Sony Profits Conundrum

Alice, over at the Wonderland blog, has an interesting post wondering about the state of Sony's finances when put in contrast with their view on second-hand game sales, and new title prices. From the article: "Yet it turns out that discounting new releases also results in higher sales. MCV continues: 'BVG's The Chronicles of Narnia jumped ten places up the ChartTrack top 40 last week, thanks to a 16 per cent sales increase, following its slashing to £19.99 at most High Street retailers.' My question: what the hell are they complaining about? Why curtail the perfectly reasonable and legal second-hand market if they're making money hand-over-fist with the current situation?"

Comments

Ehh, thats fine...

[engagebot]

"Why curtail the perfectly reasonable and legal second-hand market if they're making money hand-over-fist with the current situation?"

When have you *ever* heard a company say "Eh, thats fine. No thanks. I think we're plenty good..." on the subject of profits?

Risk Analysis

[ClamIAm]

I am rather certain that before large corporations begin trying to manipulate the echo chamber, they do some research and compare the risks, rewards, and consequences of doing so. We may think that Sony's insane for complaining about the used game market, but I'm sure that they've thought about the possible negative reaction that could occur by them talking about this, and reasoned the possible profit outweighs the possibility of or the seriousness of the public backlash that could/will happen.

It's a bit like the scene in Fight Club when the narrator explains how his company issues recalls. If the court settlements are less than the cost of a recall, they aren't going to fix those cars.

'Control. It's all about control.'

[Channard]

You don't need to be a bargain basement Colonel Sanders to know that someone at Sony apparently wants to keep a tight rein on distribution/selling of their games. They're a part of the same industry that insists on region coding for DVDs.

No Technical Solution to Secondhand Sales

[Nom du Keyboard]

Perhaps they have to complain about secondhand sales because there is no reasonable technical solution to them. Sure there's been talk that once you insert your new game into your new PS3 that game will suddenly be rendered unplayable on any other PS3. Boy would that be (yet another) bad move on Sony's part, to wit:

o Your PS3 dies (they do) and when you bring your new one home none of your games play on it.

o End of the game and PS3 rental market (unless you can keep each game with each PS3. This will not help PS3 penetration at all.

o Although you keep you PS3 locked up when you're not playing it, you little brother grabs you new game and takes it to a friend's house to play before you get a chance to play it yourself.

o Overall glitches that plague any new technological protection measure may only impact a few percent of the players, but that's still many thousands of now angry gamers.

With Doctrine of First Sale allowing you to do what you want with it otherwise, Sony better just learn to live with used games that they are not going to be able to collect even more money from.

Ummm... no

[sterno]

So yeah... They could afford to give it away at an almost free price as long as it above $1. If a new game was sold at $1, I'd bet everyone who owned a PS3 would buy one.

Not really. Distribution cost of a game is negligible in the grand scheme. It's the cost of developing the game, marketing the game, etc, that are expensive. Now you might think, well at $1 they don't need marketing, but then that only works for that one game, otherwise all the games start competing with eachother at the $1 mark, and you now need a marketing budget again.

A good developer is going to cost between $100-150K per year, give or take. So how many developers does the game require? How many graphics people, etc? Suddenly you're getting into quite a bit of money. How long does it take to develop the game. A year? Two? Five? Multiple that times the salaries and you see how this goes.

Now, keep in mind that for every game they release that sells well there are a few others they make that don't. So in order to remain profitable they have to charge more for games to make up for the duds they lose money on.

So a couple years of development with a group of developers plus marketing costs, packaging, and distribution it costs quite a bit to make just one game. If that one game fails, then you have to make up that cost on other games. If you've noticed, the cost of games has been pretty consistent over time. There's been a steady increase as inflation is incurred and game complexity increases, but overall what I pay for Half Life 2 is on par with what I once paid for pac man (and arguably cheaper).