This week’s episode is very long to make up for the crappiness of last week’s episode, and the crew have fun with the trolling of Target critics this past week.
The news this week includes:
This and Listener Feedback.
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 Contest Time, as Gaming Podcast is giving away a swag bag that includes The Sims 4 and some videogame merch from E3. Most of the 87 minute podcast deals with more E3 talk, and 5 minutes spent on news items.
This week’s news includes:
Let us know what you thought of E3 this week in the comments.
(Must be a continental US resident to win the contest.)
The month, June 2008, Metal Gear Solid 4 takes number one on the NDP figures with 774,600 individual units (over 1-million if you include bundles), in July… they didn’t even make the top ten figure. What the heck?
NCAA Football 09 for the Xbox 360 took number one with 397,600 games sold, nothing close to MGS4’s figures form last month but still took the first position. Wii Fit took number two position, up from its fourth position in June showing lasting appeal or the ability for gamers to purchase the rare to find game set.
Wii Play still sits in the top ten titles along with Mario Kart and Rock Band (for the Wii). As a matter of fact, four out of the top ten titles are Wii games. One for DS (Guitar Hero: On Tour), two for Xbox 360 and two for PlayStation 3.
How is it possible for Wii Play and Wii Fit to hold top positions for so long while a game like MGS4 dies off so rapidly? More than likely this is the impact from having such great console sales that even a low attach rate (games to consoles) is significant enough when millions upon millions of consoles have been sold.
If the PlayStation 3 had more units in the hands of gamers, would their top tier titles like MGS4 hold top spot for more months? Presumably yes, another negative impact from being third in the race it seems.
(Thanks, 1up)
Hi Guys, Good Episode. I’m sorry I haven’t posted in a while as I have been busy with my newborn son William. I like that you have now expanded to include other game types other thank video games. To Paul’s infamous comment Story is Game Play’s Bitch… I HATE THIS… I really only like games that have stories or enable me to make a story… I hate games that are pointless grinding. I need progression otherwise I stop paying attention and generally stop playing. I still play game from the 90s because back then they had good stories. As for the Steam Machine’s suspend feature, I like the fact they recognize the risk and disable the feature, nothing would piss me off more than suspending the game and expecting it to start back up and finding that the session had expired/become corrupt. It would be great if they can fix it but I don’t think that would change my buying decision. As for the steam machine, I don’t mind the idea if the boxes are cheaper and outperform my gaming PC… otherwise they don’t really make much sense. If I want to play my PC games on my TV I would connect my PC to the TV. Otherwise… keep recording and I’ll keep listening.