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[coolclimate]

You're not seeing it because you don't want to see it.

I doubt that 25% of the additional revenues would go back into development. I suspect it would be substantially less. Even if there were marginal budget increases, it wouldn't make much of a perceptible difference in the amount or quality of the products we were receiving. The only real differences would be that the publishers would be making more money (which is great if you're the CEO or a shareholder, but pretty much irrelevant otherwise) and that the consumer would be getting reamed to make that possible, since they're the ones being forced to give up the ability to resell the games they've bought.

If you really believe that getting rid of the used game market will lead to some sort of videogaming utopia, then you need to put down that Kool-Aid glass.

Your on drugs or something. I said DEV's get a SHARE OF USED SALES DUDE!
im feeling dickish so lets have fun
used sales... means used games... means trade ins????
unless you can make used copies out your ass then..
READ AGAIN TARD

 

[Mr Killemgood]

This isn't really the interesting part. The interesting part is that games on the iPhone are launching at 9.99 and then within a few months going on sale for 99 cents due to store competition. 90% off sales! Doesn't happen much at Gamestop. Some games even go free eventually.

Yes this is due to the makeup of the store and it's unique to the iPhone, but I don't see any reason why this couldn't occur on other services eventually. It only takes one publisher/developer that is willing to drop their price. It's inevitable that someone will shake up these static services. Already there has been some discussion that Sony's PSPGo service, with PSN Mini games, are giving more flexibility to devs in order to draw more dev support so that they can beat out the DSi store.

Why do you think devs are selling games at 99 cents? It's not because the game is bombing. They are doing that to increase their iPhone daily ranking.

Games in the top 100 have MUCH higher sales than outside of it. The top 100 is the iPhone's shelf space. Top-selling titles usually move between 15,000-30,000 copies per day regardless of price point. When a title switches it's price point back to normal, their sales ranking remains intact for some period of time, ensuring that they've made a fair share of money. In some cases (Flight Control) it's just better to offer a game at cut-rate prices and increase the ranking, selling more copies to more people at less profit.

I believe there was an earlier discussion on large iPhone sales. Many people are looking at sales the wrong way:

There are many titles that are doing quite well above the rock-bottom $0.99 cent price point. Sims 3 launched almost day-and-date with the PC version, and has sold over 500,000 copies on the iPhone/iPod Touch as of the end of July - quite nice at a $9.99 price point, no?

 

[Screaming Fist]

Of course publishers don't like used game sales if they don't make any (or only a small proportion of that from DLC) money from the deal. Especially nowadays where they still have to support the online infrastructure for it. They sell 100,000 copies, but have to support 200,000 players for example, each player costs them some slice of money because of bandwidth and infrastructure. Imagine if this was the reason why Activision have bumped up the cost of Modern Warfare 2 for one moment, justifiably or otherwise.

Now, how (without pirating) can there be 200,000 players when there are only 100,000 copies of the game floating out there in the first place? You buy the game, trade it in and someone else buys it there is still only one copy.
And if Jaffe doesn't like Gamestop buying my used copy of God of War 2 so I can get store credit to preorder God of War 3, he can open up JaffeStop and buy my games from me.

 

[Tellaerin]

Your on drugs or something. I said DEV's get a SHARE OF USED SALES DUDE!
im feeling dickish so lets have fun
used sales... means used games... means trade ins????
unless you can make used copies out your ass then..
READ AGAIN TARD

You're right. My bad. I was thinking about DD when I typed that.

The point remains the same, though. Bigger profit margins for the publisher isn't automatically going to translate to more or better games. If you think so, you're being naive.

Next time, maybe you ought to address the point the other guy makes rather than acting like a fucktard because you're 'feeling dickish'.

 

[SaggyMonkey]

Half on disc, half dlc future.

 

[Sipowicz]

I gave you one initially and you ignored it, so I shall give you the same one again, and you can go and actually do some research before you post random uneducated nonsense.

Civilization Revolution, launched at $5 on iPhone and standard retail on DS.

civ rev on ds is supposedly much better

something like rolando could have been a full priced ds game. the rest of the shit couldn't

 

[Cynar]

I'd like to believe this, but aside from Steam, I feel like companies will bend you over any way they can.

Yup, I will always buy retail because downloadable games usually ends up with us getting screwed. Just look at GamesonDemand on xbox live. :lol

 

[daegan]

I am not pissed at Gamestop at all. With the exception of some of the things they do I don't care for- stickers all over games I buy- I like the retail experience and alway like shopping at my local Gamestop (Carmel Valley, Ca) as well as the fantastic Gamestop at Universal Citywalk.

