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[Fredescu]

Sorry, but that... doesn't make much sense. The money the consumers spend in videogames is basically split between all the groups that work to put that game in the store: developer, publisher, distributor, store. If the stores are blooming but the others are having a hard time, the problem is not the retail model, the problem is how the money is split between these groups.

The only way to split the money more evenly is to reduce the sale of used games. A used game sale is not split between anyone.

 

[Mario]

Sorry, but that... doesn't make much sense. The money the consumers spend in videogames is basically split between all the groups that work to put that game in the store: developer, publisher, distributor, store. If the stores are blooming but the others are having a hard time, the problem is not the retail model, the problem is how the money is split between these groups.

Its the "retail model" that determines how the money is distributed.

As I said before the retail model is fine for retailers, but unsustainable for publishers and developers.

 

[Atreides]

The only way to split the money more evenly is to reduce the sale of used games. A used game sale is not split between anyone.

Why? They could just reduce the share they get in new games to compensate for used games.

 

[lowlylowlycook]

Sorry, but that... ddoesn't make much sense. The money the consumers spend in videogames is basically split between all the groups that work to put that game in the store: developer, publisher, distributor, store. If the stores are blooming but the others are having a hard time, the problem is not the retail model, the problem is how the money is split between these groups.

I don't think GameStop's profits would even cover EA's losses. Retail margins on new games is pretty slim. The problem is development costs and maybe the addition of higher marketing costs if you want to reach enough customers to cover a HD games development costs.

 

[Fredescu]

Why? They could just reduce the share they get in new games to compensate for used games.

Who's they? Publishers? Isn't the point of the discussion that they're not making enough money to continue publishing games?

 

[Atreides]

Its the "retail model" that determines how the money is distributed.

As I said before the retail model is fine for retailers, but unsustainable for publishers and developers.

How the money is distributed is not part of the "delivery, charging, content, and development paradigms" that you mentioned (I understood charging as in how you charge money to the user).

But my point stands. If the retail model were unsustainable, non of the groups should be blooming. If one group is blooming but the others not, then the only real problem in that retail model is how the money is split.

 

[Bending_Unit_22]

Dare I point out that "Hispanic speakers" isn't the same thing as "Spanish speakers"?

Dang, just beaten to it (EDIT: well beaten more than I initially thought). However, it also needs to be pointed out that the "Hispanic majority" by 2030 is complete hogwash (try 20% at most) though I have heard others say it so I wonder what the source is.

On topic,

Some are suggesting that moving to Wii is the silver bullet solution, but I disagree in that I think more change than a simple platform shift is required.

I don't think many advocate the Wii as a silver bullet all the time for every company. I would argue though that it is a better option more often for many.

 

[Atreides]

I don't think GameStop's profits would even cover EA's losses. Retail margins on new games is pretty slim. The problem is development costs and maybe the addition of higher marketing costs if you want to reach enough customers to cover a HD games development costs.

If they can't lower their margins, they are not really blooming them. Retail model could be broken. But if that's true, then retailers certainly aren't "blooming".

Who's they? Publishers? Isn't the point of the discussion that they're not making enough money to continue publishing games?

"They" are the stores.

 

[Fredescu]

If they can't lower their margins, they are not really blooming them. Retail model could be broken. But if that's true, then retailers certainly aren't "blooming".

They're booming because they're making a lot of money from used games which the publishers don't see a cent of. If all they sold were new games they would barely make enough money to stay in business. See the problem yet?

"They" are the stores.

Then I have no idea what you're trying to say. They should reduce their already low margins on their new games to make up for the fact that they sell used games? The high price and low margins on games is the reason they started selling used games in the first place.

 

[Atreides]

They're booming because they're making a lot of money from used games which the publishers don't see a cent of. If all they sold were new games they would barely make enough money to stay in business. See the problem yet?


Then I have no idea what you're trying to say. They should reduce their already low margins on their new games to make up for the fact that they sell used games? The high price and low margins on games is the reason they started selling used games in the first place.

