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.
Electronic Arts has announced SimAnimals, a game where you play the godlike hand and control the lifestyle of over 60 animals. In the game you’ll play the role of a disembodied hand which moves around and life animals, pick flowers and interact with the environment much like a past Lionhead Studios game: Black and White.
Hey guys, I missed the last two episode comment cycles (vacation, yeah!) so maybe I’ll start with the QOTW from the previous episode, if you don’t mind.
Preorders: Up to this point I only preordered one game, which was The Last of Us. The hype around it was so enormous that I knew that if I didn’t play it, it would get spoiled immediately. It was scheduled to be released on a Friday and I got an e-mail from my local store to come by and pay for the game (there was no preorder fee) on a Wednesday. To my surprise, the man behind the counter reached behind him and gave me the game two days before the official release date. Unfortunately, I couldn’t stay up all night playing since I had to go teach a class the next morning.
That’s why I decided to preorder my PS4 there as well. This is your typical BestBuy-like store so they don’t know much about consoles specifically so maybe they release the console a couple of days before as well.
@PS Vita price drop – That’s great news. As we discussed previously, it all comes down to what you expect from your handheld console. If you don’t want only exclusive AAA Vita titles but you’re happy with ports, cross-buy games or indie titles, this is the device to get. The games look great, they play really well, and if you’re a PS+ subscriber you don’t really have to pay much for games since the European PS+ collection lineup is pretty good. I would love it if they also did bundles with a card and a game or a PS+ subscription cheaper. This is the way to go to sell the system. Best case scenario – make the memory card specs open so that other manufacturers can make them as well, reducing the prices.
Speaking of Vita, I recently ‘platinumed’ Rayman Origins and NFS:Most Wanted. I’m currently playing Gucamelle and all those game were great fun. Just reiterating my point that this handheld is great 😉
@Ridiculous indie games.
I find the idea of such games interesting and funny but I’m not compelled to play them at all. I could maybe watch somebody else play it or watch a YT gameplay video… I just don’t feel like devoting my time to such a title while there are other games I’d rather be playing. Granted, I played QWOP for an hour or two (did you finally play it, Jonah?), I also finished Frog Fractions but it is an hour-long game at most. I tried the farming simulator game on the Vita and I didn’t get it, I had no idea what to do and I closed it rather quickly. Maybe if I was a PC gamer I would pay more attention to those quirky titles.
@Gamstop lawsuits: Doesn’t it say on the box that the game requires an online pass to play… online? Or does it say ‘Online pass included’? Anyway, I know it’s different there across the pond but it feels obvious to me that an informed gamer should know that game like the ones you mentioned require an additional purchase. Also, the person at the counter should tell the buyer that this is the case. To make a lawsuit out of it seems a bit over the top.
I always tend to investigate things in detail when I decide to buy something used. Do I need some additional components? Are all the cables included? Do the codes work, etc. It’s on me to find this out although it’s always nice to be informed about it by the seller – just makes the life easier.
@QOTW Currently, I’m pretty much exclusively a console gamer. I only own a crappy laptop computer I work on and I don’t feel like buying a gaming machine. That’s how I divide my electronic devices at home – PC = work; console = games. I used to be a PC gamer some 10 years ago. I didn’t own a console between the NES and the PS3. It was the pirate-boom era in Poland when everybody knew a ‘game dealer’ who would make ‘compilation CDs’ of games with audio stripped out and video cutscenes deleted, etc. You could get a CD with 10-20 games for an equivalent of maybe $5-$10. I quickly decided that this was not the perfect way to experience games and I preferred buying games less often but with higher ‘production value’. Ultimately, I got tired of trying to keep up with the hardware, I found I had less time to game with other things on my mind such as studies, friends, girlfriend, so I drifted away from all of it. I came back to gaming with Fallout 3 (the best RPG series of all time, as I already mentioned) and switched to PS3 then.