I can take serious issue with a particular way they run their business (which I do, the used games stuff) without hating them. In fact, my whole thing is, 'hey, let's find a way to work together on this so we can all benefit'.

David

Your benefit is being able to sell more copies of your new game by people being able to sell their other games towards it - either at something near what they paid for it to a friend/craigslist/ebay or for a bit less, but more easily at gamecrazy/gamestop/etc.

Do you really think most games would sell what they do without games acting as a currency?

 

[kiuju2k]

Straight up, if taking out the retailer gets me a new game that would cost 60 dollars new down to 30-35 dollars digital, then I'm all in. As of now, I really do not see that happening. So I guess; with that said, we will see what happens in five years.

 

[spwolf]

Yup, I will always buy retail because downloadable games usually ends up with us getting screwed. Just look at GamesonDemand on xbox live. :lol

except that is being done to appease retailers :lol

 

[Salty]

Aside from the massive change as a result of Wii's success; the biggest evolution of gaming this generation has been online integration with online distribution for titles on Live and PSN.

I would not be at all surprised if the major innovation next generation is complete or near complete digital distribution.

 

[Htown]

So this thread long and I'm not going through every page right now, so someone summarize:

What gives publishers and developers the right to have a cut of used game sales? If I make a product and sell it to you, why should I get some money if you then take it and sell it to someone else?

Or to be closer to how people seem to want the gamestop thing to work, let's say I make a box. I sell it to you, because you want it. You give me money, and I give you the box.

You use the box for whatever you're going to use it for. then you're done with it. you don't need it. But Bill does, so you sell the box to Bill. Bill takes the box, and gives you money.

Then Bill decides to sell the box to Joe. Bill gives up the box, Joe gives up the money.

I have no right to go to Bill and say, "I need you to give me part of the money Joe gave you for the box, since I made the box in the first place, and Joe COULD have bought a NEW box from me instead."

You got your money when the first sale was made. Period. You shouldn't get money if Gamestop sells a used game to somebody else, because NEITHER THAT MONEY NOR THAT GAME BELONG TO YOU. It doesn't matter if they sell it for a profit or not, it has nothing to do with you. the fact that someone might by a used one instead of a new one is IRRELEVANT.

This whole idea is goddamn ridiculous.

 

[Shurs]

I just read the OP but have yet to read the replies. I just wanted to say that Jaffe has a fair point and this Les guy came off as an asshole. To draw comparisons to the auto industry is silly as there's no digital distribution method for cars that manufacturers can hold over the heads of used car dealers. I don't find it unreasonable for game makers to propose receiving a cut of used game sales when they have the option of digital distribution.

I just wanted to get that out of the way before I read what should be an interesting thread.

 

[someguyinahat]

I would like you to find me the store where the salespeople make it a point to tell people that their store DOESN'T offer the best price.

Ironically, only one. Gamestop. I inquired about used games, and the cashier said that if I want used games, not to buy them at Gamestop. He then recommended two other used game stores in my city. No other store that I've visited has done such a thing.

To take this thing on a bit of a tangent, what would a DD model do for localization of games? Would we still find games only available in Japan (and to a lesser extent, Europe or NA) even when it's not distributed physically, in the same way certain websites are localized? Or do you think the floodgates would open?

 

[iammeiam]

Does the no price protection thing still hold true?

Because if so, asking for a cut of used sales is insanely hypocritical--If the publisher is free from all financial obligation for what happens to a game after it is sold to a retail chain (which I am not opposed to), then they should be willing to be equally free of the benefits. It sucks that the entire video game price model is ridiculous and encourages the booming used market, but if publishers want a cut of the used profits they should probably figure out a way to get into the used business, not just demand in as soon as somebody works out how to profit.

I'm not a GS fan, but there's a reason used video games are such a big business, and GS is taking advantage of the situation, not creating it.

 

[MedHead]

I'm not sure why some are of the opinion the "egg-headed guy" was more obnoxious than Jaffe. I thought Jaffe was known for his tendency to be tactless.

 

[onken]

So that huge diatribe because Jaffe dared to "basically" tell him to fuck off? I agree with the guy but it's hard to empathise when you're a colossal dickhead.