There are intermediate states between "blooming" and "losing money". You are arguing as if they could only be in one of these two states. If they are really blooming, then they can lower their margins. Yes, they started selling used games because they had low margins. If we assume that now they are better financially, then they can lower their margins now (even if they couldn't before). If we don't assume so, then there is no point in saying that they are blooming.

 

[Mario]

How the money is distributed is not part of the "delivery, charging, content, and development paradigms" that you mentioned (I understood charging as in how you charge money to the user).

Yes, actually. Where the money ends up and how much gets there totally depends on all of those things and more.

But my point stands. If the retail model were unsustainable, non of the groups should be blooming. If one group is blooming but the others not, then the only real problem in that retail model is how the money is split.

So you are saying that just because Nintendo and Activision are making money hand over fist, everything is fine?

And again, the retail model has within it a mechanism for distributing money. That mechanism is no longer profitable or sustainable for a large number of publishers and developers in this splintered, hit driven, crowded, high barrier to entry, retailer controlled, increasingly used game dominated market.

If we assume that now they are better financially, then they can lower their margins now (even if they couldn't before).

Why would retailers lower their margins or even stop selling used games? They have no immediate incentive to.

 

[viciouskillersquirrel]

And again, the retail model has within it a mechanism for distributing money. That mechanism is no longer profitable or sustainable for a large number of publishers and developers in this splintered, hit driven, crowded, high barrier to entry, retailer controlled, increasingly used game dominated market.

The bolded are problems that can be addressed by publishers and devs with a change of strategy. They need to either find new, more reliable customers or find ways of milking more money out of their old ones.

Trying to change the rest is a pipe dream. You can circumvent the retailer model, but then you lose access to a large potential audience.

 

[JJConrad]

So you are saying that just because Nintendo and Activision are making money hand over fist, everything is fine?

And again, the retail model has within it a mechanism for distributing money. That mechanism is no longer profitable or sustainable for a large number of publishers and developers in this splintered, hit driven, crowded, high barrier to entry, retailer controlled, increasingly used game dominated market.

You change the retail model and there will still be problems. If these publisher can't prospers the current rapidly-growing market, what makes you think they can prosper in any other? The problem isn't the retail model, its poor management. These guys can't even handle a simple leadership change, they won't be able to handle an entire market restructuring.

This gen is a transitional generation... just like the 32/64-bit gen. Some companies will destroy themselves, others will raise themselves up. There is nothing broken about.

 

[Fredescu]

Trying to change the rest is a pipe dream. You can circumvent the retailer model, but then you lose access to a large potential audience.

You can discourage used sales of your game through the design of the game itself without pulling out of stores completely. As an extreme example, you never see a pre owned copy of WoW.

 

[Mario]

The bolded are problems that can be addressed by publishers and devs with a change of strategy. They need to either find new, more reliable customers or find ways of milking more money out of their old ones.

Trying to change the rest is a pipe dream. You can circumvent the retailer model, but then you lose access to a large potential audience.

I am advocating a change in strategy, though I am not advocating abandoning retail.

 

[Atreides]

Yes, actually. Where the money ends up and how much gets there totally depends on all of those things and more.

I think I didn't explain what I meant properly: if we assume that the problem is that stores are getting a too high portion of the profits from video game sales, then the solution is clearly that some of their earnings should be passed to publishers, distibutors and developers, and that would mean that the stores should be charged more from the product that the distributors / publishers sell to them.

So you are saying that just because Nintendo and Activision are making money hand over fist, everything is fine?

Groups as the groups I named a few messages ago, I quote what I said "the groups that work to put that game in the store: developer, publisher, distributor, store".
So what I meant was: "If the retail model were unsustainable, none of the groups (developers, publishers, distributors, stores) should be blooming. If one group (stores) is blooming but the others (publisher, distributors, developers) not, then the only real problem in that retail model is how the money is split".

And again, the retail model has within it a mechanism for distributing money. That mechanism is no longer profitable or sustainable for a large number of publishers and developers in this splintered, hit driven, crowded, high barrier to entry, retailer controlled, increasingly used game dominated market.

Why would retailers lower their margins or even stop selling used games? They have no immediate incentive to.

