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.
I liked the show, it was fun. I really hope Liam (I hope I remembered the name) will recover.
@New R18+ guidelines drawn up:
It is a step forward, true, but not without some question marks.
I personally don’t like their definition for what’s allowed in terms of violence for R18+. It’s very ambiguous, and it could lead to a handful of people selecting what’s R18+ and what’s RC depending on their personal taste and/or “gifts” received from publishers …
Lol “device that you could plug in” 😀
Jonah, enforcing such fines is a bit more difficult and costly than what a government is willing to invest.
@Kojima: This year has become meaningless
I feel the guy 🙁 … I also have no idea how the last 365 days passed.
Derrick, I definitely agree with the CISCO engineer vs. game devs. While I do put some heart on the stuff I work at my day job, it is far less that what I put into mods or other personal projects.
And while the money comes from the day job, the satisfactions and frustrations come from personal projects. It’s where the heart is.
@Chinese labor camp prisoners forced to play MMOs:
Playing MMOs as a punishment … there’s just something weird about it. I mean as long as you have the freedom of choice as to when to start playing and when to stop playing, MMOs don’t seem that scary.
But when you’re forced to stare in the monitor for hours and hours, day after day, I can see this having the negative effects that would make playing MMOs an effective punishment.
I guess any activity can be turned into a punishment, as long as you can turn the punished person into hating that said activity.
– you can play it while pooping!
Actually, that is a good selling point 🙂 Think of Chinese prisoners again: now they can stack all consoles in a room and have the prisoners “work” from anywhere on the compound 😛
Derrick, you’re not letting down anybody. I enjoyed the podcast a lot, mostly for the personalities of you guys. And by reading the comments in the show you allowed the listeners to somehow connect with you guys.
Anyway, I’ll keep an eye on the RSS feed. Who knows.
at first i was happy because when i updated the podcast on a smartphone i finally saw the new episode and i said yes!!!! Then i saw the title i was like oh man but its okay derrick and jennifer i will only consider this a pause and you could continue anytime you like @qotw i would like to be surprised to see the podcast up and running again
ill be playing minecraft while your gone and will always wait for your comeback
Thanks for all the memories. The TD gaming podcast got me through 2 years of night shifts and was always a weekly highlight. All the best to all of you in the future.
Hope things continue to improve with your son, Derrick and Jennifer. Thanks for your efforts Jonah over the last 20 episodes. And farewell to my fellow listeners and commentors. (Especially Herr_Alien, who always had something insightful to add. Maybe you should team up with Jonah for continuing the cast =D. )
Roger, Wilco, Over and Out.
@Tristan: the thought occurred to me too, but unfortunately (1) I am too PC-centric to be of an actual use to the podcast and (2) spare time is always an issue for me. To get an idea, I got a copy of Portal 2 for … almost a month now and I only managed to play 30 minutes of it.
Add to that time zone differences and things like synchronizing schedules can become hairy.
As for the question of the week, I would love to see the podcast continue.
Jonah, a piece of advice, if you do decide to continue: take a small break to think a bit on the format, find somebody to co-host it, help you out with editing (btw, since editing doesn’t require synchronizing schedules, I can help out with that).
I’ve really enjoyed the podcast since I started listening to it a couple of years ago and it’s sad to see Derrick and Jennifer leave, but I hope things work out well for you and your family. All the best for the future. Thanks to Don too, he was a pretty cool host 🙂
I do hope that you find a way to continue the podcast Jonah, as I think you’ve done a really good job as co-host for the last 20 or so episodes. But if it doesn’t work out, thanks for your efforts too.
And yes, Herr_Alien, you’ve been a legendary listener 😛 Every week without fail there’d be a comment from Herr Alien with many insightful nuggets of wisdom.
So anyway, if this is the end….. So long, Farewell… and I leave you with this:
“Roads? Where we’re going, we don’t need… roads.”
A new episode is coming out tonight. Didn’t have time for Reader Feedback, but hope you enjoy it!