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.
Formerly Green Monster Games, 38 Studios is growing a large pool of talented folks for their MMO endeavor. First, we heard R.A. Salvatore (writer of the Dark Elf series) was heading over to work on a story, art direction by Todd McFarlane (creator of Spawn) and now Irena Pereira from Blizzard and a sound designer, Aubrey Hodges.
This weeks gaming podcast covers a bunch of hot topics along with a bit of gaming history. We take a flashback look at Tapper, a great arcade classic and we’ll hit up some popular news articles:
First I’d like to offer sincere condolences on the passing of Andrew, that was very sad to hear, just proof that life is very short.
@LoL; I read this story as well before it was on here and I couldn’t fathom why or how any LGBT would have any kind of advantage. More over how anyone would know or why they would even care? The whole story is completely baffling.
As for any slight advantage due to genders, there was a Mythbusters episode where they tested gender biases; like “throwing like a girl”. First they had untrained kids pitch balls, they had a pattern of boys throwing harder/faster and girls being more accurate. Then when they brought in the professional players they found the differences very negligible. With training and practice any weakness or disadvantage can be overcome.
@Nintendo lower prices: Yes please, I’m all for cheaper games. Also being able to get the back log on DS that was on Wii!
@EA games too hard to learn: I agree Jonah read the manual, read forums, wiki guides, etc. There’s a ton of resources, I have several GoG and Steam games that actually do have their manuals. As for EA games I have never found them hard to learn, their games seemed to have been focusing on being as streamlined as possible.
I also find it very odd if as Jonah says that Grim Fandango isn’t that much different, aside from the sound cues, that it doesn’t work for Paul. There has got to be a way to get that game to work.
@QotW: The list is so long I’ll start with a yes there are games I get emotional with. When ever I hear the sad songs from Final Fantasy 4, 6, or 7; the music of Suikoden I and II. They bring back so many fond memories.
My condolences to family and friends of Andrew Yoon. It is a terrible misfortune to die so young. Especially following completion of a project. He sounded like a real fun guy.
@Too much kohones
I will now clean my eyes and read that again. Nope. It’s still there. What part of human logic created that idea. It’s f**king LoL, not Olympics. If they are so afraid of superior mouse clicking ability, they should also ban Michael J Fox (Parkinson’s). To be honest I was always against e-sports. We are starting to forget that video games are primarily a source of fun, not funding. But some people take it too seriously, resulting in those exiting propositions. If we could instead concentrate on banning antisocial twats from the gaming industry that would be better. Oh no wait. Then there would be no one to run the tournaments…
@Ninendo’s peasant strategy
As much as I love Nintendo games, I hate paying for them. As opposed to Xbox/PS titles which gradually fall in price, good Nintendo games stay at release price for years in UK. I am yet to find a copy of Lego City Undercover that won’t bankrupt me. However, when they re-released the Metroid Prime Trilogy for cheap, I snapped it up without a second thought. I would gladly pay for cheaper Nintendo software.
@QOTW
Mirror’s Edge Still Alive ending. Beautiful.