Developers standing up to gamestop ?

Discussion in 'Console Industry' started by eastmen, Oct 3, 2008.

  1. Dr. Nick

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    That might happen sooner than you think...Oh you meant officially. Nevermind. It hasn't disappeared but not being backwards compatible in the sense that I can play my old PSP games on it without having to rebuy them is a problem. I'd really like to buy a go, I really don't find the old PSP design comfortable at all but I'm too attached to the games I have and CFW to give it up.
     
  2. thambos

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    i remember reading someone found something about sorting by expiration date of games on the Go.

    In addition to the used game market & removing the middleman (& any potential discounts/sales), it looks like they're going after the rental business too. possibly allowing you to dl a game & then have it expire a week later or something similar. I can see them doing this on the PS3 & 360 too. MS already allows full game DLs & some of the HD video rentals in PSN are almost as large as games. Certain PS3 games might be a problem like MGS4 or FF13 or Tekken 6 where they have tons of HD video on the BD.
     
  3. Dr. Nick

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    Yeah, going after the brick and mortar is dangerous but do hardware manufactures or devs care about what rental stores think? They seem like a bigger problem than gamestop. At least Gamestop pushes the purchase of new games and harasses people to pre-order. What really does Netflix do to help the industry or Blockbuster?

    I remember a dev on here saying that devs should get a cut of each game rental which in turn lead to a somewhat nasty discussion. Well here is the opportunity to make it happen. Microsoft already has games on demand they might as well experiment with rentals. It is certainly something that these guys should consider in the future.
     
  4. obonicus

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    On the rental issue, isn't that how it works with video? Aren't there special copies that don't have the FBI warning against renting? I seem to remember rental-store copies being far more expensive to replace than ordinary copies.
     
  5. Dr. Nick

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    I think the person who suggested that devs get a piece of rentals said that the gaming industry doesn't have the same kind of deal with the rental stores as the movie industry. Then again I might be mistaken it was years ago after all.
     
  6. deathindustrial

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    Back when VHS was standard, movies would be released initially with very expensive prices (usually starting around $60 - $80 if memory serves) specifically to make cash off of rental places. After they had been out for a while the price would then be dropped so regular consumers could buy them.

    With DVDs this is rarely the case and these days the movie industry counts on DVD stores to buy up lots of product. The sales numbers for DVDs are such that they are because companies like Blockbuster buy a bajillion copies of everything, not because Jane Doe buys a movie once in a while.

    I would have to hazard that game rentals fall under the same umbrella in that game companies would be hurt more by the loss of sales by rental houses than they would by loss of sales by end users. Just because you are willing to pay $8 for a rental doesn't mean you are wiling pay $70+ for the full game.

    Cheers
     
  7. thambos

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    However, if the rental shops weren't at least making as much back on the game as they were paying for it, then they wouldn't stay in business. So it can be assumed that Sony would make more money renting games over PSN then they would selling them to rental places.

    Renting PSP games might do more harm than good though. Since very few if any rental shops rent PSP games. That might take away from potential buyers. Or maybe it might make more money if people rent a lot of games they would have never bought anyway. Who knows. :?:
     
  8. dobwal

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    Most rental places like Blockbuster and others use revenue sharing agreements to acquire most of their movie titles and alot of their games. Revenue sharing allows to rental places to acquire titles for movies and games for a cheaper price than retail with the agreement that movies studios and game publishers will recieve of a share of the revenue generated by rentals for a limited time period.

    Sony could use PSN to rent games PSP or PS3, but I doubt it would discourage publisher from selling to traditional rental stores as they generate revenue from just providing blockbuster and others with titles while I doubt Sony would pay an upfront fee just to place software on their servers. Blockbuster can sell their hardcopies when title demands go down but Sony can only choose to stop renting or providing the title for purchase.
     
  9. (((interference)))

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  10. Silent_Buddha

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    Brick and Mortar stores = free advertising. It'd basically be suicide for any of the major console players to purposely abandon the B&M stores.

    That's one of the main reasons (out of many) why Microsoft uses Points for online purchases. It keeps the B&M guys involved and makes them that much more willing to stock the console (consoles are almost always very low margin for retailers).

    I'd imagine part of why the PSP Go is so highly priced is because it factors in a larger margin for the retailers. If not, then I can't see why Sony would hamstring its sales so much otherwise. Likewise I can't see much incentive for any retailer to carry it for sale otherwise.

    Regards,
    SB
     
  11. Brad Grenz

    Brad Grenz Philosopher & Poet
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    Dragon Age: Origins is also having a free day one DLC pack for people who buy new. If you get a used copy and want it you have to pay $15. I think that's actually the best way for devs and publishers to incentivize new games and generate revenue from used.

    Sony is definitely walking a fine line with retailers on the PSPgo. I think it's actually a good place to start and the right time to try and effect a change. When you think of the way MP3s and iTunes have changed the way people buy and consume music, one of the main factors is portability. Being able to buy songs, take them anywhere and even buy on the road go a long way to cancelling out the perceived negatives of not having a physical copy.