 

[Htown]

I just read the OP but have yet to read the replies. I just wanted to say that Jaffe has a fair point and this Les guy came off as an asshole. To draw comparisons to the auto industry is silly as there's no digital distribution method for cars that manufacturers can hold over the heads of used car dealers. I don't find it unreasonable for game makers to propose receiving a cut of used game sales when they have the option of digital distribution.

It's unreasonable because they don't have any right to that used game or that money.

They got their money for the game when they sold it the first time. Period, end of story. They don't deserve a cut from gamestop any more than they deserve a cut when you sell a game on ebay.

 

[KScorp]

I just read the OP but have yet to read the replies. I just wanted to say that Jaffe has a fair point and this Les guy came off as an asshole. To draw comparisons to the auto industry is silly as there's no digital distribution method for cars that manufacturers can hold over the heads of used car dealers. I don't find it unreasonable for game makers to propose receiving a cut of used game sales when they have the option of digital distribution.

I just wanted to get that out of the way before I read what should be an interesting thread.

It's called the right of first sale. Once the game is sold, Jaffe doesn't own it anymore. He doesn't have the right for more money after the fact, even if others are making a huge profit. And that's basically what this entire thread is based on.

Also, that's the thing about digital distribution. If Jaffe hates this so much, then it's his choice if he should turn to DD or not. He'll deal with the consequences, as will resellers and consumers.

Beaten. =/

 

[AdventureRacing]

I just read the OP but have yet to read the replies. I just wanted to say that Jaffe has a fair point and this Les guy came off as an asshole. To draw comparisons to the auto industry is silly as there's no digital distribution method for cars that manufacturers can hold over the heads of used car dealers. I don't find it unreasonable for game makers to propose receiving a cut of used game sales when they have the option of digital distribution.

If DD is this fantastic option which will suddenly allow devs to get all this extra money just do it. Don't try and claim money from used game sales that they aren't entitled to.

Also you have just made a leap of logic which makes no sense. How does having a separate option in DD in anyway mean that devs should receive a cut from used game sales?

Edit:

So that huge diatribe because Jaffe dared to "basically" tell him to fuck off? I agree with the guy but it's hard to empathise when you're a colossal dickhead.

It was an exchange between 2 dickheads.

 

[voodoopanda]

I think things should go in the opposite direction and they should make video game libraries! Think of all those poor writers and publishing companies - their stuff gets given away for free. Thats way worse than the gamestop model.

A video game library would be awesome.

 

[Shurs]

If DD is this fantastic option which will suddenly allow devs to get all this extra money just do it. Don't try and claim money from used game sales that they aren't entitled to.

Also you have just made a leap of logic which makes no sense. How does having a separate option in DD in anyway mean that devs should receive a cut from used game sales?

Edit:

It was an exchange between 2 dickheads.

If games are only distributed digitally next generation, then Gamestop is in trouble. That seems like a pretty decent chip to bring to the bargaining table.

 

[KScorp]

I think things should go in the opposite direction and they should make video game libraries! Think of all those poor writers and publishing companies - their stuff gets given away for free. Thats way worse than the gamestop model.

A video game library would be awesome.

Some libraries carry video games. Not a huge selection, but surprisingly not always educational. :lol

 

[RurouniZel]

Your benefit is being able to sell more copies of your new game by people being able to sell their other games towards it - either at something near what they paid for it to a friend/craigslist/ebay or for a bit less, but more easily at gamecrazy/gamestop/etc.

Do you really think most games would sell what they do without games acting as a currency?

This x 1000. Most people aren't made of money and can't afford to pay $60 or more a month for each new worthwhile release that comes out.

While I prefer to keep most of the games I buy, there are some games I'm never going to play again, and those get traded in so I can actually afford to buy new games (like, oh, God of War, for example). No one I know buys each and every new game they want with straight up cash. Most of them trade in what they're done with to soften the blow.

The only truly worthwhile solution? Stop charging $50-60 dollars for new games. Make them $20-$30 standard (maybe $40 tops) and you'll see an increase in new game sales and decrease in used game sales.

 

[AdventureRacing]

If games are only distributed digitally next generation, then Gamestop is in trouble. That seems like a pretty decent chip to bring to the bargaining table.

Well they can go ahead and try it. If devs think they are losing money from used games just watch their profits shrivel further if they move to DD only next gen.

Gamestop wont be the only ones in trouble. Devs are already struggling as it is.

 

[Majima Everywhere System]

I'll sell my games back to Jaffe if he'd like. Show me the money.

