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.
It seems we’ve seen a lot of great concepts from Sony for their PlayStation 3 product line but very little has managed to hit the software virtual shelves. We’ve heard of Sony’s Afrika for the PS3 back at E3 in 2006 and we’re looking at it for 2008’s holiday lineup.
I’m rather puzzled by the hardware failures already at PS4/Xbone, seems like a lack of foresight to make sure their peripherals to work.
Jordan the Prince of Persia games are Platformers, not adventure.
QotW: My favorite Adventure game has to be Gabriel Knight, each game in the series was a dark thrilling mystery and the main characters were great to follow.
Speaking of which Activision is licensing out the GK IP to Jane Jensen for a remake. Thanks in part to the Kickstart project Moebius that Jane got funded. Along with other Adventure game projects inspired someone at Activision who had a passion for the GK series to convince the company to license out the series to Jane. What has me excited is seeing Adventure games get more notice as a viable product again by game companies, especially Activision.
@Xbox and PS headsets
Personally I don’t see this as a problem. As long as they provide a pack-in headset so that I can discuss my numerous relationships with my oponents mothers on Battlefield I will be fine. I can see how it is a problem for rich folk who blasted loads of cash on some shelled reptilian headset. But I am indifferent to the opinions if others. I fully support Democracy and believe that the opinions of few should be overlooked and they should all be quietly shot.
@Oh can you hear what the Rockstar is cooking?
As long as it’s not ONI 2 I will be glad to play anything Rockstar makes. To me they proved their development ability time and time again. I am curious what it will be. I am guessing it’s Bully 2 but it could be Red Dead as well. Redemption was voted as the best game of last decade so I would expect Rockstar to indulge us with as sequel.
@QOTW
Across my gaming life I played quite a few adventure games. But I don’t remember most of them. Broken Sword 3 was good. Recently I played Anna but had to quit because of lighting issues on my laptop. But my highlight was Dreamfall: The Longest Journey. I know that the prequel was better (never played it) but I quite enjoyed it. Another highlight was Beavis and Buthead game on Mega Drive. It was funny because the Beavis and Buthead IP was aimed at retarded adolescent teens but the game itself was hard as nails. It had puzzles so difficult that you would need a degree in critucal thinking to get to the end.