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.
😀 so our best wishes came true! Paul got a job!
Last think I remember playing is Wolfenstein (the 2009 one) using an analogue controller. I can’t possible imagine how somebody can be good at shooting using a controller.
Oni – it’s actually a pretty good game. Game mechanics are ok, but … you can’t quite go for a strategy that avoids hand to hand combat. The blend is ok, but you don’t get a choice. You use guns to weed out enemies from a distance, but you will eventually end up snapping enemy necks because you quickly run out of ammo.
@Games Industry Biz eulogizes Wii U, states it suffered “death by apathy”
100% with Jonah. The issue the list of available games, so you’d better make it easy for third party developers.
@XBox One:
– external HDD: so, apparently being able to upgrade things yourself is a good thing … who would have thunk it 😛 … obviously not people using PCs … or people developing for PCs.
– always online: no. Just … no. I’m not going to buy a console anyway, but I can tell you that the ‘always online’ is a major no-no for me. And most likely for others as well. And I think it applies for both games and consoles.
So yes, Microsoft would better give up on that.
@Microsoft’s Greenberg: E3 presentation will be “all about the games”
Fingers crossed. Microsoft knows that the game library is crucial if they want to sell the console.
To Pawel Predki, who loves old-fashioned point-and-click adventure games – here’s a free one:
http://www.strategyinformer.com/news/23208/free-game-spotlight-adventure-island
Thanks for the link, Jonah. I’m downloading it now so I’ll try playing through it this week. The screenshots look worse than the first Broken Sword but that’s not really what I care about in games like that 😉
@Xbox One
I watched the conference live and I wasn’t really sure what to expect. I’m pretty convinced now that Microsoft is following the path of wanting to be the only necessary multimedia box in the living room with game playing functionality only one, not the most important, of its abilities. They focused on some stuff that if it works, it will only work or make sense in the USA (integration with cable set top boxes, live NFL fantasy league integration). Seems to me like MS is really targeting the online, connected, richer part of the USA as their primary consumers. As a gamer from Europe, I didn’t feel like a proper recipient of the message they were delivering during the conference.
@Xbox One games during E3
MS said they would announce 15 exclusives during E3. I wonder how many of those will be amazing Kinect 2.0 titles. Quantum Break looked exciting. I wonder how they’re going to tie the gameplay in with the live action stuff. Or was it just the trailer?
@Used game fees (or lack thereof)
Until they tell us what will really happen, it’s really hard to say anything. I’ve read and heard conflicting stories on that. I don’t really buy used games and I’ve only ever sold one of my own. I like to have the option of going back to play them and digital-only distribution does not satisfy me.
I understand that it’s not the hardware manufacturer but rather the software publishers that are pushing this issue so it seems clear to me that whatever Microsoft does, if anything, Sony will also have to do. Let’s wait and see because there’s too many rumors floating around.
By the way, you can already preorder both new consoles via the German Amazon for 599 Euro each. The fact that the price for both of them is the same makes me think it’s just Amazon trying to get some early orders in and it’s not a ‘leak’. 600 Euro is around $780 so the price is waaay too high.
Last, but not least, congrats to Paul for getting a job!
@OH-NO
I played it a few years back. I hated it. It had an interesting fighting mechanic which was useless when someone pulled a gun at you. It was a pain even with God Mode, as the level design was crap and checkpoints were few and far between. It also suffered from the sindrome of westerne’s trying to make an east game.
@Nintendo
Everyone has been teetering around this for a year but someone finally came out and said it. Nintendo has a zombie disease that every developer is afraid to catch. I agree with Jonah. Being backward does not mean anything. Lots of publishers jumped onto Wii because it was cheap and easy to develop for. Lots of them are jumping onto iOS for the same reason. In regard Wii U, it was not killed by the consumer but by Nintendo itself. They thought that people will just buy the console because it’s Nintendo; no software needed. It’s a pity they didn’t learn their lesson after the 3DS launch fiasco.
@Xbox What?
I was complaining about the PS4 presentation but I take my words back. Xbox presentation was a classic much ado about nothing. I could shitstorm on this topic for hours but since I am a true gamer, I will reserve my judgement until I see some proper games. Bottom line: Meh. At the moment I am indifferent between a PS4 or a Xbox (I refuse to say the “ONE”). Or to put it into a perspective: a choice between a high powered Facebook or a digital set top box.
@Kerbal Xbox Rocket Science Game Verification Process
I have been following this topic for weeks and I still have no idea how it works. Some say it will tax game stores, others say it will tax the consumer. Maybe both. Oh well. Now that I am employed money is not that much of an issue as it was when I was 15. That said, it all depends how much an individual piece of software costs.
@USABox
I am with Pavel on this one. The Xbox seems like a good idea if you live in America. But it will loose half it’s functionality once outside. It really depends on how Microsoft integrates it in other countries. UK and Western Europe will have its own services but what about the rest of the world where digital cabling is not so widespread? Is there going to be a pure gaming edition of Xbox or is it just going to be aimed at 1st World countries only? Quote Microsoft: “I am sorry but you cannot play our console because you are too poor. Come back when you are White Middle Class American Male.”
@Halo 2
Don’t know what’s Jordan’s problem with Halo 2? It was a very good experience. And what’s Jonah’s problem with Skyrim? Why is everyone hammering my favourite games? I know that tastes in gaming are opinion based but I would just like you to know that you are all wrong. Those games are good because I said so.
@Arthur’s refusal to say ‘Xbox One’
Imagine what will happen when hordes of moms go their local electronics store and ask for an Xbox One and the person in the store asks which one they have in mind. The original Xbox or Xbox One. Oh, the confusion that will follow…