The traditional retail model has a system to split the earnings from sales. That system is how much the distributors / publishers charge to the stores. So there is clearly a mechanism within the retail model to fix that.

Obviously the retailers would try to retain as much profits as they can. Same with distributors / publishers, when they sell their products to the retailers. Both have some power when negotiating how to split the earnings.

 

[Mario]

I have clarified twice now that the retail model is working great for retailers but is unsustainable for publishers and developers.

In any case, you are massively underestimating the power retailers have in this market. They have no incentive to share margin with publishers, no incentive to stop selling used games, and the power to resist increased wholesale pricing.

 

[Atreides]

I have clarified twice now that the retail model is working great for retailers but is unsustainable for publishers and developers.

In any case, you are massively underestimating the power retailers have in this market. They have no incentive to share margin with publishers, no incentive to stop selling used games, and the power to resist increased wholesale pricing.

That's the point that I don't get. Why do they have more power than publishers to decide this?

I know they are not going to stop selling used games. But aren't the stores that sell used games usually specialized stores that only sell videogames? That means that they should have a lot less power to push the publishers than the other stores, because they are absolutly dependant of them, so if they are really getting great profits, publishers should be able to push them to lower their margins.

 

[JJConrad]

That's the point that I don't get. Why do they have more power than publishers to decide this?

I know they are not going to stop selling used games. But aren't the stores that sell used games usually specialized stores that only sell videogames? That means that they should have a lot less power to push the publishers than the other stores, because they are absolutly dependant of them, so if they are really getting great profits, publishers should be able to push them to lower their margins.

The current model isn't designed with specialty stores in mind. That is why we saw so much consolidation last gen. Video games are brand driven and priced as such. The little to no mark up on consoles (MSRP is sometime below retailer cost), games have a 20% - 25% mark up (which is adequate for big retailer, but thin for smaller specialties), and accessories are only a little better than that... The only strong mark-ups are with 3rd party accessories. Specialty stores probably wouldn't exist today if it weren't for rental and used sales.

I've workes in retail, both specialty and big box, both video game and non-gaming. Video game publisher control their products like Nike does their shoes. I really don't see were retail has an advantage in this market that is outside the norm for all of retail... If anything, it is more restrictive for them.

 

[Gaborn]

That's the point that I don't get. Why do they have more power than publishers to decide this?

I know they are not going to stop selling used games. But aren't the stores that sell used games usually specialized stores that only sell videogames? That means that they should have a lot less power to push the publishers than the other stores, because they are absolutly dependant of them, so if they are really getting great profits, publishers should be able to push them to lower their margins.

Actually, as with any customer/store relationship it's symbiotic. The store wants to sell the publisher's game and the publisher wants the store to buy that game for retail I mean, look at it like this. How many copies of a game would a store buy if they had to sell it at cost with no mark up whatsoever? Probably not many, right, just enough to see if you can draw in a few more customers by having it in the store. But the games that you can buy at a lower price and mark up more... THOSE make a lot more sense from your perspective. So, publishers that offer better deals to retailers make the retailer more likely to buy that game in the first place. But first the publisher has to DECIDE it's worth it to offer that better deal.

Edit: Oh, and since it's a specialty store it's more likely to be willing to deal with smaller publishers for lower volume and lower popularity games. Most "big box" stores only have so much space devoted to gaming after all.

 

[Atreides]

Actually, as with any customer/store relationship it's symbiotic. The store wants to sell the publisher's game and the publisher wants the store to buy that game for retail I mean, look at it like this. How many copies of a game would a store buy if they had to sell it at cost with no mark up whatsoever? Probably not many, right, just enough to see if you can draw in a few more customers by having it in the store. But the games that you can buy at a lower price and mark up more... THOSE make a lot more sense from your perspective. So, publishers that offer better deals to retailers make the retailer more likely to buy that game in the first place. But first the publisher has to DECIDE it's worth it to offer that better deal.

I know, that's why I said before that "Obviously the retailers would try to retain as much profits as they can. Same with distributors / publishers, when they sell their products to the retailers. Both have some power when negotiating how to split the earnings". I never intended to say that publishers are not dependant of stores. I was just saying that specialized stores are more dependant of publishers than usual stores.