 

[obonicus]

The only truly worthwhile solution? Stop charging $50-60 dollars for new games. Make them $20-$30 standard (maybe $40 tops) and you'll see an increase in new game sales and decrease in used game sales.

Why do you assume this is possible? Do you think that cutting prices by half or by 2/3 you'd see new sales increase proportionally? How much does a pub get per title in the first place? I've never seen a number above $40 (most in the low $30s). If prices are cut by $30-40, who would be bearing the brunt of that? The pub? Would they actually make money per game sold? (This is all independent of game budgets, too.)

 

[DrPirate]

Why do you assume this is possible? Do you think that cutting prices by half or by 2/3 you'd see new sales increase proportionally? How much does a pub get per title in the first place? I've never seen a number above $40 (most in the low $30s). If prices are cut by $30-40, who would be bearing the brunt of that? The pub? Would they actually make money per game sold? (This is all independent of game budgets, too.)

Only if the quantity of sold games made up for the marginal profit made before.

Didn't L4D generate more revenue when the price was slashed like, 60%?

You'd have to rely on sheer volume to make the same amount of money.

 

[RurouniZel]

Why do you assume this is possible? Do you think that cutting prices by half or by 2/3 you'd see new sales increase proportionally? How much does a pub get per title in the first place? I've never seen a number above $40 (most in the low $30s). If prices are cut by $30-40, who would be bearing the brunt of that? The pub? Would they actually make money per game sold? (This is all independent of game budgets, too.)

Have you taken a look at how well games are selling on the DS? Games like Professor Layton and Phoenix Wright sell well partially because they're $30. Do you think they'd sell just as well at $50-$60?

Many games on the original PlayStation sold for $40 brand new, many of those published by Sony themselves. I seem to remember game sales being pretty darned good then.

Only if the quantity of sold games made up for the marginal profit made before.

Didn't L4D generate more revenue when the price was slashed like, 60%?

You'd have to rely on sheer volume to make the same amount of money.

Most businesses that actually make it big (like Walmart or Best Buy) make tons of money because of this principle. Those that don't (Circuit City) end up out of business. It may not make as much sense on paper, but in practice it's what works, plain and simple.

10,000,000 sales x 5 profit > 100,000 sales X 50 profit

 

[IrishNinja]

damn, LTTP on an interesting thread. i hate going through so many pages to make sure your point hasnt been said more eloquently before, just to give up at page 7 and post anyway.

Game prices will be more flexible when retail is gone.

this seems counterintuitive. it pressuposes that the industry will feel compelled to pass on its savings despite the lack of competition.
this thread is rife with apples/oranges/cars analogies, but what industry - specifically in entertainment - has flourished and benefited the consumer when a monopoly on distrubiton was created?

When/if retail is dead/dies its the end of gaming bargains.

Being able to pickup a brand new game $10-20 lower then full price just because stores are waging price war on each other will be GONE.

I fear the day it happens.

having just picked up some PS2 greats online for $5-10 each, i clearly agree here. mind you, had i know idve bought them new, but i only learned of them at all primarily from rentals; DD would eliminate this option entirely.
here's segata forever saying things better than i.

Sure. They are removing the right of resale. They are taking away your ability to recover some of the money you paid for a game that turns out to be a turkey. This dramatically decreases the value of the purchase as you are essentially "stuck" with it after you buy it.

This would be fine if they would reduce game prices to the price of $(current game price - reasonable resale value) but they aren't doing that at the moment and I really don't see any intention in them to start doing it.

I've already noticed the result of this new business model on my buying habits. I was gunswild on buying DD games just like I do retail games at first, but after one or two turkeys, I absolutely REFUSE to take a chance on anything other than a sure bet, a known quantity. The quirky titles I would certainly give a chance to via traditional means, I will not touch with a ten-foot pole via DD. This is a loss all around.

exactly. we harp on DRM, but buyer's remorse is what will plague/harm sales on DD.

All getting rid of Gamestop will accomplish is it will spread their stranglehold on the used game market out to hundreds of online retailers who are all doing pretty much the exact same thing. Some clever fellow is going to work out a system where people can conveniently mail in their games for store credit and we'll be right back where we started.

i didnt see anyone else point this out yet - gamefly started this not too far back. not identical in the retail store sense, but very similar for a reputable online rental/swap shop. i dont trade many of my old games, but i certainly buy theirs.

