcore fans. Lets be honest with ourselves, the health potion system was way too far out of control (broken?) By mid-game or earlier, half the character inventory was full of potions and you might have just purchased shares in the potion selling company with all the spending you’ve done there. The health potion system created the infinitely powerful character, in essence, by making them immortal.

Activision Blizzard has learned a bit about their success with broad audiences in games like World of Warcraft, which has surpassed game sales over Diablo 2, their most successful game title. What they’ve decided to do in this release of Diablo is to limit the characters ability to heal and make them “mortal” again, requiring the player to use strategy, tactics and skills to defeat enemies. Rather than charging forward pressing “1” then “2” then “3” and the other hot keys for potions, you’ll be forced to back away during strong stomp attacks, mind your enemies special attacks and defend yourself.

“One of the things that happened in ‘Diablo II’,” Wilson continued, “was the player was faster than most of the monsters and had pretty much infinite health because they would just pop as many potions as they wanted. So when you have a player who has more mobility, more health and endless power, essentially the only thing you can really do to challenge [the players] is to kill them… by just spiking the difficulty.” (multiplayer blog)

Gating the users ability to heal is a classic RPG/Adventure game mechanism for changing the playing field in terms of difficulty. You can make a game with weaker enemies in abundance and still cause you harm, take a look back at Gauntlet in the arcade for an example of this method. You can build challenging enemy styles and dungeon traps to cause the player to mind their step, look at the classic Zelda series and some of their crazy enemies. A great example is the Darknuts from The Legend of Zelda, it was a small knight that could only be attacked from behind but had a sharp little dagger if you bumped them from the front. You had to use tactics to wipe out a full room of Darknuts.

Activision Blizzard will now have the option to create some fancy enemies with challenging special abilities that do not involve insta-kill upon contact battle tactics. You control a super hero character, not an immortal; there should be some challenge besides hacking and slashing through mobs of enemies. Wilson went on to say, “We can make a monster that affects your mobility, we can make a monster that has different kinds of attacks that are dangerous to you and that you actually have to avoid. And so it makes the combat a lot more interesting.”

One of the criticisms to the Diablo franchise has always been the “click fest” of battle. You sit still and click on enemies until everyone is dead. Perhaps, without having infinite potions you’ll be challenged to use your brain on occasion, like a real RPG and have more creative use of your money rather than investing a half-billion into the potion vendors.

Where does that lead the hardcore Diablo fans? Activision Blizzard hopes they’ll see a title with a lot more depth, a new style of challenge and a long term appeal.

Diablo 3 Doesn’t Look Right, Dev Says Yes Sir!Diablo 3 Doesn’t Look Right, Dev Says Yes Sir!

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.

How do you argue with that? Personally, I think the graphics look wonderful, brilliant, vibrant and professional. Diablo 3 game designer Jay Willson said:

“The key thing to remember here is that this has been Photoshopped. This isn’t created by the engine. Though it looks really cool, it’s almost impossible to do in a 3D engine because you can’t have lighting that smart and run on systems that are reasonable. If we could do that, we probably would in a few of the dungeons.” (slashdot)

Non-developers seem to forget that the colors, cameras and lighting don’t come free on a video game. Everything has limitations and, although the limitations change over time, today’s graphics for a standard machine are capable of running Diablo 3. Blizzard isn’t making a game that only hardcore PC gamers can play, this game is for everyone.

Building a video game is a lot of smoke and mirrors to make a virtual object look “real” to normal gamers. Immersion and definition is important, grainy dark graphics do set a mood, but they also frustrate many players. Remember DOOM 3? Some people could barely see the “epic graphics” of the last DOOM sequel, it’s time to mature and show off true colors.

Darkness usually is used to hide imperfections, Diablo 3 has nothing to hide.

(For a high resolution photo, checkout MTV Multiplayer Blog)