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.
@Domains for Mad Max videogames registered by Warner Bros.
Dunno. What’s the difference between those possible future games and Rage? I expect the gameplay to be the same, ok, story a tad different.
So, the future games receive a ‘meh’ from me. For now.
@Report: Xbox 720 not always online
This makes sense. Sure, Microsoft is greedy, but they made good decisions in the past regarding the availability of software for their platforms.
Jordan, I also unwrap my games. Still, Serious Sam 3 is still on hold, Amnesia is on hold, Penumbra games – just made it to the mine thinggie. Plenty of stuff to play.
QOTW:
Favourite? Gosh … Here’s the thing: QUake 3 – FPS. Doom 3 – FPS. STALKER, Fallout 3?! – FPS RPG? C&C Renegade, Red Alert: A Path Beyond?! – FPS RTS?!
So, I’ll split it in two: perspective – first person. Game mechanics – RPG took first place. That doesn’t mean I’m going to pass on a good classic RTS.
I hope I’m not late this week…
@xbox720
There was no doubt in my mind that those rumors would turn out false. There are too many people who use the current gen consoles that do not have access to broadband or do not want to be connected all the time. Microsoft would have to change their general marketing and development approach if they chose to have an always-on device.
@Zeschuk
I don’t think I agree with the statement about nothing new happening in the game industry. Some developers are working on new IPs and, although most of the mechanics remain the same, I think gamers are still waiting for new releases with excitement. There are plenty of choices right now. Some games are free-to-play, there are subscription-based games and single player only IPs. To me it seems that gamers are not yet jaded and everyone can find something just right for them. I don’t understand what kind of revolution Mr Zeschuk would like to see. Admittedly, he knows more about the inside workings of the industry than me, but I side with Paul in that it’s rather the global economy state that forces people to buy less rather than the state of the gaming industry itself.
Most casual gamers would rather spend the $60 on a new CoD than a new IP. They know what to expect, they know they will have fun, so why risk the hard-earned money on something unknown? This situation will change when people will have more disposable income, if that ever happens again 😉
@Death of handhelds
I wonder if the cultural differences play a role in how we see the situation. Granted, most of the people in Poland own an Android or iOS smartphone but the tablet market is not as full as it is in western Europe and the States. To be fair, I haven’t seen many Vitas, PSPs or 3DS’ either. To me, it’s not a matter of competition between my phone and the Vita. My Samsung won’t run Little Big Planet or Wipeout. If I need a quick game, I play some Zen Pinball, which also won’t run on my phone.
Another thing. I’m not sure how many TVs a statistical American household has. There’s one TV in my wife’s and mine apartment and if she wants to watch something I can’t use my PS3 so I play my Vita. That’s another situation where handhelds are a good solution although they still need to compete with other devices, as per your argument.
With the recent PSVita firmware upgrade I sorted my games into folders. It’s easy for me to count that I now have more than 15 games installed there. This includes some PSN games, some old Final Fantasies and one demo but there’s still plenty for me to play and there are no other portable devices that compete for my time. Well, unless you count Words with Friends on my phone…
Oh, QOTW…
I looove old-timey point-and-click adventure games. I still think the Broken Sword series is one of the best series ever made. Then there’s Syberia 1 and 2, Leisure Suit Larry, Monkey Island. Where did all those games go? Deep Silver has been publishing some adventure games recently but that’s it. The hand-drawn 2D graphics, witty humor, nice puzzles, some of which are incredibly frustrating but once you get over them you feel a sense of accomplishment. Yeah, that’s the stuff. I’d put Quantic Dreams games in the category as well, sort of… It’s a more cinematic experience but you still get an extremely interesting story and they require some brain usage.
@Batman Beyond help
As far as I remember, there was a Batman Beyond game on Xbox. It was an utter turd. In fact, up until Batman: Arkham Asylum all of the contemporary Batman games released were absolute garbage. Except for Batman Begins, which was a cross between Splinter Cell and Burnout. It’s good to see him returning to quality he deserves.
@Incredible Mad Max: The Second Revenge of Mad Max and his Amazing Friends (copyright of Warner Brothers which is a trademark of Warner Bros which is a Warner company)
Never watched any of the films. So to me it’s like Max Payne. Probably gonna tank too. Especially since it’s a movie tie in. “Hey Max, jump onto the platforms to collect yellow bolts to build a Maxmobile. Que a racing mini-game chasing trucks which are throwing barrels and occasional power up. Turn your car blue by buying Mad Points using your dads hard earned currency”
@Xbox 720 is coming out eventually so shut up
I am absolutely indifferent to the rumors about next Xbox. I am patiently waiting for E3 when it is properly announced.
@Xbox 360 launch titles
Kameo was an Xbox game that was held back and released on Xbox 360 launch. Didn’t do so well.
@Death of the Handheld market
Difficult to dispute. At the beginning I thought an iPhone was just a crappy overpriced piece of junk that would bring hipsters together over a cup of Starbucks via Instagram. And it is. However, if it can run GTA: Vice City, it is a formidable gaming-capable machine on par with Xbox and PS2. It is far superior to a DS or PSP, which just specialise in games. And as far as I know, iPhone games are designed to be short and n00b friendly. Biggest problem is that smartphones are big in Asia. Chinese, Japanese and Koreans adore iPhones. And as we all know, nowadays if something is big in Asia it will be targeted by developers (i.e. Chinese only MMOs). And that is possibly the biggest problem for handhelds. The 3rd party support they enjoyed in the past has moved on to a simpler and cheaper development industry.
@QOTW
Free-roaming action RPGs. Elder Scrolls. Deus Ex. Borderlands. I love the freedom of exploration coupled together with a character that you can develop and personalize. And a fighting mechanic where I can actively dodge and attack using my personal skill.