 

[obonicus]

Didn't L4D generate more revenue when the price was slashed like, 60%?

AFAIK they didn't actually give out real dollar figures for that increase, so it makes it hard to discuss. Not to mention that it's a self-published game on DD, which is pretty much not what RZ is referring to.

You'd have to rely on sheer volume to make the same amount of money.

Sure, but again, if you cut prices by $30-40 on retail games, where's the cut coming from? Are licensing fees and logistics costs going to be cut down as well? Will they cut into retail's already very slim margins? Because if they're not, a, say, 50% decrease in game price would mean a 3/4 decrease in per-game revenue, using the very optimistic figure of $40 off a $60 game going to the pub.

Maybe cutting a game's price by half would boost sales by 4x, but IMO it seems doubtful.

 

[RurouniZel]

AFAIK they didn't actually give out real dollar figures for that increase, so it makes it hard to discuss. Not to mention that it's a self-published game on DD, which is pretty much not what RZ is referring to.



Sure, but again, if you cut prices by $30-40 on retail games, where's the cut coming from? Are licensing fees and logistics costs going to be cut down as well? Will they cut into retail's already very slim margins? Because if they're not, a, say, 50% decrease in game price would mean a 3/4 decrease in per-game revenue, using the very optimistic figure of $40 off a $60 game going to the pub.

Maybe cutting a game's price by half would boost sales by 4x, but IMO it seems doubtful.

Among the hardcore, it would mean their money is spread out among more games, so it's less concentrated on the super big companies like EA or Square-Enix.

Among the casual crown, it would mean they're more likely to casually purchase a new game in the same way that people casually buy a new movie from time to time.

There's also the kid factor. Kids want new games. Parents don't always want to spend $50-60 dollars on new games for their kid. But they'll happily shell out $20-30 dollars for a new movie for their kid.

 

[drakesfortune]

GameStop only making $5 on boxed retail releases ensures they're going to push the used games. They make a lot more on them. I run a business, and quite well, and I'm ALWAYS going to push the thing that makes the most money. Why? I love my kids, I want them to eat, and go to college. So I'm going to do what's in my best interest, and GameStop is merely doing that.

I think Jaffe is right that some agreement could be reached, but it would have to involve GameStop getting a bigger cut of the new sales pie. If they make it more economically advantageous for gamestop to sell new games, then they will push new games. As long as there is that massive disincentive to sell new over used, they'll push used.

It's like all these people who scream that we should all drive hybrids and use less electricity. Well, it turns out that if people can save more money in gas than it costs them to buy the more expensive car, they'll do that, but if it's going to take 10 years to realize the gas savings over the price of the fancy hybrid, they're not going to bother. All people are greedy. It's life, it's human nature. You can either harness it like capitalism does, or you can fight it like socialism/communism does. The results are clear. If you harness human nature you reap massive reward, if you fight it, well...you get a huge fucking mess and nobody is happy.

 

[obonicus]

Have you taken a look at how well games are selling on the DS? Games like Professor Layton and Phoenix Wright sell well partially because they're $30. Do you think they'd sell just as well at $50-$60?

Of course not. But that's not what we're talking about. I'm asking you: who's cutting the price in this situation? Is it all coming out of the publisher's pocket? Because again, we're talking about cutting a publisher's profit from, $30-40 by, well, $30-40 dollars.

I'm not sure how the economics of the DS work, to be honest. Could you perhaps enlighten me? It seems that they do operate on much smaller margins, and I'm assuming that to you 'selling well' means 'selling well enough to be financially successful' which isn't a definition everyone shares, even at GAF. Not to mention that it's a definition that hinges on game budgets -- should DS games be the upper ceiling for budgets? Why not have everyone just move to the DS, it seems the pricing structure and the audience is there already.

10,000,000 sales x 5 profit > 100,000 sales X 50 profit

Sure, but that's trivially true. You're saying that cutting a game's price down ten-fold (assuming pubs could maintain profitability) would increase sales a hundred-fold? For all games, across all genres and across all platforms?

 

[Mar]

The dude makes a great point. If the publishers weren't charging such a stupid price for games and only giving video game stores the slimmest room for profit ($5 or so?), there'd be no reason for them to push their used game sales so much.

The fact is games are fucking expensive. And no, you can't blame the cost of development spiraling out of control. Games have always been fucking expensive. I've been a gamer since the 80s and have spent my fare share on AUD$100+ games.