Edit: Oh, and since it's a specialty store it's more likely to be willing to deal with smaller publishers for lower volume and lower popularity games. Most "big box" stores only have so much space devoted to gaming after all.

I don't intend to dispute this, because I don't know enough about other places, but it's funny how at least where I live, specialized stores actually have the same or even less space devoted to videogames than the other stores, just because they are quite small. And of course, during Christmas and such, these "big box" stores are able to increase the space devoted to videogames. Sometimes I couldn't even find some games displayed in specialized stores, but if I asked they had some copies of the game (just not displayed).

I've workes in retail, both specialty and big box, both video game and non-gaming. Video game publisher control their products like Nike does their shoes. I really don't see were retail has an advantage in this market that is outside the norm for all of retail... If anything, it is more restrictive for them.

That's exactly what I think, too.

 

[Version 3.0]

Aii, here we go with the used game discussion again.

Used game sales are not the cause of unprofitable publisher's problems, nor would the disappearance of used game sales solve anything--in fact, in the absence of other changes, it would most likely hurt the industry from end to end.

Aside from that, they're not going away through any amount of complaining or lobbying or strong-arming, nor will digital distribution change this anytime soon. The only thing that will lower or cease used game sales is a lower retail on new game (and a higher margin on new ones), so that selling back a used game isn't worth enough money (or store credit) to be worth the while, or so that profit on a used game sale isn't worth the store's effort.

Publishers are clearly not willing to pursue lower retails, nor willing to give higher margins, so they can live with the situation they've created. Nobody else (except, possibly, consumers) has the power to change the situation--certainly not retailers.

 

[shykyoichi]

You can discourage used sales of your game through the design of the game itself without pulling out of stores completely. As an extreme example, you never see a pre owned copy of WoW.

Because WoW sucks the soul of people... :lol

 

[manueldelalas]

OK it's morning here.

Where is my update?

 

[Mario]

Used game sales are not the cause of unprofitable publisher's problems, nor would the disappearance of used game sales solve anything--in fact, in the absence of other changes, it would most likely hurt the industry from end to end.

Even if you subscribe to the argument that used game sales provide consumers more revenue to purchase new games more than they detract from new game sales, at a minimum the presence of of used games in retail stores limits the selection of new games in said store.

That's the point that I don't get. Why do they have more power than publishers to decide this?

Retailers are the channel to consumers in this case. Publishers are trying to sell more games than retailers have shelf space for, so retailers can afford to be very choosey and drive publishers to offer better pricing and better price protection. Additionally, publishers have no control over the used game market.

In the case of Walmart and Gamestop, the market share of these individual operations are so significant that they have additional large influence over deal terms and incentives.

In other words, retailers have all the power right now in the retail space.

 

[Fredescu]

Nobody else (except, possibly, consumers) has the power to change the situation--certainly not retailers.

Sure they do. Whether they have the balls to try or not is another question. I already pointed out the inability to trade in MMOs, but remember the discussion from a few months back where a dev wondered about the idea of making a pre owned purchaser pay money for the ending? I'm sure there are other options to discourage used game sales too, and if publishers really think things are stacked too far in favour of the retailer they may consider implementing them.

 

[jvm]

It's up now, and Jtyettis started a topic about the new figures.

Original story:
LBP, R2, MGS4, PoP08, and TR:U LTD sales. (at Gamasutra)

 

[Spiegel]

It's up now, and Jtyettis started a topic about the new figures.

Original story:
LBP, R2, MGS4, PoP08, and TR:U LTD sales. (at Gamasutra)

jvm, I'd like to know if you could ask for the sales of one PSP game in the Top 10 December PSP games. For example GTA: Vice City Stories or The Force Unleashed.

 

[charlequin]

I know they are not going to stop selling used games. But aren't the stores that sell used games usually specialized stores that only sell videogames? That means that they should have a lot less power to push the publishers than the other stores, because they are absolutly dependant of them, so if they are really getting great profits, publishers should be able to push them to lower their margins.

