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.
I like to think of myself as a provider of counterbalance between Jonah’s XBox bias (yes, it’s there 🙂 ) and Jordan’s pessimism as far as it comes to Sony products. Look here and tell me again that there are no Vita games, I dare ya! 🙂 https://en.wikipedia.org/wiki/List_of_PlayStation_Vita_games
Sure, it is very possible that there will be few Vita-only games when PS4 comes out but we don’t know it for sure now and there really are games to play on the system now and there have been a steady flow of titles since it came out. There hasn’t been a moment when I didn’t have anything interesting to do with the system. Maybe I’m the perfect target for it but I really believe that when people get their hands on a Vita they see that it’s a great platform.
@Diablo III – yaaawn. They’re gonna milk it till the cows come home, pardon the pun. Diablo never got me excited, I find it too repetitive and ultimately boring. Putting tens or hundreds of hours into it, hoping some amazing piece of loot pops up. No, that’s not for me. I enjoyed Borderlands much more because of it’s FPP nature although the basic idea is very similar. The humor and graphical style helped too. In short, I won’t be getting Diablo III on any of the platforms.
@LoL
@LoL – I was a semi-professional bridge player so I know a thing or two about unconventional sports 🙂 I don’t mind it becoming a professional sport although it may seem a bit silly. However, if prize money in the range of $1 000 000 is at stake, I see what the fuss is about. Let them at it. I don’t really know how the labor and tax regulations play into this but if it makes it easier for people to compete it’s even better.
As far as the game itself goes, I tried playing the LOTR MOBA but I didn’t like the gameplay one and that’s how my adventure with the genre ended. Don’t really care (see Diablo III comments).
@Sony appeal – It’s probably better to pay and let the stink finally disappear. It is strange it took them so long but better late than never. Hopefully, this doesn’t happen again and if it does, they handle it better next time.
@MS family sharing – this is a great feature if it really works the way you described it. You buy one game and can share it between 10 accounts? Fantastic. It makes my wonder why Playstation now allows only two accounts to share a downloadable title and it used to be 5. Didn’t the publishers push Sony to decrease the limit because it resulted in less copies being sold? Did MS confirm that it applies to all games? Maybe it’s just 1st part downloadable titles?
@Police Quest – I mentioned already that I love adventure games. However, I was a little too late for the Sierra title and only played some Leisure Suit Larry. By the time I discovered the Quest series, the graphics scared me away from them and I don’t think it makes sense to go back and play them now.
@QOTW – There’s no other answer than Fallout! Is it a cop-out if I pick the whole series? I got the first Fallout for free with a video game magazine a long time ago. At first, I had no idea how to play it but once I figured it out it consumed me completely. I beat the first two games several times, several ways. I got Platinum trophies with F3 and New Vegas and I wasn’t bored for one minute. Amazing stories, fantastic character system. Perfection.
I loved your gaming flashback to an old classic Sierra game. I played almost all of the various Quest games. They are a sorely missed company and am glad that some of them have gone to kickstarter to make their adventure games again.
I will also be one of those that doesn’t buy a launch console I’m sticking with PC gaming.
Yay at Jordan mentioning Suikoden! I loved this series with its epic world story telling. Also Sazh from Ff13 is not the only game character to sport a bird in his hair. There is also Faylon from suikoden 5 who had one as well.
http://www.suikosource.com/chars/list/imageviewnojs.php?img=f/faylon01.png&char_id=617
I don’t know why either of these characters has a bird in his hair. A google search brings up Nicholas cage with a bird hair too. It just seems like one of those strange random things and how appropriate to have ended the last show with White Rabbit to get to thinkin about why such strangeness exists.
Qotw- even though I love Suikoden series I have to say my all time favorite is Baldurs Gate series. I loved having a group of characters I got to know. I also loved the iosometeric view I agreed with the computerized minis reference.
Oh an Shadowrun was on Snes and Genesis. I remember playing the heck out of it on Snes and can’t wait to play the new version.