What annoys me greatly is that the whole world promised everyone games would be cheaper when they moved to the CD/DVD format. Cartridges are expensive! Remember? But no, CD/DVD format games are still as expensive if not slightly more so than ever.

Digital distribution is fantastic. I love being able to access so many games easily, and there's certainly more diversity in gaming now that more people can deliver their games and take risks as well as move around various price points. However DD worries me greatly.

Having no physical ownership of your game is a very real concern. We've already had cases on the Xbox 360 where a publisher has gone bust and their titles had to be removed from the store. While these are licensing issues and will most likely be sorted out eventually and be available to buy once again. It highlights the inherent problem in that if for whatever reason a company went bust and their games removed permanently, how do you ever get that game again? You know how? Piracy. That is the only way. You hope some people have archived the data and make them available on torrent sites or something. This in itself is bad and self defeating obviously. But for a collector such as myself, simply not good enough regardless. I want my game in my hands and I want the real thing. I want the real thing that I paid real money to a developer for making.

David and others mentioned something that I'd be fully behind. Finally a DD model that I would be very happy to support. Initially release your game as DD only. Therefore your game is protected from used game sales and rentals. Then 4 or 6 weeks later release physical copies for retail sale, rental and buy back.

Hopefully this is something the industry gets behind. But I don't have much hope. This thread just shows how greedy everyone is in the game business and how the consumer is the last thing they think of.

 

[Smash88]

Oh and one more point I would like to add to this discussion. Even though we are getting no physical game box or manual that is printed, we still have to pay full price for a game through Steam or whatever other service. I rather save my monthly internet allowance and also have the feeling of owning physical property, than some game that I own only through the internet. I might as well buy the box version for that same price. It's annoying to see publishers/developers/whoever not willing to even cut the cost by $10 for a game you own digitally. Another one of the many flaws that plagues this industry.

That is why I never buy games on Steam or elsewhere unless there is some huge price slash a la 50% off L4D, or when Bioshock was $5.

 

[obonicus]

Among the hardcore, it would mean their money is spread out among more games, so it's less concentrated on the super big companies like EA or Square-Enix.

Among the casual crown, it would mean they're more likely to casually purchase a new game in the same way that people casually buy a new movie from time to time.

There's also the kid factor. Kids want new games. Parents don't always want to spend $50-60 dollars on new games for their kid. But they'll happily shell out $20-30 dollars for a new movie for their kid.

You're not really coming out and saying anything beyond 'games should be cheaper'. Do you think that cutting prices by half would increase sales by 4x? Are you saying that the burden of cutting game prices should belong to the publisher?

I mean, my hypothetical scenario was pretty optimistic. What if we're not talking about a best-case scenario (a nice fat $40 of headroom)? What if we're talking about them making, say, $35 (the number I've seen bandied around the most), before they cut their profits by $30. Now they have to sell 7x as much product to make the same money they did before, but they still only cut the price by half. Is that still doable?

 

[RurouniZel]

Of course not. But that's not what we're talking about. I'm asking you: who's cutting the price in this situation? Is it all coming out of the publisher's pocket? Because again, we're talking about cutting a publisher's profit from, $30-40 by, well, $30-40 dollars.

Sure, but that's trivially true. You're saying that cutting a game's price down ten-fold (assuming pubs could maintain profitability) would increase sales a hundred-fold? For all games, across all genres and across all platforms?

No, I'm illustrating a point that overall profits are much more important that profit margins, a concept the videogame market simple refuses to understand. This is one of many reasons that portable gaming is suddenly taking a huge chunk of console gaming's thunder; it's simply much more affordable.

I'm not saying all games would increase 100 fold, that's crazy talk. I'm saying that overall sales numbers and overall profit (read, NOT PROFIT MARGIN, OVERALL PROFIT) would increase greatly. Again, on paper it looks silly, but once again, look at Walmart, look at Best Buy, then look at Circuit City. One of those three is out of business, because they placed more emphasis on margin than overall, and paid the price (I worked there for 5 of their last years).

 

[John Master Lee]

This issue is much more complicated than it seems, and the solution involves some dramatic changes to the way games are made and sold. So until that happens, I see the used game market as one that serves a consumer need.

What issues am I talking about?

1. Games cost way too much. And while you can argue that it cost a lot of money to make games, well, it cost much more to make movies, and movies only cost $10 at the theater.