You have it totally backwards. Margins on new game product are already so low for retailers that they cannot sustain a business; as a result, specialist retailers have pushed all their business into the used market, in which distributors, publishers, and developers get no cut. If retail's margin on new games gets cut, they'll just reduce the amount of new business they do even further.

Of course, the typical publisher response here is something like "well, they should make a law that FORCES retail not to sell used games!" which is also completely missing the point....

 

[donny2112]

It is a very simple concept (though, difficult execution) to increase profits/decrease losses. You either 1) reduce costs, 2) increase revenue, or 3) combination of 1 and 2. If publishers need to make more money, they can either reduce costs of the game (that could come from development costs, advertising, or licensing) and/or increase revenue (that could come from raising prices, increasing sell-through by doing more advertising in a careful balance, or increasing sell-through by tying the game to a good, established IP in another careful balance).

Publishers have already taken the "raising prices" route this generation with the PS3/360/PSP/music games. As the generation goes on, development costs using established engines should decrease.

Options:
* Increase advertising in existing markets (red ocean problems) and/or expand advertising to new markets (risky).
* Decrease advertising for established series and hope that the fanbase will still follow.
* Find a good, underutilized, third-party IP and tie a pre-existing game to it for a boost in sales.
* Give up a third-party license and release the game as a new IP.
* Make more games using established engines on the cheap sacrificing quality for costs.
* Start the cycle over in a less expensive development environment and hope that the sales are enough to get to the "cheaper engine" phase.

Other thoughts? Something obvious I'm missing?

 

[Dalthien]

Nice post donny.


All this talk about the used game market is silly. Revenue in the video game industry has been growing at an absolutely phenomenal rate for many years now. And that is all new sales - NPD doesn't track used sales.

Ultimately, the problems that publishers are experiencing are self-inflicted wounds. They made a conscious choice to put their support (top brands, top development teams, top advertising budgets, etc.) behind the two HD systems. They knew full well going into this generation that supporting those systems would result in significantly higher costs. And as it turns out, they also ended up choosing systems with a significantly lower userbase than last generation.

Software sales for the X360/PS3 combo will never come anywhere close to the software sales for the XBX/PS2 combo from last gen. So these publishers made a choice to throw the bulk of their support behind systems which would require significantly higher costs, and yet which would offer only a fraction of the sales potential of what they were selling to last generation. So it should not be any surprise at all that many publishers are in much worse shape now than they were five years ago.

That's how business works. You make fundamentally wrong choices about the market, and you suffer the consequences. In this case, many publishers compounded the problem even more by combining two fundamental mistakes together. They chose the losing systems (avoided the market leader), and compounded the problem by also choosing the most expensive systems to develop for. This has nothing to do with the retail system, or the used-game market, or any of that stuff.

 

[Mario]

Other thoughts? Something obvious I'm missing?

Some other things that spring to mind (there are a lot of possibilities)

* leverage retail titles into download channels for wider distribution and longer "shelf life"
* leverage download titles into retail channels to access offline market
* increase revenue per title via PDLC, ingame advertising, product placement etc
* better IP exploitation through improved merchandising and licensing
* make technology and creative investments with multiple iterations of IPs in mind
* go wide on multi platform products to leverage low incremental porting costs
* hedge bets creatively with smaller initial "test" games in the value or download space before investing more heavily
* more aggressive bundling towards end of product life cycles to take advantage of value market

etc, etc

All this talk about the used game market is silly. Revenue in the video game industry has been growing at an absolutely phenomenal rate for many years now. And that is all new sales - NPD doesn't track used sales.

Used game sales have been growing at a faster rate than new game sales. Gamestop releases that information in their financial reporting.

 

[Dalthien]

Used game sales have been growing at a faster rate than new game sales. Gamestop releases that information in their financial reporting.

Yeah - but that has nothing to do with the fact that new retail product sales have been growing at a remarkable pace for many years. If many publishers were doing fine in a smaller industry several years ago, but are now struggling in a much larger industry now - then those publishers that are struggling are doing something wrong. The new retail product industry has grown substantially - at levels that would make just about any other industry terribly jealous.

