Game Retailers Make Money On The Margins

This week's Escapist deals entirely with the business of selling games, and the article A Marginal Business details how EB and Gamestop make their money. From the article: "'Used games are keeping the entire ship afloat,' a vice-president of marketing for Electronics Boutique tells me. 'EB and GameStop make basically no money from new product.' No money from new product? But everybody knows the retailers are the real profiteers of the interactive entertainment industry, brutally extracting marketing development funds and ruthlessly returning product in the name of the all-mighty dollar. Right?"

Comments

Exactly right: Used games == money

[thesandtiger]

I was at a Gamestop the other day and saw someone come in to sell some games. Not 10 minutes later, 2 of those used games got resold to other customers at a pretty good margin.

Initial sale: call it 49.99 (of which...? is profit?)
Buy it back used, currently popular title: -$25
Sell it used: $45
Buy it back re-used: $-15
Sell it re-used: $35
Buy it back re-re-used: -$5
Sell it re-re-used: $20

Off of that life-cycle for one game, they can easily make $55 bucks off of one game that had a maximum retail price of $50 bucks.

Because used game sales are so attractive, they offer incentives for people to buy and sell used games - I have one of those membership cards, and I get %10 off of the price of used games as well as a %10 bonus to the trade in value when I sell games, and also they'll let me bring a used game back for a full refund if I do so within a week of purchase, no questions asked.

Even better, they have huge leeway with what they can charge for the games - I tend to get pretty good deals when I haggle a little.

Win win for the retailer and consumer, in my opinion.

Re:Exactly right: Used games == money

[thesandtiger]

If developers want to avoid getting screwed on the used game market, they can do a number of things:

1) Create titles so compelling that no-one will want to wait for the used market.

2) Create titles so original/replayable that no-one will want to sell them to create that market.

3) Lobby their publishers to reduce the retail price so that more people will be willing to pay full retail.

4) Stop working with publishers who keep amping up prices while forcing absurd schedules making quality slip.

There are many games I'd be interested in, but there's just no way in hell I'm going to spend $50 on them, as much as I game, and as varied as my tastes are. So I rent, and, if I "more or less" liked the game when I rented, I'll buy it used.

The only time I buy new stuff is when I rented and absolutely loved the game and want to help encourage similar development - Katamari Damacy, for example. I bought a dozen copies to give as gifts. And there are some games I have that are years and years old that I *still* come back and play with regularity and, in fact, have bought multiple copies because I've lost my disks or switched platforms.

Doesn't surprise me

[Lime Green Bowler]

When the retail price of a game is $50 or more, it doesn't surprise me if people would rather wait for it to go 'bargain bin' or 'used' rather than buying new. No sense getting burned on a lousy game. Again. *ahem* Don't you see games becoming the next 'used car' market?

Hokey/hostile copy protection schemes such as Steam and Starforce aren't helping matters either. No sense ragging on Steam since it has been hashed out here before, and Starforce's hardware/software-hostility has a cult following of gamers who stay informed of titles NOT to buy.