2. Which brings me to the next big issue. There is really only one major outlet for game buying, and that's through retail. Digital distribution is coming, but it's still nascent. One reason there isn't such a similar bru-ha-ha with movies is because movie makers have many ways to make money beyond the theater. DVD sales. Rentals. Cable TV.

So here's my solution:

1. Create a console standard, so that a game developer doesn't waste money porting to different systems. Also have console build in middleware apps, so that development costs are greatly reduced.

2. Mark all console systems down down $50. This will open up the number of people who buy them, and thus you have a much bigger market. Or better yet, have only one console standard, so that a game developer doesn't have to waste money porting to each system.

3. With a much bigger console install base (let's say it rivals how many people down DVD systems or have cable TV), you can sell games cheaper, around $20 a pop for a AAA game.

3. Support DLC content with new level packs, add-ons, and such to capitalize on micro-transaction. Keep the price cheap, around $.99, and you'll start to find that people hold onto their old games, keeping the used games market at bay.

I'm sure that's a pipe dream. But it is one solution to greatly reducing the appeal of the used game market.

 

[drakesfortune]

Or how about pubs compete with gamestop and offer to take games in for the same value that gamestop does in a trade credit? It'd certainly be a more complicated model, but it's certainly doable. Then they could sell the used games themselves, or destroy them.

The key here is that the pubs have to be more creative. They need to compete somehow with the used market. There is no other solution for the next decade or so...at least.

So many people out there today wouldn't even dream of buying a game and downloading it. The market that you write off when you go dd is HUUUUUUGE. I don't think anyone wants to write that market off yet. I know Sony is experimenting with this with psp go and Patapon 2, but I'm guessing it's not going to be very successful. I'd bet a lot of dough that the Patapon 2 sales figures are atrocious.

 

[obonicus]

No, I'm illustrating a point that overall profits are much more important that profit margins, a concept the videogame market simple refuses to understand.

I think the videogame industry does understand this -- they actually have figure on profitability and games sales, undoubtedly they pay people to conduct market studies. Yes, overall profits are what matters. But to maintain your profits after you cut your profit margins, you have to at least increase your sales proportionally. That's why I keep asking: in your scenario, who's paying for the price cut? How much would sales actually have to increase if we don't want to touch game budgets? Or is your argument actually 'everyone should make portable games'?

This is one of many reasons that portable gaming is suddenly taking a huge chunk of console gaming's thunder;

Is this true outside of japan? I don't think it's even really true on GAF.

I'm not saying all games would increase 100 fold, that's crazy talk. I'm saying that overall sales numbers and overall profit (read, NOT PROFIT MARGIN, OVERALL PROFIT) would increase greatly.

And I'm asking: how? Is demand elasticity for games so great that a price-cut will be followed by a much larger sales boost?

 

[njean777]

well i believe that the used game market is fine. As a consumer you should have a choice and for now we do. The problem i could see with DD is they could fix prices but also we could see many DD services popping up and competing. Right now we have Direct 2 Drive, Steam, impulse. More could def. pop up so the future of DD is a weird one.

 

[Zabka]

What annoys me greatly is that the whole world promised everyone games would be cheaper when they moved to the CD/DVD format. Cartridges are expensive! Remember? But no, CD/DVD format games are still as expensive if not slightly more so than ever.

Maybe it's different where you live, but current games are either the same price or less than 16-bit games without adjusting for inflation. The high-end games would sometimes go for $70 to $80 US.

Chrono Trigger had an MSRP of $76.98 in 1995. That's $107.75 in 2008 dollars.
Final Fantasy 3 was $79.99.
I can't find any old Genesis game prices, but I'm pretty sure I spent $80 on Phantasy Star IV.

$60 is a pittance considering the amount of features some games ship with today.

 

[RurouniZel]

I think the videogame industry does understand this -- they actually have figure on profitability and games sales, undoubtedly they pay people to conduct market studies. Yes, overall profits are what matters. But to maintain your profits after you cut your profit margins, you have to at least increase your sales proportionally. That's why I keep asking: in your scenario, who's paying for the price cut? How much would sales actually have to increase if we don't want to touch game budgets? Or is your argument actually 'everyone should make portable games'?

The publisher charges the store less to carry a game, and assigns a smaller MSRP. They would do so because they want to increase their overall profit and userbase. If they were smart, they would do this.

Is this true outside of japan? I don't think it's even really true on GAF.

On GAF, no. Outside of GAF, I think it's safe to say there's more DS'es on the market then there are Wiis. Specific games may not chart in the first month, but overall the sales are higher in the long term. Key words: Higher, and Long Term.