You seem intent on finding other outlets to place blame, instead of focusing it where it predominantly lies. On the publishers themselves. They chose a business model wherein they have increased their cost structure at a very rapid rate, and yet are trying to sell their products to a much reduced base of customers. They fucked up when they made their initial plans for which platforms they were going to support at the start of this generation. That is by far the biggest cause of the problems facing most publishers right now.

 

[Opiate]

Yeah - but that has nothing to do with the fact that new retail product sales have been growing at a remarkable pace for many years. If many publishers were doing fine in a smaller industry several years ago, but are now struggling in a much larger industry now - then those publishers that are struggling are doing something wrong. The new retail product industry has grown substantially - at levels that would make just about any other industry terribly jealous.

You seem intent on finding other outlets to place blame, instead of focusing it where it predominantly lies. On the publishers themselves. They chose a business model wherein they have increased their cost structure at a very rapid rate, and yet are trying to sell their products to a much reduced base of customers. They fucked up when they made their initial plans for which platforms they were going to support at the start of this generation. That is by far the biggest cause of the problems facing most publishers right now.

I agree with almost all of this.

 

[Mario]

Yeah - but that has nothing to do with the fact that new retail product sales have been growing at a remarkable pace for many years.

You suggested growth was predominantly new game sales. That was incorrect.

If many publishers were doing fine in a smaller industry several years ago, but are now struggling in a much larger industry now - then those publishers that are struggling are doing something wrong.

The retail space is different today than several years ago. Used games take up more shelf space than hisotrically. There are more platforms being supported simultaneously than at any time in history. There is more content being put into retail than ever before. The average cost of bringing a game to market is higher. Cash cow products and franchises such as Mario Kart and Guitar Hero are dominating new sales.

This means less shelf space for new titles, and for those titles that aren't superb sellers from the outset very short shelf lives. The channel is different.

Games which would have been successful a few years ago are underperforming horribly now.

This does not absolve publishers from wrong doing (they are bought into the model after all). It doesn't matter who is to blame, the traditional retail model is unsustainable for publishers and developers.

You seem intent on finding other outlets to place blame, instead of focusing it where it predominantly lies. On the publishers themselves.

I'm not suggesting a lot of publishers aren't doing things terribly wrong. They may be the sole cause. That still doesn't change the fact the retail model isn't working for them.

They chose a business model wherein they have increased their cost structure at a very rapid rate, and yet are trying to sell their products to a much reduced base of customers. They fucked up when they made their initial plans for which platforms they were going to support at the start of this generation. That is by far the biggest cause of the problems facing most publishers right now.

Yes, they are operating in the traditional retail model with traditional retail model development practises.

I'm glad you agree with me.

 

[Dalthien]

Yes, they are operating in the traditional retail model with traditional retail model development practises.

But their struggles aren't due to the traditional retail model. The struggles are due to wrong choices. Last gen, publishers chose to put their focus on the market leading systems. This gen, they chose to put their focus on the losing systems. And as an added bonus, they also chose to develop for the most expensive systems.

When you go from moderate-size budgets with a focus on the XBX/PS2 sized userbase, to a focus on much higher budgets and the much reduced X360/PS3 sized userbase, then things are going to be tough. But the traditional retail model isn't to blame. The choices by many publishers are to blame. The traditional retail model has been growing very nicely year after year. It just so happens that Nintendo has been taking most of that growth because Nintendo made the correct choices about the market, and many other publishers chose poorly about where the market would be this gen.

 

[donny2112]

* leverage retail titles into download channels for wider distribution and longer "shelf life"

This allows the publisher to take more of a cut, but for hardcore games, I doubt it'll extend the shelf life to any appreciable increase in sales. For more "everyone" games, I'd think digital distribution wouldn't be where they find most of their market. In that case, re-releasing at a budget price may be more effective.

* leverage download titles into retail channels to access offline market

Particularly with the "everyone" games (see PopCap), definitely.

* increase revenue per title via PDLC, ingame advertising, product placement etc

Another way to raise the price of a game.