    I think Sony and publishers must also be concerned with the spread of used game sales. It was one thing when it was an eBay and Gamestop thing, but with the various pilot programs at Walmart, Best Buy, Toys R Us and even Amazon the question becomes more urgent.
     
  12. Mintmaster

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    Nobody is talking about outlawing anything. In fact, this move is making games more like everything else you mentioned. Games without extra content codes don't wear out, lose performance, loose their lustre, etc. The only reason to buy new instead of used is if you want it when it just comes out or because you want to voluntarily support the devs.

    Basically, this accomplishes two things:
    1) Used game sellers get less money for unloading a title, but they probably won't realize it when they buy the game, because it's seen as a bonus.
    2) Used game buyers, turned off by the poorer product on sale, buy fewer used games. Even if they don't buy that particular game new, they will buy something with their dollars. The industry benefits, because they get these dollars instead of the original buyers.
    No, the fallacy is you think this is the only way that game makers benefit. The tiny percentage of would-be used game buyers that do bite the bullet and buy new (along with the perception that the added content is a bonus for on-the-fence new buyers), is all that the dev needs to make this move a no brainer. They don't care about people who wouldn't buy a game if it wasn't available used and discounted.

    Where the industry as a whole benefits, though, is that if a used game buyer decides not to buy 3 used games because they now lack content, he will probably buy at least one new game.
     
  13. thambos

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  14. Entropy

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    These are good arguments - however, there is also the arguments that
    * people who have bought new, sold it after a while, and used the funds to finance a new purchase, will get less for their old game putting a damper on their purchase of new games.
    * Higher cost of entry makes people less inclined to try something unknown. They may not discover franchises they would otherwise enjoy, will spend less, and the already rampant "sequelitis" of the industry will get further entrenched.
    * There is a large part of the market that are "bottom-feeders". They buy games used or from the bargain bin. Only rarely are titles bought new. However, these consumers provide an market for products that would otherwise bring no profit at all, some will grow in purchasing power and become big spenders, they add significantly to the size of the group of people-who-play-games. The suppression of the used game market will lead to less games being played in total. This will affect the industry long-term. Less people playing => less buzz => fewer newcomers => lower volumes of sales.
    * I made a post earlier that looked on the suppression of the second hand trade from the parent perspective. Viewed from a parents perspective such developments are bad through and through. Most parents are NOT happy with their kids spending their time chasing coloured pixels in front of a screen, and if the game publishing houses serves them up a less tasty deal it will only strengthen the parents case in the desireability of weaning their kids from their habit.

    Basically, the consumer hostile schemes that copyright holders come up with in their attempts to squeeze more money out of their customers all hinge on the idea that they have a captive audience. The customer needs their fix, and while they will try to pay as little as possible, they will pay to get it.
    In a greater perspective, this assumption simply isn't true, and schemes that are consumer hostile will lead to the overall market shrinking. There is nothing wrong with wanting to run a profitable business, but if you want it to be sustainable, you should do it by bringing new customers in, and provide better value to keep your existing ones.

    The shorter term results are harder to predict how they will balance out.
     
  15. fearsomepirate

    fearsomepirate Dinosaur Hunter
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    DVDs don't wear out. A decently bound book will last for decades. A house can last a hundred years if you take care of it. And somehow, they keep pressing DVDs, printing books, and building houses.

    If game makers don't want people to get rid of their games after two weeks, they should make them worth keeping.
     
  16. dobwal

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    A robust DD system that totally replaces the current retail system will change alot of the dynamics of retail market today. Publishers will be able to gain a level of price flexibility that they never had in traditional retail. Furthermore, the shelf lives of game will go up substantiably.

    Publishers won't have to worry about current retail dynamics regarding price. If you ship millions of games at full retail prices, you have to give a reseasonable amount of time to retailers to move that stock before you can ship the same software at lower price. With DD thats unneccessary and you can move up and down the price range more readily as you try to maximize sales. DD give publishers the ability to make as many price cuts as they want as well as when those prices can occur without negatively affecting others that they depend on to sell games. Temporary price cuts is now alot feasible under a robust DD system.

    A title's shelf life is totally dependent on its ability to move units at a healthy pace, once that pace diminishes that titles likelihood of maintaining visibility and a supply that will allow for maxium sales goes down dramatically. The likelihood of any one title being on any one B&M store's shelf after a year is very small unless its a big name title. A DD system will maintain a much bigger library because the cost to offer any one individual software is much cheaper over time. Another aspect is bundling old games. 2 years from now Epic could hypothetically bundle Gears, Gears2 and Unreal Tournament for $20. Under a DD system, this would be an inexpensive way to encourages sales. Under the current system, retailers might inhibit such a bundle due to risk of limited sales. Whats the prospect of EA offering you their entire 2006 lineup for the 360 or PS3 for $100.00 under the current system. How about under a DD system?

