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.
Circuit City seems to have a problem paying their bills or so it seems, as Sony stopped their shipments mid-transit and returned them before hitting the distributors command center. In this unfavorable market climate, with the holidays around the corner, it seems bad for Circuit City to lose the trust of Sony.
Funny enough I actually started by looking for podcasts in Google. Yes I was overwhelmed by the number of podcasts I had no idea. Then I started narrowing my results and typed podcasts about games. Yes you were the first one that popped up.
@ question of the week- this question made me laugh because I just watched six batman movies. I was watching my nephew who is obsessed with barman. I also watched the brave and the bold. I think I would have to say Christopher Nolan batman. The catch is he would have to have a big say in the game. I think his view on Gotham City and batman is phenomenal.
Did I hear Jordan’s wife in the background?
@Square Enix exec says long console lifespans “biggest mistake”
… what? So they left for the web and found it a greener pasture than a console? As for profit margins, dunno. Yes, production costs are smaller for a browser. But the competition is …
Question: how many big names (Activision, id and so on) dropped the console totally in the favor of a web browser plug in?
@No fee to be charged for connecting to Wii U network
They have to recoup the costs from some other place. What will that be?
@Michael Fassbender pegged to star in Assassin’s Creed flick
Erm … movies made after games don’t have a great track record …
The main issues with movies made after games is that they deceive the gamer. They have expectations set up by the game and the movie somehow doesn’t deliver.
Both game fans and movie makers seem to forget one aspect that makes the game good and (because of it lacking) makes movies … not so good: interactivity.
@Batman game:
Erm, I don’t like super hero games that much (my way of saying I wouldn’t play one … well, except the NES games).
Dunno. I’d go for Christopher Nolan, the atmosphere in Dark Knight was good – less super hero-y stuff, more realism.
Keep the bloopers coming 🙂
@Square Enix exec says long console lifespans “biggest mistake”: You already covered every argument on this subject so I’ll just say this: I think that Sony and Microsoft are making a mistake by letting Nintendo get a year or more head-start in next-gen consoles.
No fee to be charged for connecting to Wii U network: Completely agree with the opinion that they had no other choice in this matter.
Next Rocksteady Batman game will feature Silver Age Bats: I’m hoping they can pull this off after the amazing Arkham series, it can be a nice change of pace.
Michael Fassbender pegged to star in Assassin’s Creed flick: Have zero expectations for this, hoping to be pleasantly surprised.
@QOTW: I already have enough of my Batman fix (cartoons, movies and video games), so I don’t really care what version they use at this point.
Hey!
@ass ass in Creed movie
I hope this movie is better than other movies based on games… Mario comes to mind right away 🙁
@QOTW meh.. Not my kind of comic… But ill go with adam west batman, he was funny in a kinda sad way
Thanks for the code!! (but i still have not got it) :p
@Square Enix and lifespans
That’s a difficult one to answer. For money consious gamers this generation was the best. However, the gaming industry is slowing down. Most of the upcomming titles are sequals or reboots. A new generation might bring back some originality. Regarding iOS and WEB game turncoats, you covered an item a few weeks back where Epic games stated that their iOS game brought more profits than Gears of War. But I don’t think that big names like, Activision or EA, will go purely iOS/WEB. The console market is highly monopolistic. It’s difficult and costly to make a console game. It’s much cheaper and easier to programm for an iPad.
@WiiU and free network
The 3DS has a free network. But you cannot benefit from it if there are NO GAMES THAT USE IT. Satoru Iwata released a statement at some point, that they will not concentrate on on-line, like Xbox 360. Which means that WiiU users will be stuck with crap network, like the Wii (2 minutes to get to the Wii Shop screen).
@Batmans QOTW
I am not sad enough to know what guy made what Batman. WIKIPEDIA!!! I CHOOSE YOU!!!
Tim Burton’s Batman could be fun, if they would bring back the actors that played villans (Danny Devito, Arnie, Jim Carrey). The recent comix emo Batman would make for a nice 18 rated game. But I think the animated series would be the best choice. It was a very good representation of Batman.
PS: they had Batman: Brave and the Bold game on Wii and DS. Might want to check it out.
@Arthur V – console lifespan
I’m afraid it’ll be just the opposite: new hardware? No cool new software available yet? Quickly, do a high definition version of Mario and sell it as Mario U! Or a high definition of Halo and call it Halo-rango!
“It’s difficult and costly to make a console game. It’s much cheaper and easier to programm for an iPad.”
Not sure about that in term of immediate costs. XNA is free, there’s a free version of Visual Studio.
If I’m not mistaking, all compilers for Apple are not free, and there’s a developer fee you have to pay.
The Terry McGinnis Batman from Batman Beyond, is awesome and it’s a from a Batman age that haven’t been explored much so developers would have great creative freedom and few restrictions.