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.
Sony’s been talking about how they’ve overtaken the Xbox 360 here in the States, perhaps this is because Microsoft shifted their attention to pwning them in Japan? Xbox 360 sold 25,000 units to PlayStation 3‘s minor 9,673 units according to
@WatchDogs – The problem with MS cloud computing is similar to PS Move. If it’s not obligatory or bundled with the system the install base is lower so the devs are less inclined to develop for it. Kudos to Ubisoft for taking advantage of the cloud but it is true that for users with slower Internet connection, the ‘dynamism’ may not be as improved as they say.
@Sony Dualshock4 – I’m pretty sure this can be fixed with a firmware update or at least I hope it can. There has to be a hardware option to do that – I understand that it’s the software that’s not allowing it at this point. As far as the battery lifetime goes, I have to say I’m satisfied with Dualshock 3. True, it’s a pain in the butt that you can charge it with the system off. I own two controllers so if one runs out of juice I plug it in and use the other one. As a last resort I could play with the controller plugged in but it rarely comes to that. Having said that, I hope it will be possible to charge the new controllers with the PS switched off.
@Indian prices – I agree with Jonah that EA could verify their customers somehow. A credit card would be the easiest way out although a mail-in method would also work. Punishing those people just because some idiots from the other side of the world take advantage of the system is precisely why EA gets all the ‘accolades’ it gets year in and year out. #WorstCompany
@Vita – it’s true that there aren’t many or even a few AAA Vita games in development but I like to be more optimistic. I hope that Vita will gain popularity with the new Playstation and once the install base grows, developers will notice that it makes sense to make games for the handheld.
Also, bringing back older games makes sense in this context. For people who buy PS4 and don’t have PS3 right now, Vita could be the way to experience the great PSN games such as Dead Nation (YEAH!) or Guacamelee.
By the way, have you played Velocity Ultra on the Vita? Look below.
@QOTW – I have to say Velocity Ultra. It’s a great vertical shoot’em up for the Vita. However, it has a twist in that your ship can teleport through walls and other obstacles. It’s easy to learn, more difficult to master, it has achievements and trophies and it requires a lot of skill if you want to complete all the stages flawlessly.
@Dynamicism (is that a word?)
OMFG!!! Dynamic water!!! I wonder if it involves advanced fish AI? Having a marginally better environment won’t sell the console. It sounds like a cool gimmick, but just like in GTA, rushing through the city at high speed you won’t even notice it.
@Matrick
If I would not care any harder, I would
start sucking in other people’s cares and turn UK into a country full of apathetic pricks (i.e. France). I don’t tend to place names to faces in the video gaming business. For me he will always be that smug short guy who wasted a lot of time on conferences talking crap no one cared about.
@PS controllers
Don’t care. I bought an adaptor that lets me plug in my Xbox 360 and PS2 controllers into my PS3. Haven’t used the official PS3 controller ever since. If I get a chance to do so with PS4 I will gladly. Dual shock controllers overstayed there welcome; a relic of an era long past that should have been redesigned at the PS3 stage.
@favourie Indie game
I played 2 in the last year. Both of them were rip offs of another series. CastleMiner Z is a Minecraft clone which focuses less on building and more on mob survival. It has craftable guns and loads of zombies to shoot. Another game is White Noise; a Slender rip off. Almost the same but has coop which results in some hilarious gags. I tend to turn to indies because a lot of them have coop support. Most mainstream titles just concentrate on pvp multiplayer.
Candlejack is such a lame meme. Look. I said Candlejack and I am still here. It’s not like I am making fun of Vladimir Puti-
In Soviet Russia, Candlejack is abducted by you.