* better IP exploitation through improved merchandising and licensing

Take an IP you already have and make sure it isn't underutilized. Opens up the exposure to get the name out ther and the risk if the merchandising doesn't work out. Could get big fans of the series to spend a little extra for the "full" experience (e.g. Halo books, figurines), though.

* make technology and creative investments with multiple iterations of IPs in mind

Do you think MySims started out with a plan for a Racing and Party spinoff, or do you think that was only a later idea?

* go wide on multi platform products to leverage low incremental porting costs

Reducing cost per product.

* hedge bets creatively with smaller initial "test" games in the value or download space before investing more heavily

Demos are a double-edged sword, but getting your idea out there can serve to build hype. Essentially an increase in advertising for the "real" game.

* more aggressive bundling towards end of product life cycles to take advantage of value market

Expanding to a new price-range audience.

Nice!

 

[hinode]

Yes, they are operating in the traditional retail model with traditional retail model development practises.

I'm glad you agree with me.

By 'traditional retail model', do you mean for retail in general or videogames in particular?

Giving retailers such a small margin per new product so that they have to turn to used products to actually make a profit is frankly an incredibly stupid move, as it means the optimal policy for retailers is a business model where the profits of publishers suffer. It should be evident to anyone with a modicum of business sense - or basic math, really - to realize that the retailers would prioritize the products that actually make them their profit (used goods), and if the producers suffer, well that's their problem.

If this is particular to the videogame industry, then the retail model *is* broken for the industry, this generation mainly served to revealed the stress fractures, and publishers need to take business courses on how to get their interests aligned with retailers instead of at cross purposes.

 

[Eteric Rice]

Point is that a lot of stuff needs to change, but it seems no one is willing to do so. Let them reap what they sew.

I just read the interview with the Winter people. Seems it's hard to pitch a Wii game to a publisher that isn't a kid's game. Nintendo really needs to try to change the perception of publishers soon, shit is getting annoying.

 

[Chumly]

The retail space is different today than several years ago. Used games take up more shelf space than hisotrically. There are more platforms being supported simultaneously than at any time in history. There is more content being put into retail than ever before. The average cost of bringing a game to market is higher. Cash cow products and franchises such as Mario Kart and Guitar Hero are dominating new sales.

This means less shelf space for new titles, and for those titles that aren't superb sellers from the outset very short shelf lives. The channel is different.

So not only did Publishers fail to originally allocate the correct resources to the correct platforms they are now killing themselves by flooding the Wii market with cheap games giving themselves short shelve life. God dam they are smart!

 

[Link]

Point is that a lot of stuff needs to change, but it seems no one is willing to do so. Let them reap what they sew.

I just read the interview with the Winter people. Seems it's hard to pitch a Wii game to a publisher that isn't a kid's game. Nintendo really needs to try to change the perception of publishers soon, shit is getting annoying.

Yeah, good luck with that. 2+ years of the Wii selling like gangbusters and third parties still haven't changed their tune. What makes you think anything will be different this year? They'd rather go down with the ship, it seems.

 

[donny2112]

2+ years of the Wii selling like gangbusters and third parties still haven't changed their tune.

They've gone from ignoring the Wii audience to patronizing the Wii audience. I'm specifically thinking of EA Sports/Peter Moore here. Activision seems to be getting their act together, but I think they're pretty much alone when it comes to big Western publishers.

 

[Flying_Phoenix]

No, but they are bigger problems than ever before. Used game sales are rising as a proportion of overall sales. Effective shelf space and shelf life is more limited because of more platforms being supported and more content is being produced than ever before. The crowded market is now crowded with great titles.

However these titles are selling more then ever before. I mean yeah used game sales are a big deal but if your selling more copies then ever it really shouldn't matter. I see this much like the PC industry. Yeah tons of games get pirated but tons of games get sold. Yes while there are more games then ever there are also more stores then ever as well as more space for the shelf (even though it's still too crowded).

As the ability for the industry to produce quality content in volume has matured, the traditional model has become increasingly stressed and outdated.

Large budgets don't help, but the main problem is the traditional retail model is dying fast. There are plenty of low cost games that are losing money too.