    In essense, a robust DD system will provide a much bigger inventory with full availabilty. It will also provide a broader price range as every title will be more viable and can compete for gamers' dollars through pricing years out. Lack of shelves space makes this impossible under the current retail system, but a DD has a much better potential for infinite shelf space. It would also allow for more creative ways to entice sales and can better value over time than whats possible with the current retail system.

    Purchase of new games with funds from traded games still don't help publishers out when those traded games also compete with new titles. If you trade in 4 titles for $15 dollars and buy a newer title, publishers still have to eventually contend with 4 used games sold at much higher price (than their traded value). Under that limited scenario, you have 5 new game sold and 4 used games sold with $300 gaming dollars going to purchase new games and $120 gaming dollars ($30 used price) going to purchase used titles. Bascially the publishers get one additional sales but lose out to what amounts to gaming dollars worth two new titles being spent on used games.
     
    #136 dobwal, Oct 9, 2009
    Last edited by a moderator: Oct 9, 2009
  17. Silent_Buddha

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    The fallacy here is thinking that the companies are doing something to potentially alienate entire sections of their consumer base in order to squeeze out another percentage or two of margins.

    The fact is that most game companies are constantly on the edge of losing money. Those few that are solidly profitable are only in good shape due to them having a major MAJOR blockbuster cash cow (WoW, COD: MW, GTA). But cash cows don't last forever (EA + The Sims for instance).

    It's still absolutely amazing that computer games have come down in price over the last 2 decades and has been virtually steady over the past decade or so, all in the face of increasing dev costs, inflation, technology costs, advertising costs, packaging costs, etc... Console games I'm not so sure about. I think those have gone up slightly?

    Add in adjustments for inflation and cames are significantly cheaper now than they were a decade or two decades ago.

    At the moment, publishers are looking for any way possible to prevent prices from going HIGHER. Pubs, despite public misconception know that higher prices will have a negative effect on sales volume. And when you are teetering on the edge of being in the red or being in the black, you can't afford to throw away any sales volume.

    As I've noted before. There aren't many things pubs can do anymore to maintain current price levels. They've already done away with extensive manuals, extravagent maps, expensive box packaging, etc.

    The only things they have left is to give would be pirater's an incentive to purchase the game. And to give people that would otherwise buy used games an incentive to buy new. Oh and digital distribution, but the market still isn't ready for that en masse. And even that will only give them a few more years breathing room until they are facing the same spectre of possibly having to raise prices to try to be profitable.

    The only other option many pubs have if they are going to survive and turn a profit is to raise prices. And noone, publishers or consumers, wants to do that.

    Regards,
    SB
     
  18. Entropy

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    And the logical conclusion, as far as I can see it, is that the business model simply isn't sustainable.

    What you're saying is that publishers are caught between a rock and a hard place. Well, yes. Because the consumers are not prepared to pay the price for their business model to be effective - barely now, and presumably even less so in the future. The trends are clear. However, there is an industry built around the current modus operandi. Publishers, retail chains, some developers et cetera - there are a lot of people that would like things to be exactly as they have been, only more profitable. They will obviously do whatever they hope will work to change the situation to their benefit. Nobody said that the evolutionary loosers ever gave up without a fight.

    Dobwal puts his finger on a particularly sore spot - the retail environment. But like you S_B, I don't think that going all DD is ready for prime time, and besides, there will always be consumers that simply enjoy browsing physical shelves or touch an accessory before they buy it, that will help sustain at least some retail activity.

    What constitutes a solution? I honestly don't think there is one that allows the current model to sustain growth.

    Personally, I feel that one thing that needs to change is the blockbuster business model. Games publishing has more and more come to resemble the cinema movie industry. Huge production costs, huge promotional efforts to break into limited cinema space and entice movie goers, and the need for the blockbusters to financially sustain the other efforts which are produced in the hopes of finding new cash cows for the future. The costs involved requires very substantial funding, making independent efforts very unlikely to have any major audience. Even while not very good, creatively this system actually works better for films than for games (because the film audience is wider, whereas just about everything in games is targeted to 7-12 year old boys). It works better still, i.e. it almost works ;) for the product where the model originated - books, which has the widest range of consumers and themes, and much lower costs.

    Another observation is that corporate inertia makes it difficult for an industry to change. It is more likely to fade and be complemented and slowly superceded by alternatives. Where we have seen a lot of activity and vitality is in areas outside the old, such as browser games, lighter weight downloadable content for all platforms and phone games (where Apples app store and iTunes point the way for digital distribution). It's worth noting that all of these examples feature drastically lower production and distribution costs. My personal opinion is that this is the direction of the future.
     
    #138 Entropy, Oct 10, 2009
    Last edited by a moderator: Oct 10, 2009
  19. tuna

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    I don't think so. Blockbuster games are not expensive (for me) and I want stuff that will entertain me the most, not the cheapest. So I have no problem spending €60 on a game that will really entertain me. But I do have a problem spending €6 on crap.
     
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