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.
Yoichi Wada of Square Enix has let the cat out of the bag. The cat is Final Fantasy XIII for the Xbox 360 and it will be simultaneously released with the PlayStation 3 version. This may be an end to an exclusive era for Sony as all their big brands jump to non-exclusion.
Hi Guys.
Thanks for this episode, even if i am not so much into Resident Evil, it was interesting to listen to your thoughts about it 🙂
I played the last RE on PS4 … it was 7? Dont know exactly 🙂
I finished Hollow Knight, Detroit Become Human and Monsterboy and the cursed Kingdom … made it to 97% without any walkthroughs 🙂 Yesterday i started with Kingdom Hearts 2.5 because i want to play through this until i start KH 3. And of Course: a lot of Magic The Gathering Arena!
What do you guys think about all these new-old games coming out besides RE? Like Monsterboy or all these HD Remakes of this and that? Do you like it or do you like the original feeling of the old games and do you want to play only graphical blasts in 2019 (like Last Of Us 2, Anthem and such Triple A titles)?
For your question of the week: i want a remake of Metroid (the original one on NES and Super Metroid for SNES) as well or some GameBoy Games like Gargoyles Quest or Simons Quest 🙂
There are some Non-Video Games from my childhood (C64 and Amiga) i would love to see as a remake: Apydia, Turrican, Moonstone, New Zealand Story or Baldurs Gate. On the other side maybe these games were good back in the days but would not be good anymore today even with better graphics? 🙂
Please stay as you are and keep going with the good work.
Greetings from germany,
Ralf