I very much agree with this. I do think smaller budget games are selling more then ever before though (looks at handhelds) but I definitely do agree that the gaming market has to go in some sort of rebirth in order for it to truly grow and expand. It's not just the high costs of consoles and expectations for games that are hurting the industry but how it's given to the consumer (non-standardization, inability to download console games directly to hard-drive, etc.)

Hell I remember I brought Guilty Gear XX ^ Core for Wii on Amazon and for shits and giggles I just always looked for it at stores to see if they had it. It was like the 7th store and 3rd or 4th Gaming Centric store I checked until I saw it.

I have a full NPD subscription. But not the time to pursue that research.

My point is, problems are being experienced by games at all ends of the budget spectrum and on all platforms. Some are suggesting that moving to Wii is the silver bullet solution, but I disagree in that I think more change than a simple platform shift is required.

To me the Wii movement is simply a bandaid for this. I mean yeah they can then stop with the losses but eventually the competition of presentation and budget will start again and same with the expectations race for big budget titles. So yeah it won't be flashy cutting edge graphics, multiple modes, and massive detailed worlds, instead it will probably be movie leveled presentation and pacing detail. Think Final Fantasy XII and Resident Evil 4 on paper neither of these would be too much of an expensive game to create (especially the latter) however they were both very expensive to create (even discluding the multiple versions) due to the immense work on presentation and pacing put into them. So yeah being on the Wii will significantly aid the smaller/medium developers (even though most have moved there) but won't do squat for companies like EA, Activision-Blizzard, or Square-Enix as they'd eventually be in the same situation they are in now. Just not AS bad due to the games being slightly cheaper to produce.

Yeah, good luck with that. 2+ years of the Wii selling like gangbusters and third parties still haven't changed their tune. What makes you think anything will be different this year? They'd rather go down with the ship, it seems.

Do you like not read news?

 

[Eteric Rice]

Yeah, good luck with that. 2+ years of the Wii selling like gangbusters and third parties still haven't changed their tune. What makes you think anything will be different this year? They'd rather go down with the ship, it seems.

I don't think the western developers will, I'm just thinking that if they want to stay relevant, they should change their tunes.

Hopefully Japan keeps heading towards the Wii like they seem to be now. They're our only hope. :/

 

[Mario]

But their struggles aren't due to the traditional retail model. The struggles are due to wrong choices. Last gen, publishers chose to put their focus on the market leading systems. This gen, they chose to put their focus on the losing systems. And as an added bonus, they also chose to develop for the most expensive systems.

Okay, you are obviously working to an incorrect, non industry definition here. The "traditional retail model" includes the components of financing, development, distribution, and sales.

You are agreeing with me. Having to make platform choices and the chance of backing the "wrong" choice is an example of a problem with the model.

The traditional retail model has been growing very nicely year after year.

The traditional retail market can grow. The traditional retail model cannot - its a model. See above.

This allows the publisher to take more of a cut, but for hardcore games, I doubt it'll extend the shelf life to any appreciable increase in sales. For more "everyone" games, I'd think digital distribution wouldn't be where they find most of their market. In that case, re-releasing at a budget price may be more effective.

By "shelf life" in this context I meant they are extending the availability of the product. A game can be available for years as a download long after it has disappeared from store shelves. Releasing as a budget title may not even be an option retailers will accept if it didn't perform well first time around (though that in itself is another bullet point strategy).

Do you think MySims started out with a plan for a Racing and Party spinoff, or do you think that was only a later idea?

Its possible, but I don't think so in that case.

I do think a property like Spore has much more calculated SKU and expansion plans as they would have modeled off the Sims franchise.

By 'traditional retail model', do you mean for retail in general or videogames in particular?

My comments are only in the context of videogames.

So not only did Publishers fail to originally allocate the correct resources to the correct platforms they are now killing themselves by flooding the Wii market with cheap games giving themselves short shelve life.

Quality games and high budget games can and have been failing too. The problem is slower selling games have a short shelf life for reasons previously mentioned. Its a problem faced on all platforms.