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.
@Black&White
It was the first PC game I played properly. I was surprised at how complex the game was compared to console games. I enjoyed it but it got tedious real quick. One thing that annoyed me about that game was the difference in effort you had to put to be good or bad. If you wanted to be good, you had to feed the villagers, build them houses, protect them and look for their sheep. Being bad was so much easier. Just pick up a bunch of kids and chuck them in the sea. And their parents. And animals. Just chuck everything in the see. That took care of everything and you were on your way to becoming an Elite Omnipotent Asshole.
@Steambox
I for one would love to have a console that runs steam games. For many out there high system requirements are a barrier to PC games. And they just keep getting higher and higher each year. I bet Johna’s new rig already can’t run the latest releases on highest specs. And I find buying PC games to run them in shitty resolution not worth my money. The Steambox would be a good thing. A gaming dedicated PC with decent specs and a powerful cooling system for a sensible price. Although the idea does sound too ambitious. PC games are not uniform. Fitting them all on one hardware if bound to have issues.
@World of Rockcraft
I think they will do it. But for next gen hardware. Wouldn’t want them to make an MMO out of it because I don’t want some twats ruining my criminal empire.
@QOTW
I am with Paul on this one. I get deep into a single-player game storyline. I read books in Elder Scrolls games. I talk to every villager in Final Fantasy games. I do every available side quest in Mass Effect. But when it comes to MMOs, I tend to avoid stories. Mostly because they are crap. 90% are set in a medieval setting where some Dark Lord has been revived and now there is like 3 million warriors that try to stop him. But you are the specialiest one here. Also, because I only play MMOs with friends and it’s difficult to read stuff when others are not interested in the story. I am really into the DC Universe story but that’s because I already have a large knowledge of DC Comics.