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.
In an interesting interview this week at 1up.com,
@EA deletes Tweets: Glad they removed the poor taste in tweets that was like rubbing salt into a wound.
I’d like to defend Indy games as you don’t need great graphics for great gameplay. Braid is a nice puzzle platforming game. I’m glad you mentioned Dust an Elysian Tail, Jonah. Not all the Indy games are 8-bit, Dust being one of them. I just completed the game and it was fantastic and very impressive that one person was able to do so much in making that game. Any game that adds to the diversity of games available to play is a good thing.
Also many of these Indy games are on Steam and GoG now.
@Parity Policy: It would be nice to have LAuchn Parity like when Skyrim came out and all DLC was released on Xbox and PC first and it wasn’t until months later that PS3 got anything. That was really unfair that PS owners had to wait so long to get the DLC’s for Skyrim.
I think some people are willing to wait though for the game to come to their prefered console. Take Minecraft for instance First on PC, than Pocket edition, Xbox and finally PS and each platform just adds to the sales of the overall game.
QotW: My favorite game related April Fool’s prank would be when Mojang did Minecraft 2.0. They got several YouTube Minecraft LP’ers to make video’s showcasing the features of Minecraft 2.0. The features ranged from the ridiculous Pink Wither, Diamond chickens, redstone bug monster, & exploding furnaces; to the features that we actually now have like Coal Blocks, Slime blocks, Hay bales, etc. It was a fun laugh to have and even more interesting to see the features that they actually are implementing from that prank.
Alpha: The delay of Skyrim DLC on the PlayStation 3 was strictly a technical issue.
Hey guys,
I couldn’t disagree with you more regarding porting and re-launching titles on different platforms even months after the original launch.
Saying that if someone had wanted to play a game they would have already done it doesn’t make much sense, in my eyes. I only own Sony consoles and my laptop is not able to support even the less demanding titles, since I mostly use it for work. This means that I’m naturally cut off from titles that are not available on PlayStation. That’s why I believe it’s a good idea on Sony’s part to port games such as Fez or Minecraft on PlayStation to make those titles available for people such as me who otherwise have no access to them.
By no means are such titles system sellers but being able to play them on Sony’s machines makes it less and less probable that a given gamer will buy another console, which is good for the company, I presume.
I agree with Alphashard that some people, including me, have no problem waiting for a game to come to PlayStation, in my case. I don’t need to buy all the newest titles since my backlog would keep me busy for months. And if a fun, although older, game comes to PlayStation, I might consider getting it.
@Infamous Second Son
I just started playing the game last week and I’m some 4 hours in. I don’t really see how ‘dumbed down’ the title is compared to the first two games. Jordan mentioned that all the opponents are the same, which I can’t agree with. I already encountered 4 different D.U.P. soldier types and there’s also the drug dealers so I don’t think it’s that different than in the PS3 games. So far I feel that it’s just another Infamous game, with a similar, forgettable story and cool powers and action scenes. I enjoy it quite a bit.
@QOTW I deliberately avoid news sites on April Fool’s so I don’t really have an answer to the question. Let me chime in on last week’s QOTW, though. I used to subscribe to a video game magazine called CD Action, here in Poland. What was great about it was that every month they would include one or two full versions of games on CD/DVD and also tons of demos and other stuff. Back in the lat 90’s the CD also contained funny pictures, gifs, etc. so it was like an offline version of 9gag. I don’t buy such magazines any more, but I also don’t visit video game news websites that often. I get most of my news from podcasts and I don’t mind the delay of several days before the news reach me.
League of Legends never ceases to amuse with its ‘URF’ related jokes 🙂
Great podcast by the way 😀
@EA flogging a dead horse
That was deffinetly a lapse of judgement. In my opinion every company should have an IT expert that approves all internal internet posts. So that if he sees something stupid he can find the person who posted it and slap some sense into him. It’s not nice making fun of disabled companies that are impaired by their management.
@Microsoft Indi
I played some good Indi games on Xbox 360. Mostly rip offs of PC games (Day Z, Minecraft). But they are cheap and mostly multiplayer, so make for a good blast. I absolutely don’t care when and where they are released. If a game is good enough I will eventually play it. I have no problem waiting. Plenty of other games out there.
@QOTW
A long time ago (2007?) the website gamefaqs.com (a cheat, hint website) had an April’s fool joke where entering the website greeted you with a page saying that cheating in video games was a crime and you should enter at your own risk. That was quite amusing. Also, a few years ago we had the Assasin’s Creed Kinect video. Wish it was true.