Dysfunctional Console Industry Struggles For New Profit Centers

MojoKid writes "The rumor mill is still churning out quite a bit of information on new consoles this week, including new data on Nintendo's upcoming Wii U. According to unnamed developers, the Wii U actually isn't as powerful as the Xbox 360 or PS3, despite boasting HD graphics and significantly improved hardware. Meanwhile, the Xbox 720, codenamed Durango, is reportedly targeting the holiday season of 2013 as a launch window. Rumors are floating about of a required always-on internet connection and of locking out the used game market. What this discussion truly highlights is just how dysfunctional the entire console industry is and how skewed its profits are. Profits on hardware sales are so small, game shops can't survive on console sales alone. $60 MSRPs are subsidized by exchange and trade-in programs. Kicking Gamestop in the teeth may occasionally sound like fun, but the idea of killing the used games market doesn't make much sense. If used title values collapse and MSRPs stay the same or rise, the entire industry could hamstring itself in the name of higher profits."

Comments

If they kill the used game market,

[Anonymous Coward]

They damn well better lower the prices on new games. Or my new gaming platform just may be an iPad buying games off the the app store.

Re:If they kill the used game market,

[AngryDeuce]

Oh yeah, also, historically speaking, we're paying much less for a new game than we used to be. Ditto consoles.

According to The Inflation Calculator:

Atari 2600 - $199 in 1977 - $707 today (in 2010 dollars, anyway)
Intellivision - $299 in 1979 - $886 today
NES - $199 in 1985 (US release) - $398 today
PC Engine/TG-16 - $249 in 1989 - $432 today

Games were also pretty expensive. I didn't actually buy my own games until the NES-era (and I'm having a hard time finding historical retail prices on video game cartridges), but even then, a new game was somewhere in the neighborhood of $50 back then, which would translate to $100 today. And look at how little you got for it in the case of a lot of games! I paid the equivalent of $100 for Mario Bros. 2 and beat it in a day. Ditto Mega Man 2 and 3. Ditto a lot of games.

I think many of us are more cognizant of how much were paying for games today because we're not using birthday money and allowance to buy them anymore, coupled with the fact that it's harder and harder to justify the expense with the economy being rough like it is. But in truth, we used to get charged a hell of a lot more.

That's not to say that I don't have my own misgivings, particularly related to the abuse of DLC as a concept. It seems like more and more games are coming out with 2/3 of the content they used to, with the intention of selling the remaining 1/3 in a few $10 increments down the road. The DLC on disc bullshit is even more ridiculous and unforgivable in my opinion.

Higher profits

[Enderandrew]

Killing used sales doesn't mean higher profits for console makers. Those who are only willing to spend $20 on a used title aren't suddenly going to drop $400+ for a new console and then start paying $60 for new games. They'll likely just spend $20 on used games for current gen titles like they do. Console makers will hurt the adoption of their consoles and lower profits. And some gamers will be less likely to spend $60 on games that already currently do so, if there is no longer an option to sell the game back and make back some of their money.

I don't understand how Microsoft and Sony think this will lead to higher profits. And frankly if Microsoft or Sony does this, but the other does not, then it will just drive business to that console.

Re:Higher profits

[Eponymous Coward]

I don't understand how Microsoft and Sony think this will lead to higher profits.

I sometimes think that high prices aren't all about profit. It almost seems like Microsoft / Sony / Nintendo think it would be an insult to offer their best titles for $15 even if that meant they would make much more money. Prestige matters to them.

Re:To the games industry:

[tripleevenfall]

They've already been massively cheaping out by churning out these games that are basically just unreal clones.

Make a few maps and a few weapons, corral a server or two, you're done. No need to invest in an actual story or developing an expensive single player campaign. Force everyone into online play.

Online play also has the bonus effect of making a game useless after most people have moved on to the next big game, thus encouraging the player of the current game to buy something new.

Re:Worked for the PC game market

[Moheeheeko]

The main reason that the PC is doing better is that the development companies dont have to make expensive we-lose-our-ass-on-each-sale hardware every 5 years. All they have to do is pop some new parts in the dev machines every 2-3.

Same goes for the consumer. The last time I spent 300+ on PC parts (the cost of a new console by a very modest estimate) My purchase Included one of the most expensive parts to buy, a new monitor. And even then, it isnt NECCISARY to upgrade all that often, I know people who game on PC who havent upgraded in 6+ years.

Then we have Things like steam sales, and if you are patient with your gaming, you can come away smelling like a rose most of the time. That one game you kinda wanted to try 6 months ago but never gort around to it? if it was good, you are looking at $30, not so good? $5-$10.

The videogame hobby as a whole, is cheaper for the consumer on the PC