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.
Bad economic times mingled with company acquisition spells disaster for many game titles but the story ends well, we hope, for Ghostbusters. The game was slated for a Holloween release, last year, but was given the boot by
@The Last of Us features Naughty Dog’s “longest ever” campaign
… me likes. I quite like long SPs, so, bring it 🙂
The entire premise of the game sounds really nice, so this turns out to be one of the games I’m looking for.
@Sony confirms 4K movie service for PS4
… eh? I guess they’re trying to create a market for their TVs? Just doesn’t make sense. Somebody else should create content and be able to distribute it in order to drive up demand. If you do both then you’re risking too much.
As for eye resolution, it’s about 60 arc seconds. Think of a 3DS held at 10 – 12 inch away from the eyes.
@Ubisoft confirms Assassin’s Creed IV: Black Flag
… but Assassin’s Creed III is still quite recent. This is slowly becoming a Call of Duty thing. Not much of a fan.
@What was your favorite moment in the TD Gaming Podcast over the years?
I honestly can’t tell. Just too many to pick from.
Cop-out. Pick your favorites and just go with them.
@The Last of Us features Naughty Dog’s “longest ever” campaign: Again, as a PS3 fanboy and a huge Uncharted fan I can’t be more excited about The Last of Us. Already pre-ordered it.
I don’t believe it’s going to be a bad game so the more the better. However, I hope it’s more difficult than Uncharted 3 and is more tactical or strategic rather than an interactive movie. Sure, it’s not going to be open world but add some more decisions to it!
BTW, the fact that the infected are not zombies has been long known and is not a spoiler in any way unless you’re employing Paul’s blackout strategy while waiting for game releases 😉
@Sony confirms 4K movie service for PS4
Don’t care, don’t want. I’m usually satisfied with DVD-quality movies, I very rarely use the Blu-ray drive in my PS3. The movies should be more about other qualities than presentation. I hated Avatar which was nothing else than Pocahontas in space and all the fancy 3D CGI effects couldn’t save the movie for me. This is Sony being Sony and messing things up for no purpose whatsoever.
@BioShock Infinite‘s ending may cause controversy:
Insert disclaimer: The views expressed here are solely those of the author of this comment in his private capacity and do not in any way represent the views of the podcast’s staff 😉
This is great news! As an ardent atheist I’m always looking forward to breaking boundaries as far as talking about religion and showing it in media goes. In my opinion a game where Jesus and the Christian God are presented is nothing different than Kratos and Zeus in God of War. If you want to quit your job because of a controversial portrayal of a fictional character it’s your choice.
@What was your favorite moment in the TD Gaming Podcast over the years?
I only started listening some 30 episodes ago but I always enjoy Paul’s one-liner ‘don’t give a f*cks’ 😉 No hate mail for you, Paul, sorry…
@Naughty Dog
I agree. Every time they say they created amazing AI it always falls short. I still remember AI in FEAR using empty see-through shelves as cover. I just wish they would make a good Crash Bandicoot game. I miss them so…
@Sony better-than-life videos
I thought Sony learned their lesson with 3D: do not support technology unless it’s widely accepted by the consumer. If you care about resolution so much then you are fickle. You can have a 4k Star Wars Episode 1 but it will still be shit. It’s all about the content.
@Bioshook
I agree with Paul. Sounds a lot like a publicity stunt. Reminds me of Hitman. Never cared about controversy. Incest in Metal Gear Solid 2. Ghetto in GTA San Andreas. As long as they implement it appropriately and not just to shock some weak minded fools so that they make some racket i.e. free publicity.
@Assasins Greed
Milk is going sour. Maybe the franchise is really turning into the bull. Last one I played was AC2. I like the franchise but I prefer to leave it for later. To much of the same game can ruin franchise.
@QOTW
I enjoy each and every episode. And I plan on enjoying it for a long time to come…