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’s amazing to think we’re in our third year of “next generation” console bliss. Three years have passed since the first Xbox 360 shipped, for good or bad, and it’s time to start thinking about the future.
Did someone say Yoga? I have returned from my deep educational derangement, securing my graduation and unemployment. Now that I am a professional vagabond with a smexy new Xbox One, I will dedicate more time to gaming and ultimately this podcast. Don’t go Paul. Here is some love. Manly comrad-like non-platonic love.
@Non-tangible gaming
I purchased the Xbox One Titanfall bundle and had to endure a 4 hour download of the game. I fully understand why console gaming is still disk based. On the other hand, my Steam library has 170 titles which I can download at high speed at a moments notice. Until my Xbox can pull off that kind of performance at Steam like prices, I don’t think I will download that many console games. I have loads of digital PS3 titles for that very reason.
@Gaming conventions
Never been to one purely dedicated to a single game. Never really been that dedicated to just one game. Here in UK it’s rare to find a gaming convention at all. Even major events tend to skip out a year or two. I know there are some dedicated communities in London but it’s easier to buy weaponised uranium then to find one. However, if I could ever go to one, it would most likely be about Elder Scrolls or Halo.
PS: City of Heroes was made in the dark days of gaming when homophobia was supreme and untraditional sexual orientation was frowned upon. Allowing a city full of adolescent boys running around in coloured briefs would be marketing suicide. It’s quite amusing. Since then homosexuality went mainstream and even became a marketing selling point for some games. It’s only a matter of time until you can create a transgender 5th generation foxkin character in an RPG.
Another good episode guys and I’m glad you enjoyed the Princess Bride reference.
@Console Digital gaming: I’m all for this as I really do enjoy not having to worry about where disks are. I have quite a few in digital format on my PS3.
@Sims4: I agree with Jonah, it’s one thing to re-write the mechanic on how something works in a game like with Civ V’s Espionage and Religion being vastly different to how it worked in previous games. To just stripping out features that you know will be repackaged into a expansion pack not looking much different or better for it’s delay. All the things that have been left out has had us feel like we’re going back to Sims 1.
@Youtube offline: Hey if they want to give me free music who am I to complain? heh
@QotW: I almost went to a Minecon in Orlando since that’s near to where I live. However it was really hard to get tickets. They sold them in groupings of 3k and they all went in seconds. Freaking jackals.
heyaaaaa xD after 2 years lol downloading an episode here feels like a trip to memory lane haha not sure if u remember me xD