And I'm asking: how? Is demand elasticity for games so great that a price-cut will be followed by a much larger sales boost?

If demand does not exist, you create demand. Cutting prices is a great way to create demand. Why do you think Sony/Microsoft keep cutting their console prices? To create demand.

 

[John Master Lee]

Going back to my last post. Now that I think about it, the solution isn't a pipe dream. It's CLOUD COMPUTING. It just dawned on my why there is so much investor interest in this type of technology, and why companies like Trion, and guys like Denis Dyack are evangelizing it.

If it actually works, then it addresses most of the issues I raised that need to be fixed. Woah...

Who cares about a used game market if I can buy a console system for less than $50, and any AAA game for less than $20?

 

[arstal]

Well, I know my habits for DD purchases.

If it's a company that I have lots of loyalty for- which is pretty much Stardock and some Paradox stuff, and only their developed titles- I won't pay full price. I am more likely to buy DD, but mostly titles under $20.

I don't think Gamestop is what is keeping companies from jacking up prices, if anything, according to Stardock, it's the opposite. I know in the case of GalCiv II, they specifically mentioned that they wanted to sell it $10 cheaper on Stardock Central (their precursor to Impulse), but the big chains threatened to not stock their product if they did so, as Stardock would be undercutting them. If Gamestop really wanted to push used games, they'd offer more then a $5 discount, that's not enough for me to take the risk on a scratched disc unless I have no other choice.

Note: Stardock is one of those companies that understands the difference between total profit and profit margin. Brad Wardell even posted a rather arrgoant, though true, piece about a year ago calling some other developers "rockstars who didn't know how to make a profit", while crowing how GC2 made an eight-digit profit.

BTW we aren't getting the manuals and stuff, but what if I don't want a manual? I do think DD, legal or illegal, is what has kept PC gaming from going up in price like console gaming.

As for DD games and localization, some DD games are still region-locked. Stardock makes a point of not putting games on Impulse that aren't avaliable in the US, but will region lock to outside places, I've seen some games banned to Germans. Paradox region-locks with glee, a lot of their stuff isn't purchaseable by Americans- would a proxy work in this case?

One last thing, as for the revenue slashing increasing profit margins. It does- once you've gotten all the people willing to pay full price. Stardock here says they have a policy on this- they tend to only do two types of cuts: A very small cut if they think a game is still "hot", like $5 or so, or a very large cut to do the L4D scenario.

That said, the real question is: Is Gamestop necessary, and if so, for how long? Ultimately, I think the answer to that won't depend on any of this, but the direction of broadband in America- and whether Time Warner can get its broadband caps accepted. They're going to put millions into outing Eric Massa from Congress (who is their big enemy)- and they'll likely succeed since Massa is going against the tides so much. This is what is going to be the big factor. If caps put an tax on DD, then Gamestop's 100% safe.

 

[KevinCow]

$60 is a pittance considering the amount of features some games ship with today.

And it's obscene considering how few features most games ship with today.

 

[Wolves Evolve]

I don't think anybody in the games industry thinks 60 dollar prices, in a ongoing recession (and yes, it is ongoing no matter what Jim Cramer tells you) can be sustained without most people reselling at 30-40.

 

[Night_Trekker]

Who cares about a used game market if I can buy a console system for less than $50, and any AAA game for less than $20?

Hell, who cares about gaming at all if we're living in a magical fantasy world where all our dreams come true?

 

[Yagharek]

3. Support DLC content with new level packs, add-ons, and such to capitalize on micro-transaction. Keep the price cheap, around $.99, and you'll start to find that people hold onto their old games, keeping the used games market at bay.

So basically step 3 is "fuck over the customer" with death by a thousand paper cuts? Why not make every component of the start menu an unlockable by 99c microtransactions ... oh, but its happening already.

The problem here is that people in this thread and on message boards all over the place are saying the problem lies not with the devs or publishers, but with the customers and the stores giving them what they want. That's why you have people defending ridiculous comments by jaffe as quoted in the blog, and calling the other guy an egghead.

Book publishers deal with parallel imports, used sales, shit market conditions etc and yet somehow they manage to survive and thrive. Or at least the market does because people want to buy books. But it seems the gaming industry is developmentally challenged because there are a lot of vocal elements within it that wish to be openly hostile towards the people paying their paychecks. Customers are number one.